CHARTMASTER’s

GST TOTAL BOOK

On

Goods and Services Tax

(Group 1 – Paper 3 - Section B)

I
N
For

CA Intermediate SO
H
Jan 25/May 25 & onwards
ES
M
A
R
A
C

CA RAMESH SONI
www.rameshsoni.com

Ramesh Soni Classes | Bangalore | 9353619482 | 7483378296

First Edition: March 2020
Eighth Edition: August 2024
Price: Rs 700/-

I
N
SO
CHARTMASTER’S GST Total Book

On Indirect Tax Laws

H
For CA Intermediate
ES

© with Author
M

Laws stated in this book is amended upto 31st August, 2024

A

Every effort has been made to avoid errors or omissions in this publication. In spite
R

of this, errors may creep in. Any mistake, error or discrepancy noted may be brought
to our notice which shall be taken care of. It is notified that the users will be
A

responsible for any damage or loss of action to any one, of any kind, in any manner,
there from. It is suggested that to avoid any doubt, the reader should cross-check
C

all the facts, law and contents of the material on web with original Government
publications or notifications.

No part of this publication may be reproduced, distributed, transmitted or copied in

any form or by any means, including photocopying, recording, or other electronic or
mechanical methods or reproduced on any disc, tape, perforate media or other
information storage device, without the prior written permission of the author. Breach
of this condition is liable for legal action

All disputes are subject to Bangalore jurisdiction only.

This publication is for private circulation only.

 CHARTMASTER’s GST
No. of
Sl
Particulars Illustrations/ Page No.
No.
Questions
GST in India - An Introduction - 1.1 – 1.10

1. GST in India - An Introduction - Q & A 15 1.11 – 1.16

GST in India - An Introduction – MCQ 27 1.17 – 1.20

Supply - 2.1 – 2.21

2. Supply – Q & A 33 2.22 – 2.35

I
Supply – MCQ 27 2.36 – 2.42

N
Charge of GST - 3.1 – 3.9

SO
3. Charge of GST - Q & A 17 3.10 – 3.15

Charge of GST – MCQ 12 3.16 – 3.18

Composition levy - 4.1 – 4.5

H
4. Composition levy - Q & A 15 4.6 – 4.11
ES

Composition levy - MCQ 20 4.12 – 4.15

Registration - 5.1 – 5.22

M

5. Registration - Q & A 43 5.23 – 5.39

Registration – MCQ 33 5.40 – 5.47

A

Exemptions from GST 1 6.1 – 6.33

R

6. Exemptions from GST - Q & A 45 6.34 – 6.55

Exemptions from GST – MCQ 39 6.56 – 6.64

A

Value of Supply 2 7.1 – 7.6

C

7. Value of Supply - Q & A 21 7.7 – 7.17

Value of Supply - MCQ 11 7.18 – 7.20

Tax Invoice, Credit and Debit Notes - 8.1 – 8.15

8. Tax Invoice, Credit and Debit Notes - Q & A 32 8.16 – 8.28

Tax Invoice, Credit and Debit Notes – MCQ 21 8.29 – 8.32

Accounts & Records - 9.1 – 9.5

9. Accounts & Records - Q & A 12 9.6 – 9.9

Accounts & Records – MCQ 7 9.10 – 9.11

E-way bill - 10.1 – 10.8

10.
E-way bill - Q & A 17 10.9 – 10.14
 No. of
Sl
Particulars Illustrations/ Page No.
No.
Questions
E-way bill – MCQ 11 10.15 – 10.17

Time of Supply - 11.1 – 11.4

11. Time of Supply - Q & A 39 11.5 – 11.18

Time of Supply – MCQ 14 11.19 – 11.21

Input Tax Credit - 12.1 – 12.15

12. Input Tax Credit - Q & A 34 12.16 – 12.31

Input Tax Credit – MCQ 25 12.32 – 12.38

Payment of Tax - 13.1 – 13.11

I
N
13. Payment of Tax - Q & A 28 13.12 – 13.23

SO
Payment of Tax – MCQ 14 13.24 – 13.25

TDS and TCS - 14.1 – 14.6

14. TDS and TCS – Q & A 14 14.7 – 14.15

H
TDS and TCS – MCQ 7 14.16 – 14.17
ES

Returns - 15.1 – 15.19

15. Returns - Q & A 26 15.20 – 15.29

Returns – MCQ 9 15.30 – 15.31

M

Place of Supply - 16.1 – 16.13

A

16. Place of Supply – Q & A 19 16.14 – 16.19

R

Place of Supply – MCQ 28 16.20 – 16.26

17. Computation of GST Liability 18 17.1 – 17.29

A

18. Case study based MCQs (24 case studies) 110 18.1 – 18.40
C

Total No. of Questions (including MCQ) 846

 GST in India - An Introduction
1. GST in India - An Introduction

What is Tax?

Tax is a compulsory financial charge imposed upon a taxpayer

 under an act/law by the government
 in order to fund various public expenditures and fulfil the developmental needs like infrastructure,
health care, education, security, military, defence etc.

Types of Taxes

Taxes are broadly classified into direct taxes and indirect taxes.

Let us understand the difference between Direct Taxes and Indirect taxes
Direct taxes Indirect taxes
A direct tax is charge, which is imposed directly on Indirect taxes are imposed on goods and
the taxpayer and paid directly to the Government services and its incidence is borne by the
by the persons on whom it is imposed. The burden consumers who ultimately consume the product

I
of this tax cannot be shifted by the taxpayer to or the service. It is also called consumption taxes.

N
someone else.
A significant direct tax imposed in India is income Significant Indirect taxes in India are GST &

SO
tax. Customs.
Direct taxes are progressive in nature. Indirect taxes are regressive in nature
Rich pays more taxes compared to poor. because they equally impact the rich or poor.
Example: Income tax is higher for higher income Example: GST paid on food in restaurant is same
H
groups and lower for lower income groups. whether a person is rich or poor.
ES

Features of Indirect Taxes

(i) An important source of revenue for government: Indirect taxes are a major source of tax
M

revenue for governments worldwide and continues to grow as more countries move to consumption-
based tax regimes.
A

(ii) Tax on commodities and services: It is levied on commodities at the time of sale or import/export
R

thereof. Hence, it is also known as commodity taxation. It is also levied on provision of services.

(iii) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For example,
A

GST paid by the supplier of the goods is recovered from the buyer at the time of sale.
C

(iv) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price of the
commodity, most of the time the tax payer pays the same without actually knowing that he is paying
tax to the Government. Thus, tax payer does not perceive a direct pinch while paying indirect taxes.

(v) Promotes social welfare: High taxes are imposed on the consumption of harmful products (also
known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only checks their
consumption but also enables the State to collect substantial revenue.

(vi) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the poor
have to pay the same rate of indirect taxes.

What is GST – Goods and Services Tax?

As per Article 366: Definitions of Goods and Services Tax

Clause 12A: Goods and services tax means
 any tax on supply of goods, or services or both
 except taxes on the supply of the alcoholic liquor for human consumption.

CA Ramesh Soni 1.1

 GST in India - An Introduction
Author: Alcoholic liquor for human consumption is a major source of revenue for the states & hence all the
states disagreed to subsume it into GST and so the government in order to ensure smooth transition into
GST, agreed to keep alcoholic liquor for human consumption out of the ambit of GST.

Why is GST Introduced? i.e., Deficiencies in the erstwhile indirect tax regime

1. Cascading effect of tax is one of the vital ill of existing Indirect Tax.
It means, a tax that is levied on a good at each stage of the production process up to the point of being
sold to the final consumer. It is also known as tax on tax.

2. Double taxation on certain transactions.

Certain transactions were subject to double taxation and were taxed as both goods and services, since
under the earlier regime, distinction between goods and services was often blurred.

3. No CENVAT (Central excise duty) credit after manufacturing stage to a dealer.

In the earlier regime, a manufacturer of dutiable goods charge excise duty and value added tax on
intra-state sale of goods or central sales tax (CST) on inter-state sale of goods. VAT or CST is levied
inclusive of excise duty.

I
N
SO
H
ES
M

4. Several taxes were not subsumed.

There were several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc. which were not
A

subsumed in the VAT. Hence for a single transaction, multiple taxes in multiple forms were required to
be paid.
R

5. CST was another source of distortion in terms of its cascading nature.

A

Being an origin-based tax, CST was also against one of the basic principles of consumption taxes that
tax should accrue to the jurisdiction where consumption takes place.
C

Various features of GST are as under:

1. GST is a tax: Since it’s a tax, as per article 265 it can be levied only under the authority of law.

2. It’s a tax on supply of goods or services or both: Whenever goods or services or both are supplied
GST shall be levied. The word supply is very important here.

3. GST is a consumption tax: Consumption tax means the tax is ultimately borne by the consumers, not
by suppliers. Suppliers are collection agents acting on behalf of government.

4. GST is a destination-based tax (DBT): If Destination principle is followed, India will tax imports and
not exports, On the other hand, as per Origin principle we will tax Exports and not imports.

5. GST is a Value added tax: VAT as a model is adopted in GST: VAT refers to a staged collection
process. It refers to a system where taxes paid at an earlier stage are allowed as a credit to a taxable
person, which he uses to set off against his output tax liability.

CA Ramesh Soni 1.2

 GST in India - An Introduction
Pre and Post GST Scenario

Tax Goods/ Taxable Event Taxable person Tax charged Tax

Service levied
by
Pre GST
Excise Goods Manufactured Manufacturer Central Excise duty CG
VAT Goods Sales – Intrastate Trader/Dealer Value added tax SG
CST Goods Sales – Interstate Trader/Dealer Central Sales tax SG
Service tax Services Provisioning of service Service provider Service tax CG
Post GST
GST Goods/ Supply Taxable person Goods and Services tax CG +
Services SG
Note: CG: Central government, SG: State government

Dual Model of GST

India has adopted dual model of GST which is imposed concurrently by the centre and the state i.e., both

I
centre and state will impose tax on a transaction simultaneously.

N
GST to be levied by centre will be called CGST & that to be levied by states (incl. states with legislature)
will be called SGST. GST to be levied by UTs to be called UTGST (UTs without legislature).

Note: India has adopted its GST model from Canada.

SO
Nature of supply and types of GST charged on different types of trade and Commerce
H
India: Section 2(56) of CGST act
ES

India means
 the territory of India as referred to in article 1 of the Constitution,
M

 its territorial waters,

 seabed and sub-soil underlying such waters,
A

 continental shelf,
 exclusive economic zone or any other maritime zone as referred to in the Territorial Waters,
R

Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and
 the air space above its territory and territorial waters
A
C

CA Ramesh Soni 1.3

 GST in India - An Introduction
State: Section 2(103) of CGST act

State includes a Union territory with Legislature

Union territory: Section 2(114) of CGST act

Union territory means the territory of—

(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu;
(d) Ladakh
(e) Chandigarh; and
(f) other territory.

Explanation - Each of the territories specified in sub-clauses (a) to (f) shall be considered to be a separate
Union territory;

Intrastate Supply: Where the Location of supplier and place of supply is within the same state/union
territory it is treated as intrastate supply.

I
N
Interstate Supply: Where the Location of supplier and place of supply are in

SO
(i) Two different states,
(ii) Two different Union Territories,
(iii) A State and a Union territory
it is treated as interstate trade.
H
In case of Intrastate supply within state/UT: we always charge CGST & SGST/CGST & UTGST.
ES

In case of Interstate supply: we always charge IGST (i.e., CGST & SGST integrated together).

Taxes Subsumed into GST

M

Central taxes subsumed

A

1. Central Excise duty

2. Service tax
R

3. CVD & Special CVD (Countervailing duty) levied under Customs

4. Central Sales Tax
A

5. Central surcharges & Cesses in so far as they relate to supply of goods & services
C

State taxes subsumed

1. Entertainment Tax (except those levied by local bodies)

2. Tax on lottery, betting and gambling
3. Entry Tax (All Forms) & Purchase Tax
4. VAT/ Sales tax
5. Luxury tax
6. Taxes on advertisements
7. State surcharges and cesses in so far as they relate to supply of goods & services

Taxes not subsumed into GST

1. Basic custom duty

2. Property tax and stamp duty
3. Electricity duty
4. Excise duty on Alcoholic liquor for Human consumption
5. Excise duty on petrol, diesel etc.
6. Entertainment tax charged by local bodies (municipality)
CA Ramesh Soni 1.4
 GST in India - An Introduction
Note: In case of tobacco and tobacco products, the centre alone would have the power to levy excise duty
in addition to GST. The levy of excise duty is only in manufacturing stage; GST is leviable on the amount
(inclusive of excise duty)

Various Taxes on Goods/Services (Summary)

Goods/Services SED CED VAT/CST GST
Alcoholic Liquor for Human Consumption Yes Yes
High Speed Diesel, Crude Petroleum, Motor Spirit, Aviation turbine Yes Yes
fuel, Natural Gas (HPMAN)
Tobacco and tobacco products Yes Yes
Opium, Indian hemp and other narcotic drugs and narcotics Yes Yes
Other Goods/Services Yes
SED: State excise duty CED: Central excise duty

Benefits of GST

 Creation of Unified national market: GST aims to make India a common market with common tax
rates and procedures & remove the economic barriers thus paving the way for an integrated economy

I
at the national level.

N
 Boost to ‘Make in India' initiative: GST will give a major boost to the ‘Make in India' initiative of the

SO
Government of India by making goods and services produced in India competitive in the national as
well as international market.

 Enhanced investment and employment: The subsuming of major Central and State taxes in GST,
H
complete and comprehensive setoff of input tax on goods and services and phasing out of Central Sales
Tax reduces the cost of locally manufactured goods and services and increases the competitiveness of
ES

Indian goods and services in the international market and thus, gives boost to investments and Indian
exports. With a boost in exports and manufacturing activity, more employment is generated and GDP
is increased.
M

 Ease of doing business: Simpler tax regime with fewer exemptions along with reduction in multiplicity
of taxes under GST has led to simplification and uniformity. The uniformity in laws, procedures and tax
A

rates across the country makes doing business easier.

R

 Automated procedures with greater use of Information technology: There are simplified and
automated procedures for various processes such as registration, returns, refunds, tax payments.
A

 Reduction in compliance costs: The compliance cost is lesser under GST as multiple record-keeping
C

for a variety of taxes is not needed, therefore, there is lesser investment of resources and manpower
in maintaining records.

 Benefits to industry: GST has given more relief to trade and industry through a more comprehensive
and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State
taxes in the GST and phasing out of CST. The transparent and complete chain of set-offs which results
in widening of tax base and better tax compliance also leads to lowering of tax burden on an average
dealer in trade and industry.

 Mitigation of ill effects of cascading: By subsuming most of the Central & State taxes into a single
tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it
would mitigate the ill effects of cascading, improve competitiveness and improve liquidity of the
businesses.

 Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration
for small businesses. Further, single registration is needed in one State. Small businesses have also
been provided the additional benefit of composition scheme. With the creation of a seamless national

CA Ramesh Soni 1.5

 GST in India - An Introduction
market across the country, small enterprises have an opportunity to expand their national footprint with
minimal investment.

Genesis of GST (History from origin)

GST is a path breaking indirect tax reform which will create a common national market. GST has subsumed
multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc.
Year Events
1954 France was the first country to implement GST. At present about 160 countries have adopted
GST.
2000 The then Prime Minister mooted the concept of GST and set up a committee to design a Goods
and Services Tax (GST) model for the country.
2004 Kelkar Task force strongly recommended fully integrated GST on national basis.
2006-07 Union FM, P. Chidambaram, while presenting the Budget, announced that GST would be
introduced from April 1,2010
19.12.14 The Constitution (122nd Amendment) Bill, 2014 introduced in the Lok Sabha
06.05.15 The Lok Sabha passed the Constitution (122nd Amendment) Bill, 2014
2016 The Rajya Sabha passed the Bill on August 03, 2016.

I
 Subsequent to ratification of the Bill by more than 50% of the States, the Constitution

N
(122nd Amendment) Bill, 2014 received the assent of the President on 08.09.16 &
 It became the Constitution (101st Amendment) Act, 2016, which paved the way of GST in

SO
India
March 17 On 27th March, 2017, the Central GST legislations introduced – CGST Bill, 2017, IGST
bill 2017, UTGST bill 2017, (GST compensation to states) bill, 2017 in Lok Sabha & On 29th
March, 2017, Lok Sabha passed these bills.
H
12.04.17 President’s assent was given and bills were enacted.
01.07.17 GST rolled out in India.
ES

08.07.17 GST law was made applicable to the state of Jammu and Kashmir

Constitutional Provisions
M

India has a three-tier federal structure, comprising the Union Government, the State Governments and the
A

Local Government. The power to levy taxes and duties is distributed among the three tiers of Governments,
in accordance with the provisions of the Indian Constitution.
R

The Constitution of India is the supreme law of India. It contains 448 Articles and 12 Schedules
Power to levy and collect taxes whether, direct or indirect emerges from the Constitution of India. In case
A

any tax law, be it an act, rule, notification or order is not in conformity with the Constitution, it is called
ultra vires the Constitution and is illegal and void.
C

Thus, a study of the basic provisions of the Constitution is essential for understanding the genesis of the
various taxes being imposed in India.

Article 265: No tax to be levied without authority of Law

Article 265 of the Constitution of India prohibits arbitrary collection of tax.

It states that “no tax shall be levied or collected except by authority of law”.

Article 245: Power to make laws by Parliament and by state legislature

This Article empowers

 Parliament may make laws for the whole or any part of the territory of India, and
 The legislature of a State may make laws for the whole or any part of the State”

CA Ramesh Soni 1.6

 GST in India - An Introduction
Article 246: Distribution of Power to make Law

It gives the respective authority to Union and State Governments for levying tax.

Seventh Schedule to Article 246: Divides the legislative powers into the following three lists:
Union list – List I State list – List II Concurrent list - List
Parliament (CG) (State legislature) III
Entry Items (1 to 97) E Items (1 to 66) E Items
no. No. No. (1 to 47)
82 Taxes on income other 46 Taxes on agricultural Income 1 Criminal law
than agricultural income
83 Custom duty 51 SED on AL for HC, opium, Indian 44 Stamp duties
hemp and other narcotics drugs
84 Duties of excise on 54 Taxes on the sale or purchase of
HPMAN and Tobacco and goods (Value added tax)
Tobacco products
92A Central sales tax 62 Tax on luxuries, including taxes on
97 Any other matters not entertainments, amusements,

I
enumerated in List II/III betting and gambling.

N
Article 254 of the constitution deals with the effect of inconsistency between the law of parliament and

SO
law of state legislature. Article 254 deals with the supremacy of the laws made by Parliament.

AL for HC: Alcoholic Liquor for Human Consumption

HPMAN: High speed diesel; Petroleum crude; Motor spirit (petrol); Aviation turbine fuel; Natural gas.
H
Constitutional Amendment
ES

Introduction of the GST required amendment in the Constitution so as to enable integration of the central
excise duty, additional duties of customs, State VAT and certain State specific taxes and service tax into a
comprehensive Goods and Services Tax and to empower both Centre and the States to levy and collect it.
M

Consequently, Constitution (101st Amendment Act), 2016 (hereinafter referred to as CAA) was passed.
A

Significant provisions of Constitution (101st Amendment) Act, 2016

 Concurrent powers on Parliament and State Legislatures to make laws governing taxes on goods and
R

services.
 Levy of IGST on inter-State transactions of goods and services to be levied and collected by the
Central Government and apportioned between the Union and the States in the manner provided by
A

Parliament by Law as per the recommendation of the GST Council.

 Principles for determining the place of supply and when a supply takes place in the course of inter-
C

State trade or commerce shall be formulated by the Parliament, by law.

 GST will be levied on all supply of goods and services except alcoholic liquor for human consumption.
 On the following products GST shall not be levied, till a date to be notified on the recommendations
of the GST Council:
 High Speed Diesel
 Petroleum Crude
 Motor Spirit (commonly known as Petrol)
 Aviation Turbine Fuel
 Natural Gas
 The Union Government shall retain the power to levy duties of excise on the aforesaid products
besides tobacco and tobacco products manufactured or produced in India.
 Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and
States namely, Goods & Services Tax Council (GST Council).
 The provisions relating to GST Council came into force on 12th September, 2016. President
constituted the GST Council on 15th September, 2016.
 The Union Finance Minister is the Chairman of this Council and Ministers in charge of Finance/Taxation
or any other Minister nominated by each of the States & UTs with Legislatures are its members.

CA Ramesh Soni 1.7

 GST in India - An Introduction
Besides, the Union Minister of State in charge of Revenue or Finance is also its member. The function
of the Council is to make recommendations to the Union and the States on important issues like tax
rates, exemptions, threshold limits, dispute resolution etc.

Significant amendments made by Constitution Amendment Act are discussed below in detail:

Article 246A: Special provisions with respect to GST

(1) Notwithstanding anything contained in Articles 246 and 254,

 Parliament, and,
 subject to clause (2), the Legislature of every State,
 have power to make laws with respect to GST imposed by the Union or by such State.
Author’s comments
This article overrides article 246 and 254, Article 246 distributes power between the parliament &
state legislature and 254 deals with situation when there is inconsistency between the law of
parliament and law of state legislature, where it says law by parliament shall prevail. Article 246A
provides concurrent power to CG & SG to levy GST.
(2) Parliament has exclusive power to make laws with respect to GST where the supply of goods,

I
or of services, or both takes place in the course of inter-State trade or commerce.

N
Author’s comments:
Parliament to make law regarding interstate supply and state will have no power in case of interstate

SO
trade.
Explanation:
The provisions of this article, shall, in respect of GST referred to in clause (5) of article 279A, take
effect from the date recommended by the GST Council
H
Author’s comments
Provisions in respect of petroleum crude, high speed diesel, motor spirit (also known as petrol),
ES

natural gas, aviation turbine fuel shall apply from the date recommended by GST council.

Article 269A: Levy and collection of GST on inter-State supply

M

(1) GST on supplies in the course of inter-State trade or commerce (IGST)

 shall be levied & collected by the government of India (CG) &
A

 such tax shall be apportioned between the Union & the States
R

 in the manner provided by Parliament by law on the recommendations of the GST Council.
Explanation: for the purpose of this clause, Supply of goods, or of services or both in the course
of import into the territory of India shall be deemed to be supply of goods, or of services, or both
A

in the course of inter-state trade or commerce

C

Author’s comments: IGST shall be levied by CG and apportioned between union and state.

GST (Compensation to states) act 2017

A GST Compensation Cess at specified rate has been imposed under the GST (Compensation to States)
Cess Act, 2017 on the specified luxury items or demerit goods, like pan masala, tobacco, aerated waters,
motor cars etc., computed on value of taxable supply.
Compensation Cess is leviable on intra-State supplies & inter-State supplies with a view to provide for
compensation to the States for the loss of revenue arising on account of implementation of the GST.
Initially, GST compensation cess was levied for a period of 5 years upto 30th June, 2022. However, its levy
and collection has been extended till 31st March, 2026.

CA Ramesh Soni 1.8

 GST in India - An Introduction
Article 279A: GST Council-Constitutional body

Section 2(36): Council means the GST Council established under article 279A of the Constitution.

I
N
(1) Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and
States namely, Goods & Services Tax Council (GST Council).

SO
(2) The joint forum of the Centre & States namely, GST Council.
a. The provisions relating to GST Council came into force on 12th September, 2016.
b. President constituted the GST Council on 15th September, 2016.
(3) Members of the GST council-total 33 members
H
 The Union Finance Minister - Chairman
 The Union Minister of State in charge of Revenue or Finance- Member
ES

 Ministers in charge of Finance/Taxation or any other Minister nominated by each of the States &
UTs with Legislatures - Members.
(4) The function of the Council is to make recommendations to the Union & the States on
important issues like:
M

 The taxes, cesses and surcharges which may be subsumed in the GST;
 The Goods and services subjected to/ exempted from GST
A

 Model GST laws, principles of levy, apportionment of GST levied on Inter-State supplies & the
R

principles that govern the place of supply;

 Threshold limit of turnover below which no GST shall be charged on goods/services
 Rates of GST,
A

 Special rates for specified period to raise additional resources during any natural calamity or disaster
 Special provisions with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir,
C

Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
 The date on which GST be levied on petroleum crude, high speed diesel, motor spirit, natural gas
and aviation turbine fuel, etc.
(5) One half of the total number of members of the GST Council shall constitute the quorum at its meetings.
(6) Every decision of the GST Council is taken by a majority of not less than three-fourths of the weighted
votes of the members present and voting.
 Vote of the Centre has a weightage of one-third (i.e., 33.33%) of total votes cast and
 Votes of all the State governments (31) taken together have a weightage of two-thirds (i.e.,
66.67%) of the total votes cast, in that meeting.

Common Portal

 GST Portal – www.gst.gov.in – is a website managed by Goods and Services Tax Network.
 GSTN is a not-for Profit Company incorporated under provisions of Sec 8 of Companies Act, 2013
 IT has been set by the Government to establish a uniform interface for the tax payer and a common &
shared IT infrastructure between the Centre and States.
 The functions of the GSTN include

CA Ramesh Soni 1.9

 GST in India - An Introduction
 facilitating registration;
 forwarding the returns to Central and State authorities;
 computation and settlement of IGST;
 matching of tax payment details with banking network;
 providing various MIS reports to the CG and the SGs based on the taxpayer return information;
 providing analysis of taxpayers' profile.
 The portal is one single common portal for all GST related services like obtaining registration, paying
tax, filing of returns, etc.
 GSTN provides three front end services to the taxpayers namely registration, payment and return
through GST Common Portal.
 The Common GST Electronic Portal for furnishing electronic way bill is www.ewaybillgst.gov.in [managed
by the National Informatics Centre, Ministry of Electronics & Information Technology, Govt of India].
 Further, Invoice Registration Portal (IRP) is the website for uploading/reporting of e-invoices. It is
managed by the National Informatics Centre, Ministry of Electronics & Information Technology.
 The Common GST Electronic Portal for preparation of the invoice in terms of rule 48(4), namely:
 www.einvoice1.gst.gov.in;  www.einvoice2.gst.gov.in;  www.einvoice3.gst.gov.in;
 www.einvoice4.gst.gov.in;  www.einvoice5.gst.gov.in;  www.einvoice6.gst.gov.in;
 www.einvoice7.gst.gov.in;  www.einvoice8.gst.gov.in;  www.einvoice9.gst.gov.in;
 www.einvoice10.gst.gov.in;

I
N
GST Suvidha Providers (GSPs)/ Application Service Providers (ASPs)

SO
 GSTN has selected certain Information Technology, Information Technology enabled Services and
financial technology companies, to be called GST Suvidha Providers (GSPs).
 GSPs develop applications to be used by taxpayers for interacting with the GSTN.
H
 GSP develops applications having features like return filing, reconciliation of purchase register data with
auto populated data for acceptance/rejection/modification, dashboards for taxpayers for quick
ES

monitoring of GST compliance activities.

 They customize products that address the needs of different segment of users.
 GSPs may take the help of ASPs who act as a link between taxpayers and GSPs.
 Hence, we can say that GSPs will act as link between taxpayer and GSTN portal, and ASP will act as
M

link between taxpayer and GSPs.

A

GST Laws: Act and Rules

R

Particulars ACT
CGST IGST SGST UTGST
A

Act CGST Act, 2017 IGST Act, 2017 SGST Act, 2017 UTGST Act, 2017
Applicability On intra-state On inter-state On intra-state supply On intra-state
C

supply supply supply

No of Acts 1 CGST act 1 IGST act 31 SGST acts 1
No of Sections 1 to 174 1 to 25 1 to 174 1 to 26
Rules
Rule CGST rules, 2017 IGST rules, 2017 State wise rules. NA
No of rules 1 to 162 1 to 3 1 to 162 NA

CA Ramesh Soni 1.10

 GST in India - An Introduction – Q & A
1. GST in India - An Introduction – Q & A

Basics

1.
Explain the salient features of indirect taxes.
(ICAI Study Material)
Answer:
(i) An important source of revenue: Indirect taxes are a major source of tax revenues for
Governments worldwide and continue to grow as more countries move to consumption-oriented tax
regimes. In India, indirect taxes contribute more than 50% of the total tax revenues of Central and
State Governments.
(ii) Tax on commodities and services: It is levied on commodities at the time of manufacture or
purchase or sale or import/export thereof. Hence, it is also known as commodity taxation. It is also
levied on provision of services.
(iii) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For
example, GST paid by the supplier of the goods is recovered from the buyer by including the tax in
the cost of the commodity.

I
(iv) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price of the

N
commodity, most of the time the tax payer pays the same without actually knowing that he is
paying tax to the Government. Thus, tax payer does not perceive a direct pinch while paying

SO
indirect taxes.
(v) Inflationary: Tax imposed on commodities and services causes an all-round price spiral. In other
words, indirect taxation directly affects the prices of commodities and services and leads to
inflationary trend.
H
(vi) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority of the
products or services are subject to indirect taxes with low thresholds.
ES

(vii) Promotes social welfare: High taxes are imposed on the consumption of harmful products (also
known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only checks their
consumption but also enables the State to collect substantial revenue.
M

(viii) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the poor
have to pay the same rate of indirect taxes on certain commodities of mass consumption. This may
A

further increase the income disparities between the rich and the poor.
R

2.
Which of the existing taxes are proposed to be subsumed under GST? or
List any four State levies, which are subsumed in GST.
A

(ICAI Study Material) & (CA INTER MOCK TEST PAPER-18) (CA Inter May 18-similar)
Answer:
C

The GST would replace the following taxes:

(i) Taxes currently levied by the Centre:
(a) Central Excise duty & Additional Excise Duties
(b) Central Sales Tax
(c) Excise Duty under Medicinal & Toilet Preparation Act
(d) Additional Duties of Customs (commonly known as CVD)
(e) Special CVD
(f) Service Tax
(g) Central Surcharges and Cesses so far as they relate to supply of goods and services

(ii) State taxes that would be subsumed under the GST are:
(a) State VAT
(b) Luxury Tax
(c) Entry Tax (all forms)
(d) Entertainment and Amusement Tax (except when levied by the local bodies)
(e) Taxes on advertisements
(f) Purchase Tax

CA Ramesh Soni 1.11

 GST in India - An Introduction – Q & A
(g) Taxes on lotteries, betting and gambling
(h) State Surcharges and cesses so far as they relate to supply of goods and services

3.
List the taxes, which are not subsumed in GST

Answer:
(a) Basic Customs Tax
(b) Property tax and stamp duty
(c) Electricity duty
(d) Excise duty on alcohol
(e) Excise duty on petrol, diesel etc.
(f) Entertainment tax charged by local bodies (municipality).

4.
GST is a destination-based tax on consumption of goods or services or both. Discuss the
validity of the statement.
(ICAI study material)
Answer:

I
N
The given statement is valid. GST is a destination-based tax on consumption of goods or services or both.
GST is known as destination-based tax since the tax would accrue to the taxing authority which has

SO
jurisdiction over the place of consumption which is also termed as place of supply.
For example, if A in Delhi produces the goods and sells the goods to B in Haryana. In this case, the tax
would accrue to the State of Haryana and not to the State of Delhi. On the other hand, under pre-GST
regime, origin-based taxation was prevailing in such cases.
H
Under origin-based taxation, the tax used to accrue to the State from where the transaction originated. In
the given case, under origin-based taxation, the central sales tax would have been levied by Centre and
ES

collected by the State of Delhi and not by the State of Haryana.

5.
Under Goods and Services Tax (GST), only value addition is taxed and burden of tax is to be
M

borne by the final consumer. Examine the validity of the statement.

(ICAI study material)
A

Answer:
The statement is valid. Goods and Services Tax is a destination-based tax on consumption of goods and
R

services. It is levied at all stages right from manufacture up to final consumption with credit of taxes paid
at previous stages available as setoff. Resultantly, only value addition is taxed and burden of tax is to be
A

borne by the final consumer.

C

6.
What are the benefits which the Country will accrue from GST? or
“The new GST regime is a boom for all”. Comment on the rationale of GST in the light of the
above statement. Or
(CBIC FAQ) & (ICAI study material)
Answers:
 Creation of Unified national market: GST aims to make India a common market with common tax
rates and procedures & remove the economic barriers thus paving the way for an integrated economy
at the national level.
 Boost to ‘Make in India' initiative: GST will give a major boost to the ‘Make in India' initiative of
the Government of India by making goods and services produced in India competitive in the national
as well as international market.
 Enhanced investment and employment: The subsuming of major Central and State taxes in GST,
complete and comprehensive setoff of input tax on goods and services and phasing out of Central
Sales Tax (CST) reduces the cost of locally manufactured goods and services and increases the
competitiveness of Indian goods and services in the international market and thus, gives boost to
investments and Indian exports. With a boost in exports and manufacturing activity, more
employment is generated and GDP is increased.
CA Ramesh Soni 1.12
 GST in India - An Introduction – Q & A
 Ease of doing business: Simpler tax regime with fewer exemptions along with reduction in
multiplicity of taxes under GST has led to simplification and uniformity. The uniformity in laws,
procedures and tax rates across the country makes doing business easier.
 Automated procedures with greater use of IT: There are simplified and automated procedures
for various processes such as registration, returns, refunds, tax payments.
 Reduction in compliance costs: The compliance cost is lesser under GST as multiple record-
keeping for a variety of taxes is not needed, therefore, there is lesser investment of resources and
manpower in maintaining records.
 Benefits to industry: GST has given more relief to trade and industry through a more
comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several
Central and State taxes in the GST and phasing out of CST. The transparent and complete chain of
set-offs which results in widening of tax base and better tax compliance also leads to lowering of tax
burden on an average dealer in trade and industry.
 Mitigation of ill effects of cascading: By subsuming most of the Central & State taxes into a single
tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it
would mitigate the ill effects of cascading, improve competitiveness and improve liquidity of the
businesses.
 Benefits to small traders and entrepreneurs: GST has increased the threshold for GST
registration for small businesses. Further, single registration is needed in one State. Small businesses

I
N
have also been provided the additional benefit of composition scheme. With the creation of a
seamless national market across the country, small enterprises have an opportunity to expand their

SO
national footprint with minimal investment.

7.
Which are the commodities which have been kept outside the purview of GST? Examine the
H
status of taxation of such commodities after introduction of GST?
(CBIC FAQ) & (ICAI study material)
ES

Answer:
Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016 defines
the Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of
alcoholic liquor for human consumption. Therefore, alcohol for human consumption is kept out of GST by
M

way of definition of GST in the Constitution. Five petroleum products viz. petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out of the
A

purview of GST; GST Council shall decide the date from which they shall be included in GST. The
erstwhile taxation system (CST/VAT & central excise) still continues in respect of the said commodities.
R

8.
A

What type of GST is proposed to be implemented? Why is Dual GST required? Or

A dual GST has been implemented in India. Elaborate.
C

(CBIC FAQ) & (ICAI study material)

Answer:
A dual GST has been implemented in India with the Centre and States simultaneously levying it on a
common tax base. The GST levied by the Centre on intra-State supply of goods and / or services is called
the Central GST (CGST) and that levied by the States/ Union territory is called the State GST (SGST)/
Union GST (UTGST). Similarly, Integrated GST (IGST) is levied and administered by Centre on every
inter-State supply of goods and/or services.
India is a federal country where both the Centre and the States have been assigned the powers to levy
and collect taxes through appropriate legislation. Both the levels of Government have distinct
responsibilities to perform according to the division of powers prescribed in the Constitution for which
they need to raise resources. A dual GST, therefore, keeps with the Constitutional requirement of fiscal
federalism.

9.
Discuss the leviability of GST or otherwise on the following:
(a) Alcoholic liquor for human consumption
(b) Petroleum crude, diesel, petrol, ATF and natural gas
CA Ramesh Soni 1.13
 GST in India - An Introduction – Q & A
(c) Tobacco
(d) Opium, Indian hemp and other narcotic drugs and narcotics
(ICAI study material)
Answer:
(a) Alcoholic liquor for human consumption: is outside the realm of GST. The
manufacture/production of alcoholic liquor continues to be subjected to State excise duty and inter-
State/intra-State sale of the same is subject to CST/VAT respectively.

(b) Petroleum crude, diesel, petrol, ATF and natural gas: As regards petroleum crude, diesel,
petrol, ATF and natural gas are concerned, they are not presently leviable to GST. GST will be levied
on these products from a date to be notified on the recommendations of the GST Council.
Till such date, central excise duty continues to be levied on manufacture/production of petroleum
crude, diesel, petrol, ATF and natural gas and inter-State/intra-State sale of the same is subject to
CST/ VAT respectively.

(c) Tobacco: Tobacco is within the purview of GST, i.e., GST is leviable on tobacco. However, Union
Government has also retained the power to levy excise duties on tobacco and tobacco products
manufactured in India. Resultantly, tobacco is subject to GST as well as central excise duty.

I
N
(d) Opium, Indian hemp and other narcotic drugs and narcotics: Opium, Indian hemp and other
narcotic drugs and narcotics are within the purview of GST, i.e., GST is leviable on them. However,

SO
State Governments have also retained the power to levy excise duties on such products
manufactured in India. Resultantly, Opium, Indian hemp and other narcotic drugs and narcotics are
subject to GST as well as State excise duties.
H
Constitutional Provisions
ES

10.
Why was the Constitution of India amended recently in the context of GST? or
Why was the need to amend the Constitution of India before introducing the GST?
(ICAI study material)
M

Answer:
Earlier, the fiscal powers between the Centre and the States are clearly demarcated in the Constitution
A

with almost no overlap between the respective domains. The Centre has the powers to levy tax on the
manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics etc.) while the
R

States have the powers to levy tax on the sale of goods. In the case of inter-State sales, the Centre has
the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the
A

States. As for services, it is the Centre alone that is empowered to levy service tax.
Introduction of the GST required amendments in the Constitution so as to simultaneously empower the
C

Centre and the States to levy and collect this tax. The Constitution of India has been amended by the
Constitution (one hundred and first amendments) Act, 2016 for this purpose. Article 246A of the
Constitution empowers the Centre and the States to levy and collect the GST.

11.
Discuss Article 246A which grants the power to make laws with respect to Goods and Services
Tax.
(ICAI Study material)
Answer:
Article 246A stipulates that Parliament, and, the Legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State.
Parliament has exclusive power to make laws with respect to goods and services tax where the supply of
goods, or of services, or both takes place in the course of inter-State trade or commerce.
However, in respect to petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel, the aforesaid provisions shall apply from the date to be notified by
the Government on the recommendations by the GST Council.

CA Ramesh Soni 1.14

 GST in India - An Introduction – Q & A
12.
Discuss Article 269A pertaining to levy and collection of GST on inter-State supply.
(ICAI Study material)
Answer:
Article 269A of the Constitution stipulates that Goods and Services Tax on supplies in the course of inter-
State trade or commerce shall be levied and collected by the Government of India and such tax shall be
apportioned between the Union and the States in the manner as may be provided by Parliament by law
on the recommendations of the Goods and Services Tax Council.
Here, supply of goods, or of services, or both in the course of import into the territory of India shall be
deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
Parliament is empowered to formulate the principles for determining the place of supply, and when a
supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

GST Council

13.
What would be the role of GST Council? Or
“The GST Council stands as the backbone of the whole GST law.” What is the role of GST
Council under GST? Or

I
N
Enumerate any five matters on which the GST council may make recommendation under Article
279A of the constitution of India.

SO
(Author Recommendation)

Answer:
A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of
H
the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers to make
recommendations to the Union and the States on
ES

 the taxes, cesses and surcharges levied by the Centre, the States and the local bodies which may be
subsumed under GST;
 the goods and services that may be subjected to or exempted from the GST;
 the date on which the GST shall be levied on petroleum crude, high speed diesel, motor sprit
M

(commonly known as petrol), natural gas and aviation turbine fuel;

 model GST laws, principles of levy, apportionment of IGST;
A

 the threshold limit of turnover below which the goods and services may be exempted from GST;
 the rates including floor rates with bands of GST;
R

 any special rate or rates for a specified period to raise additional resources during any natural
calamity or disaster;
A

 special provision with respect to the North-East States, J&K, Himachal Pradesh and Uttarakhand; and
 any other matter relating to the GST, as the Council may decide.
C

14.
List the special category States as prescribed in Article 279A of the Constitution of India.
(ICAI Study Material)
Answer:
There are 11 Special Category States, namely, States of Himachal Pradesh, Uttarakhand, Mizoram,
Manipur, Meghalaya, Arunachal Pradesh, Assam, Nagaland, Sikkim, Tripura and Jammu & Kashmir.

GSTN

15.
What is GSTN and its role in the GST regime? Or Discuss any two functions of GSTN or
Discuss the need and functions of the common GST portal.
(ICAI Study Material) & (CA Inter MTP)
Answer:
GSTN stands for Goods and Services Tax Network (GSTN). It is not-for Profit Company incorporated
under provisions of Sec 8 of Companies Act, 2013. GSTN has been set up to cater to the needs of GST.
GSTN has made up site/ portal which have been notified as common GST electronic portal.
CA Ramesh Soni 1.15
 GST in India - An Introduction – Q & A
Thus, GSTN has provided IT infrastructure under GST law. GST portal developed by it is used by Central
Government as well as by the State Governments. GST portal is referred as ‘common portal’. This portal
is the taxpayer interface with the Government.
GSTN is providing facilities to taxpayers as well as Government. Following are some important
functions which are performed by GSTN
(i) Facilitation of registration (as under GST, registration is online);
(ii) Payment of GST (Challan for GST payment is created online);
(iii) Returns filing (as under GST, all returns are online);
(iv) Maintenance of ledgers of taxpayers (e-liability, e-credit and e-cash ledger for each registered
taxpayer);
(v) Running the matching engine for matching, reversal and reclaim of input tax credit (presently, it
has been deferred);
(vi) Providing analysis of tax payers’ profile (based on such analysis, cases will be selected for scrutiny/
audit);
(vii) Sharing of information in taxpayers returns with Centre and State Governments / tax authorities;
(viii) providing various MIS reports to the Central and the State Governments based on the tax payer
return information;
(ix) Computation and settlement of IGST (transfer of funds in between Central Tax Account, State Tax
Accounts and Integrated Tax Account);

I
N
SO
H
ES
M
A
R
A
C

CA Ramesh Soni 1.16

 GST in India – An Introduction-MCQ
1. GST in India – An Introduction - MCQ

Basics (b) India.

(c) Australia.
1. The functions of Goods and Services (d) France.
Network (GSTN) include:
(a) facilitating registration Taxes subsumed & not subsumed into GST
(b) forwarding the returns to Central and State
authorities 9. Which of the following taxes have not
(c) computation and settlement of IGST been subsumed in GST?
(d) All of the above (a) Entertainment Tax (except those levied by
local bodies)
2. Tobacco products are subject to: (b) Entertainment tax charged by local bodies.
(a) Excise duty (c) Both of the above.
(b) Excise duty plus GST (d) None of the above.
(c) Only GST
(d) VAT 10. Which of the following taxes have been
subsumed in GST?

I
3. India has adopted its GST model from (a) Central Sales Tax

N
(a) US (b) Central Excise Duty
(b) UK (c) VAT

SO
(c) Europe (d) All of the above
(d) Canada
11. Various taxes have been subsumed in GST
4. Which is known as the GST common to make one nation one tax one market for
H
portal? consumers. Out of the following,
(a) www.cbic.gov.in determine which taxes have been
ES

(b) www.gstn.gov.in subsumed in GST.

(c) www.gst.gov.in (i) Basic customs duty levied under
(d) all of the above Customs Act, 1962
M

(ii) Taxes on lotteries

5. Which one of the following is/are correct? (iii) Entertainment Tax (levied by local
(a) Direct Taxes are regressive in nature; bodies)
A

Indirect Taxes are progressive in nature. (a) (ii)

R

(b) Direct Taxes are progressive in nature; (b) (ii) and (iii)
Indirect Taxes are regressive in nature. (c) (iii)
(c) Direct Taxes are progressive in nature; (d) (i), (ii) and (iii)
A

Indirect Taxes are progressive in nature.

(d) Direct Taxes are regressive in nature; Constitutional Provisions
C

Indirect Taxes are regressive in nature.

12. List-I of the Constitution contains matters
6. Which of the following is not a feature of in respect of which ___________ has the
GST? exclusive right to make laws.
(a) GST is a destination-based tax. (a) Central Government
(b) GST is a Value Added Tax. (b) State Government
(c) GST is an Origin based tax. (c) Both Centre and State Governments
(d) None of the above. (d) None of the above

7. India has adopted _____ of GST. 13. According to Article 366(12A), GST means
(a) National Model. any tax on supply of goods or services or
(b) Australian Model. both except for taxes on the supply of:
(c) Dual Model. (a) Alcoholic liquor for human consumption
(d) None of the above. (b) Tobacco & Tobacco products
(c) Petroleum Crude, High Speed Diesel,
8. The First Country to implement GST was Motor Spirit, Natural Gas and Aviation
(a) Canada. Turbine Fuel

CA Ramesh Soni 1.17

 GST in India – An Introduction-MCQ
(d) All of the above (a) GST will not be levied at all
(b) GST will be levied from a date to be notified
14. ________of the Constitution provides on the recommendations of the GST
that no tax shall be levied or collected Council
except by authority of law? (c) GST is levied, but exempted by notification
(a) Article 254 in public interest.
(b) Article 245 (d) None of the above
(c) Article 265
(d) Article 256 21. Choose the correct from the following
with respect to Special Category States.
Article 279A – GST Council (a) Arunachal Pradesh, Assam, Jammu and
Kashmir, Manipur, Meghalaya, Mizoram,
15. Which article of the Constitution outlines Nagaland, Sikkim, Tripura, Andhra Pradesh
the composition & function of GST Council and Uttarakhand
(a) 270 (b) Arunachal Pradesh, Assam, Jammu and
(b) 279A Kashmir, Manipur, Meghalaya, Mizoram,
(c) 246A Nagaland, Sikkim, Telangana, Himachal
(d) 269A Pradesh and Uttarakhand

I
(c) Arunachal Pradesh, Jammu and Kashmir,

N
16. Provisions related to GST Council came Manipur, Meghalaya, Mizoram, Nagaland,
into force with effect from Sikkim, Tripura, Himachal Pradesh and

SO
(a) 17th July, 2017. Uttarakhand
(b) 12th September, 2016. (d) Arunachal Pradesh, Assam, Jammu and
(c) 15th September, 2016. Kashmir, Manipur, Meghalaya, Mizoram,
(d) None of the above. Nagaland, Sikkim, Tripura, Himachal
H
Pradesh and Uttarakhand.
17. President constituted the GST Council on:
ES

(a) 17th July, 2017. GSP/ASPs

(b) 12th September, 2016.
(c) 15th September, 2016. 22. Which of the following is/are correct?
M

(d) None of the above. (a) GSPs will act as link between taxpayer and
GSTN Portal and ASP will act as link
A

18. GST Council consist of ͟__no of members. between taxpayer and GSPs.
(a) 33 (b) ASPs will act as link between taxpayer and
R

(b) 34 GSTN Portal and GSP will act as link

(c) 37 between taxpayer and GSPs.
(d) None of the above. (c) GSPs will act as link between ASP and
A

taxpayer and ASP will act as link between

19. Which of the following is not the correct taxpayer and GSPs.
C

option? (d) GSPs will act as link between taxpayer and

(a) Centre has a weightage of one-third of total GSTN Portal and ASP will act as link
votes cast and State government together between GSTN Portal and GSPs.
have a weightage of two-thirds of the total
votes cast. Miscellaneous
(b) Centre has a weightage of two-third of total
votes cast and State government together 23. Which of the following statement is/are
have a weightage of one-thirds of the total incorrect:
votes cast. 1. Manufacture/production of alcoholic
(c) Centre has a weightage of half of total liquor for human consumption is
votes cast and State govt together have a subject to State excise duty and inter-
weightage of half of the total votes cast. State/intra-State sale of the same is
(d) Both (b) & (c). subject to GST respectively.
2. Central excise duty is levied on
20. On Petroleum Crude, High Speed Diesel, manufacture/production of petroleum
Motor Spirit, Natural Gas & Aviation crude, diesel, petrol, ATF and natural
Turbine Fuel: gas and inter-State/intra-State sale of

CA Ramesh Soni 1.18

 GST in India – An Introduction-MCQ
the same is subject to CST/ VAT 4. Opium, Indian hemp and other
respectively. narcotic drugs and narcotics are
3. Union Govt retains the power to levy subject to VAT/CST as well as State
Central excise duties on tobacco and excise duties.
tobacco products manufactured in (a) (1), (2) & (3)
India. Tobacco is subject to GST as (b) (1) & (4)
well as central excise duty. (c) (1), (2), (3) & (4)
(d), (3) & (4)
24. Which of the following statements is 26. _________________ is leviable on
incorrect? ______________ of Tobacco
(a) Alcoholic liquor for human consumption is (i) GST; supply
outside the realm of GST (ii) Central excise duty; manufacture
(b) Manufacture/ production of alcoholic (iii) Central sales tax; inter-State sale
liquor is subject to State excise duty. (iv) Value Added Tax; intra-State sale
(c) Inter-State/intra-State sale of the alcohol (v) State excise duty; manufacture
is subject to CST/ VAT respectively. Choose the most appropriate answer:
(d) Alcoholic liquor for human consumption is (a) (ii), (iii) and (iv)
subject to GST. (b) (i)

I
(c) (i) and (ii)

N
25. Presently, ________ is leviable on (d) (i) and (iv)
_________ of petroleum and diesel.

SO
(i) GST; supply 27. ________ is leviable on ________ of
(ii) Central excise duty; opium and Indian hemp.
manufacture/production (i) GST; supply
(iii) Central sales tax; inter-State sale (ii) Central excise duty; manufacture
H
(iv) Value Added Tax; intra-State sale (iii) Central sales tax; inter-State sale
(v) State excise duty; manufacture (iv) Value Added Tax; intra-State sale
ES

Choose the most appropriate answer: (v) State excise duty; manufacture
(a) (ii), (iii) and (iv) Choose the most appropriate answer:
(b) (i) (a) (ii), (iii) and (iv)
M

(c) (i) and (ii) (b) (i)

(d) (i) and (v) (c) (i) and (v)
A

(d) (i) and (ii)

Answers:
R

Qs Ans Reason
1. d Functions of GSTN include Facilitating Registration, Providing MIS report, Computation
& settlement of IGST, matching of tax payment details with banking network, forwarding
A

returns to central & state authorities, providing analysis of taxpayer’s profile.

C

2. b Both Central excise duty and GST are levied on Tobacco products.
3. d India has adopted the GST model from Canada.
4. c The following are the common portals: www.gst.gov.in, ewaybillgst.gov.in, einvoice1-
10.gst.gov.in.
5. b Direct taxes are progressive in nature, as the rich pay more taxes compared to the poor.
Indirect taxes are regressive in nature because they equally impact the rich and poor.
6. c Features of GST: It’s a tax on supply of goods or service, it is a consumption tax, it is a
destination-based tax, it is value added tax. GST is not origin-based tax.
7. c India has adopted the Dual model of GST which is imposed concurrently by the centre
& the state.
8. d France was the first country to implement GST.
9. b Taxes not subsumed under GST: Basic custom duty, Entertainment tax levied by local
bodies, property tax & stamp duty, electricity duty.
10. d Following are the taxes subsumed into GST.
Central taxes subsumed - Central Excise duty, Service Tax, Central sales tax, CVD &
Special CVD, Surcharges & cesses.
State taxes subsumed – State surcharges & cesses, Tax on lottery, betting, gambling,
entry tax, purchase tax, VAT & sales tax, Luxury tax.
CA Ramesh Soni 1.19
 GST in India – An Introduction-MCQ
Qs Ans Reason
Since Central Sales Tax, Central Excise duty, VAT are subsumed, answer is D.
11. a (i) Basic customs duty: Not subsumed into GST
(ii) Taxes on lotteries: Subsumed into GST
(iii) Entertainment Tax (levied by local bodies): Not subsumed into GST.
12. a Seventh Schedule to Article 246 divides legislative powers into List I - Union List, List
II- State List, List III- Concurrent List, Matters enumerated in List I, the CG has the
exclusive power to make law.
13. a According to Article 366(12A), GST means any tax on supply of goods or services or
both except Alcoholic Liquor for human consumption.
14. c Article 265 of the constitution provides that no tax shall be levied or collected except
by authority of law.
15. b Article 279A of the constitution provides the outline of the composition and functions
of the GST Council.
16. b GST Council came into force on 12th September, 2016
17. c The President constituted the GST Council on 15th September, 2016.
18. a Members of the GST Council consist of 33 members including 2 union members and 31
State finance ministers/ministers nominated by state.

I
N
19. d The Question is asking Which is not the correct option.
(b) & (c) are not the correct option, hence answer is (d).

SO
20. b GST on Petroleum crude, High speed diesel, Motor spirit, Natural gas and Aviation Turbine
Fuel shall be levied from a date to be notified on the recommendations of GST Council.
21. d Special Category States are with respect to the states of Arunachal Pradesh, Assam,
Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal
H
Pradesh and Uttarakhand.
22. a GSPs will act as link between taxpayer and GSTN Portal and ASP will act as link between
ES

taxpayer and GSPs.

23. b Correct Sentences are stated below
1. Manufacture/production of alcoholic liquor for human consumption is subject to State
excise duty and inter-State/intra-State sale of the same is subject to CST/VAT
M

respectively.
2. Central excise duty is levied on manufacture/production of petroleum crude, diesel,
A

petrol, ATF and natural gas and inter-State/intra-State sale of the same is subject to
CST/ VAT respectively.
R

3. Union Govt retains the power to levy Central excise duties on tobacco and tobacco
products manufactured in India. Resultantly, tobacco is subject to GST as well as
A

central excise duty.

4. Opium, Indian hemp and other narcotic drugs and narcotics are subject to GST as well
C

as State excise duties.

24. d (a) Alcoholic liquor for human consumption is outside the realm of GST – correct,
GST is not leviable on alcoholic liquor for human consumption.
(b) Manufacture/ production of alcoholic liquor is subject to State excise duty-
correct
(c) Inter-State/intra-State sale of the alcohol is subject to CST/ VAT respectively
- correct
(d) Alcoholic liquor for human consumption is subject to GST- Incorrect.
25. a (i) GST; supply – Not leviable
(ii) Central excise duty; manufacture/production - leviable
(iii) Central sales tax; inter-State sale - leviable
(iv) Value Added Tax; intra-State sale- leviable
(v) State excise duty; manufacture – Not leviable.
26. c On manufacturing of tobacco, Central Excise duty is levied and on sale, GST is levied.
27. c On manufacturing of Opium, state excise duty is levied and on sale, GST is levied.

CA Ramesh Soni 1.20

 Supply
2. Supply

Introduction

 A taxable event is any transaction or occurrence that results in a tax being imposed.
 Various taxable events that existed under the previous law were manufacture, sale, rendering of service,
etc. have been done away with and now the taxable event under GST is supply.
 Taxable event under GST law is supply of goods or services or both. Hence no supply no GST.

Goods: Section 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.

I
Movable property shall mean property of every description, except immovable property

N
Immovable property shall include

SO
 land,
 benefits to arise out of land, and
 things attached to the earth, or
 permanently fastened to anything attached to the earth;
H
Author’s comment:
ES

Immovable property hence means

 Land
 Benefits to arise out of land: TDR (Transfer of Development Right), Rights to ways, the right to catch
M

away fish, right to collect dues from a fair or market on a land.

 Things attached to the earth: Things rooted in the earth like trees, or embedded in the earth like
A

Buildings, walls flats, cement factory, etc.

 Things permanently fastened to anything attached to the earth: Telecommunication towers, lift,
R

etc.

Money: Section 2(75):

A

Money means
C

 the Indian legal tender or any foreign currency,

 cheque, promissory note, bill of exchange,
 letter of credit, draft, pay order,
 traveller cheque, money order, postal or
 electronic remittance or
 any other instrument recognised by the RBI
 when used as a consideration to settle an obligation or exchange with Indian legal tender of another
denomination
 but shall not include any currency that is held for its numismatic value;

“Securities” include shares, scrips, stocks, bonds, debentures, marketable securities, etc

Actionable claim (Section 3 of The Transfer of Property Act, 1882)

Actionable claim means a claim

 to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation
or pledge of moveable property,

CA Ramesh Soni 2.1

 Supply
 or to any beneficial interest in moveable property not in the possession, either actual or
constructive, of the claimant,
 which the Civil Courts recognize as affording grounds for relief,
 whether such debt or beneficial interest be existent, accruing, conditional or contingent.

Examples of Actionable claims are:

 Lottery, Betting, gambling: Right to claim the prize or the amount.
 Claim for arrears of rent: Right to receive rent
 Claim for the money due under insurance policy: Right to receive policy amount

Services: [Section 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.

I
N
Explanation - For the removal of doubts, it is hereby clarified that the expression “services” includes
facilitating or arranging transactions in securities.

SO
Author’s comment:
1. Services means anything other than goods, hence we can say that immovable property is not goods
but it will fall within the preview of services as per section 2(102) & hence we can say that any
H
transaction in immovable property can be termed as a service.
2. Activities relating to use of Money: Even if money is not service but activities relating to use of
ES

money is a service, for example lending money and receiving interest.

3. Examples for Conversion:
 Giving cash to bank and getting DD/traveller’s cheque for which bank charges a service charge
 Converting Dollar to INR for which bank charges conversion charges
M

 Getting Rs 2000 converted in Rs 10 notes for which bank charges fees.

4. Securities are neither goods nor services but if stock broker charges a commission/ brokerages
A

charges/ portfolio maintenance charges/Investment management fees/demat charges those will be

R

services.

Section 7: Scope of Supply

A

Section 7(1): For the purposes of this Act, the expression "supply" includes—
C

Section 7(1)(a):

All forms of supply of goods or services or both such as:

 Sale (transfer of property in goods from one person to another person for a consideration)
 Transfer (where ownership may not be transferred but the right in the goods is transferred)
 Barter (the exchange of goods/services for other goods/services, without the use of money)
 Exchange (It is kind of Barter but money is also involved)
 Licence (When one person gives right to other person to use IPR, software licenses, etc)
 Rental (Periodical payment for use of another’s property)
 Lease (A lease is an agreement whereby the lessor conveys to the lessee in return for a payment
or series of payments the right to use an asset for an agreed period of time)
 Disposal (Disposal is a term generally used for selling of old scrap/second hand items)
 made or agreed to be made
 for a consideration by a person
 In the course or furtherance of business

CA Ramesh Soni 2.2

 Supply
Author’s comment:
The important things for a transaction to fall in the definition of supply are:
1. A form of supply – Example: Sale, transfer, barter, exchange, etc.
2. For a Consideration
3. In the Course or furtherance of business.

Explain will the following transactions constitute supply.

Sl. Particulars Form of Supply -
No. supply Yes/No?
1 Ram a dealer sold laptop worth Rs 1 lakh & issued invoice in favour of Mr. Sale Yes
Shyam
2 Audi sold a car to Mr Ram for Rs 25 Lakhs & Ram gave his old Car plus Exchange Yes
Rs 15 lakhs.
3 Mohan deals in electronics sold a laptop to Mr Ram for Rs 25000, and Mr Barter Yes
Ram gave his wife’s Diamond ring.
4 Ram Provides accounts classes to Raghav and in return Raghav gives Barter Yes
Ram his Gold ring.
5 Ram a manufacturer produces shirts, at the year - end he disposed off all Disposal Yes

I
the remaining waste in his factory for Rs 50000

N
6 Ram is a dealer of new phones. He supplied for Rs 20,000 to Mr. B along Exchange Yes
with exchange of an old phone and the price of the new phone without

SO
exchange is Rs 24,000.
7 Ram, a developer of IT software and holder of licence thereon. License to License Yes
use software was given to different clients for Rs 20 lakhs
8 Ram owns a residential building in a commercial locality. Large vacant Renting Yes
H
land in the backyard is given on rent of Rs 1,80,000 per month to a
parking contractor.
ES

9 Goods sent for a demonstration on returnable basis. Transfer No

10 Mr. A is the owner of Xerox machine. He transferred the right to operate Renting / Yes
the Xerox machine to Mr. B for a consideration of Rs 10,000 per month leasing
M

for four months

A

GST is essentially a tax only on commercial transactions. Hence, only those supplies that are in the course
or furtherance of business qualify as supply under GST.
R

Resultantly, any supplies made by an individual in his personal capacity do not come under the ambit of
GST unless they fall within the definition of ‘business’.
A

Examples:
C

1. Ram buys a car for his personal use and after a year sells it to a car dealer. Sale of car by Ram to car
dealer is not a supply under CGST Act because said supply is not made by Ram in the course or
furtherance of business
2. Reena sold her old gold bangles and earrings to ‘Aabhushan Jewellers’. Sale of old gold jewellery by an
individual to a jeweler will not constitute supply as the same cannot be said to be in the course or
furtherance of business of the individual

Section 7(1)(aa):

The activities or transactions, by a person, other than an individual, to its members or constituents or vice-
versa, for cash, deferred payment or other valuable consideration.

Explanation. – For the purposes of this clause, it is hereby clarified that, notwithstanding anything
contained in any other law for the time being in force or any judgment, decree or order of any Court,
tribunal or authority, the person and its members or constituents shall be deemed to be two separate
persons and the supply of activities or transactions inter se shall be deemed to take place from one such
person to another;”.

CA Ramesh Soni 2.3

 Supply
Section 7(1)(b):

Importation of services,
 For a consideration
 Whether or not in the course or furtherance of business and

Author’s comments:
Points to be observed while applying this provision
 It should be importation of services, not goods (for goods GST is levied & collected under customs)
 Import for a consideration
 Import may or may not be for in the course or furtherance of business.

Examples:
1. Ramesh & Co. received legal services from Lakshman in Malaysia for $ 1000
Answer: Transaction covered under 7(1)(b), it is supply and GST leviable. Business entity to pay GST
under RCM.

2. Ramesh wanted to construct his house and has taken interior designer service for his
residential house from China for Yen 10000.

I
N
Answer: Transaction covered under 7(1)(b), it is supply. However, GST is exempt on such transactions.

SO
3. Ramesh wants to study abroad and receives some admission consultancy services from
London based consultants for 1000 pounds
Answer: Transaction covered under 7(1)(b), it is supply. However, GST is exempt on such transactions.
H
4. Ram in India imported free services from Google and Facebook, without any consideration.
Is it supply subject to GST?
ES

Answer: These are not considered as supply and hence not attract GST. GST will be levied only when
services are provided with consideration.

Section 7(1)(c): Deemed supply (Supply without consideration)

M

The activities specified in Schedule I

A

 made or agreed to be made

 without a consideration.
R

Activities specified in Schedule I

A

As per Schedule I, in the following four cases, supplies made without consideration will be treated as supply
under section 7 of the CGST Act:
C

1. Permanent transfer or disposal of business assets where input tax credit has been availed on such
assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified
in section 25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to
an employee shall not be treated as supply of goods or services or both.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the
principal.
4. Import of services by a person from a related person or from any of his other establishments outside
India, in the course or furtherance of business.

CA Ramesh Soni 2.4

 Supply
Let us now analyse them one by one:

1. Permanent Transfer/Disposal of Business Assets (PTDOBA) where ITC has been availed on
such assets:

Business asset means goods held for sale or used for the purpose of business

Conditions to be satisfied to qualify as supply

1. There must be disposal or transfer of business assets
2. Transfer must be on permanent basis.
3. Input tax credit has been availed on such assets.

Hence Permanent transfer or disposal will not cover the following assets
1. Business assets on which ITC is blocked under GST.
2. Business assets though eligible for ITC, ITC has not been availed by the registered person.

Examples:
1. Ram a trader in clothes permanently transfers stock of Rs 1 lakh to a trust free of cost.

I
2. A coaching institute donated its projector to charity (ITC was taken on the projector).

N
3. Ramesh has an electronic shop, transfer a TV to his home (ITC was taken on the TV).

SO
Let us understand some examples:
Taxable Inward ITC Outward Relevant section Consequence
person
Trader of Mobile Availed Sale of 7(1)(a) – Supply GST Payable on
H
mobile mobile transaction
value
ES

Trader of Mobile Availed Gifted 7(1)(c) – Para a - Supply GST payable

mobile mobile PTOBA
Trader of Capital Availed Sold after 1 7(1)(a) – Supply GST payable
M

mobile goods year

(Machine)
A

Trader of Capital Blocked Gifted Not supply since not GST not payable
mobile goods covered under any section
R

(Car)
Manufacturer Raw Availed Sold shoes 7(1)(a) – Supply GST Payable on
of shoes material transaction
A

(leather) value.
C

Manufacturer Raw Availed Gifted shoes Not supply, but ITC ITC not allowed
of shoes material proportionately to be
(leather) calculated and Disallowed –
Section 17(5)

2. Supply of goods, services or both between related person/distinct persons as specified in

section 25, when made in the course or furtherance of business:

Exception: Gifts not exceeding Rs 50000 in value in a FY by an employer to an employee shall not be
treated as supply of goods or services or both.

Related persons [Explanation to Section 15]:

For the purposes of this Act, -
(a) Persons shall be deemed to be "related persons" if -
(i) Such persons are officers or directors of one another's businesses;
(ii) Such persons are legally recognised partners in business;
(iii) Such persons are employer and employee;

CA Ramesh Soni 2.5

 Supply
(iv) Any third person directly/indirectly owns/controls/holds at least 25% of voting stock/ shares
of both of them;
(v) One of them directly or indirectly controls the other; (Holding-Subsidiary)
(vi) Both of them are directly or indirectly controlled by a third person; (subsidiaries of 1 holding
co.)
(vii) Together they directly or indirectly control a third person; or
(viii) They are members of the same family;
(b) The term "person" also includes legal persons;
(c) Persons who are associated in the business of one another in that one is the sole agent or sole
distributor or sole concessionaire (trading rights), howsoever described, of the other, shall be
deemed to be related.

Section 2(49): Family means, –

(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent
on the said person.

Examples on Gift:

I
Gift to Whether supply or not?

N
1. Employee Rs 45,000 No, it is not supply since within limit of Rs 50000
2. Employee Rs 55,000 Yes, it is supply since it crosses the limit of Rs 50000, accordingly Value of

SO
supply Rs 55000 and GST applicable on Rs 55000
3. Other (RP) Rs 5,000 Yes, it is supply, no monetary limit applicable

Distinct persons (as specified in section 25)

H
Separate registration makes distinct person: A person who has obtained or is required to obtain more
than one registration, whether in one state/UT or more than one state/UT shall, in respect of each such
ES

registration, be treated as distinct person for the purpose of this act.

Examples:
1. Ram has an electronics shop registered in Bangalore (Karnataka) and another electronic shop in
M

Mangalore (Karnataka) and he has obtained separate registration for both the shops. Ram shall be
treated as distinct person in respect of both registrations.
A

2. Ram, a Chartered Accountant, has a registered head office in Karnataka. He has also obtained
registration in Delhi in respect of his newly opened branch office. Ram shall be treated as distinct
R

persons in respect of registrations in Karnataka and Delhi.

3. Stock transfer: Ram Fabrics transfers 100 shirts from his factory located in Karnataka to his retail
A

showroom in Tamil Nadu. The factory and retail showroom of Ram Fabrics are registered in the States
where they are located. Although no consideration is charged, supply of goods from factory to retail
C

showroom constitutes supply, since both are distinct person.

Establishment in another state is a separate person:

Where a person has obtained or is required to obtain registration in a state or union territory in respect of
an establishment, has an establishment in another state or union territory, then such establishments shall
be treated as establishments of distinct persons for the purpose of this act.

Example: Ram has electronics shop registered in Bangalore (Karnataka) and a liquor shop in Tamil Nadu.
Since supply of alcoholic liquor for human consumption is a non-taxable supply i.e., exempt supply, Ram is
not required to obtain registration in the state of Tamil Nadu. In such a situation the electronic shop and
liquor shop shall be treated as establishment of distinct person.

CA Ramesh Soni 2.6

 Supply
Clarification on Interstate movement of various modes of conveyance, carrying goods or
passengers or for repairs & maintenance between distinct persons

Issue: Whether inter-state movement of various modes of conveyance, carrying goods or passengers or
for repairs and maintenance, between distinct persons as specified in section 25(4) of the CGST act, 2017,
[except for further supply of the same conveyance is leviable to IGST]?

The issue of inter-state movement of goods like movement of various modes of conveyance, between
distinct persons as specified in section 25(4) of the said Act, not involving further supply of such
conveyance, including Trains, Buses, Trucks, Tankers, Trailers, Vessels, Containers, Aircrafts,
(a) carrying goods or passengers or both; or
(b) for repairs and maintenance, [except in cases where such movement is for further supply of the same
conveyance] was discussed in GST Council’s meeting held on 11th June, 2017 and the Council
recommended that such inter-state movement shall be treated ‘neither as a supply of goods or supply of
service’ and therefore not be leviable to IGST.
In view of above, it is hereby clarified that the inter-state movement of goods like movement of various
modes of conveyance, between distinct persons as specified in section 25(4) of the CGST Act, 2017, may
not be treated as supply and consequently IGST will not be payable on such supply.
However, applicable CGST/SGST/IGST, as the case may be, shall be leviable on repairs and maintenance

I
N
done for such conveyance.

SO
Crux:
1. Inter-state movement of conveyances carrying goods/passengers/both in conveyance: shall
be treated 'neither as a supply of goods nor as a supply of service' & therefore not be leviable to IGST.
2. On Repairs and maintenance or work done: applicable CGST/SGST/IGST, as the case may be, shall
H
be leviable
3. If movement is for further supply of conveyance: Treated as supply and IGST leviable.
ES

4. Same clarification also applicable in case of interstate movement of rigs, tools & spares and all goods
on wheels (like cranes).

3. Principal to Agent supply or vice-versa

M

Supply of goods
A

a. by a principal to his agent, where the agent undertakes to supply such goods on behalf of the
R

principal is considered as supply.

b. by an agent to his principal, where the agent undertakes to receive such goods on behalf of the
principal is considered as supply.
A

Circular explaining scope of Principal-agent relationship in the context of Schedule I

C

The key ingredient for determining relationship under GST would be whether the invoice for the
further supply of goods on behalf of the principal is being issued by the agent or not. Where the invoice for
further supply is being issued by the agent in his name then, any provision of goods from the principal to
the agent would fall within the fold of the said entry. However, it may be noted that in cases where the
invoice is issued by the agent to the customer in the name of the principal, such agent shall not fall within
the ambit of Schedule I of the CGST Act.
Similarly, where the goods being procured by the agent on behalf of the principal are invoiced in the name
of the agent then further provision of the said goods by the agent to the principal would be covered by the
said entry. In other words, the crucial point is whether or not the agent has the authority to pass or receive
the title of the goods on behalf of the principal.

Crux:The true test to determine whether GST will be applicable on such transaction will be to
find out who issues invoice?
1. If the Invoice for further supply is being issues by the agent in his name, then any transfer of
goods from principal to the agent will fall within the scope of schedule I, and he would be required to
take compulsory registration under section 24 provided principal is a taxable person.

CA Ramesh Soni 2.7

 Supply
2. If the Invoice is issued by the agent in the name of the principal, such agent will not fall within
the scope of schedule I, he will be required to take a registration under section 22(1) only when he
crosses 20 lakhs.

1. Import of services by a person from a related person or from his establishments located
outside India, without consideration, in the course or furtherance of business

Examples:
1. Ram ltd located in India, holds 51% of shares of Shyam Ltd, a USA company. Shyam Ltd provides
Business Auxiliary Services to Ram Ltd., will be treated as supply.

2. Ram Ltd. of Mumbai imports business support services from its head office located in USA. The head
office has rendered such services free of cost to its branch office. Services received by Ram Ltd. will
qualify as supply even though the head office has not charged anything from it.

3. Ram, a proprietor registered in Karnataka, has sought architect services from his son located in London,
with respect to their new home constructed house in Karnataka. Although services have been received
by Ram is without any consideration from his son - a related person, still it will not qualify as supply

I
since the same has not been received in course or furtherance of business.

N
4. Ram, a proprietor registered in Karnataka, has sought legal services with respect to his business, from

SO
his brother who is well settled in London. Services have been received by Ram without any consideration
will not qualify as supply since brother since independent is not a related person here. Even though it
has been received in course or furtherance of business.
H
Section 7(1A): Activities or transactions to be treated as supply of goods/supply of services
ES

Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section
(1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II;

Schedule II is as follows:
M

1. Transfer
A

(a) any transfer of the title in goods is a supply of goods;

R

(b) any transfer of right in goods/of undivided share in goods without the transfer of title thereof, is a
supply of services;
(c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass
A

at a future date upon payment of full consideration as agreed, is a supply of goods.

C

Undivided share in goods

Ram and Shyam are co-owner of a JCB machine. Which they give on rent. Shyam sells his share in
goods to another person Lakshman. This is also known as transfer of undivided share in goods. In this
scenario only, the undivided share is transferred to Lakshman and not the title in goods and hence it is
supply of service. However, if both Ram and Shyam transfer the share to Lakshman, it will involve
transfer of title also and hence will be termed as Supply of goods.

Example:
(a) Audi sold a car to Ram for Rs 50 lakhs – Supply of goods
(b) Ram supplied a machine to Shyam on hire purchase basis (i.e., possession given immediately but
title to be transferred on payment of last instalment) – Supply of goods

2. Land and Building

(a) any lease, tenancy, easement, licence to occupy land – Supply of Services
(b) any lease or letting out of the building including a commercial, industrial or residential complex for
business or commerce, either wholly or partly- Supply of Services

CA Ramesh Soni 2.8

 Supply
Circular on Issue related to taxability of ‘tenancy rights’ under GST

Issue:
1. Whether Transfer of tenancy rights to a new tenant against consideration would attract
GST although stamp duty & registration charges have been levied on such transfer?
2. Whether services provided by outgoing tenant by way of surrendering the tenancy rights
against consideration in the form of a portion of tenancy premium would be liable to GST?

Clarification:
 the activity of transfer of ‘tenancy rights’ is squarely covered under the scope of supply and taxable
per-se.
 Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is
taxable. However, renting of residential dwelling for use as a residence to an unregistered person
is exempt.
 Hence, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy
premium or periodic rent or both (to an unregistered person) is exempt.
 As regards services provided by outgoing tenant by way of surrendering the tenancy rights against
consideration in the form of a portion of tenancy premium is liable to GST.

I
N
3. Treatment or Process
Any treatment or process which is applied to another person's goods is a supply of services.

SO
Example: Varnishing chairs and tables, Heat treatment on glass, printing logo on tees, etc.

Circular No. 34/8/2018-GST dated 01.03.18

H
Whether rethreading of tyres is a supply of goods or services?
Activity Supply of Goods or Service
ES

Supplier buys old tyres, does the re-treading and Supply of re-treaded tyres, where the old tyres
supplies re-treaded tyres. belong to the supplier of re-treaded tyres, is a
supply of goods.
Supplier only does re-threading on old tyres for Pre-dominant element is process of re-treading
M

customers, using rubber and other material. which is a supply of service. Rubber used for re-
treading is an ancillary supply.
A

Whether activity of bus body building, is a supply of goods or services?

Activity Supply of Goods or Service
R

If the Bus body building entity build a bus by Supply of goods

working on the chassis that is owned by him &
A

supplies bus.
Only building the body of the bus on the chassis Fabrication of body on chassis is the principal
C

provided by a customer and charging fabrication supply, and it is Supply of service.

charges (material also used during fabrication)

CA Ramesh Soni 2.9

 Supply
4. Transfer of Business Assets
(a) 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 the business so as no longer to form part of those assets, such
transfer or disposal is a supply of goods by the person;

Crux:
 Permanent transfer of business asset with consideration – supply of goods
 Permanent transfer of business asset without consideration (ITC availed) – Supply of
goods.
 Permanent transfer of business asset without consideration (ITC not availed) – Not
supply, no GST.

Examples:
1. Ram sold his office laptop for Rs 50000 – Supply of goods
2. Ram a wholesaler of medicines distributed medicines free of cost – supply of goods
3. Ram purchased a car for business and sold it for 5 lakhs after a year – supply of goods

(b) where, by or under the direction of a person carrying on a business, goods held or used for the

I
purposes of the business are

N
- put to any private use or
- are used, or made available to any person for use, for any purpose other than a purpose of

SO
the business,
- the usage or making available of such goods is a supply of services;

Crux: Temporary transfer/use of business assets for non-business purpose: supply of services
H
Examples:
ES

M/s Ram Ltd. provided car to one of its directors for his personal purposes and charged Rs 30,000
per month. It is supply of service and the same is taxable under GST.
M

(c) where any person ceases to be a taxable person,

- any goods forming part of the assets of any business carried on by him
A

- shall be deemed to be supplied by him in the course or furtherance of his business immediately
before he ceases to be a taxable person,
R

unless-
(i) Business is transferred as a going concern to another person; or
(ii) Business is carried on by a personal representative who is deemed to be a taxable person.
A

Examples:
C

1. Ram-Shyam & Co a partnership firm decided to dissolve the partnership firm. Goods left in stock
taken over by the partners. Taking over of goods by partners will be considered as a supply of
goods. Since, business is not continued further by the partners.
2. Ram is in the business of running a restaurant. It intends to sell its business as a going concern
to Shyam. It would not be required to pay GST on such sale of its business.

5. Supply of Services
(a) Renting of immovable property

Author: Land and building has already been covered under para 2, hence we can say the intention
of law under this para is to cover all other immovable property like telecommunication towers,
furniture which is attached in a building, etc.

(b)Construction of complex, building, civil structure, etc.

Except where the entire consideration has been received after issuance of completion certificate,
where required, by the competent authority or after its first occupation, whichever is earlier.

CA Ramesh Soni 2.10

 Supply
(c) Temporary transfer or permitting use or enjoyment of any intellectual property right

Author’s comments:
1. IPR means Patents, trademarks, copy rights, etc.
2. Permanent transfer is supply of goods.

(d)Development, design, programming, customisation, adaptation, upgradation,

enhancement, implementation of IT software

(e) Agreeing to obligation

 to refrain from an act, or
 to tolerate an act or situation, or
 to do an act

Author’s comments:
1. Refrain: stop oneself from doing something.
2. Tolerate: allow the existence, occurrence, or practice of (something that one dislikes or
disagrees with) without interference.

I
N
(f) Transfer of the right to use any goods for any purpose (whether or not for a specified

SO
period) for cash, deferred payment or other valuable consideration.

6. Composite supplies- Supply of Services

The following composite supplies shall be treated as a supply of services, namely: —
(a) works contract as defined in section 2(119); and
H
(b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food
or any other article for human consumption or any drink (other than alcoholic liquor for human
ES

consumption), where such supply or service is for cash, deferred payment or other valuable
consideration.
M

Works contract services: means a contract for building, construction, fabrication, completion, erection,
installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or
A

commissioning of any immovable property wherein transfer of property in goods (whether as goods or in
some other form) is involved in the execution of such contract.
R

Section 7(2): Notwithstanding anything contained in sub-section (1),

A

(a) Activities or transactions specified in Schedule III or

C

(b) Such activities or transactions undertaken by the CG, SG, 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.

Notification
(1) Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of
the Constitution or to a Municipality under article 243W of the Constitution.
(2) Services by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or
application fee or by whatever name it is called.

Clarification on GST applicable with respect to licenses and privileges other than alcoholic liquor
license granted by government
Services provided by the Government to business entities including by way of grant of privileges, licences,
mining rights, natural resources such as spectrum etc. against payment of consideration in the form of fee,
royalty etc. are taxable under GST. Tax is required to be paid by the business entities on such services
under reverse charge.
CA Ramesh Soni 2.11
 Supply
Crux: Supply of service by way of grant of Alcoholic liquor license by the SG is out of scope of
supply, any other services by government by way of grant of mining right, natural resources
against fees or royalty are taxable under GST.

Schedule III: Activities/transactions shall be treated as neither supply of goods nor supply of
services

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

Clarification on Perquisites provided by employer to the employees as per contractual

agreement

Issue: Whether various perquisites provided by the employer to its employees in terms of
contractual agreement entered into between the employer and the employee are liable for
GST?
Clarification:
 Any perquisites provided by the employer to its employees in terms of contractual agreement
entered into between the employer and the employee are in lieu of the services provided by
employee to the employer in relation to his employment.

I
N
 Perquisites provided by the employer to the employee in terms of contractual agreement entered
into between the employer and the employee, will not be subjected to GST when the same are

SO
provided in terms of the contract between the employer and employee.

2. Services by any court or Tribunal established under any law for the time being in force
H
Court includes: District court, high court and Supreme Court.
ES

Author: Here Tribunal means the one established under any law, However, an Arbitral tribunal is a
private tribunal constituted by parties for settlement of any dispute between themselves, services of
Arbitral tribunal are subject to GST.
M

3. Services by Government officials (name given by author for simplicity)

(a) Functions performed by the
A

 Members of Parliament, Members of State Legislature,

R

 Members of Panchayats, Members of Municipalities and Members of other local authorities;

(b) Duties performed by any person who holds any post in pursuance of the provisions of the
A

Constitution in that capacity; or

C

Example: President of India, Vice President of India, Prime Minister of India, Chief Justice of India,
Speaker of the Lok Sabha, Chief Election Commissioner, Comptroller and Auditor General of India,
Chairman of Union Public Service Commission, Attorney General of India, in that capacity.

(c) Duties performed by

 any person as a chairperson or a member or a director
 in a body established by the CG/SG/LA and who is not deemed as an employee before the
commencement of this clause.

Example: Chairman of Telecom regulatory authority of India (TRAI), Members and directors of
finance commission who are not employees.

4. Services of funeral, burial, crematorium or mortuary including transportation of the

deceased.

5. Sale of land and, subject to clause (b) of para 5 of schedule II, sale of building

CA Ramesh Soni 2.12

 Supply
Particulars Supply of Goods or Service GST Liability
Sale of Land Neither supply of goods nor No GST
service – Schedule III
Sale of building – Entire consideration Neither supply of goods nor NO GST
received after issuance of completion service – Schedule III
certificate or first occupancy (whichever is
earlier)
Sale of building – where part or full Supply of service (schedule II- Liable to GST –
consideration received before issuance of Para 5(b)) Supply of service
completion certificate or first occupancy
(whichever is earlier)

Clarifications regarding applicability of GST on sale of land after levelling, laying down of
drainage lines etc.

Issue: Whether GST is applicable on sale of land after levelling, laying down of drainage
lines etc.

I
Clarification:

N
 Land may be sold either as it is or after some development such as levelling, laying down of
drainage lines, water lines, electricity lines, etc.

SO
 Sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the
CGST Act, 2017 and accordingly does not attract GST.
 However, it may be noted that any service provided for development of land, like levelling, laying
of drainage lines (as may be received by developers) shall attract GST at applicable rate for such
H
services.
ES

6. Actionable claims, other than specified actionable claims.

"Specified actionable claim" means the actionable claim involved in or by way of—
(i) betting;
M

(ii) casinos;
(iii) gambling;
A

(iv) horse racing;

(v) lottery; or
R

(vi) online money gaming;’

A

Crux: Although actionable claims are goods but supply of only specified actionable claims viz. betting,
casinos, gambling, horse racing, lottery or online money gaming: GST shall be levied.
C

Section 7(3):

Subject to sub-sections (1), (1A) and (2)

 The Government may, on the recommendations of the Council, specify, by notification
 The transactions that are to be treated as —
(a) a supply of goods and not as a supply of services; or
(b) A supply of services and not as a supply of goods.

Section 8 - Tax liability on Composite & Mixed Supply

Composite supply [Section 2(30)]

Composite supply means a supply made by a taxable person to a recipient and:

 comprises two or more taxable supplies of goods or services or both, or any combination thereof.
 are naturally bundled and supplied in conjunction with each other, in the ordinary course of
business

CA Ramesh Soni 2.13

 Supply
 one of which is a principal supply.

Illustration: Where goods are packed and transported with insurance, the supply of goods, packing
materials, transport and insurance is a composite supply and supply of goods is a principal supply;

Section 8(a): Composite supply

A composite supply comprising two or more supplies, one of which is a principal supply,
- shall be treated as a supply of such principal supply

Mixed supply Section 2(74)

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.

Illustration — A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can

I
N
be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are
supplied separately;

SO
Section 8(b): Mixed Supply

A mixed supply comprising of

H
 two or more supplies
 shall be treated as supply of that particular supply which attracts highest rate of tax.
ES

Classify whether the following are composite supply or mixed supply

SN Supply Are they Is there a Composite Treated as
naturally principal or Mixed supply of?
M

bundled supply supply?

1 Air transport along with meal on board. Yes Yes CS Principal
A

The meal is included in the ticket. supply

2 Hotel-stay along with complimentary Yes Yes CS Principal
R

breakfast. supply
3 Gift package consisting of sweets, No No MS That supply
A

chocolates, candles, perfume, and attracting

crackers. highest rate
C

4 Buying a new bike along with insurance Yes Yes CS Principal

and free maintenance service for a year. supply
5 Hotel facility along with free laundry Yes Yes CS Principal
service and airport pickup included in the supply
hotel package.
6 Cosmetic package with Hair oil, lotion, No No MS That supply
cream, comb, shampoo, and face wash. attracting
highest rate
7 Buying a laptop along with laptop bag for Yes Yes CS Principal
Rs 40,000 supply
8 Buying a computer and a printer together No No MS That supply
for Rs 50,000 attracting
highest rate
9 Booking a trip with make my trip for Rs Yes Yes CS Principal
20,000, services provided travel, guide, supply
hotel and food.

CA Ramesh Soni 2.14

 Supply
SN Supply Are they Is there a Composite Treated as
naturally principal or Mixed supply of?
bundled supply supply?
10 Buying a TV with free installation and Yes Yes CS Principal
getting one-year free warranty supply

Circulars

Clarification on supply of food or beverages in cinema hall

Issue: whether supply of food and beverages at cinema halls is taxable as restaurant service
which attract GST at the rate of 5% or not

Clarification:
 If food & beverages at cinema halls are supplied independently: taxable as restaurant service.
 If sale of cinema ticket (i.e. Cinema exhibition service) and supply of food & beverage are
clubbed & satisfying the test of composite supply: then rate of principal supply i.e. exhibition of
cinema will apply.

I
N
Clarification on servicing of cars involving both supply of goods (spare parts) & services (labour)

SO
Issue: Servicing of cars involving both supply of goods (spare parts) & services (labour), where
the value of goods and services are shown separately, to be treated under GST?

Clarification:
H
 The taxability of supply would have to be determined on a case-to-case basis looking at the facts and
circumstances of each case.
ES

 Where a supply involves supply of both goods & services & the value of such goods and services supplied
are shown separately, the goods & services would be liable to tax at the rates as applicable to such
goods & services separately.
M

Clarification on taxability of printing contracts

A

Issue: whether supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes
etc., printed with design, logo, name, address or other contents supplied by the recipient of such supplies,
R

would constitute supply of goods or supply of services.

A

Clarification: Supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes
etc. printed with logo, design, name, address or other contents supplied by the recipient of such printed
C

goods, are composite supplies and the question, whether such supplies constitute supply of goods or
services would be determined on the basis of what constitutes the principal supply.
Activity Supply of Goods or Service
In the case of printing of books, pamphlets, Supply of printing [of the content supplied by the
brochures, annual reports, and the like, where recipient of supply] is the principal supply and
only content is supplied by the publisher or the therefore such supplies would constitute supply of
person who owns the usage rights to the service.
intangible inputs while the physical inputs including
paper used for printing belong to the printer,
In case of supply of printed envelopes, letter cards, Predominant supply is supply of goods and the
printed boxes, tissues, napkins, wall paper etc. by supply of printing of the content [supplied by the
the printer using its physical inputs including paper recipient of supply] is ancillary to the principal
to print the design, logo etc. (supplied by the supply of goods and therefore such supplies would
recipient of goods). constitute supply of goods

CA Ramesh Soni 2.15

 Supply
Clarification on taxability of shares held in a subsidiary company by holding company

Issue: Whether the activity of holding shares by a holding company of the subsidiary company
will be treated as a supply of service or not and whether the same will attract GST or not.

Clarification: Securities held by the holding company in the subsidiary company are neither goods nor
services. Further, purchase or sale of shares/securities, in itself is neither a supply of goods nor a supply
of services. For a transaction/activity to be treated as supply of services, there must be a supply u/s 7. It
cannot be said that a service is being provided by the holding company to the subsidiary company unless
there is a supply of services by the holding company to the subsidiary co. in accordance with section 7.

Crux: The activity of holding of shares of subsidiary co. by the holding co. per se cannot be treated as a
supply of services by a holding co. to the said subsidiary co. and cannot be taxed.

Clarification on various doubts related to treatment of sales promotion schemes under GST
[Circular No. 92/11/2019-GST dated 07.03.2019]

Taxability of two schemes has been clarified as under:

A. Free samples and gifts:

I
N
 It is a common practice among certain sections of trade & industry, such as, pharmaceutical
companies which often provide drug samples to their stockists, dealers, medical practitioners, etc.

SO
without charging any consideration.
 As per section 7(1)(a) of the CGST Act, the expression “supply” includes all forms of supply of goods
or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made
or agreed to be made for a consideration by a person in the course or furtherance of business.
H
 Therefore, the goods or services or both which are supplied free of cost (without any consideration)
shall not be treated as “supply” under GST (except in case of activities mentioned in Schedule I of
ES

the CGST Act).

 Accordingly, it is clarified that samples which are supplied free of cost, without any consideration,
do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I
of the CGST Act.
M

 Further, section 17(5)(h) of the said Act provides that ITC shall not be available in respect of goods
lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Thus, it is clarified
A

that input tax credit shall not be available to the supplier on the inputs, input services and capital
goods to the extent they are used in relation to the gifts or free samples distributed without any
R

consideration. However, where the activity of distribution of gifts or free samples falls within the
scope of „supply‟ on account of the provisions contained in Schedule I of the said Act, the supplier
A

would be eligible to avail of the ITC. (To be discussed in Input tax credit chapter)
C

B. Buy one get one free offer: Example, “buy one soap and get one soap free”/ “Get one tooth brush
free along with the purchase of tooth paste”.

As per section 7(1)(a), the goods/services which are supplied free of cost (without any consideration)
shall not be treated as “supply” under GST (except in case of activities mentioned in Schedule I of the
CGST Act).
 It may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is being
“supplied free of cost” without any consideration.
 In fact, it is not an individual supply of free goods, but a case of two or more individual supplies
where a single price is being charged for the entire supply. It can at best be treated as supplying
two goods for the price of one.
 Taxability of such supply will be dependent upon as to whether the supply is a composite supply or
a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the
CGST Act.
 It is also clarified that ITC shall be available to the supplier for the inputs, input services and capital
goods used in relation to supply of goods or services or both as part of such offers.
(To be discussed in Input tax credit chapter)

CA Ramesh Soni 2.16

 Supply
Circular: Levy of GST on the service of display of name or placing of name plates of the donor in
the premises of charitable organisations receiving donation or gifts from individual donors.

Representations have been received seeking clarification

 whether GST is applicable on donations or gifts received from individual donors by charitable
organisations involved in advancement of religion, spirituality or yoga
 which is acknowledged by them by placing name plates in the name of the individual donor.

Individual donors provide financial help or any other support in the form of donation or gift to institutions
such as religious institutions, charitable organisations, schools, hospitals, orphanages, old age homes etc.
The recipient institutions place a name plate or similar such acknowledgement in their premises to express
the gratitude. When the name of the donor is displayed in recipient institution premises, in such a manner,
which can be said to be an expression of gratitude and public recognition of donor’s act of
philanthropy(generosity) and is not aimed at giving publicity to the donor in such manner that it would be
an advertising or promotion of his business, then it can be said that there is no supply of service for a
consideration (in the form of donation).
There is no obligation (quid pro quo) on part of recipient of the donation or gift to do anything (supply a
service). Therefore, there is no GST liability on such consideration.

I
N
Some examples of cases where there would be no taxable supply are as follows: -
(i) “Good wishes from Mr. Rajesh” printed underneath a digital blackboard donated by Mr. Rajesh to

SO
a charitable Yoga institution.
(ii) “Donated by Smt. Malati Devi in the memory of her father” written on the door or floor of a room or
any part of a temple complex which was constructed from such donation.
H
In each of these examples, it may be noticed that there is no reference or mention of any business
activity of the donor which otherwise would have got advertised. Thus, where all the three conditions are
ES

satisfied namely
- the gift or donation is made to a charitable organization,
- the payment has the character of gift or donation and
- the purpose is philanthropic (i.e., it leads to no commercial gain) and not advertisement,
M

- GST is not leviable.

A

Crux:
1. If three tests satisfied (donation is made to a charitable organisation, payment has character of
R

donation and Purpose is philanthropic i.e. no commercial gain) – Activity will not fall within scope
of supply hence no GST.
A

2. All other cases – Where the name plate is basically for promoting business of donor – Activity will
fall in supply and GST is leviable.
C

GST applicability on liquidated damages, compensation and penalty arising out of breach of
contract or other provisions of law [Circular No. 178/10/2022-GST dated 03.08.22]

Applicability of GST on payments in the nature of liquidated damage, compensation, penalty, cancellation
charges, late payment surcharge etc. arising out of breach of contract or otherwise and scope of the entry
at para 5 (e) of Schedule II of CGST Act in this context has been examined in the following paragraphs.
“Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an
act” has been specifically declared to be a supply of service in para 5(e) of Schedule II of CGST
Act if the same constitutes a “supply” within the meaning of the Act. The said expression has
following three limbs: -

a. Agreeing to the obligation to refrain from an act-

Examples of activities that would be covered by this part of the expression would include
 Non-compete agreements, where one party agrees not to compete with the other party in a
product, service or geographical area against a consideration paid by the other party.

CA Ramesh Soni 2.17

 Supply
 a builder refraining from constructing more than a certain number of floors, even though
permitted to do so by the municipal authorities, against a compensation paid by the neighbouring
housing project, which wants to protect its sunlight, or
 An industrial unit refraining from manufacturing activity during certain hours against an
agreed compensation paid by a neighbouring school, which wants to avoid noise during those hours.

b. Agreeing to the obligation to tolerate an act or a situation-

Some Examples would include activities such as
 a shopkeeper allowing a hawker to operate from the common pavement in front of his shop against
a monthly payment by the hawker, or
 An RWA tolerating the use of loud speakers for early morning prayers by a school located in the
colony subject to the school paying an agreed sum to the RWA as compensation.

c. Agreeing to the obligation to do an act-

This would include the case
- Where an industrial unit agrees to install equipment for zero emission or discharge at the behest of
the RWA of a neighbouring residential complex against a consideration paid by such RWA, even
though the emission/discharge from the industrial unit was within permissible limits and there was
no legal obligation upon the individual unit to do so.

I
N
The description “agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to

SO
do an act” was intended to cover services such as described above. However, over the years doubts have
persisted regarding various transactions being classified under the said description.

Some of the important examples of such cases are Service Tax/GST demands on –
H
 Liquidated damages paid for breach of contract;
 Compensation given to previous allottees of coal blocks for cancellation of their licenses pursuant to
ES

Supreme Court Order;

 Cheque dishonor fine/penalty charged by a power distribution company from the customers;
 Penalty paid by a mining company to State Government for unaccounted stock of river bed material;
 Bond amount recovered from an employee leaving the employment before the agreed period;
M

 Late payment charges collected by any service provider for late payment of bills;
 Fixed charges collected by a power generating company from State Electricity Boards (SEBs) or by
A

SEBs/DISCOMs from individual customer for supply of electricity;

 Cancellation charges recovered by railways for cancellation of tickets, etc.
R

Above three activities must comply with the following conditions:

A

1. There must be an expressed or implied agreement or contract must exist

Above three activities must be under an “agreement” or a “contract” (whether express or implied) to
C

fall within the ambit of para 5(e) of Schedule II. In other words, one of the parties to such
agreement/contract (the first party) must be under a contractual obligation to either (a) refrain or (b)
tolerate or (c) do.

2. Consideration must flow in return to this contract/agreement

Further some “consideration” must flow in return from the other party to this contract/agreement (the
second party) to the first party for such (a) refraining or (b) tolerating or (c) doing.

Taxability of these transactions is discussed in greater detail in the following paragraphs.

Liquidated Damages
It is argued that performance is the essence of a contract. Liquidated damages cannot be said to be a
consideration received for tolerating the breach or non-performance of contract. They are rather payments
for not tolerating the breach of contract. Payment of liquidated damages is stipulated in a contract to ensure
performance and to deter non-performance, unsatisfactory performance or delayed performance.
The liquidated damages or penalty are not the desired outcome of the contract. By accepting the liquidated
damages, the party aggrieved by breach of contract cannot be said to have permitted or tolerated the
deviation or non-fulfilment of the promise by the other party. Where the amount paid as ‘liquidated
CA Ramesh Soni 2.18
 Supply
damages’ is an amount paid only to compensate for injury, loss or damage suffered by the aggrieved party
due to breach of the contract and there is no agreement, express or implied, by the aggrieved party
receiving the liquidated damages, to refrain from or tolerate an act or to do anything for the party paying
the liquidated damages, in such cases liquidated damages are merely a flow of money from the party who
causes breach of the contract to the party who suffers loss or damage due to such breach. Such payments
do not constitute consideration for a supply and are not taxable.
Examples of such cases are:
(1) damages resulting from damage to property, negligence, piracy, unauthorized use of trade name,
copyright,
(2) penalty stipulated in a contract for delayed construction of houses,

Cheque dishonour fine/ penalty

The supplier wants payment to be received on time and does not want cheque to be dishonoured. There is
never an implied or express offer or willingness on part of the supplier that he would tolerate deposit of an
invalid, fake or unworthy instrument of payment against consideration in the form of cheque dishonour fine
or penalty.
The fine or penalty that the supplier or a banker imposes, for dishonour of a cheque, is a penalty imposed
not for tolerating the act or situation but a fine, or penalty imposed for not tolerating, penalizing and thereby
deterring and discouraging such an act or situation. Therefore, cheque dishonour fine or penalty is not a

I
N
consideration for any service and not taxable.

SO
Penalty imposed for violation of laws
Laws are not framed for tolerating their violation. They stipulate penalty not for tolerating violation but for
not tolerating, penalizing and deterring such violations. There is no agreement between the Government
and the violator specifying that violation would be allowed or permitted against payment of fine or penalty.
H
There cannot be such an agreement as violation of law is never a lawful object or consideration.
In short, fines and penalty chargeable by Government or a local authority imposed for violation of a statute,
ES

bye-laws, rules or regulations are not leviable to tax.

Forfeiture of salary or payment of bond amount in the event of the employee leaving the
employment before the minimum agreed period
M

The said amounts are recovered by the employer not as a consideration for tolerating the act of such
premature quitting of employment but as penalties for dissuading the non-serious employees from taking
A

up employment and to discourage and deter such a situation.

Further, the employee does not get anything in return from the employer against payment of such amounts.
R

Therefore, such amounts recovered by the employer are not taxable as consideration for the service of
agreeing to tolerate an act or a situation.
A

Late payment surcharge or fee

C

It is ancillary to and naturally bundled with the principal supply such as of electricity, water,
telecommunication, cooking gas, insurance etc. it should be assessed at the same rate as the principal
supply.

Fixed charges for power

Minimum fixed charges remain the same whether electricity is consumed or not or it is scheduled/consumed
below the contracted or available capacity or a minimum threshold and that does not mean that minimum
fixed charge or part of it is a charge for tolerating the act of not scheduling or consuming the minimum the
contracted or available capacity or a minimum threshold.
Both the components of the price, the minimum fixed charges/capacity charges and the variable/energy
charges are charged for sale of electricity and are thus not taxable as electricity is exempt from GST.

Cancellation charges
The facilitation service of allowing cancellation against payment of cancellation charges is also a natural
part of a bundle. It is invariably supplied by all suppliers of passenger transportation service as naturally
bundled and in conjunction with the principal supply of transportation in the ordinary course of business.

CA Ramesh Soni 2.19

 Supply
Therefore, facilitation supply of allowing cancellation of an intended supply against payment of cancellation
fee or retention or forfeiture of a part or whole of the consideration or security deposit in such cases should
be assessed as the principal supply.
For example, cancellation charges of railway tickets for a class would attract GST at the same rate as
applicable to the class of travel (i.e., 5% GST on first class or air-conditioned coach ticket and nil for other
classes such as second sleeper class). Same is the case for air travel.

Crux: Schedule II: Para 5(e) considers: Agreeing to the obligation to refrain from an act, to tolerate an act
or a situation or to do an act as a supply of service.
To be considered as supply of service under Para 5(e), above three activities must comply with
the following conditions:
 There must be an expressed or implied agreement or contract to refrain, tolerate or to do an act.
 Consideration must flow in return to this contract/agreement.

Clarification on liability to pay GST in respect of warranty replacement of parts and repair
services during warranty period. (Circular applicable for Jan 25 & May 25 attempt onwards)

Issue 1: There are cases where the original equipment manufacturer offers warranty for the
goods supplied by him to the customer and provides replacement of parts and/ or repair services

I
N
to the customer during the warranty period, without separately charging any consideration at
the time of such replacement/ repair services.

SO
Whether GST would be payable on such replacement of parts or supply of repair services,
without any consideration from the customer, as part of warranty?

Clarification: The value of original supply of goods (provided along with warranty) by the manufacturer to
H
the customer includes the likely cost of replacement of parts and / or repair services to be incurred during
the warranty period, on which tax would have already been paid at the time of original supply of goods.
ES

As such, where the manufacturer provides replacement of parts and/ or repair services to the customer
during the warranty period, without separately charging any consideration at the time of such replacement/
repair services, no further GST is chargeable on such replacement of parts and/ or repair service during
warranty period.
M

However, if any additional consideration is charged by the manufacturer from the customer, either for
replacement of any part or for any service, then GST will be payable on such supply with respect to such
A

additional consideration.
R

Issue 2: Whether GST would be payable on replacement of parts and/ or repair services provided
by a distributor without any consideration from the customer, as part of warranty on behalf of
A

the manufacturer?
C

Clarification: There may be instances where a distributor of a company provides replacement of parts
and/ or repair services to the customer as part of warranty on behalf of the manufacturer and no separate
consideration is charged by such distributor in respect of the said replacement and/ or repair services from
the customer. In such cases, as no consideration is being charged by the distributor from the customer, no
GST would be payable by the distributor on the said activity of providing replacement of parts and/ or repair
services to the customer.
However, if any additional consideration is charged by the distributor from the customer, either for
replacement of any part or for any service, then GST will be payable on such supply with respect to such
additional consideration.

Issue 3: In the above scenario where the distributor provides replacement of parts to the
customer as part of warranty on behalf of the manufacturer, whether any supply is involved
between the distributor and the manufacturer?

Clarification: There can be 4 instances as discussed below:-

(a) There may be cases where the distributor replaces the part(s) to the customer under warranty either
by using his stock or by purchasing from a third party and charges the consideration for the part(s) so
replaced from the manufacturer, by issuance of a tax invoice, for the said supply made by him to the
CA Ramesh Soni 2.20
 Supply
manufacturer. In such a case, GST would be payable by the distributor on the said supply by him to the
manufacturer.
(b) There may be cases where the distributor raises a requisition to the manufacturer for the part(s) to be
replaced by him under warranty and the manufacturer then provides the said part(s) to the distributor
for the purpose of such replacement to the customer as part of warranty. In such a case, where the
manufacturer is providing such part(s) to the distributor for replacement to the customer during the
warranty period, without separately charging any consideration at the time of such replacement, no
GST is payable on such replacement of parts by the manufacturer.
(c) There may be cases where the distributor replaces the part(s) to the customer under warranty out of
the supply already received by him from the manufacturer and the manufacturer issues a credit note in
respect of the parts so replaced subject to provisions of section 34(2) of the CGST Act. Accordingly, the
tax liability may be adjusted by the manufacturer.
(d) There may be cases where the distributor replaces the goods or its parts to the customer under warranty
by using his stock and then raises a requisition to the manufacturer for the goods or the parts, as the
case may be. The manufacturer then provides the said goods or the parts, as the case may be, to the
distributor through a delivery challan, without separately charging any consideration at the time of such
replenishment. In such a case, no GST is payable on such replenishment of goods or the parts, as the
case may be.

I
N
Issue 4: Where the distributor provides repair service, in addition to replacement of parts or
otherwise, to the customer without any consideration, as part of warranty, on behalf of the

SO
manufacturer but charges the manufacturer for such repair services either by way of issue of
tax invoice or a debit note, whether GST would be payable on such activity by the distributor?

Clarification: In such scenario, there is a supply of service by the distributor and the manufacturer is the
H
recipient of such supply of repair services in accordance with the provisions of section 2(93)(a) of the CGST
Act, 2017. Hence, GST would be payable on such provision of service by the distributor to the manufacturer.
ES

Issue 5: Sometimes companies provide offers of Extended warranty to the customers which can
be availed at the time of original supply or just before the expiry of the standard warranty period.
Whether GST would be payable in both the cases?
M

Clarification:
A

(a) If a customer enters into an agreement of extended warranty with the supplier of the goods at the time
of original supply, then the consideration for such extended warranty becomes part of the value of the
R

composite supply, the principal supply being the supply of goods, and GST would be payable
accordingly.
A

However, if the supply of extended warranty is made by a person different from the supplier of the
goods, then supply of extended warranty will be treated as a separate supply from the original supply
C

of goods and will be taxable as supply of services.

(b) In case where a consumer enters into an agreement of extended warranty at any time after the original
supply, then the same shall be treated as a supply of services distinct from the original supply of goods
and the supplier of the said extended warranty shall be liable to discharge GST liability applicable on
such supply of services.

Note: The provisions pertaining to availability of input tax credit shall be discussed in the chapter of ITC
Input Tax Credit.

CA Ramesh Soni 2.21

 Supply - Q & A
2. Supply - Q & A

Basics

1.
What is the taxable event under GST? Or
Meghraj & Co. wishes to commence the business of supplying ready-made garments within
Punjab and in the neighbouring States of Delhi and Haryana. Kindly state as to what is the
taxable event under GST and leviability of CGST, SGST/UTGST and IGST on the same?
(ICAI study material)
Answer:
Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be levied on
intra-State supplies. IGST will be levied on inter-State supplies.

Section 7(1)(b): Import of services with/without consideration

2.
Examine whether the activity of import of service in the following independent cases would

I
amount to supply under section 7 of the CGST Act, 2017?

N
(i) Miss Shriniti Kaushik received vaastu consultancy services for her residence located at
Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the said

SO
service is 5,000 Australian dollars.
(ii) Miss Shriniti Kaushik received interior decoration services for her residence located at
Bandra, Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [wholly
dependent on Miss Shriniti]. Further, Miss Shriniti did not pay any consideration for the
H
said service.
(iii) Will your answer change if in the above case, if Miss Shriniti has taken interior
ES

decoration services with regard to her business premises and not her residence?
Note: Any specific exemption by way of notification needs to be ignored.
(ICAI study material) & (RTP CA INTER-NOV 2018)
M

Answer:
(i) Supply, under section 7 of the CGST Act, 2017, inter alia,
 includes import of services for a consideration
A

 even if it is not in the course or furtherance of business.

R

Thus, although the import of service for consideration by Miss. Shriniti Kaushik is not in course or
furtherance of business [as the interior decoration services have been availed in respect of
residence], it would amount to supply.
A

(ii) Schedule I of CGST Act, inter alia, stipulates that import of services from a related person located
C

outside India, without consideration is treated as supply if it is provided in the course or furtherance
of business. Explanation to section 15, inter alia, provides that persons shall be deemed to be
“related persons” if they are members of the same family. Further, family means, —
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
In the given case, Miss Shriniti Kaushik has received interior decoration services from her brother.
In view of the above, Miss Shriniti and her brother shall be considered to be related as Miss Shriniti’s
brother is wholly dependent on her.
However, Miss Shriniti has taken interior decoration services for her residence and not in course or
furtherance of business.
Consequently, services provided by Miss Shriniti’s brother to her would not be treated as supply
under section 7 read with Schedule I of the CGST Act.

(iii) In the above case, if Miss Shriniti has taken interior decoration services with regard to her business
premises, services provided by Miss Shriniti’s brother to her would be treated as supply under section
7 read with Schedule I, as the same are provided in course or furtherance of business.

CA Ramesh Soni 2.22

 Supply - Q & A
3.
Mrs. Pragati received legal advice for her personal problems & paid 1,000 pounds as a legal fee
to Miss Unnati of U.K. (London). Explain whether the above activity of import of service would
amount to supply under section 7 of the CGST Act, 2017?
If in above case both of them are real sisters & no consideration is paid, then will it change
your answer? Further in the above case both of them are real sisters & Mrs. Pragati receives
legal advice for her business & she didn't pay any consideration then what will be your
answer?
(CA INTER MTP - AUG 2018)
Answer:
Answers to each given situation is as follows:
1) Import of legal service for consideration of 1,000 pound:
Importation of service for consideration is supply whether or not in the course or furtherance of
business [section 7(1) (b) of CGST Act]. Thus, even if Mrs Pragati has received such service for his
personal purpose, import will qualify as supply as it is being made for consideration.

2) Import of legal service without consideration:

(a) Import of legal service in personal matter

I
Import of any service without consideration amounts to supply in terms of Section 7(1)(c) read

N
with Schedule I (Para 4) only if following conditions are fulfilled:
1. Import is in course or furtherance of business;

SO
2. Import is from related person or own establishment outside India
Import of legal service will not amount to supply as such import it not in course or furtherance
of business (as such advice is for personal matter)
H
(b)Import of legal service in business matter
Import of service is for business matter, then such import without consideration would
ES

amount to supply if it is from related person or his other establishment outside India.
Import from real sister is not import from ‘related person’. GST law has defined related person
to include members of same family. Sister is considered as family member if she is wholly or
mainly dependent upon the person. In given question, it seems Mrs Unnati in UK is quite
M

independent and no way dependent upon Mrs Pragati and therefore, Mrs Pragati and Mrs.
Unnati are not ‘related person’ under GST law.
A

Since import of service without consideration is not from related person or other establishment
outside India, it will not amount to supply under GST law.
R

4.
A

Examine whether the following activities would amount to "supply" under GST law?
(i) Glory Ltd. is engaged in manufacturing and selling of cosmetic products. Seva Trust, a
C

charitable organisation, approached Glory Ltd. to provide financial assistance for its
charitable activities. Glory Ltd. donated a sum of Rs. 2 lakhs to Seva Trust with a
condition that Seva Trust will place a hoarding at the entrance of the trust premises
displaying picture of products sold by Glory Ltd.
(ii) Mr. Swamy of Chennai is working as a manager with ABC Bank. He consulted M/s. Jacobs
and Company of London and took its advice for buying a residential house in Mumbai and
paid them consultancy fee of 200 UK Pound for this import of service.
(CA Inter May 22)
Answer:
(i) An activity qualifies as supply under GST only if it is for a consideration and is in course/furtherance
of business. Donations received by the charitable organizations are treated as consideration only
when there’s an obligation on part of the recipient of the donation to do anything.
Since in the given case, the display of products sold by the donor – Glory Ltd. - in charitable
organisation’s premises aims at advertising/promotion of its business, it is supply for consideration
in course/furtherance of business and thus, qualifies as supply under GST law.
(ii) Supply includes importation of services, for a consideration whether or not in the
course/furtherance of business. Thus, in the given case, the import of services by Mr. Swamy
amounts to supply although it is not in course/furtherance of business.
CA Ramesh Soni 2.23
 Supply - Q & A
Section 7(1)(c): Activities/transactions specified in Schedule I

5.
Examine whether the following activities would be treated as supply under GST law?
Wesco Ltd, a registered person in Ahmedabad (Gujarat) having head office located in
Singapore, received management consultancy services free of cost from its head office.
(CA Inter Nov 23 -2 Marks)
Answer:
As per schedule I, in case of import of services by a person from a related person or from his
establishments located outside India, without consideration, in the course or furtherance of business shall
be treated as “supply”.
Hence, services received by Wesco Ltd. qualify as supply even though such services have been provided
free of cost by the head office.

6.
With reference to provisions of the CGST Act, 2017 discuss in brief, when ''Importation of
services" is to be considered as supply and when it is not to be considered as supply.
(CA Inter Nov 20)
Answer:

I
N
Importation of services for a consideration whether or not in the course or furtherance of business is to
be considered as supply.

SO
Importation of services by a person without consideration is deemed as supply provided the following two
conditions are satisfied: -
(a) such import is from related person or from his establishments located outside India, and
(b) such import is in the course or furtherance of business.
H
In case any or both of the above two conditions is/are not satisfied, the import of services without
consideration shall not be deemed as supply.
ES

7.
Damodar Private Ltd., registered in Delhi, has transferred some goods to its branch, registered
in West Bengal, so that the goods can be sold from the branch. The goods have been
M

transferred without any consideration. The company believes that the transaction undertaken
by it does not qualify as supply as no consideration is involved. Ascertain whether the transfer
A

of goods by Damodar Private Ltd. to its branch office qualifies as supply.

(ICAI study material)
R

Answer:
As per Schedule I of the CGST Act, supply of goods or services or both between related persons or
A

between distinct persons as specified in section 25, when made in the course or furtherance of business,
is deemed as supply even if made without consideration.
C

In the given case, since the Damodar Private Ltd. and its branch located in another State are distinct
persons, supply of goods between them qualifies as supply.

8.
Answer the following questions:
(a) Sudama Associates, a registered supplier, disposes the computers owned by the business
without consideration and it has not claimed input tax credit on such computers.
Examine whether the disposal of computers by Sudama Associates qualifies as deemed
supply under Schedule I of the CGST Act.
(b) Prithvi Enterprises appoints Champak to procure certain goods from the market.
Champak identifies various suppliers who can provide the goods as desired by Prithvi
Enterprises, and asks a supplier – Satya Manufacturers to send the goods and issue the
invoice directly to Prithvi Enterprises.
You are required to determine whether Champak can be considered as an agent of Prithvi
Enterprises in terms of Schedule I of the CGST Act.
(ICAI study material)

CA Ramesh Soni 2.24

 Supply - Q & A
Answer:
(a) As per section 7(1)(c) read with Schedule I of the CGST Act, permanent transfer or disposal of
business assets is treated as supply even though the same is made without consideration. However,
this provision would apply only if input tax credit has been availed on such assets.
Therefore, the disposal of computers by Sudama Associates is not a supply as the input tax credit
has not been availed on the same.

(b) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods by an agent to his
principal where the agent undertakes to receive such goods on behalf of the principal qualifies as
supply even if the same is made without consideration. Further, Circular clarifies that principal-agent
relationship falls within the ambit of the Schedule I only where the goods being procured by the agent
on behalf of the principal are invoiced in the name of the agent. In that case, further provision of the
said goods by the agent to the principal without consideration, would be covered in Schedule I and
thus would qualify as supply.
In the given case, Champak is only acting as the procurement agent, and has in no way involved
himself in the supply or receipt of the goods. The invoice is being issued in the name of Prithvi
Enterprises and not Champak.
Hence, Champak is not an agent of Prithvi Enterprises for the supply of goods in terms of Schedule I

I
of the CGST Act.

N
9.

SO
Gagan Engineering Pvt. Ltd., registered in Haryana, is engaged in providing maintenance and
repair services for heavy steel machinery. For carrying out the repair work, Gagan Engineering
Pvt. Ltd. sends its container trucks equipped with items like repair equipments, consumables,
tools, parts etc. from Haryana workshop to its own repairing centres (registered under GST
H
law) located in other States across India where the clients’ machinery are being brought and
are being repaired. Discuss the leviability of GST on the inter-State movement of trucks from
ES

the workshop of Gagan Engineering Pvt. Ltd. in Haryana to its own repairing centres located in
other States across India.
(ICAI study material)
Answer:
M

As per section 25(4), a person who has obtained more than one registration, whether in one State or
Union territory or more than one State or Union territory shall, in respect of each such registration, be
A

treated as ‘distinct persons’.

Schedule I to the CGST Act specifies situations where activities are to be treated as supply even if
R

made without consideration. Supply of goods and/or services between ‘distinct persons’ as specified in
section 25, when made in the course or furtherance of business is one such activity included in Schedule I
A

under para 2.
However, in view of the GST Council’s recommendation, it has been clarified that the inter-State
C

movement of various modes of conveyance between ‘distinct persons’ as specified in section 25(4), not
involving further supply of such conveyance, including trucks carrying goods or passengers or both; or for
repairs and maintenance, may be treated ‘neither as a supply of goods nor supply of service’ and
therefore, will not be leviable to IGST [Circular No. 1/1/2017 IGST dated 07.07.2017].
Thus, in the given case, inter-State movement of trucks from the workshop of Gagan Engineering Pvt.
Ltd. located in Haryana to its repair centres located in other States is ‘neither a supply of goods nor
supply of service’.

10.
Examine whether the following activities would amount to supply under section 7 of CGST Act:
(a) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from factory
in Delhi to the Mumbai depot without consideration so that the same can be sold.
(b) Raman is an architect in Chennai. His brother who is settled in London is a well-known
lawyer. Raman has taken legal advice from him free of cost with regard to his family
dispute.
(c) Would your answer be different if in the above case, Raman has taken advice in respect

CA Ramesh Soni 2.25

 Supply - Q & A
of his business unit in Chennai?
(ICAI study material)
Answer:
(a) Schedule I of CGST Act, inter alia, stipulates that supply of goods or services or both between
related persons or between distinct persons as specified in section 25, is supply even without
consideration provided it is made in the course or furtherance of business. Further, where a person
who has obtained or is required to obtain registration in a State in respect of an establishment, has
an establishment in another State, then such establishments shall be treated as establishments of
distinct persons [Section 25 of the CGST Act].
In view of the same, factory and depot of Sulekha Manufacturers are establishments of two
distinct persons. Therefore, supply of goods from Delhi factory of Sulekha Manufacturers to Mumbai
Depot without consideration, but in course/furtherance of business, is supply under section 7 of the
CGST Act.

(b) Schedule I of CGST Act, inter alia, stipulates that import of services from a related person
located outside India, without consideration is treated as supply if it is provided in the course or
furtherance of business. Persons shall be deemed to be “related persons” if they are members of
the same family. Further, family means, —

I
(i) the spouse and children of the person, and

N
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.

SO
In the given case, Raman has received free of cost legal services from his brother. However, in
view of the above, Raman and his brother cannot be considered to be related as Raman’s brother is
a well-known lawyer and is not wholly/mainly dependent on Raman. Further, Raman has taken legal
advice from him in personal matter and not in course or furtherance of business. Consequently,
H
services provided by Raman’s brother to him would not be treated as supply under section 7 of the
CGST Act read with Schedule I.
ES

(c) In the above case, if Raman has taken advice with regard to his business unit, services provided
by Raman’s brother to him would still not be treated as supply under section 7 of the CGST Act read
with Schedule I as although the same are provided in course or furtherance of business, such
M

services have not been received from a related person.

A

11.
Sahab Sales, an air-conditioner dealer in Janakpuri, Delhi, needs 4 air-conditioners for his
R

newly constructed house in Safdarjung Enclave. Therefore, he transfers 4 air - conditioners [on
which ITC has already been availed by it] from its stock, for the said purpose. Examine
A

whether the said activity amounts to supply under section 7 of the CGST Act, 2017.
Further, a Janakpuri resident, Aakash, approached Sahab Sales. He sold an air- conditioner to
C

Sahab Sales for Rs. 5,000. Aakash had bought the said air-conditioner six months before, for
his residence. Does sale of the air conditioner by Aakash to Sahab Sales amount to supply
under section 7 of the CGST Act, 2017
(CA INTER RTP - 2018)
Answer:
Section 7 defines the scope of ‘supply’. In general, supply covers those transactions where goods or
services or both are supplied for consideration in course of or furtherance of business (Section 7(1)
(a)). Besides that, scope of supply has been extended to cover certain specified transactions which are
undertaken even without any consideration (Section 7(1) (c) read with Schedule I). One such
transaction without consideration is where business assets on which ITC has been availed are
transferred or disposed off permanently.
In view of said provisions, the answer to given situations are as follows:
(a) Permanent transfer of air-conditioner (trading stock which is his business asset on which
he has availed ITC): permanent transfer of air conditioners by Sahab Sales from its stock for
personal use at its residence, though without consideration, would amount to supply.
(b) Sale by Aakash (non-business entity) of his second-hand air-conditioner: Such sale will not
qualify as supply under section 7 of the CGST Act, 2017 as although it is made for a consideration ,
but it’s not in the course or furtherance of business.
CA Ramesh Soni 2.26
 Supply - Q & A

Section 7(1A): Activities shall be Supply of goods or Supply of services

12.
Happy Constructions Ltd., a registered builder under GST in Bengaluru, Karnataka has got
permission to build five floors from the Municipal Projects for one of its projects at Suraj
Nagar. Aditya Constructions, a neighbouring housing project approached Happy Constructions
Limited to discuss regarding blockage of sun light issue arising out of construction of five
floors and asked it to build only three floors for which Rs. 20 lakh was offered as
compensation. Happy Constructions Limited agreed to the offer. It may be noted that Aditya
Constructions is not ready to pay any further amount to Happy Constructions Ltd. in addition
to the amount already agreed.
Briefly explain with correct legal provision whether the above amount received as
compensation is liable to GST or not? And if considered as taxable, then calculate the total GST
payable by Happy Constructions Ltd. Assume the applicable rate of CGST and SGST is 9% each.
Also state the conditions to be complied with.
(CA Inter RTP May 24)
Answer:
Agreeing to obligation to refrain from an act, or to tolerate an act or situation, or to do an act has been

I
N
specifically declared to be a supply of service vide para 5(e) of Schedule II of the CGST Act, 2017 if the
same constitutes a supply as per the CGST Act, 2017.

SO
In the given case, Happy Constructions Limited has agreed to build only three floors, even though it is
permitted to construct five floors by the Municipal Authorities, for a compensation of Rs. 20 lakh. This
results in supply of service.
The conditions to be complied with for the above supply will be
H
(a) There must be an expressed or implied agreement or contract must exist.
(b) Consideration must flow in return to this contract/ agreement.
ES

Since Aditya Constructions is not ready to pay any further amount to Happy Constructions Limited in
addition to the amount already agreed, the amount received Rs. 20 lakh shall be treated as inclusive of
GST and the GST payable will be Rs. 20,00,000 x 9/118 = Rs. 1,52,542.37 or Rs. 1,52,542 (rounded off)
as CGST and SGST each.
M

13.
A

R-TECH Consultancy, registered in Bangalore, supplies technical consultancy services to its

clients. It has been providing technical services to Tata Ltd., Bangalore since past two years.
R

Consideration is settled by Tata Ltd. assignment wise. Tata Ltd. paid Rs 66 lakh to R-TECH
Consultancy on 10th September, 20XX on R-TECH consultancy agreeing to not provide similar
A

technical services to any other business entity in India or abroad for a period of 8 years. R-
TECH Consultancy is of the view that Rs 66 lakh is not chargeable to GST.
C

You are required to examine whether the view taken by R-TECH Consultancy is valid in law.
Calculate GST liability of R-TECH Consultancy, if any. The technical services provided by R-
TECH consultancy are otherwise chargeable to GST at the rate of 18%. It may be noted that
Tata Ltd. is not ready to pay any further amount to R-TECH Consultancy in addition to the
amount already agreed.

Answer:
The view taken by R-TECH Consultancy is not valid in law. The scope of supply is defined by
section 7(1) of CGST Act, 2017. As per section 7(1)(a), it will be considered as supply since it is in the
course or furtherance of business. Further paragraph 5(e) of Schedule II provides that agreeing to the
obligation to refrain from an act, or to tolerate an act or a situation, or to do an act is treated as supply
of service.
Thus, any consideration received for agreeing to the obligation to refrain from an act, is subject to GST.
Consideration received for non-compete agreement is deemed as consideration for supply of services
Consideration of Rs 66 lakh received on the promise of R-TECH consultancy of not providing similar
services to any other person, is consideration for supply which is chargeable to GST.
Since GST is not separately collected, it will be assumed that it is included in Rs 66 lakh.
Where the value of supply is inclusive of GST, the tax amount is determined in the following manner:
CA Ramesh Soni 2.27
 Supply - Q & A
Tax amount = (Value inclusive of taxes x GST rate in %) [IGST or CGST, SGST/UTGST] / (100 + sum
of GST rates in %)
Consequently, value of taxable supply will be Rs 55,93,220 (i.e., Rs 66,00,000 x 100/118).
GST liability on Rs 55,93,220 will be calculated as follows-
Particulars Rs
Taxable value of supply 55,93,220
Add: CGST @ 9% of Rs 55,93,220 5,03,390
SGST @ 9% of Rs 55,93,220 5,03,390
Total GST liability 10,06,780

14.
Mr. Happy has a huge residential property located at a prime location in Mumbai, Maharashtra.
He has let out the 1st and 2nd floor to Mr. Peace for residential purposes in April. Mr. Peace
surrenders his tenancy rights to Mr. Serene for a tenancy premium of Rs. 10,00,000 on 1st
June. Mr. Serene has also paid the applicable stamp duty and registration charges on transfer
of tenancy rights. Moreover, Mr. Serene has agreed to pay a monthly rent of Rs. 1,00,000 to
Mr. Happy from June. Determine the taxability of the transaction(s) involved in the given case,
for the month of June.

I
(ICAI study material)

N
Answer:
CBIC Circular clarifies that the activity of transfer of tenancy right against consideration [i.e., tenancy

SO
premium] is squarely covered under supply of service liable to GST. It is a form of lease or renting of
property and such activity is specifically declared to be a service in Schedule II i.e., any lease, tenancy,
easement, licence to occupy land is a supply of services.
Although stamp duty and registration charges have been levied on such transfer of tenancy rights, it shall
H
be still subject to GST. Merely because a transaction/supply involves execution of documents which may
require registration and payment of registration fee and stamp duty, would not preclude them from the
ES

‘scope of supply’ and from payment of GST.

The transfer of tenancy rights cannot be treated as sale of land/ building in Schedule III. Thus, it is not a
non-supply under GST and consequently, a consideration for the said activity shall attract levy of GST.
M

Services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in
the form of a portion of tenancy premium is liable to GST. Hence, in the given case, the tenancy premium
of Rs. 10,00,000 received by Mr. Peace for surrendering his tenancy rights to Mr. Serene is liable to GST.
A

The circular further clarifies that since renting of residential dwelling for use as a residence is exempt
R

[Entry 12 of Notification No. 12/2017 CT (R) dated 28.06.201732], grant of tenancy rights in a residential
dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt.
Consequently, monthly rent Rs. 1,00,000 received by Mr. Happy from Mr. Serene is exempt.
A

15.
C

Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of
services? Give reason.
(ICAI study material)
Answer:
Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title,
although at a future date.

16.
Transfer of title and/or possession is necessary for a transaction to constitute supply of goods.
Examine.
(ICAI study material)
Answer:
Title as well as possession both has to be transferred for a transaction to be considered as a supply of
goods. In case title is not transferred, the transaction would be treated as supply of service in terms of
Schedule II (1) (b) of the CGST Act. In some cases, possession may be transferred immediately but
title may be transferred at a future date like in case of sale on approval basis or hire purchase
arrangement. Such transactions will also be termed as supply of goods.

CA Ramesh Soni 2.28

 Supply - Q & A

17.
State whether the following supplies would be treated as supply of goods or supply of services
as per Schedule II of the CGST Act:
(a) Renting of immovable property
(b) Goods forming part of business assets are transferred or disposed of by/under directions
of person carrying on the business.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at
a future date.
(e) Temporary transfer or permitting use or enjoyment of any intellectual property right.
(f) Any treatment or process which is applied to another person’s goods.
(g) Transfer of title in goods.
(ICAI study material)
Answer:
(a) Supply of services
(b) Supply of goods
(c) Supply of services

I
(d) Supply of goods

N
(e) Supply of services
(f) Supply of services

SO
(g) Supply of goods

Section 7(2)(a): Activities or transactions specified in Schedule III

H
18.
List any 5 (Five) activities/transactions specified under Schedule III of the CGST Act, 2017
ES

which shall be neither treated as supply of goods nor as supply of services. Detailed
explanations is not required.
(CA Inter May 23-5 marks)
M

Answer:
Activities or transactions which shall be treated neither as a supply of goods nor a supply of services are
as under:-
A

(1) Services by an employee to the employer in the course of or in relation to his employment
R

(2) Services by any court or Tribunal established under any law for the time being in force.
(3) Functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities.
A

(4) Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity.
C

(5) Duties performed by any person as a Chairperson or a Member or a Director in a body established by
the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.
(6) Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
(7) Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building. (i.e. in case, where entire
consideration for sale of building received after issuance of completion certificate or after its first
occupation, whichever is earlier).
(8) Actionable claims, other than specified actionable claims.
"Specified actionable claim" means the actionable claim involved in or by way of—
(i) betting;
(ii) casinos;
(iii) gambling;
(iv) horse racing;
(v) lottery; or
(vi) online money gaming;’

19.

CA Ramesh Soni 2.29

 Supply - Q & A
Determine whether GST is payable in each of the following independent transactions:
Dhruv Developers sold a plot of land in Greater Noida after levelling, laying down of drainage
lines, water lines and electricity lines.
(CA Inter May 23 RTP)
Answer:
GST is not payable by Dhruv Developers on sale of plot of land. Circular clarifies applicability of GST on
sale of land after levelling, laying down of drainage lines etc. As per Para 5 of Schedule III of the CGST
Act, 2017, ‘sale of land’ is neither a supply of goods nor a supply of services. Therefore, the sale of land
does not attract GST. Land may be sold either as it is or after some development such as levelling, laying
down of drainage lines, water lines, electricity lines, etc. It is clarified that sale of such developed land is
also sale of land and is covered by Para 5 of Schedule III and accordingly, does not attract GST.

20.
Angad Private Ltd. is engaged in the business of distribution of construction material. As an
incentive, Angad Private Ltd. pays an amount of Rs. 75,000 to its employees upon achieving a
specified sales target. The incentive is part of the salary of the employees and applicable tax is
deducted at source as per relevant income tax provisions. Angad Private Ltd. is of the view
that GST is not leviable on such incentive paid to the employees. Whether the view taken by
Angad Private Ltd. is correct?

I
N
(ICAI study material)
Answer:

SO
Yes, Angad Private Ltd.’s view is correct. In terms of section 7(2) read with Schedule III of the CGST Act,
services by an employee to employer in the course of or in relation to his employment shall not be
treated as supply under GST. Further, the amount paid as incentive by Angad Private Ltd. is not in the
nature of gift, and thus, is not covered under Schedule I of the CGST Act. In fact, in the given case, the
H
incentive is part of the salary and is directly linked to the sales target. Therefore, the services provided by
the employees in return of the incentive given to them shall not be treated as a “supply”.
ES

In the light of above discussion, GST is not leviable on the incentive paid by Angad Private Ltd. to
employees.

Section 7(2)(b)
M

21.
A

Sarvanna & Sons wishes to start supplying liquor in the State of Tamil Nadu. Therefore, it
applies for license for selling liquor to the Tamil Nadu Government for it has charged specified
R

fee from it. Examine whether the grant of alcoholic liquor license by the Tamil Nadu
Government to Sarvanna & Sons qualifies as supply.
A

(ICAI study material)

Answer:
C

Services by way of grant of alcoholic liquor license by the State Governments have been notified to be
treated neither as a supply of goods nor as a supply of service. Such licence is granted against
consideration in the form of licence fee or application fee or by whatever name it is called. This special
dispensation is applicable only to supply of service by way of grant of liquor licenses by the State
Governments as an agreement between the Centre and States and is not applicable/has no precedence
value in relation to grant of other licenses and privileges for a fee in other situations, where GST is
payable.
Thus, in the given case, the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna &
Sons is neither a supply of goods nor a supply of service.

CA Ramesh Soni 2.30

 Supply - Q & A
Section 8: Tax liability on composite and mixed supplies

22.
Composite supply is treated as supply of that particular goods or services which attracts the
highest rate of tax. Examine the validity of the statement.
(ICAI study material)
Answer:
The statement is not correct. Composite supply is treated as supply of the principal supply. It is the mixed
supply that is treated as supply of that particular goods or services which attracts the highest rate of tax.

23.
Mrs. Kajal, a registered supplier of Jaipur (Rajasthan) & also engaged in event management
services, has made the following supplies in the month of January:
(i) Supply of a laptop along with the laptop bag to a customer of Mumbai for Rs. 55,000
(exclusive of GST).
(ii) Supply of 10,000 kits (at Rs. 50 each) amounting to Rs. 5,00,000 (exclusive of GST) to
Ram Fancy Store in Kota (Rajasthan). Each kit consists of 1 hair oil, 1 beauty soap and 1
hair comb.
(iii) 100 kits are given as free gift to Jaipur customers (all unrelated) on the occasion of Mrs.

I
N
Kajal's birthday. Each kit consists of 1 hair oil and 1 beauty soap. Cost of each kit is Rs. 35.
Input tax credit has not been taken on the goods contained in the kit.

SO
(iv) Event management services provided free of cost to her brother (wholly dependent on her)
for his son’s marriage function in Indore (Madhya Pradesh). Cost of providing said services
is Rs. 80,000.
(v) 1,400 chairs and 100 coolers hired out to Function Garden, Ajmer (Rajasthan) for Rs.
H
3,30,000 (exclusive of GST) including cost of transporting the chairs and coolers from Mrs.
Kajal's godown at Jaipur to Function Garden, Ajmer.
ES

Assume rates of GST to be as under: -

S. No. Particulars Rate of GST
1 Laptop 18%
2 Laptop bag 28%
M

3 Hair oil 18%

4 Beauty soap 28%
A

5 Hair comb 12%

R

6 Event management service 5%

7 Service of renting of chairs and coolers 12%
8 Transportation service 5%
A

From the above information, examine each of the above supplies made by Mrs. Kajal for the
month of January and determine the rate of GST applicable on the same.
C

(ICAI study material)

Answer:
S. Particulars Rate
No. of GST
(i) Supply of laptop bag along with laptop to Mumbai customer 18%
[Being naturally bundled, supply of laptop bag along with the laptop is a composite
supply which is treated as the supply of the principal supply [viz. laptop] in terms of
section 8(a). Accordingly, rate of principal supply, i.e., laptop will be charged.]
(ii) Supply of kits to Ram Fancy Store 28%
[It is a mixed supply and is treated as supply of that particular supply which attracts
highest tax rate [viz. beauty soap] in terms of section 8(b).]
(iii) Free gifts to customers Nil
[Cannot be considered as supply under section 7 read with Schedule I as the gifts are
given to unrelated customers without consideration.]
(iv) Event management services provided free of cost to her brother for his son’s 5%
marriage shall be considered as supply as the services are being provided to a related
person. Since it is an individual supply, it will be taxed at the rate applicable on said

CA Ramesh Soni 2.31

 Supply - Q & A
S. Particulars Rate
No. of GST
service.
(v) Chairs and coolers hired out to Function Garden 12%
[Transportation services provided by Mrs. Kajal are exempt. However, since chairs and
coolers are hired out along with their transportation, it is a case of composite supply
wherein the principal supply is hiring out of chairs and coolers. Accordingly,
transportation service will also be taxed at the rate applicable for renting of chairs and
coolers*]
Note: As per section 2(30) of the CGST Act, 2017, composite supply means a supply made by a taxable
person to a recipient consisting of two or more taxable supplies. Since in point (v), service of hiring out of
chairs & coolers is taxable while transportation service is exempt, it is possible to take a view that this is
not a case of composite supply. In that case, the two services will be treated as independent services and
taxed accordingly.

24.
Brishti Ltd. is manufacturer of cosmetic products: (1) Hair oil (GST Rate - 18%), (2) Sun
screen cream (GST Rate- 28%), (3) Shampoo (GST rate - 28%), and (4) Hair comb (GST Rate -

I
12%). The said products are supplied in a single package and the Price per package is Rs.

N
500 (exclusive of taxes). 20,000 packages were supplied by the company to its dealer.
Determine the nature of supply and its tax liability.

SO
(CMA INTER - MTP DEC 2018 -5 MARKS)
Answer:
The treatment would be as follows:
Nature of Combination Supply: Mixed supply
H
Each of the goods in the package has individual identity and can be supplied
separately but are deliberately supplied conjointly for a single consolidated price.
ES

Hence, the supply would constitute a mixed supply.

Treatment under GST: Highest tax rate applicable 28% GST
As per section 8(b) of the CGST Act, tax rates applicable in case of mixed supply
would be the rate of tax attributable to that one supply (goods, or services) which
M

suffers the highest rate of tax from amongst the supplies forming part of the mixed
supply. Therefore, entire package will be chargeable to 28% GST.
A

Value of Supply: 500

R

Value of taxable supply per package

No. of packages 20,000
Total Value 1,00,00,000
A

GST Liability @ 28% 28,00,000

C

25.
“Diligent Force” a professional training institute gets its training material of “Aptitude
Quotient” printed from “Durga printing House” a printing press. The content of the material is
provided by the Diligent Force who owns the usage rights of the same while the physical
inputs including paper used for printing belong to the Durga Printing House.
Ascertain whether supply of training material by the Durga Printing House constitutes supply
of goods or supply of services.
(RTP Nov 19)
Answer:
CBIC Circular has clarified that supply of books printed with contents supplied by the recipient of such
printed goods, is composite supply and the question, whether such supplies constitute supply of goods or
services would be determined on the basis of what constitutes the principal supply.
Principal supply has been defined in section 2(90) of the CGST Act as supply of goods or services which
constitutes the predominant element of a composite supply and to which any other supply forming part of
that composite supply is ancillary.
In the case of printing of books where content is supplied by the publisher or the person who owns
the usage rights to the intangible inputs while the physical inputs including paper used for printing belong

CA Ramesh Soni 2.32

 Supply - Q & A
to the printer, supply of printing [of the content supplied by the recipient of supply] is the principal supply
and therefore, such supplies would constitute supply of service.
Thus, in view of the above-mentioned provisions, the supply of training material by the Durga Printing
House would constitute supply of services.

26.
Determine whether the following supplies amount to composite supplies:
i. A hotel provides 4 days-3 nights’ package wherein the facility of breakfast and dinner is
provided along with the room accommodation.
ii. A toothpaste company has offered the scheme of free soap along with the toothpaste.
(ICAI study material)
Answer:
Under composite supply, two or more taxable supplies of goods or services or both, or any
combination thereof, are naturally bundled and supplied in conjunction with each other, in the
ordinary course of business, one of which is a principal supply.
In view of the same,
i. since, supply of breakfast and dinner with the accommodation in the hotel are naturally bundled,
said supplies qualify as ‘composite supply’.

I
ii. since supply of soap along with the toothpaste are not naturally bundled, said supplies do not

N
qualify as ‘composite supply’.

SO
27.
Dumdum Electronics has sold the following electronic items to Akbar Retail Store.
(i) Refrigerator (500 litres) taxable @ 18%
(ii) Stabilizer for refrigerator taxable @ 12%
H
(iii) LED television (42 inches) taxable @ 12%
(iv) Split air conditioner (2 Tons) taxable @ 28%
ES

(v) Stabilizer for air conditioner taxable @12%

Dumdum Electronics has issued a single invoice, indicating price of each of the above items
separately in the same. Akbar Retail Store has given a single cheque of Rs. 1,00,000/- for all
the items as a composite discounted price. State the type of supply and the tax rate applicable
M

in this case.
(ICAI Study Material)
A

Answer:
In the given case, the items supplied by Dumdum Electronics are not naturally bundled in the ordinary
R

course of business. Therefore, such supply is not a composite supply. Further, although Akbar Retail Store
has paid a composite discounted price for these goods, Dumdum Electronics has not charged a single
A

price for the said supply. Therefore, said supply is also not a mixed supply.
Supply of these goods is, therefore, supply of individual items which are taxable at the respective rates
C

applicable to them.

28.
Manikaran, a registered supplier of Delhi, has supplied 20,000 packages at Rs. 30 each to
Mukhija Gift Shop in Punjab. Each package consists of 2 chocolates, 2 fruit juice bottles and a
packet of toy balloons. Determine the rate(s) of GST applicable in the given case assuming the
rates of GST to be as under:
Goods/services supplied GST rate
Chocolates 18%
Fruit juice bottles 12%
Toy balloons 5%
(ICAI study material)
Answer:
As per section 2(74) of the CGST Act, 2017, 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.

CA Ramesh Soni 2.33

 Supply - Q & A
Supply of a package containing chocolates, fruit juice bottles and a packet of toy balloons is a mixed
supply as each of these items can be supplied separately and is not dependent on any other. Further, as
per section 8(b) of the CGST Act, 2017, the mixed supply is treated as a supply of that particular supply
which attracts the highest rate of tax. Thus, in the given case, supply of packages is treated as supply of
chocolates [since it attracts the highest rate of tax] and the rate of GST applicable on the package of Rs.
6,00,000 (20,000 × Rs. 30) is 18%.

Miscellaneous

29.
Examine whether the following activities would be treated as supply under GST law?
Mr. Sonu from Chandigarh purchased a water cooler from Malhotra Bros. of Hoshiarpur for
Rs.25,000 to donate it to a temple situated in Hoshiarpur. Mr. Sonu directed Malhotra Bros. to
engrave the words on the water cooler- "Donated by Mr. Sonu from Chandigarh" and dispatch
the water cooler directly to the temple.
(CA Inter Nov 23 -2 Marks)
Answer:
Donations received by the charitable organisations are treated as consideration only if there exists, quid
pro quo, i.e., there is an obligation on part of recipient of the donation or gift to do anything (supply a

I
N
service).
Since the name of the donor, Mr. Sonu is displayed in temple as an expression of gratitude and public

SO
recognition of his act of philanthropy and is not aimed at advertising or promotion of his business, hence,
donation of water cooler by Mr. Sonu to temple is without quid pro quo and is, thus, not a supply under
GST law.
However, supply of water cooler by Malhotra Bros. to Mr. Sonu is supply as it is made for consideration in
H
course or furtherance of business.
ES

30.
Examine the implications of GST on supply of food and beverages at cinema halls.
(CA Inter RTP May 24)
Answer:
M

Eating joint is a wide term which includes refreshment or eating stalls/ kiosks/ counters or restaurant at a
cinema also.
A

The cinema operator:

(i) may run these refreshment/eating stalls/kiosks/counters/ restaurant themselves
R

or
(ii) they may give it on contract to a third party.
A

The customer may like to avail the services supplied by these refreshment/snack counters or choose not
to avail these services. Further, the cinema operator can also install vending machines, or supply any
C

other recreational service such as through coin-operated machines etc. which a customer may or may not
avail.
It is hereby clarified vide Circular No. 201/13/2023 GST dated 01.08.2023 that:
(i) supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as:
(a) the food or beverages are supplied by way of or as part of a service, and
(b) supplied independent of the cinema exhibition service.
(ii) where the sale of cinema ticket and supply of food and beverages are clubbed together, and such
bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate
applicable to service of exhibition of cinema, the principal supply.

31.
PTL Pvt. Ltd. is a retail store of merchandise located in 25 States/UTs in the country. For the
purpose of clearance of stock of merchandise and to attract consumers, PTL Pvt. Ltd. launched
scheme of “Buy One Get One Free” for the same type of merchandise, for instance, one shirt to
be given free with purchase of one shirt. Determine how the taxability of the goods supplied
under “Buy One Get One Free” scheme is determined.
(ICAI study material)

CA Ramesh Soni 2.34

 Supply - Q & A
Answer:
As per section 7(1)(a), the goods or services which are supplied free of cost (without any
consideration) are not treated as “supply” except in case of activities mentioned in Schedule I of the
CGST Act. Under “Buy One Get One Free” scheme, it may appear at first glance that in case of offers like
“Buy One, Get One Free”, one item is being “supplied free of cost” without any consideration. However, it
is not an individual supply of free goods, but a case of two or more individual supplies where a single
price is being charged for the entire supply. It can at best be treated as supplying two goods for the price
of one.
Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a
mixed supply and the rate of tax shall be determined accordingly.

32.
The temple of ancestral deity of Mr. Aman goel and his family is located at Beri, Haryana. The
temple is run by a charitable organisation registered under section 12AB of the Income Tax
Act, 1961. The family has got unshakeable faith in their ancestral deity. Mr. Aman is a big
entrepreneur having flourishing business of tiles in Gurugram. Upon the birth of their first
child, he donated Rs 10 lakh to the said temple for construction of a sitting hall in the temple.
On the main door of the sitting hall, a name plate was placed stating “Donated by Mr. Aman
Goel upon birth of his first child”.

I
N
You are required to examine the leviability of GST on the donation received from Mr. Aman
Goel?

SO
(CA Inter RTP – May 20)
Answer:
It has been clarified vide Circular No. 116/35/2019 GST dated 11.10.2019 that when the name of the
donor is displayed in the religious institution premises, by placing a name plate or similar such
H
acknowledgement, which can be said to be an expression of gratitude and public recognition of donor’s
act of philanthropy and is not aimed at giving publicity to the donor in such manner that it would be an
ES

advertising or promotion of his business, then it can be said that there is no supply of service for a
consideration (in the form of donation). There is no obligation (quid pro quo) on part of recipient of the
donation or gift to do anything (supply a service). Therefore, there is no GST liability on such
consideration.
M

In the given case, there is no reference or mention of any business activity of the donor which
otherwise would have got advertised. Thus, since the gift or donation is made to a charitable
A

organization, the payment has the character of gift or donation and the purpose is philanthropic (i.e., it
leads to no commercial gain) and not advertisement, hence GST is not leviable.
R

33.
A

Examine the existence of "consideration" for donation received by charitable institutions from
individual donors, without quid pro quo an important feature as defined in section 2(31) of the
C

CGST Act, 2017.

(CA Inter May 24 – 5 marks)
Answer:
Donations received by the charitable institutions from individual donors are treated as consideration only
if there exists, quid pro quo, i.e., there is an obligation on part of recipient of the donation or gift to do
anything.
If the name of the donor is displayed in charitable institution’s premises as an expression of gratitude and
public recognition of his act of philanthropy and is not aimed at advertising or promotion of his business,
there is no supply for the payment in the form of donation.

CA Ramesh Soni 2.35

 Supply - MCQ
2. Supply - MCQ

Goods & services Section 7(1)(c): Activities/transactions

specified in Schedule I
1. Goods as per section 2(52) includes:
(i) Actionable claims 6. Determine which of the following
(ii) Growing crops attached to the land independent cases will be deemed as supply
agreed to be severed before supply. even if made without consideration in terms
(iii) Money of Schedule I of the CGST Act, 2017?
(iv) Securities (i) AB & Associates transfers stock of goods
(a) (i) and (iii) from its Mumbai branch to Kolkata depot
(b) (iii) and (iv) for sale of such goods at the depot.
(c) (i) and (ii) (ii) Mr. Raghuveer, a dealer of air-
(d) (ii) and (iii) conditioners permanently transfers the
motor vehicle free of cost. ITC on said
2. Which of the following is not considered as motor vehicle was blocked and

I
‘goods’ under the CGST Act, 2017? therefore, was not availed.

N
(i) Ten-paisa coin having sale value of Rs. (iii) Mrs. Riddhi, an employee of Sun Ltd.,
100. received gift from her employer on the

SO
(ii) Shares of unlisted company occasion of Diwali worth Rs. 21,000.
(iii) Lottery tickets (a) (i)
(a) (i) (b) (ii)
(b) (ii) H (c) (iii)
(c) (ii) and (iii) (d) Both (i) and (ii)
(d) (i), (ii) and (iii)
ES
7. _____ specifies the activities to be treated as
3. Ram a stock broker charges some service supply even if made without consideration.
charges or service fees or documentation (a) Schedule I of CGST Act
fees or broking charges or such like fees or (b) Schedule II of CGST Act
M

charges are charged in relation to (c) Schedule III of CGST Act

transactions in securities, the same would be (d) All of the above
A

a consideration for provision of service. Will

such brokerage/service fees be service and 8. Which of the following transactions does not
R

chargeable to GST? qualify as supply under GST law?

(a) Yes (a) Disposal of car without consideration and
A

(b) No where the supplier has not claimed ITC on such

car.
C

4. Which one of the following is/are correct? (b) When a principal makes supplies to his agent
(a) Currency held for its numismatic value falls who is also registered under GST and is
under Goods. situated within the same State and the invoice
(b) Currency held for its numismatic value doesn’t for further supply is issued by the agent in his
fall under Goods. name.
(c) Money shall include currency held for its (c) When the Head Office makes a supply of
numismatic value. services to its own branch outside the State.
(d) Both a & c (d) When a person imports services without
consideration for the purposes of his business
5. Activities related to the use of money or its from his elder son living outside India.
conversion by cash or any other mode by
charging a separate consideration is 9. Mr. James Bond is a registered person under
Services? GST in the State of Maharashtra who sells
(a) False. footwear to his customers locally within the
(b) True. same State. He has been appointed as an
agent by M/s. Toto Shoes Ltd., a company
CA Ramesh Soni 2.36
 Supply - MCQ
registered under GST in the State of 12. Mr. Venkat hired a professional firm based
Karnataka. During a financial year, M/s. Toto in UK to receive the legal consultancy
Shoes Ltd., sends taxable goods worth Rs services for his family dispute. The services
5.00 crore from its Bengaluru store to Mr. received by Mr. Venkat ______ in case such
James Bond who sells such goods for Rs 5.00 services are received by Mr. Venkat
crore by raising invoices using the GSTIN of (I) free of cost; or
M/s. Toto Shoes Ltd. Mr. James Bond (II) for a consideration of US$ 1,000.
receives a commission of Rs 60.00 lakh from (a) (I) amount to supply; (II) amount to supply
M/s. Toto Shoes (P) Ltd., during the said (b) (I) do not amount to supply; (II) amount to
financial year. supply
Compute the value of supply of Toto Shoes (c) (I) amount to supply; (II) do not amount to
(P) Ltd. and Mr. James Bond for the FY. supply
(a) M/s. Toto Shoes (P) Ltd.: Nil and James Bond: (d) (I) do not amount to supply; (II) do not
Rs 5.6 crore amount to supply
(b) M/s. Toto Shoes (P) Ltd.: Rs 5 crore and James
Bond: Rs 5.6 crore

I
(c) M/s. Toto Shoes (P) Ltd.: Rs 5 crore and James 13. Which of the following statements is true

N
Bond: Rs 60 lakh under GST law?
(d) None of the above (a) Grand-parents are never considered as

SO
related persons to their grand-son/grand-
10. Which of the following is not a supply under daughter
the CGST Act, 2017? (b) Grand-parents are always considered as
(a) Goods supplied free of cost by X & Sons to its H related persons to their grand-son/grand-
agent for further supply to customers at Rs. daughter
5,000. (c) Grand-parents are considered as related
ES
(b) Importation of accounting services (for persons to their grand-son/grand-daughter
business purposes) free of cost from a only if they are wholly dependent on their
dependent father residing in the US. grand-son/grand-daughter
M

(c) An expensive watch gifted to an employee for (d) Grand-parents are considered as related
Rs. 50,000. persons to their grand-son/grand-daughter
A

(d) A machinery disposed off free of cost on which only if they are not dependent on their grand-
input tax credit has been availed. son/grand-daughter.
R

11. Which of the following services received, in Section 7(1A): Activities shall be Supply of
the course or furtherance of business, goods or Supply of services
A

without consideration amount to supply?

(i) Import of services by a person in India 14. Which of the following activities/
C

from his son well-settled in USA transactions qualify as supply of goods?

(ii) Import of services by a person in India (a) Dhruvtara Electronics supplies washing
from his brother well-settled in machines to its customers.
Germany (b) Bigbang Steels Ltd. supplies a machinery on
(iii) Import of services by a person in India rent to Jigayasa Manufacturers.
from his brother (wholly dependent on (c) Larsen Technicians given by Deendayal
such person in India) in France Automobiles on job work basis. retreads the
(iv) Import of services by a person in India tyres
from his daughter (wholly dependent (d) Vigyaan Technologies develops a customized
on such person in India) in Russia software for a business school.
(a) i, iii and iv
(b) ii, iii and iv 15. Assuming that all the activities given below
(c) ii and iii are undertaken for a consideration, state
(d) i and ii which of the following is not a supply of
service?
(a) Renting of commercial office complex
CA Ramesh Soni 2.37
 Supply - MCQ
(b) An employee agreeing to not work for the actionable claims.
competitor organization after leaving the (d) All of the above
current employment
(c) Repairing of mobile phone Section 8: Tax liability on composite and mixed
(d) Provision of services by an employee to the supplies
employer in the course of employment
20. Which of the following supplies are naturally
16. Which of the following activities is a supply bundled?
of services? (a) Rent deed executed for renting of two different
(a) Transfer of right in goods/ undivided share in floors of a building-one for residential and
goods without transfer of title in goods another for commercial purpose to same
(b) Transfer of title in goods person
(c) Transfer of title in goods under an agreement (b) Pack of watch, tie and belt
which stipulates that property shall pass at a (c) Package of canned food such as burger,
future date. chocolates, sweets, cake etc.
(d) All of the above (d) None of the above

I
N
Section 7(2)(a): Activities or transactions 21. A ____ supply comprising of two or more
specified in Schedule III supplies shall be treated as the supply of that

SO
particular supply that attracts the highest
17. Which of the following activities shall be rate of tax.
treated neither as supply of goods nor (a) Composite
supply of services? H (b) Mixed
(i) Permanent transfer of business assets (c) Both (a) and (b)
where input tax credit has been availed (d) None of the above
ES
on such assets
(ii) Temporary transfer of intellectual 22. There is a difference in taxability of goods
property right forming part of composite supply and mixed
M

(iii) Transportation of the deceased supply. Here are a few examples from which
(iv) Services by an employee to the you need to identify which is correct example
A

employer in the course of employment of composite supply and mixed supply.

(a) (i) & (iii) (i) Mr. A buys a car and purchases the
R

(b) (ii) & (iv) warranty and maintenance of the car by

(c) (i) & (ii) paying a nominal amount. Car, warranty
(d) (iii) & (iv) and maintenance here are a mixed
A

supply.
18. Which of the following activities are (ii) Mr. A buys a car and purchases the
C

considered neither as supply of goods nor warranty and maintenance of the car by
supply of services? paying a nominal amount. Car, warranty
(a) Inter- State movement of trucks between and maintenance here are a composite
distinct persons for repairs and maintenance. supply.
(b) Grant of mining rights by the Governments (iii) Mrs. A buys a microwave oven and some
to businesses. utensils for use in the microwave oven.
(c) Services provided by an employer to the Both microwave ovens and utensils are
employee. sold at a single price. Microwave oven
(d) Lottery. and its utensils here are a mixed supply.
(iv) Mrs. A buys chocolates, juices and
19. Which of the following activities is outside biscuits from a shop. All items have
the scope of supply & not taxable under GST? different prices. Chocolates, juices and
(a) Services by an employee to the employer in biscuits are a mixed supply.
the course of or in relation to his employment The correct examples of composite and
(b) Services of funeral mixed supply are: -
(c) Actionable claims, other than specified (a) i, iv
CA Ramesh Soni 2.38
 Supply - MCQ
(b) ii, iii (d) None of the above
(c) ii, iii, iv
(d) None of the above 25. Booking of Air Tickets with meal on board
during travel will be taxed as & at the rate
23. M/s. Vishu Megamart, operating a store of?
located and registered in Rajasthan, has (a) Composite supply & principal supply
come out with big discount offers at the time (b) Mixed supply & principal supply
of Diwali on various gift items. In order to (c) Composite supply & highest rate
attract more customers, it has decided to (d) Any of the above
supply a gift pack containing 5 packets of
Haldiram’s Namkeen (200 grams each) 26. Jaskaran supplies gift packages at Rs. 30
taxable @ 12%, 1 packet of Roasted Smoked each to its customers. Each package consists
Almonds (100 gram) taxable @ 18%, 1 of 2 chocolates, 2 fruit juice bottles and a
packet of Bournville Chocolate (50 mg) packet of toy balloons. Rates of GST
taxable @ 28% and 1 bottle of Real Fresh applicable on chocolates, fruit juice bottles
Juice (1 litre) taxable @ 18% in a single and toy balloons are 18%, 12% and 5%

I
basket for a single price of Rs. 1,000/-. respectively. Jaskaran is liable to pay GST

N
State the type of supply and the tax rate @________________.
applicable on the same. (a) 18%, 12% and 5% separately on value of

SO
(a) Composite supply; Tax rate of the principal supply of chocolates, fruit juice bottles and toy
item, i.e., Namkeen @18% balloons respectively
(b) Composite supply; Highest tax rate out of all (b) 18% on the price charged for the gift package
items, i.e., 28% applicable to chocolates H (c) 12% on the price charged for the gift package
(c) Mixed supply; Tax rate of principal item, i.e., (d) 5% on the price charged for the gift package
Namkeen @18%
ES
(d) Mixed supply; Highest tax rate out of all items, 27. Under GST Act a supply of assortment of
i.e., 28% applicable to chocolates sweets, chocolates and firecrackers packed
in a gift hamper is
M

24. What are the factors differentiating (a) Joint supply

composite supply & mixed supply? (b) Composite supply
A

(a) Nature of bundling i.e., artificial or natural (c) Mixed supply

(b) Existence of principal supply (d) Assorted supply
R

(c) Both of the above

Answers:
A

Qs Ans Reason
1. c Goods means every kind of movable property
C

• 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.
From the above definition it is clear than money and securities are not goods.
2. b 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.
Money means
 the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange,
letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance

CA Ramesh Soni 2.39

 Supply - MCQ
Qs Ans Reason
or any other instrument recognised by the RBI when used as a consideration to settle an
obligation or exchange with Indian legal tender of another denomination
 but shall not include any currency that is held for its numismatic value;
Applying the above definition:
(i) Ten-paisa coin having sale value of Rs. 100: Currency held for numismatic value is not
money and hence goods.
(ii) Shares of unlisted company: Shares are securities and hence not goods.
(iii) Lottery tickets: They are actionable claims and hence goods.
3. a Securities are neither goods nor services but explanation to definition of services provides that
“services” includes facilitating or arranging transactions in securities. Hence, if a stock broker
charges a commission/brokerage charges/portfolio maintenance charges /investment management
fees/demat charges those fall under services and chargeable to GST.
4. a Goods means every kind of movable property Other than money and Securities
Money means
 the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange,

I
letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance

N
or any other instrument recognised by the RBI when used as a consideration to settle an

SO
obligation or exchange with Indian legal tender of another denomination
 but shall not include any currency that is held for its numismatic value;
Since money does not include any currency that is held for its numismatic value, Currency held for
its numismatic value shall fall under goods.
5. b Services means anything other than goods, money and securities but includes activities related
H
to the use of money or its conversion by cash or any other mode for which a separate consideration
is charged.
ES
6. a (i) AB & Associates transfers stock of goods from its Mumbai branch to Kolkata depot
for sale of such goods at the depot: Supply between distinct person is a supply as per
schedule I.
M

(ii) Mr. Raghuveer, a dealer of air-conditioners permanently transfers the motor vehicle
free of cost. ITC on said motor vehicle was blocked and therefore, was not availed:
A

Since ITC is blocked & hence not availed, it is not a supply as per Para I schedule I.
(iii) Mrs. Riddhi, an employee of Sun Ltd., received gift from her employer on the occasion
R

of Diwali worth Rs. 21,000: Gift to employee up to Rs. 50,000 per annum per employee is
not a supply as per schedule I.
7. a As per Section 7(1)(c), activities specified in Schedule I made without a consideration shall be
A

treated as deemed supply.

C

8. a Section 7(1)(C), Schedule I Para I, Permanent transfer or disposal of business assets where
ITC has been availed on such assets qualifies as supply.
Since the supplier has not claimed ITC on such car, it does not qualify as supply.
9. c Section 7: Since the invoice for further supply of goods by James Bond is in the GSTN of Toto
Shoes ltd, the sales made by James bond shall be included in the turnover of Toto Shoes ltd.
Further, the commission earned by James Bond shall be included his turnover.
Hence, the VOS of Toto Shoes ltd = Rs 5 Crore since invoice was raised in his name & The turnover
of James Bond shall be the commission earned = Rs 60 lakhs.
10. c Gifts not exceeding Rs. 50,000 in value in a FY by an employer to an employee shall not be treated
as supply of goods or services or both. Therefore, there will be no GST Liability.
11. a Schedule I, Para 4.
Import of services by a person from a related person or from his establishments located outside
India, without consideration, in the course or furtherance of business
Related party definition under GST included family
Section 2(49): Family means, –
(i) the spouse and children of the person, and

CA Ramesh Soni 2.40

 Supply - MCQ
Qs Ans Reason
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
Applying the above:
(i) Import of services by a person in India from his son well-settled in USA: Son is a
related person, hence it’s a supply.
(ii) Import of services by a person in India from his brother well-settled in Germany:
Brother well-settled in Germany is not a related person, hence it is not a supply.
(iii) Import of services by a person in India from his brother (wholly dependent on such
person in India) in France: Dependent brother is a related person, hence it’s a supply.
(iv) Import of services by a person in India from his daughter (wholly dependent on such
person in India) in Russia: Daughter is a related person, hence supply.
12. b (I) Importation of service free of cost does not amount to supply under schedule I para 4;
(II) Importation of service for a consideration amounts to supply under section 7(1)(b).
13. c Schedule I, Para 4.
Related party definition under GST included family

I
Section 2(49): Family means, –

N
(i) the spouse and children of the person, and

SO
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
Hence Grand-parents are considered as related persons to their grand-son/grand-daughter only if
they are wholly dependent on their grand-son/grand-daughter
14. a (a) Dhruvtara Electronics supplies washing machines to its customers - Supply of goods
H
(b) Bigbang Steels Ltd. supplies a machinery on rent to Jigayasa Manufacturers – Renting
i.e. giving right to use is a supply of service.
ES
(c) Larsen Technicians given by Deendayal Automobiles on job work basis. retreads the
tyres – Job work is a supply of service.
(d) Vigyaan Technologies develops a customized software for a business school –
M

Customising software is a supply of Service.

15. d (a) Renting of commercial office complex: as per Schedule II para 2, letting out of building
A

including a commercial, industrial or residential complex is a supply of service.

(b) An employee agreeing to not work for the competitor organization after leaving the
R

current employment: as per para 5(e) of schedule II, not to do/refrain from doing something
is a supply of service.
(c) Repairing of mobile phone: as per para 5(e) of schedule II, to do an act is a supply of service.
A

(d) Provision of services by an employee to the employer in the course of employment:

C

As per schedule III, It’s neither supply of goods not supply of service.
16. a As per Schedule II any transfer of right in goods/of undivided share in goods without transfer of
title thereof, is a supply of services.
17. d (i) Permanent transfer of business assets where ITC has been availed on such assets:
It’s a supply, Supply of goods
(ii) Temporary transfer of intellectual property right: It’s a supply, Supply of service.
(iii) Transportation of the deceased: Section 7(2)(a) read with schedule III: neither as supply
of goods nor supply of services.
(iv) Services by an employee to the employer in the course of employment: Section 7(2)(a)
read with schedule III: neither as supply of goods nor supply of services.
18. a (a) Inter- State movement of trucks between distinct persons for repairs and
maintenance – it is considered as neither supply of goods nor supply of service as per circular.
(b) Grant of mining rights by the Governments to businesses – activity will be considered as
a supply.
(c) Services provided by an employer to the employee – activity will be considered as supply.
(d) Lottery: activity of selling lottery is a supply.

CA Ramesh Soni 2.41

 Supply - MCQ
Qs Ans Reason
19. d Schedule III specifies activities or transaction that shall be treated as neither supply of goods
nor supply of services
20. d None of the above are naturally bundled, Naturally bundled are normally advertised as a
package, different elements are not available separately and different elements are integral to one
overall supply.
21. b Mixed supply means two or more individual supplies of goods or services, made in conjunction
with each other for a single price. It shall be treated as supply of that particular supply which
attracts the highest rate of tax.
22. b (i) Mr. A buys a car and purchases the warranty and maintenance of the car by paying a nominal
amount. Car, warranty and maintenance here are a mixed supply – it’s a composite supply.
(ii) Mr. A buys a car and purchases the warranty and maintenance of the car by paying a nominal
amount. Car, warranty and maintenance here are a composite supply – True, it’s a composite
supply.
(iii) Mrs. A buys a microwave oven and some utensils for use in the microwave oven. Both
microwave ovens and utensils are sold at a single price. Microwave oven and its utensils here

I
are a mixed supply – It’s a mixed supply individual supplies are supplied for a since

N
supplied for a single price.

SO
(iv) Mrs. A buys chocolates, juices and biscuits from a shop. All items have different prices.
Chocolates, juices and biscuits are a mixed supply – Its neither mixed nor composite.
23. d Section 8: It is a mixed supply; It shall be treated as supply of that particular supply which attracts
the highest rate of tax.
24. c Composite supply comprises two or more taxable supplies, naturally bundled and supplied in
H
conjunction, one of which is a principal supply.
25. a It is a composite supply and taxable at the rate of principal supply.
ES
26. b It is a mixed supply. Mixed supply means two or more individual supplies of goods or services,
made in conjunction with each other for a single price. It shall be treated as supply of that particular
supply which attracts the highest rate of tax.
M

27. c It is a mixed supply. Mixed supply means two or more individual supplies of goods or services,
made in conjunction with each other for a single price. It shall be treated as supply of that particular
A

supply which attracts the highest rate of tax.

R
A
C

CA Ramesh Soni 2.42

 Charge of GST
3. Charge of GST

Section 9 of the CGST act: Levy & collection of CGST

Section 9 is the charging provision of the CGST Act. It provides the maximum rate of tax that can be
levied on supplies leviable to tax under this law, the manner of collection of tax & the person responsible
for paying such tax.

Section 9(1): CGST levied on Intra-state supply of g/s/b (except AL) on value (u/s 15) @ max
20%

Subject to the provisions of sub-section (2),

 there shall be levied a tax called the CGST
 on all intra-State supplies
 of goods or services or both,
 except on the supply of alcoholic liquor for human consumption,
 on the value determined under section 15
 at such rates, not exceeding 20%,

I
 as may be notified by the Government on the recommendations of the Council (NG-RC)

N
 collected in such manner as may be prescribed
 and shall be paid by the taxable person.

SO
Notification no. 1/2017, 11/2017-Central Tax (Rate): Notifying the rates applicable.

Rates presently notified are 0%, 0.125%, 1.5%, 2.5%, 6%, 9% and 14%
H
Section 9(2): CGST on 5 specified petro products (HPMAN) to be levied from notified date
ES

The central tax

 on the supply of
M

 High speed diesel, Petroleum crude, Motor spirit (commonly known as petrol), Aviation turbine
fuel, Natural gas and
 shall be levied with effect from such date as may be notified by the Government on the
A

recommendations of the Council (NG-RC)

R

Author’s comment:
Presently central excise duty and VAT/CST is levied on Manufacture and sale of Petroleum products;
A

however, we can expect that in future GST may be levied on recommendation of GST council.
C

Reverse charge

Section 2(98): Reverse Charge means the liability to pay tax by the recipient of supply of g/s/b instead
of the supplier of such g/s/b.
 under u/s 9(3)/ (4), or
 under u/s 5(3)/ (4) of the IGST act.

Section 9(3): Reverse charge on notified goods & services

The Government may, on the recommendations of the Council, by notification,

 specify categories of supply of goods or services or both,
 the tax on which shall be paid on RCM by the recipient of such g/s/b and
 all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax
in relation to the supply of such goods or services or both.

Notified categories of goods on which 100% GST to be paid by recipient: (NA for CA Inter)

CA Ramesh Soni 3.1

 Charge of GST
Notified categories of services on which 100% GST to be paid by recipient of services
[Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017]

Category of Supply of Services Supplier of service Recipient (liable)

1 Supply of Services by a goods transport agency Goods transport Person mention
(not paid 6% GST) agency under (a) to (g),
(a) Any factory registered under by the but located in
Factories Act, 1948 taxable territory
(b) Any society registered under the Societies (TT).
Registration Act, 1860/any other law for the
time being in force
(c) Any co-operative society established
by/under any law
(d) Any person registered under GST act
(e) Any body-corporate established by/under
any law;
(f) Any partnership firm (registered/
unregistered) including AOPs;

I
(g) Any Casual taxable person

N
However, RCM not applicable if:
Services provided by a GTA to—

SO
(a) a Department/Establishment of CG/SG/UT;
(b) Local authority; or
(c) Govt agencies,
which has taken registration under the CGST act only for the purpose of deducting tax under
H
section 51 & not for making a taxable supply of goods or services.
ES

Further, nothing contained in this entry shall apply where, -

i. the supplier has taken registration under the CGST Act, 2017 and exercised the option to pay
tax on the services of GTA in relation to transport of goods supplied by him under forward
M

charge; and
ii. the supplier has issued a tax invoice to the recipient charging Central Tax at the applicable
A

rates and has made a declaration on such invoice issued by him.

Recipient of GTA service – The person who pays the freight i.e., either the consignor/consignee.
R

GTA means any person who provides services in relation to transport of goods by road and issues
consignment note, by whatever name called (Consignment note means bilty)
A

Exemptions with respect to GTA services

C

Entry No. 21A: Services provided by a GTA to an unregistered person

Services provided by a GTA to an unregistered person, including an unregistered casual
taxable person, other than the following recipients:
(a) any factory/ registered under or governed by the Factories Act, 1948; or
(b) any Society registered under the Societies Registration Act, 1860/under any other law
(c) any Co-operative Society established by or under any law for the time being in force; or
(d) any body corporate established, by or under any law for the time being in force; or
(e) any partnership firm whether registered or not under any law including association of persons;
(f) any CTP registered under the CGST Act or the IGST Act or the SGST Act or the UTGST Act
are exempt.

Entry no. 21B: Services by GTA to TDS Deductors

Services provided by a GTA, by way of transport of goods in a goods carriage, to, —
(a) a department or Establishment of the CG/SG/UT; or
(b) local authority; or
(c) Governmental agencies,

CA Ramesh Soni 3.2

 Charge of GST
Category of Supply of Services Supplier of service Recipient (liable)
which has taken registration for the purpose of deducting tax u/s 51 & not for making a taxable supply
of goods/services.

2 Services provided by an individual advocate Individual advocate/ Any business entity

including a senior advocate/firm of advocates by a senior advocate/ located in the
way of legal services, directly or indirectly. firm of advocates. taxable territory.

 Legal service means any service provided in relation to advice, consultancy/ assistance in any
branch of law, in any manner & includes representational services before any court, tribunal or
authority.
 LLP formed & registered under the provisions of the LLP Act, 2008 shall also be considered as a
partnership firm or a firm.
 The business entity located in the taxable territory who is litigant, applicant or petitioner, as the
case may be, shall be treated as the person who receives the legal services for the purpose of this
notification;

Exemption to legal services

I
N
Entry no. 45: Extract
a partnership firm of advocates or an individual as an advocate other than a senior advocate,

SO
by way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with an ATO up such amount in the PFY as makes it eligible for exemption from
H
registration under the CGST act; or
(iv) the Central Government, State Government, Union territory, local authority, Governmental
ES

Authority or Government Entity

a senior advocate by way of legal services to-
(i) any person other than a business entity; or
(ii) a business entity with an ATO up such amount in the preceding financial year as makes it eligible
M

for exemption from registration under the CGST act; or

(iii) the Central Government, State Government, Union territory, local authority, Governmental
A

Authority or Government Entity

R

3 Services supplied An arbitral tribunal Any business entity

 by an arbitral tribunal located in TT
A

 to a business entity
C

Exemption entry no. 45

Services provided by an arbitral tribunal to –

(i) any person other than a business entity; or
(ii) a business entity with an ATO up such amount in the preceding financial year as makes
it eligible for exemption from registration under the CGST act; or
(iii) the Central Government, State Government, Union territory, local authority, Governmental
Authority or Government Entity.

4 Services provided Any person Any Body corporate

 by way of sponsorship or partnership firm
 to any body corporate or partnership firm. located in TT
Example:
 Sponsorship services by Shyam to Ram ltd – RCM
 Sponsorship services by Shyam ltd to Ram – FCM

5 Services supplied by the CG, SG, UT, LA to a BE CG, SG, UT, LA Any business entity

CA Ramesh Soni 3.3

 Charge of GST
Category of Supply of Services Supplier of service Recipient (liable)
excluding- located in TT
(1) renting of IMP, and
(2) services specified below-
(i) Services by Department of Posts and the
Ministry of Railways (Indian Railways);
(ii) Services in relation to an aircraft/a
vessel, inside/outside the precincts of a
port/an airport;
(iii)Transport of goods or passengers.
5A Services supplied by the Central Government CG, SG, UT or LA Any person
[excluding the Ministry of Railways (Indian registered under the
Railways)], State Government, Union territory CGST act 2017
or local authority
 by way of renting of immovable property
 to a person registered under the CGST act
2017
Explanation: Provisions of this notification, in so far as they apply to the Central Government and

I
State Governments, shall also apply to the Parliament and State Legislatures, Courts and Tribunals.

N
5A Service by way of renting of residential dwelling Any person Any registered

SO
A to a registered person. Person
6 Services supplied A Director (non- The Co/Body
 by a director of a Company/ Body Corporate executive director) Corporate in TT
 to the said company or the body corporate
H
Examples:
 Ram is a director (non-executive director), charges sitting fees to company – RCM, CO liable
ES

 Ram is a director (Executive director) – out of supply of supply, since he is an employee.

7 Services supplied by an Insurance agent An insurance agent Any person carrying

M

 to any person carrying on insurance on insurance

business business in TT- life/
A

general insurance
8 Services supplied by a recovery agent A recovery agent Banking Co/
R

 to Banking Co/Financial institution/NBFC in Financial institution/

TT NBFC in TT
9 Supply of services by a music composer, Music composer, Music company,
A

photographer, artist or the like by way of photographer, artist, producer or the like,
transfer or permitting the use or enjoyment of a or the like located in the
C

copyright covered under section 13(1)(a) of the taxable

Copyright Act, 1957 relating to original dramatic, territory.
musical or artistic works to a, music company,
producer or the like.
9A Supply of services by an author by way of Author Publisher located in
transfer or permitting the use or enjoyment the taxable territory:
of a copyright covered u/s 13(1)(a) of the
Copyright Act, 1957 relating to original literary
works to a publisher.
However, an author can choose to pay tax under forward charge if-
(i) he has taken registration under the CGST Act and filed a declaration, in the prescribed form, that he
exercises the option to pay CGST on the said service under forward charge in accordance with
section 9(1) and to comply with all the provisions as they apply to a person liable for paying the tax
in relation to the supply of any goods and/or services and that he shall not withdraw the said option
within a period of 1 year from the date of exercising such option;
(ii) he makes a declaration on the invoice issued by him to the publisher.

CA Ramesh Soni 3.4

 Charge of GST
Category of Supply of Services Supplier of service Recipient (liable)
10 Supply of services Members RBI
 by members of overseeing committee
 to Reserve Bank of India
11 Services supplied Individual DSAs other A banking
 by individual Direct Selling Agents (DSAs) than a body corporate, company/a NBFC in
other than a body corporate, partnership/LLP partnership or LLP. TT
 to bank or NBFCs.
Note: RCM is applicable only if DSA is an Individual, and hence bank will be liable to pay. However, if
DSA is another entity (co/BC/Firm) FCM will be applicable.

12 Services provided Business facilitator A banking company,

 by business facilitator (BF) (BF) located in the TT.
 to a banking company
13 Services provided An agent of business A business
 by an agent of business correspondent correspondent (BC) correspondent,
 to business correspondent (BC) located in the TT
14 Services provided by way of supply of security Any person except a A registered person,

I
personnel to a RP: body corporate located in the TT.

N
Exception: this entry shall not apply to, —
(i) a department or Establishment of the

SO
CG/SG/UT; or LA/Governmental agencies;
registered as TDS deductor & not for making
a taxable supply of g/s; or
(ii) A RP paying tax under section 10
H
(composition supplier)
15 Services provided by way of renting of a motor Any person other than Any body corporate
ES

vehicle designed to carry passengers where the a body corporate, who located in the
cost of fuel is included in the consideration supplies the service to taxable territory.
charged from the service recipient, provided to a a body corporate and
M

body corporate. does not issue an

invoice charging
central tax at the rate
A

of 6 % (CGST) to the
R

service recipient
Author’s comment: There are two rates applicable on the service of renting of vehicles,
• 5% with limited ITC (ITC only of input service in the same line of business) and
A

• 12% with full ITC.

C

RCM shall be applicable only, If the supplier fulfils all the following conditions: –
(a) Supplier of service is other than a body-corporate;
(b) does not issue an invoice charging GST @12% from the service recipient; and
(c) supplies the service to a body corporate.

16 Services of lending of securities under Securities Lender i.e., a person Borrower i.e., a
Lending Scheme, 1997 ("Scheme") of Securities who deposits the person who borrows
and Exchange Board of India ("SEBI"), as securities registered in the securities under
amended. his name or in the the Scheme through
name of any other an approved
person duly authorised intermediary of
on his behalf with an SEBI.
approved intermediary
for the purpose of
lending under the
Scheme of SEBI

CA Ramesh Soni 3.5

 Charge of GST
Circular: Situations in which corporate recipients are liable to pay GST on renting of motor
vehicles designed to carry passengers

Issue: Doubts have been raised whether RCM is applicable on:

(i) service of renting of motor vehicle designed to carry passengers
or
(ii) service of transportation of passengers.

It is clarified that there is a clear distinction between the two services which is as under:
A. The two services fall under two different headings in the Tariff.
B.
(i) Services of renting of motor vehicles designed to carry passengers covers:
 renting of motor vehicle
 for transport of passengers
 for a period of time
 where the renter defines how and when the vehicles will be operated, determining schedules,
routes and other operational considerations.
(ii) ‘Passenger transport services’ covers passenger transport services over pre-determined routes on

I
pre-determined schedules.

N
Crux:

SO
 Where the body corporate hires the motor vehicle (for transport of employees etc.) for a period of
time, during which the motor vehicle shall be at the disposal of the body corporate, the service would
fall under ‘services of renting of motor vehicles designed to carry passengers’, and the body corporate
shall be liable to pay GST on the same under RCM.
H
 Where the body corporate avails the passenger transport service for specific journeys or voyages and
does not take vehicle on rent for any particular period of time, the service would fall under ‘passenger
ES

transport services’ and the body corporate shall not be liable to pay GST on the same under RCM.

Circular No: 140/10/2020 – GST dated 10.06.20 - Clarification in respect of levy of GST on
M

Director’s remuneration

Issue: Whether the remuneration paid by companies to their directors falls under the ambit of entry in
A

Schedule III of the CGST Act i.e., “services by an employee to the employer in the course of or in relation
R

to his employment” or whether the same are liable to be taxed in terms of notification No. 13/2017 –
Central Tax (Rate) dated 28.06.2017 (entry no.6).
A

The issue of remuneration to directors has been examined under following two different
categories:
C

(i) leviability of GST on remuneration paid by companies to the independent directors defined in terms
of section 149(6) of the Companies Act, 2013 or those directors who are not the employees of the
said company; and
(ii) leviability of GST on remuneration paid by companies to the whole-time directors including managing
director who are employees of the said company.

Clarification:
Independent Director
- Not an employee, GST payable by Company under RCM.
Whole time director/Whole time director
- as per definition under companies’ act, he may be a person who is not an employee
- If Director is working in the capacity of an employee + amount accounted as salary & TDS u/s 192 of
IT act is deducted: then the same is falling in schedule III – Not a supply, hence no GST.
- If Director is not working in the capacity of an employee + amount paid is in the nature of
professional fees and not salary and TDS u/s 194J of the IT Act is deducted – Supply, GST payable by
co. under RCM.

CA Ramesh Soni 3.6

 Charge of GST
Clarification on Taxability of services supplied by director of a company in his personal
capacity such as renting of immovable property to the company/body corporate.

Issue: Whether services supplied by director of a company in his personal capacity such as
renting of immovable property to the company or body corporate are subject to Reverse
Charge mechanism:

Clarification: Services supplied by a director of a company or body corporate to the company or body
corporate in his private or personal capacity such as services supplied by way of renting of immovable
property to the company or body corporate are not taxable under RCM. Only those services supplied by
director of company or body corporate, which are supplied by him as or in the capacity of director of that
company or body corporate shall be taxable under RCM in the hands of the company or body corporate.

Crux: Only those services supplied by director in the capacity of director shall be taxable under RCM &
other services supplied in his private/personal capacity are not taxable under RCM.

Section 9(4): RCM on specified class of registered person w.r.t specified supplies from
unregistered supplier.

I
N
The Government may, on the recommendations of the Council, by notification, specify a class of
registered persons who shall, in respect of supply of specified categories of goods or services or both

SO
received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such
supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he
is the person liable for paying the tax in relation to such supply of goods or services or both.
SN Category of supply of goods and services Supplier Recipient
H
1 Supply of such g/s/b [other than services by way of grant TDR, long Supplier of Promotor
term lease of land (against upfront payment in the form of premium, goods/service
ES

salami, development charges etc.) or FSI (incl. additional FSI)] which

constitute the shortfall from the minimum value of g/s/b required to
be purchased by a promoter for construction of project, in a FY (or
part of the FY till the date of issuance of CC/FO, whichever is earlier)
M

2 Cement falling in Chapter Heading 2523 in the First Schedule Cement Promoter
to the Customs Tariff Act, 1975
A

3 Capital goods falling under any chapter in the first schedule to the Supplier of Promotor
Customs Tariff Act, 1975 supplied to a promoter for construction of a CGs
R

project on which tax is payable or paid at the rate prescribed.

A

Section 2(44): Electronic commerce

C

Electronic commerce means the supply of goods or services or both, including digital products over
digital or electronic network;

Section 2(45): Electronic commerce operator (ECO)

Electronic commerce operator means any person who owns, operates or manages digital or electronic
facility or platform for electronic commerce;

Section 9(5): Notified category of services on which tax payable by ECO if such services
provided through it (ECO).

The Government may, on the recommendations of the Council, by notification, specify categories of
services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such
services are supplied through it, and all the provisions of this Act shall apply to such ECO as if he is the
supplier liable for paying the tax in relation to the supply of such services:

CA Ramesh Soni 3.7

 Charge of GST
Proviso:
ECO has physical presence in taxable territory (TT) ECO liable to pay tax
ECO does not have physical presence in TT Any Person representing such ECO (for any
purpose) in TT liable to pay
ECO has neither physical presence not any ECO shall appoint a person in TT (for tax
representative in TT purpose) & such person shall be liable

NNo. 17/2017-CT(R): Notified categories of services supplied through ECO

(i) Services by way of transportation of passengers by a

- radio taxi (which is in two-way communication with central office through GPS/GPRS)
- motor cab (MV to carry < 6 passengers excl. driver on hire/reward)
- maxi cab (MV to carry > 6 < 12 passengers excl. driver on hire/reward)
- motor cycle, or any other motor vehicle except omnibus;

 Radio taxi: means a taxi including a radio cab, by whatever name called, which is in two- way
radio communication with a central control office and is enabled for tracking using Global
Positioning System (GPS) or General Packet Radio Service (GPRS).

I
 Maxi cab: means any motor vehicle constructed or adapted to carry more than 6 passengers,

N
but not more than 12 passengers, excluding the driver, for hire or reward.
 Motor cab: means any motor vehicle constructed or adapted to carry not more than 6

SO
passengers excluding the driver for hire or reward.
 Motor car: means any motor vehicle other than a transport vehicle, omnibus, road-roller,
tractor, motor cycle or invalid carriage.
 Omnibus: means any motor vehicle constructed or adapted to carry more than 6 persons
H
excluding the driver.
ES

(ia) Services by way of transportation of passengers by an omnibus except where the person
supplying such service through electronic commerce operator is a company.
M

(ii) Services by way of providing accommodation

- In hotels, inns, guest houses, clubs, campsites/other commercial places
A

- meant for residential or lodging purposes,

Except where the person supplying such service through ECO is liable for registration u/s 22(1).
R

(iii) Services by way of house-keeping

-
A

Such as plumbing, carpentering etc.,

Except where the person supplying such service through ECO is liable for registration u/s 22(1).
C

(iv) Supply of restaurant service other than the services supplied by restaurant, eating joints
etc. located at specified premises.
Explanation: Specified premises means premises providing hotel accommodation service having
declared tariff of any unit of accommodation above Rs. 7,500 per unit per day or equivalent.

Circular: GST on service supplied by restaurants through e-commerce operators

Sl Issue Clarification
No
1 Would ECOs have to still collect TCS in ECOs will no longer be required to collect TCS and
compliance with section 52 of the CGST Act, file Form GSTR-8 in respect of restaurant services
2017? on which it pays tax in terms of section 9(5).
2 Would ECOs have to mandatorily take a ECO is not required to take separate registration
separate registration w.r.t supply of restaurant for payment of tax on restaurant service u/s 9(5).
service [notified under 9(5)] through them
even though they are registered to pay GST
on services on their own account?
CA Ramesh Soni 3.8
 Charge of GST
Sl Issue Clarification
No
3 Would the ECOs be liable to pay tax on supply ECOs will be liable to pay GST on supplies made
of restaurant service made by unregistered by unregistered restaurant.
business entities?
4 What would be the aggregate turnover of ATO of Restaurant will include supplies made`
person supplying ‘restaurant service’ through through ECO.
ECOs?
5 Can ECO utilize its Input Tax Credit to pay tax The liability of payment of tax by ECO as per
w.r.t ‘restaurant service’ supplied through the section 9(5) shall be discharged in cash.
ECO?
6 Would supply of goods or services other than On other supplies (other than restaurant services
‘restaurant service’ through ECOs be taxed at made through ECO) GST will continue to be billed,
5% without ITC? collected and deposited in the same manner as is
being done at present. ECO will deposit TCS on
such supplies.
7 Would ‘restaurant service’ and goods or Considering that liability to pay GST on supplies
services other than restaurant service sold by other than ‘restaurant service’ through the ECO,

I
a restaurant to a customer under the same and other compliances under the Act, including

N
order be billed differently? Who shall be liable issuance of invoice to customer, continues to lie
for raising invoices in such cases? with the respective suppliers (and ECOs being

SO
liable only to collect tax at source (TCS) on such
supplies), it is advisable that ECO raises separate
bill on restaurant service in such cases where ECO
provides other supplies to a customer under the
H
same order.
8 Who will issue invoice in respect of restaurant The invoice in respect of restaurant service
ES

service supplied through ECO - whether by the supplied through ECO under section 9(5) will be
restaurant or by the ECO? issued by ECO.
M

Section 5 of the IGST act: Levy and Collection of IGST

A

Section 5(1): IGST is levied on Inter-state supply of g/s/b (except AL) @ max 40%
R

Subject to the provisions of sub-section (2), there shall be levied a tax called the IGST
- on all inter-State supplies of goods or services or both,
A

- except on the supply of alcoholic liquor for human consumption,

- on the value determined under section 15 of the CGST Act and
C

- at such rates, not exceeding forty per cent,

- as may be notified by the Government on the recommendations of the Council and
- collected in such manner as may be prescribed and shall be paid by the taxable person:
Author’s comments: Difference from CGST: Intra-state – Interstate, rate of tax-20% - 40%

Section 5(2): IGST on 5 petroleum products (HPMAN)

Section 5(3): Reverse charge under IGST on notified goods & services

Any service supplied by any person who is located in a non-taxable territory to any person located in the
taxable territory. Thus, in case of import of service, tax is payable by the person importing such service.

Section 5(4): RCM on specified class of RPs w.r.t specified supplies from unregistered supplier

Section 5(5): Notified category of services on which tax payable by ECO.

CA Ramesh Soni 3.9

 Charge of GST – Q & A
3. Charge of GST – Q & A

Section 9(3) of CGST/5(3) of IGST act: RCM on specified Goods/Services

Services provided by CG/SG/UT/LA

1.
"Under the GST law, taxes on taxable services supplied by the Central Government or the State
Government to a business entity in India are payable by recipient of services".
State the exceptions of the above statement.
(CA Inter May 22 – 5 marks - amended)
Answer:
Tax on following services supplied by the Central Government or State Government to a
business entity in India is payable by the recipient of services:
(1) services of renting of immovable property provided to an unregistered business entity.
(2) services by the Department of Posts and the Ministry of Railways (Indian Railways);
(3) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport.
(4) services of transport of goods or passengers.

I
N
Goods Transport Services (GTA) & Author’s services of permitting use of copyright

SO
2.
Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm,
which is not registered under GST. Determine the person liable to pay tax in this case.
Note: GTA does not exercise the option to itself pay GST.
H
(ICAI study material-amended)
Answer:
ES

In case of services provided by Goods Transport Agency in respect of transportation of goods by road to,
inter alia, any partnership firm whether registered or not under any law; GST is liable to be paid by such
partnership firm. Therefore, in the given case, Kapil & Co. is liable to pay GST under reverse charge.
M

3.
'Veer Transport', a registered Goods Transport Agency (GTA) paying IGST @ 12%, transported
A

goods by road of Dilip & Company, a sole proprietary firm (other than specified person) which
R

is not registered under GST or any other Law.

Assume that recipient is located in taxable territory. Ignore the aggregate turnover and
exemption.
A

(CA Inter Nov 20)

Answer:
C

In case of a GTA service, where GST is payable @ 5% and recipient is one of the specified recipients, tax
is payable by the recipient of service under reverse charge.
However, where GST is payable @ 12%, tax is payable under forward charge by the supplier of service.
Therefore, in the given case, tax is payable under forward charge by "Veer Transport", a registered GTA.
Note: In the given case, since the recipient of service is other than specified recipient, i.e., unregistered
sole proprietorship firm, GTA service is exempt from GST. However, in the above answer, the said
exemption has been ignored since the question specifically requires the students to ignore the
exemptions, if any, available.

Author

4.
Mr. Kamal Jain, an unregistered famous author, received Rs. 20 lakh of consideration from PQR
Publications Ltd. for supply of services by way of temporary transfer of a copyright covered
under section 13(1)(a) of the Copyright Act, 1957 relating to original literary works of his new
book. Also, state if Kamal has an option to pay GST under FCM.
Assume that recipient is located in taxable territory. Ignore the aggregate turnover and

CA Ramesh Soni 3.10

 Charge of GST – Q & A
exemption.
(CA Inter Nov 20)
Answer:
Supply of services by an author by way of transfer of a copyright covered under section 13(1)(a) of the
Copyright Act, 1957 relating to original literary works to a publisher located in the taxable territory is
taxable under reverse charge mechanism.
Thus, in the given case, the recipient of service, i.e., PQR Publications Ltd. is liable to pay GST. The tax
can be paid by the author under forward charge if the author is a registered person. Since in the given
case, the author is an unregistered person, the said option is not available to him.

5.
Mr. Anurag, a famous Author is engaged in supply of services by the 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 works to a publisher. Explain
in brief the conditions under which an Author can choose to pay tax under forward charge.
(CA Inter Jan 21)
Answer:
Mr. Anurag, can choose to pay tax under forward charge provided he fulfills the following conditions: -
(i) He has taken registration under the GST law.

I
N
(ii) He has filed a declaration, in the prescribed form, that he exercises the option to pay tax on the said
service under forward charge and, to comply with all the provisions of the GST law as they apply to a

SO
person liable for paying the tax in relation to the supply of any goods and/or services and that he
shall not withdraw the said option within a period of 1 year from the date of exercising such option.
(iii) He makes a declaration on the invoice issued by him in prescribed form to the publisher.
H
Sponsorship Services
ES

6.
Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP.
Determine the person liable to pay tax in this case.
(ICAI study material)
M

Answer:
In case of services provided by any person by way of sponsorship to any body corporate/partnership firm,
A

GST is liable to be paid under reverse charge by such body corporate/partnership firm located in the
taxable territory. Further, for the reverse charge purposes, Limited Liability Partnership formed and
R

registered under the provisions of the LLP Act, 2008 is also be considered as a partnership firm.
Therefore, in the given case, WE-WIN Cricket Academy is liable to pay GST under reverse charge.
A

7.
C

Panini Private Limited agrees to sponsor a sports event organized by Pink City Club in Jaipur.
Panini Private Limited has paid an amount of Rs. 50,00,000 for such sponsorship of the sports
event. Consequently, said event was named after the brand name of Panini Private Limited.
Examine who is the person liable to pay tax in the given case.
(ICAI study material)
Answer:
Reverse charge notification, provides that sponsorship services provided by any person to a body
corporate/partnership firm located in the taxable territory, shall be liable to GST under reverse charge.
In the present case, Pink City Club is the supplier of sponsorship services which is receiving the
consideration in the form of sponsorship fee of Rs. 5 lakhs from Panini Private Ltd, against the provision
of sponsorship service. Since the recipient of sponsorship services- Panini Private Limited is a body
corporate, the tax on said services is payable by the recipient - Panini Private Ltd, under reverse charge.

8.
State the person liable to pay GST in the following independent service provided:
M/s. Purohit Consultants, a partnership firm registered in Delhi as a regular tax payer, paid
sponsorship fees of Rs. 70,000 at a seminar organized by a private NGO (a partnership firm) in
Delhi.
CA Ramesh Soni 3.11
 Charge of GST – Q & A
(CA Inter May 23-RTP)
Answer:
In case of services provided by any person by way of sponsorship to any body corporate or partnership
firm, GST is liable to be paid under reverse charge by such body corporate or partnership firm located in
the taxable territory.
Since in the given case, sponsorship services are being provided by the private NGO to a partnership
firm – M/s. Purohit Consultants, GST is payable by Purohit Consultants on said services under reverse
charge.

Renting of Residential House

9.
State the person liable to pay GST in the following independent service provided:
Siddhi Builders, registered in Haryana, rented out 20 residential units owned by it in Sanskriti
Society to Rudra Technologies, an IT based firm registered in the State of Haryana, for
accommodation of its employees.
(CA Inter May 23-RTP)
Answer:
Services provided by way of renting of residential dwelling for use as residence is exempt from GST.

I
N
However, where the residential dwelling is rented to a registered person, said exemption is not available.
Further, tax on service provided by way of renting of residential dwelling to a registered person is payable

SO
by the recipient under reverse charge.
Therefore, in the given case, Rudra Technologies is liable to pay GST on the residential dwellings taken
on rent by it from Siddhi Builders, under reverse charge mechanism.
H
Securities lending Services
ES

10.
Rob Shareholding Ltd., an approved intermediary, has entered into a transaction wherein
certain securities were to be lent to Dhandhan Bank, under Securities Lending Scheme, 1997.
Dhandhan Bank shall pay specified lending fee against such lending of securities to it. Explain
M

the taxability of transactions involved in the Securities Lending Scheme, 1997.

(ICAI study material)
A

Answer:
Securities Lending Scheme, 1997 (hereafter referred to as SLS) facilitates the lending and borrowing of
R

securities. Securities are neither covered in the definition of goods nor covered in the definition of
services. Therefore, a transaction in securities which involves disposal of securities is not a supply in GST
A

and hence not taxable.

However, SLS doesn’t treat lending of securities as disposal of securities and therefore is not excluded
C

from the definition of services. The lending fee charged from the borrowers of securities has the character
of consideration and is taxable under GST. Apart from above, the activities of the intermediaries
facilitating lending and borrowing of securities for commission or fee are also taxable separately.

Director services

11.
Mr. Priyam, director of Sun Moon Company Private Limited, provided service to the company
for remuneration of Rs. 1,25,000. Briefly answer whether GST is applicable in the below
mentioned independent cases? If yes, who is liable to pay GST?
(i) Mr. Priyam is an independent director of Sun Moon Company Private Limited and not an
employee of the company.
(ii) Mr. Priyam is an executive director, i.e., an employee of Sun Moon Company Private
Limited. Out of total remuneration amounting to Rs. 1,25,000, Rs. 60,000 has been
declared as salaries in the books of Sun Moon Company Private Limited and subjected to
TDS under section 192 of the Income-Tax Act (IT Act). However, Rs. 65,000 has been
declared separately other than salaries in the Sun Moon Company Private Limited’s
accounts and subjected to TDS under section 194J of the IT Act as professional services.
CA Ramesh Soni 3.12
 Charge of GST – Q & A
(RTP May 21)
Answer:
(i) As per Para I of Schedule III of the CGST Act, services by an employee to the employer in the course
of or in relation to his employment are non-supplies, i.e., they are neither supply of goods nor supply
of services. Services provided by the independent directors who are not employees of the said
company to such company, in lieu of remuneration as the consideration for the said services, are
clearly outside the scope of Schedule III and are therefore taxable. Further, such remuneration paid
to the directors is taxable in hands of the company, on reverse charge basis. Thus, GST is applicable
in this case and Sun Moon Company Private ltd is liable to pay GST.
(ii) The part of director’s remuneration which is declared as salaries in the books of a company and
subjected to TDS under section 192 of the Income-tax Act (IT Act), is not taxable being consideration
for services by an employee to the employer in the course of or in relation to his employment in
terms of Schedule III.
Further, the part of employee director’s remuneration which is declared separately other than salaries
in the company’s accounts and subjected to TDS under section 194J of the IT Act as fees for
professional or technical services are treated as consideration for providing services which are
outside the scope of Schedule III and is therefore, taxable. The recipient of the said services i.e., the
company, is liable to discharge the applicable GST on it on reverse charge basis.
In lieu of the above provisions, Rs. 60,000 declared as salaries in the books of Sun Moon Company

I
N
Private Limited and subjected to TDS under section 192 of the Income-Tax Act (IT Act), is not
taxable being consideration for services by an employee to the employer in the course of or in

SO
relation to his employment in terms of Schedule III.
Further, Rs. 65,000 declared separately other than salaries in the Sun Moon Company Private
Limited’s accounts and subjected to TDS under section 194J of the IT Act as professional services is
treated as consideration for providing services which is outside the scope of Schedule III and is
H
therefore, taxable. The recipient of the said services i.e., the Sun Moon Company Private Limited, is
liable to discharge the applicable GST on it on reverse charge basis.
ES

12.
Arpan Singhania is a director in Narayan Limited. The company paid him the sitting fee
amounting to Rs. 25,000, for the month of January. Further, salary was paid to Arpan
M

Singhania amounting to Rs. 1.5 lakh for the month of January on which TDS was also deducted
as per applicable provisions under Income-tax law. Tapasya & Associates, in which Arpan
A

Singhania is a partner, supplied certain professional services to Narayan Limited in the month
of January for an amount of Rs. 2 lakhs. Discuss the person liable to pay tax in each of the
R

supplies involved in the given case.

A

Answer:
Sitting fee paid to director – As per reverse charge notification, tax on services supplied by a director
C

of a company/ body corporate to the said company/ body corporate, located in the taxable territory, is
payable under reverse charge. Hence, in the present case, the sitting fee amounting to Rs. 25,000,
payable to Arpan Singhania by Narayan Limited, is liable to GST under reverse charge and thus, recipient
of service - Narayan Limited – is liable to pay GST on the same.

Salary paid to director - As per Circular No.140/10/2020 GST dated 10.06.2020, the part of director’s
remuneration which is declared as salary in the books of a company and subjected to TDS under section
192 of the Income-tax Act, are not taxable being consideration for services by an employee to the
employer in the course of or in relation to his employment in terms of Schedule III. Therefore, in the
given case, the salary received by Arpan Singhania of Rs. 1.5 lakh is not liable to GST.

Services provided by Tapasya & Associates – Tapasya & Associates have rendered certain
professional services to Narayan Limited. The fact that Arpan Singhania is a partner in Tapasya &
Associates and a director in Narayan Limited does not have any impact on the taxability of the
professional services supplied by Tapasya & Associates to Narayan Limited. The professional services
provided by Tapasya & Associates to Narayan Limited are liable to GST under forward charge and thus,
supplier - Tapasya & Associates – is liable to pay GST on the same.

CA Ramesh Soni 3.13

 Charge of GST – Q & A
13.
Vivek Goyal, director of A2Z Pvt. Ltd., has received sitting fee amounting to Rs. 1 lakh from
A2Z Pvt. Ltd for attending the Board meetings. Who is the person liable to pay tax in this case?
(ICAI study material)
Answer:
GST on supply of services by director of a company to the said company located in the taxable territory is
payable on reverse charge basis.
Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., A2Z Pvt. Ltd.

Arbitral Tribunal, Sponsorship services & Renting of immovable property services by govt

14.
State person liable to pay GST in the following independent cases provided recipient is located
in the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Govt to a business entity.
(ICAI study material)

I
Answer:

N
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity
located in the taxable territory is payable under reverse charge, in the given case, GST is payable by

SO
the recipient - business entity.
(b) GST on sponsorship services provided by any person to any body corporate or partnership firm
located in the taxable territory is payable under reverse charge. Since in the given case, services
have been provided to an individual, reverse charge provisions will not be attracted. GST is payable
H
under forward charge by the supplier – company.
(c) GST on services supplied by Central Government [excluding ministry of railways(Indian Railways)],
ES

State Government, Union territory/ local authority by way of renting of immovable property to a
person registered under CGST Act, 2017 is payable under reverse charge. Therefore, in the given
case, GST is payable under reverse charge by the recipient – registered business entity
M

Advocate & Senior advocate services

A

15.
R

Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company having
turnover of Rs. 50 lakhs in preceding F. Y. Who is the person liable to pay tax in this case?
(ICAI study material)
A

Answer:
GST on legal services supplied by an advocate [Mr. Sushrut] to any business entity [M/s. Tatva Trading
C

Company] located in the taxable territory is payable on reverse charge basis.

Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., M/s. Tatva Trading
Company.

Insurance Agent, Recovery Agent & Security Services

16.
State the person liable to pay GST in the following independent cases provided recipient is
located in the taxable territory:
(a) Services supplied by an insurance agent to an Insurance Company.
(b) Services supplied by a recovery agent to a car dealer.
(c) Security services (services provided by way of supply of security personnel) provided to a
registered person.
(ICAI study material)
Answer:
(a) GST on services supplied by an insurance agent to any person carrying on insurance business located
in the taxable territory is payable under reverse charge. Therefore, in the given case, GST is payable

CA Ramesh Soni 3.14

 Charge of GST – Q & A
under reverse charge by the recipient – Insurance Company.
(b) GST on services supplied by a recovery agent to a banking company or a financial institution or a non-
banking financial company located in the taxable territory is payable under reverse charge. However,
since, in the given case, services are being supplied by a recovery agent to a car dealer, GST is
payable under forward charge by the service provider - recovery agent.
(c) GST on security services (services provided by way of supply of security personnel) provided to a
registered person, located in the taxable territory is payable under reverse charge. Therefore, in the
given case, GST is payable under reverse charge by the recipient – registered person receiving the
services.

Section 9(5) of CGST/5(5) of IGST act: Levy of GST on ECO

17.
Harishchandra of New Delhi makes a request for a motor cab to "Super ride" for travelling
from New Delhi to Gurgaon (Haryana). After Harishchandra pays the cab charges using his
debit card, he gets details of the driver - Jorawar Singh and the cab's registration number.
"Super ride" is a mobile application owned and managed by Perry India Ltd. located in India.
The application "Super ride" facilitates a potential customer to connect with the persons

I
providing cab service under the brand name of "Super ride".

N
Perry India Ltd. claims that cab service is provided by Jorawar Singh and hence, he is liable to
pay GST. With reference to the provisions of IGST Act, 2017, determine who is the person

SO
liable to pay GST in this case?
(ICAI study material – CA Final)
Answer:
Section 5(5) of the IGST Act, 2017 provides that tax on inter-State supplies of specified services
H
notified by Government shall be paid by the electronic commerce operator (ECO) located in taxable
territory if such services are supplied through it. Services by way of transportation of passengers by a
ES

motor cab supplied through ECO is one of the notified services.

Electronic commerce operator (ECO) means any person who owns, operates or manages digital or
electronic facility or platform for supply of goods or services or both.
Since Perry India Ltd. owns and manages a mobile application in the name of “Super ride”, to facilitate
M

supply of passenger transportation service in motor cabs over a digital network, it is an ECO. Thus, Perry
India Ltd., an ECO located in India, is liable to pay GST in the given case.
A
R
A
C

CA Ramesh Soni 3.15

 Charge of GST - MCQ
3. Charge of GST - MCQ

Section 9(1) of CGST/5(1) of IGST act: 5. Sindhu Transporters, an unregistered

Normal Levy Goods Transport Agency, provides the
services of transportation of goods by
1. What is the maximum rate prescribed road to Bindusaar Manufacturers,
under CGST Act? registered under GST. GST is payable by
(a) 12% _______@______, in the given case.
(b) 28% (a) Sindhu Transporters; 5%
(c) 20% (b) Sindhu Transporters; 12%
(d) 18% (c) Bindusaar Manufacturers; 5%
(d) Bindusaar Manufacturers; 12%
2. The maximum rate of IGST can be:
(a) 20% 6. Nilanchal Chamber of Commerce
(b) 30% organized a business summit. Safal
(c) 40% Private Limited, a manufacturer of
(d) None of the above readymade garments, sponsored the
summit and paid a sponsorship fee of Rs.

I
N
Section 9(2): CGST on 5 specified products 1,20,000 to Nilanchal Chamber of
Commerce. Mr. Godbole, an independent

SO
3. On supply of which of the following director of Safal Private Limited, provided
item(s), GST shall be levied with effect the services worth Rs. 50,000 to the
from such date as may be notified by the company. The value on which Safal
Government on the recommendations of Private Limited is liable to pay GST is ___.
the Council: (a) Rs. 1,20,000
H
(a) Petroleum crude (b) Rs. 1,70,000
ES

(b) Alcoholic liquor for human consumption (c) Rs. 50,000

(c) Both (a) and (b) (d) Nil
(d) None of the above
7. Which of the following services does not
M

Section 9(3) of CGST Act: Reverse Charge fall under reverse charge provisions as
Mechanism on Notified Services contained u/s 9(3) of the CGST Act?
A

(a) Services supplied by arbitral tribunal to

4. XX, registered in Delhi, purchased books business entity located in Ladakh
R

from PC Traders, registered in Uttar (b) Sponsorship services provided to a

Pradesh. Books are exempt from GST. XX partnership firm located in Jammu &
A

arranged the transport of these books Kashmir

from a goods transport agency (GTA) (c) Sponsorship services provided to a body
C

which charged a freight of Rs. 9,000 for corporate located in Kerala

the same. GST is payable @ 5% on such (d) Service of renting of motor vehicle for
GTA services. Which of the following passengers provided to a recipient other
statement is correct in the given context: than body corporate.
Note: GTA has not opted to pay GST itself.
(a) GST of Rs. 450 is payable by XX on revere 8. GST is not payable by recipient of services
charge basis. in the following cases: -
(b) Supply of goods and supply of GTA service (i) Services provided by way of
is a composite supply wherein supply of sponsorship to ABC Ltd. located in
goods is the principal supply and since India.
principal supply is an exempt supply, no (ii) Services supplied by a director
tax is payable on freight. (registered under GST) of Galaxy Ltd.
(c) Since exempt goods are being transported, to Mr. Krishna
service provided by GTA for transporting (iii) Services by Department of Posts by
the same is also exempt. way of speed post to MNO Ltd.
(d) GST of Rs. 450 is payable by the GTA. located in India.
(iv) Services supplied by a recovering
agent to SNSP Bank located in India.
CA Ramesh Soni 3.16
 Charge of GST - MCQ
(a) (i) & (iii) (a) Exempt supply
(b) (i) & (iv) (b) 9,000 payable by Jhulelal Palkiwala & Co.
(c) (ii) & (iii) (c) 9,000 payable by Burger Queen (P) Ltd.
(d) (ii) & (iv) (d) Non-taxable supply

9. GST is payable by the recipient under Section 9(5): Notified category of services
reverse charge on:
(a) Sponsorship services 11.Akila is providing beautician services
(b) Transport of goods by rail online through Urban clap. Is the said
(c) Transport of passengers by air service a notified service u/s 9(5) of CGST
(d) All of the above Act?
(a) Yes
10.Jhulelal Palkiwala & Co. is a firm of (b) No
advocates registered in GST in the State
of Punjab. It provides legal consultancy 12.Which of the following is/are correct?
services to various clients. It has provided (a) If ECO has physical presence in taxable
consultancy services of Rs. 50,000 on 5 territory, ECO shall be liable to pay GST.
Sep to Burger Queen Ltd., a registered (b) If ECO doesn’t have any physical presence

I
business entity located in Mizoram. in taxable territory, the Representative

N
Burger Queen Ltd. achieved the turnover shall be liable to pay GST.
of Rs. 15,00,000 in the preceding financial (c) If ECO doesn’t have any physical presence

SO
year. The law firm raised proper invoice in taxable territory, the Representative
on the Burger Queen Ltd. on 25 Sep. shall not be liable to pay GST.
Calculate the taxability of above (d) Both A & B.
transaction if applicable rate of tax is
H
18%.
ES

Answers:
Qs Ans Reason
1. c As per Section 9(1) of CGST Act, maximum rate prescribed is at such rates, not
M

exceeding 20%
2. c As per Section 5(1) of IGST Act, maximum rate prescribed is at such rates, not
A

exceeding 40%
3. a As per Section 9(2), GST on High-speed diesel, Petroleum crude, Motor spirit, Aviation
R

turbine fuel, Natural gas shall be levied from such date as may be notified by the
government on the recommendations of the council.
4. a GST is payable under RCM on GTA service availed by a recipient even though the
A

goods transported are exempt supply.

C

Also, in case of GTA service the person who pays the freight is the recipient also liable to
pay GST on GTA services.
Hence in the given case, XX ltd is liable to pay GST on the GTA services i.e. Rs 9,000 * 5%
= Rs. 450.
5. c Recipient being a registered person under GST and the supplier being unregistered GTA,
the RP i.e. Bindusaar manufacturer shall be liable to pay the GST under RCM @ 5%.
6. b Safal Private Limited being a company is liable to pay GST under RCM on:
1. Sponsorship amount = Rs. 1.2 lacs
2. Amount paid to Independent director = Rs. 50,000.
7. d (a) Services supplied by arbitral tribunal to business entity located in Ladakh: In
case of services by Arbitral tribunal to business entity, business entity is liable to pay
GST under RCM.
Note: Assumed turnover of business entity in PFY exceeded Registration imit.
(b) Sponsorship services provided to a partnership firm located in Jammu &
Kashmir: Sponsorship services provided to body corporate or partnership firm, RCM is
applicable.
(c) Sponsorship services provided to a body corporate located in Kerala: RCM is
applicable.
CA Ramesh Soni 3.17
 Charge of GST - MCQ
Qs Ans Reason
(d) Service of renting of motor vehicle for passengers provided to a recipient other
than body corporate: In case of renting of motor vehicle, RCM is applicable only if
service is provided to body corporate. Hence, in this case, RCM is not applicable.
8. c (i) Services provided by way of sponsorship to ABC Ltd. located in India:
Sponsorship services provided to a body corporate, Body corporate ABC ltd (i.e. the
recipient) is liable to pay GST under RCM.
(ii) Services supplied by a director (registered under GST) of Galaxy Ltd. to Mr.
Krishna: Director providing services to body corporate, Body corporate is liable to pay
GST under RCM. However, in the given case, director is providing services to Individual
Mr. Krishna, hence Recipient is not liable.
(iii) Services by Department of Posts by way of speed post to MNO Ltd. located in
India: In the given case, GST is chargeable under forward charge by the post office,
hence Recipient is not liable
(iv) Services supplied by a recovering agent to SNSP Bank located in India:
Services by recovery agent to bank, RCM is applicable and recipient SNSP bank is liable
to pay GST under RCM.
9. a In case of services provided by way of sponsorship to any body corporate or

I
partnership firm , GST shall be payable by the recipient of service.

N
10. c As per section 9(3) read with RCM notification: Legal services provided by a firm

SO
of advocate to a business entity shall attract RCM. However, Entry No. 45: Services
provided by a business entity with an ATO up such amount in the PFY as makes it eligible
for exemption from registration shall be Exempt from GST.
The ATO limit applicable for Mizoram is Rs. 10 lakhs.
Since, the turnover of Burger Queen in the PFY is Rs 15 lakhs, which is exceeding the
H
registration limit. Burger Queen shall be liable to pay GST under RCM.
GST liability: Rs 50,000 * 18% = Rs. 9,000, payable by Burger Queen.
ES

11. b Beautician services are not notified service under 9(5).

12. d If ECO has physical presence in taxable territory, ECO shall be liable to pay GST and if ECO
doesn’t have any physical presence in taxable territory, the Representative shall be liable
M

to pay GST.
A
R
A
C

CA Ramesh Soni 3.18

 Composition levy
4. Composition Levy

Introduction

The Composition levy scheme is a very simple, hassle-free compliance scheme for small taxpayers
(traders, manufacturers and service providers). It is a voluntary and optional scheme.

Relevant definitions

“Turnover in State” or “Turnover in Union territory”

Means
 the 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 made within a State or Union territory by a taxable person,
 exports of goods or services or both and
 inter-State supplies of g/s/b made from the State or UT by the said taxable person but

I
 excludes central tax, State tax, Union territory tax, integrated tax and cess;

N
Author’s comment: Same as ATO, only difference word aggregate is missing. Hence, we do not

SO
aggregate All India under same PAN.

Section 2(92): Quarter

H
Quarter shall mean a period comprising three consecutive calendar months, ending on the last day of
March, June, September and December of a calendar year;
ES

Objective of Composition
M

To bring simplicity and to reduce the compliance cost on the small taxpayers.
A

Section 10: Composition levy

R

(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-
sections (3) and (4) of section 9,
 a RP, whose ATO in the PFY did not exceed 50 lakh rupees, may opt (rule 3) to pay, in lieu of
A

the tax payable by him under section 9(1),

 an amount of tax calculated at such rate as may be prescribed, (rule 7) but not exceeding, —
C

(a) one per cent of the turnover in State or turnover in Union territory in case of a manufacturer,
(b) two and a half per cent of the turnover in State or turnover in UT in case of persons engaged in
making supplies referred to in clause (b) of paragraph 6 of Schedule II, and
(c) half per cent of the turnover in State or turnover in UT in case of other suppliers,
subject to such conditions and restrictions as may be prescribed: (rule 5)

Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such
higher amount, not exceeding one crore and fifty lakh rupees, as may be recommended by the Council:

Notification:
An eligible RP, whose aggregate turnover in the PFY did not exceed 1.5 crores, may opt to pay, under
composition, an amount of tax as prescribed under rule 7 of the CGST Rules, 2017:

Provided that the said aggregate turnover in the preceding financial year (PFY) shall be Rs 75 lakh in
the case of an eligible registered person, registered u/s 25 of the said Act, in any of the following States:
(i) Arunachal Pradesh, (iii) Meghalaya, (v) Nagaland,
(ii) Manipur, (iv) Mizoram, (vi) Sikkim,

CA Ramesh Soni 4.1

 Composition levy
(vii) Tripura, (viii) Uttarakhand:

Note: RP shall not be eligible to opt for composition levy u/s 10(1) if such person is a manufacturer of
the goods stated below:
SN Description
1 Ice cream and other edible ice, whether or not containing cocoa.
2 Pan masala.
2A Aerated Water
3 All goods, i.e., Tobacco and manufactured tobacco substitutes.
4 Fly ash bricks or fly ash aggregates; Fly ash blocks
5 Bricks of fossil meals or similar siliceous earths
6 Building bricks
7 Earthen or roofing tiles

Author: Only manufacturers of the above goods are ineligible, traders are eligible.

Provided further that (2nd proviso) a person who opts to pay tax under clause (a)/(b)/(c) may supply
services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding

I
10% of turnover in a State/UT in the PFY or Rs 5 lakhs, whichever is higher.

N
SO
Explanation. — For the purposes of second proviso, the value of exempt supply of services provided by
way of extending deposits, loans or advances in so far as the consideration is represented by way of
interest or discount shall not be taken into account for determining the value of turnover in a State or
Union territory.
H
Author’s comment:
1. RP shall be eligible to opt for the composition scheme provided:
ES

• either he is not at all engaged in supply of services other than restaurant services or
• in case he supplies services other than restaurant services, value of such services does not exceed
10% of the turnover in a State/UT in the PFY or Rs 5 lakh, whichever is higher.
M

2. Value of turnover in a State/UT shall exclude interest/discount.

A

Rule 3: Intimation for composition levy

R

(1) Fresh registration

Any person who applies for registration under of rule 8(1) may give an option to pay tax u/s
10 in Part B of FORM GST REG-01, which shall be considered as an intimation to pay tax under the
A

said section.
Note: Rule 4: Option to pay tax under compo will be effective from the date on which the person
C

becomes liable to registration where the application for registration has been submitted within a
period of 30 days from such date.
Where an application for registration has been submitted by the applicant after the expiry of thirty
days from the date of his becoming liable to registration, the effective date of registration shall be the
date of the grant of registration

(2) Already registered person

 Electronically file an intimation in FORM GST CMP-02,
 prior to the commencement of the financial year for which the option to pay tax under the
aforesaid section is exercised and
 shall furnish the statement in FORM GST ITC-03 in accordance with rule 44(4) within a
period of sixty days from the commencement of the relevant financial year.

Note: Rule 4: The option to pay tax u/s 10 shall be effective from the beginning of the FY.

(3) Any intimation in respect of any place of business in any State/UT shall be deemed to be an intimation
in respect of all other places of business registered on the same PAN.

CA Ramesh Soni 4.2

 Composition levy
Rule 7: Rate of tax of the composition levy (under CGST)

SN Section under which Category of registered persons Rate of tax

composition levy is opted
1 Sub-sections (1) and (2) Manufacturers, other than ½ % of the turnover in the
of section 10 manufacturers of such goods as State/UT
may be notified by the Government
2 Sub-sections (1) and (2) Suppliers making supplies referred 2 ½ % of the turnover in
of section 10 to in clause (b) of paragraph 6 of the State/UT
Schedule II
3 Sub-sections (1) and (2) Any other supplier eligible for ½ % of the turnover of
of section 10 composition levy under sub- taxable supplies of goods
sections (1) and (2) of section 10 & services in the State/UT
4 Sub-section (2A) of RPs not eligible under the 3% of the [turnover of]
section 10 composition levy under sub- supplies of goods and
sections (1) and (2), but eligible to services in the State or UT.
opt to pay tax u/s 10(2A).

I
Rule 5: Conditions and restrictions for composition levy

N
(1) Compliance by person opting for composition scheme

SO
The person exercising the option to pay tax under section 10 shall comply with the following
conditions, namely: -
(a) he is neither a CTP/NRTP;
(b) ....... not applicable now
H
(c) ....... not applicable now
(d) he shall pay tax under section 9(3)/(4) on inward supply of goods or services or both;
ES

(e) he was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of
section 10, during the preceding financial year;
(f) he shall mention the words "composition taxable person, not eligible to collect tax on
supplies" at the top of the bill of supply issued by him; and
M

(g) he shall mention the words "composition taxable person" on every notice or signboard
displayed at a prominent place at his principal place of business and at every additional place or
A

places of business.
R

(2) RP not required to file fresh intimation every year

The registered person paying tax u/s 10 may not file a fresh intimation every year and he may
A

continue to pay tax under the said section subject to the provisions of the Act and these rules.
C

Section 10(2): Person ineligible to opt for composition

The registered person shall be eligible to opt under sub-section (1), if—
(a) save as provided in sub-section (1), he is not engaged in the supply of services;
(b) he is not engaged in making any supply of goods or services which are not leviable to tax under this
Act;
(c) he is not engaged in making any inter-State outward supplies of goods or services;
(d) he is not engaged in making any supply of services through an ECO who is required to collect tax at
source under section 52;
Author’s comment:
 If a person is supplying through own platform, he will be eligible for composition scheme
 If a person is supplying through Flipkart, Flipkart will be liable to deduct TCS u/s 52
(e) he is not a manufacturer of such goods as may be notified by the Government on the
recommendations of the Council; and
Author’s comment: Manufacturer is ineligible, trader is eligible.

(f) he is neither a CTP nor a NRTP.

CA Ramesh Soni 4.3

 Composition levy
Multiple registered units to opt together for composition scheme
Provided that where more than one RPs are having the same PAN, the RP shall not be eligible to opt for
the scheme under sub-section (1) unless all such RPs opt to pay tax under that sub-section.

Section 10(2A): Composition scheme for person ineligible under 10(1) & 10(2)

Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of
sub-sections (3) and (4) of section 9,
 a registered person, not eligible to opt to pay tax under sub-section (1) and sub section (2),
 whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees,
 may opt to pay, in lieu of the tax payable by him under section 9(1),
 an amount of tax calculated at such rate as may be prescribed, but not exceeding 3% of the turnover
in State or turnover in Union territory,
 if he is not—
(a) engaged in making any supply of goods or services which are not leviable to tax under this Act;
(b) engaged in making any inter-State outward supplies of goods or services;
(c) engaged in making any supply of services through an electronic commerce operator who is
required to collect tax at source under section 52;
(d) a manufacturer of such goods or supplier of such services as may be notified by the Government

I
N
on the recommendations of the Council; and
(e) a casual taxable person or a non-resident taxable person:

SO
Provided that where more than one registered person are having the same Permanent Account Number,
the registered person shall not be eligible to opt for the scheme under this sub-section unless all such
registered persons opt to pay tax under this sub-section.
H
Section 10(3): Composition levy shall lapse with effect from the day RP crosses ATO.
ES

The option availed of by a RP under sub-section (1) or sub-section (2A), as the case may be, as the case
may be, shall lapse with effect from the day on which his aggregate turnover during a financial year
exceeds the limit specified under sub-section (1) or sub-section (2A), as the case may be.
M

Rule 6: Validity of composition levy

A

(1) RP paying tax under composition valid till he satisfies all the conditions
R

The option exercised by a registered person to pay tax under section 10 shall remain valid so long as
he satisfies all the conditions mentioned in the said section and under these rules.
A

(2) RP ceases to satisfy conditions, issue tax invoice, file intimation CMP-04 in 7 days of event
C

The person referred to in sub-rule (1) shall be liable to pay tax under section 9(1) from the day he
ceases to satisfy any of the conditions mentioned in section 10 or the provisions of this Chapter and
shall issue tax invoice for every taxable supply made thereafter and he shall also file an intimation for
withdrawal from the scheme in GST CMP-04 within seven days of the occurrence of such event.

(3) RP intending to withdraw file CMP 04 before the date of such withdrawal
The registered person who intends to withdraw from the composition scheme shall, before the date of
such withdrawal, file an application in FORM GST CMP-04, duly signed or verified through electronic
verification code, electronically on the common portal.

(4) PO has reason to believe RP not eligible/has contravened, issue SCN in CMP 05
Where the proper officer has reasons to believe that the registered person was not eligible to pay tax
under section 10 or has contravened the provisions of the Act or provisions of this Chapter, he may
issue a notice to such person in FORM GST CMP-05 to show cause within fifteen days of the receipt of
such notice as to why the option to pay tax under section 10 shall not be denied.

(5) Upon receipt of notice RP to reply in CMP 06, PO to issue order in CMP-07 within 30 days

CA Ramesh Soni 4.4

 Composition levy
Upon receipt of the reply to the show-cause notice issued under sub-rule (4) from the registered
person in FORM GST CMP-06, the proper officer shall issue an order in FORM GST CMP-07 within a
period of thirty days of the receipt of such reply, either accepting the reply, or denying the option to
pay tax under section 10 from the date of the option or from the date of the event concerning such
contravention, as the case may be.

(6) RP ceases/withdrawal filed/PO passed a withdrawal order: RP to file ITC 01 within 30 days
Every person who has furnished an intimation under sub-rule (2) or filed an application for withdrawal
under sub-rule (3) or a person in respect of whom an order of withdrawal of option has been passed
in GST CMP-07 under sub-rule (5), may electronically furnish at the common portal, either directly or
through a Facilitation Centre notified by the Commissioner, a statement in GST ITC-01 containing
details of the stock of inputs and inputs contained in semi-finished/finished goods held in stock by him
on the date on which the option is withdrawn or denied, within a period of 30 days from the date from
which the option is withdrawn/from the date of the order passed in GST CMP-07, as the case may be.

(7) Any intimation or application for withdrawal under sub-rule (2) or (3) or denial of the option to pay
tax under section 10 in accordance with sub-rule (5) in respect of any place of business in any State
or Union territory, shall be deemed to be an intimation in respect of all other places of business
registered on the same Permanent Account Number.

I
N
Section 10(4): A taxable person (under composition) not to collect tax, nor take ITC

SO
A taxable person to whom the provisions of sub-section (1)/(2A) apply shall not collect any tax from the
recipient on supplies made by him nor shall he be entitled to any credit of input tax.
H
Section 10(5): TP pays tax under compo even if ineligible, he shall be liable to penalty
ES

If the PO has reasons to believe that a taxable person has paid tax under sub-section (1) or sub-section
(2A), as the case may be, despite not being eligible, such person shall, in addition to any tax that may
be payable by him under any other provisions of this Act, be liable to a penalty and the provisions of
section 73 or 74 shall, mutatis mutandis, apply for determination of tax and penalty.
M

Explanation 1.— For the purposes of computing aggregate turnover of a person for determining his
A

eligibility to pay tax under this section, the expression "aggregate turnover" shall include the value of
supplies made by such person from the 1st day of April of a financial year upto the date when he
R

becomes liable for registration under this Act, but shall not include the value of exempt supply of services
provided by way of extending deposits, loans or advances in so far as the consideration is represented by
A

way of interest or discount.

C

Explanation 2. — For the purposes of determining the tax payable by a person under this section, the
expression "turnover in State or turnover in UT" shall not include the value of following supplies, namely:
(i) supplies from the first day of April of a financial year upto the date when such person becomes liable
for registration under this Act; and
(ii) exempt supply of services provided by way of extending deposits, loans or advances in so far as the
consideration is represented by way of interest or discount.

Author’s comment:
• For the purpose of checking eligibility: ATO shall include supplies from 1st April upto date of
becoming liable for registration but exclude interest/discount.
• For the purpose of paying tax: TO in state/UT shall exclude supplies from 1st April upto date of
becoming liable for registration and interest/discount.

CA Ramesh Soni 4.5

 Composition levy – Q & A
4. Composition levy – Q & A

Section 10(1) & 10(2): Person eligible & ineligible to opt for composition

1.
Who are not eligible to opt for composition scheme for goods under GST Laws?
(CA Inter May 23) - updated
Answer:
The registered person who is not eligible for composition scheme for goods under GST law are as under:
(i) Supplier engaged in making any supply of goods or services which are not leviable to tax.
(ii) Supplier engaged in making any inter-State outward supplies of goods or services.
(iii) Person supplying any services through an electronic commerce operator who is required to collect tax
at source (under section 52).
(iv) Manufacturer of ice cream, pan masala, tobacco, aerated waters, fly ash bricks; fly ash aggregate, fly
ash blocks, bricks of fossil meals or similar siliceous earths, building bricks, earthen or roofing tiles.
(v) Supplier who is either a casual taxable person or a non-resident taxable person.
(vi) Supplier of services exceeding an amount which is higher of 10% of the turnover in a State/U.T. in
the preceding financial year or Rs. 5 lakhs.

I
N
2.
Taxpayer ‘Bholaram’ is a trader (who has opted for composition levy for goods) of both taxable

SO
and exempted goods (goods exempted by way of a notification).
It has one retail showroom – A1 in Punjab and another retail showroom – A2 in Rajasthan,
both selling taxable as well as exempted goods. Total turnover (including taxable and
exempted goods) of the two showrooms in last FY was Rs. 115 lakhs (Rs. 85 lakhs + Rs. 30
H
lakh respectively). Turnover of showrooms A1 and A2 in the first quarter of current financial
year is Rs. 35 lakhs [A1 - Rs. 15 lakhs (Rs. 5 lakhs from sale of taxable goods and Rs. 10 lakhs
ES

from sale of exempted goods) and A2 - Rs. 20 lakhs (Rs. 10 lakhs from sale of taxable goods
and Rs. 10 lakh from sale of exempted goods)]. Compute the amount payable under
composition levy under section 10(1) & 10(2) of the CGST Act, 2017 by ‘Bholaram’.
M

(ICAI study material)

Answer:
Unit Location Turnover in PY Turnover in 1st Quarter of this year Total tax (@1%)
A

A1 Punjab Rs. 85 lakhs Rs. 5 lakhs Rs. 5,000

R

A2 Rajasthan Rs. 30 lakhs Rs. 10 lakhs Rs. 10,000

Total Rs. 115 lakhs Rs. 15 lakhs Rs. 15,000
Note: A supplier, other than manufacturer and restaurant service provider, eligible for composition levy
A

under section 10(1) & 10(2) has to pay tax @ 1% (CGST+ SGST) of the turnover of only taxable supplies
of goods and services in the State.
C

3.
Determine whether the suppliers in the following cases are eligible for composition levy, under
section 10(1) & 10(2), provided their turnover in preceding year does not exceed Rs. 1.5 crore:
(i) Mohan Enterprises is engaged only in trading of pan masala in Rajasthan and is registered
in the same State.
(ii) Sugam Manufacturers has registered offices in Punjab and Haryana and sells goods
manufactured by it in the neighboring States.
(ICAI study material)
Answer:
(i) A supplier engaged in the manufacture of goods as notified under section 10(2)(e), during the
preceding FY is not eligible for composition scheme under section 10(1) and 10(2). Ice cream and
other edible ice, whether or not containing cocoa, Pan masala, Tobacco and manufactured tobacco
substitutes, aerated waters, fly ash bricks, fly ash aggregate, fly ash blocks, bricks of fossil meals or
similar siliceous earths, building bricks, earthen or roofing tiles are notified under this category.
However, in the given case, since Mohan Enterprises is engaged in trading of pan masala and not
manufacture and his turnover does not exceed ` 1.5 crore, he is eligible for composition scheme

CA Ramesh Soni 4.6

 Composition levy – Q & A
subject to fulfilment of specified conditions.
(ii) Since supplier of inter-State outward supplies of goods or services is not eligible for composition levy,
Sugam Manufacturers is not eligible for composition levy.

4.
Answer the following, after reading the below given two paragraphs:
(i) Briefly discuss the relevant provision
(ii) decide the correct conclusion and
(iii) determine the validity of the given advice (Correct/Incorrect)
Raju is engaged in the manufacture of 'Fly ash Bricks' in the State of Kerala. He started his
activity in the month of April 2022 and deals only in intra-State. His tax consultant advised him
to register under composition levy under GST as Raju's turnover is expected to be below Rs. 1
crore for the said financial year.
(CA Inter Nov 22 – 2 marks)
Answer:
A registered person whose aggregate turnover in the preceding financial year did not exceed Rs. 1.5 crore
in a State/UT may opt for composition scheme subject to fulfilment of specified conditions. One of these
conditions is that he must not be engaged in the manufacture of notified goods including fly ash bricks.

I
Therefore, in the given case, since Raju is engaged in manufacture of fly ash bricks, he cannot opt for

N
composition levy even though his aggregate turnover in the preceding financial year is nil.
Thus, the advice given by his tax consultant is not correct.

SO
5.
Sultan & Sons, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product
‘P’ and product ‘Q’ exempt by way of a notification, in the State of Maharashtra. Its aggregate
H
turnover in the preceding financial year is Rs. 130 lakhs. The firm wishes to opt for
composition scheme under sub-sections (1) & (2) of section 10 of the CGST Act. However, its
ES

accountant is of the view that a person engaged in making supply of exempt goods is not
eligible for the said scheme. Discuss. Note: Assume that Sultan & Sons is not engaged in
manufacture of goods as notified under section 10(2)(e).
(ICAI study material)
M

Answer:
The view taken by the accountant of Sultan & Sons is not valid in law. A registered person with an
A

aggregate turnover in a preceding financial year up to Rs. 1.5 Crore is eligible for composition levy, under
section 10(1) & 10(2), in Maharashtra. Further, such person must not be engaged in making any supply
R

of goods which are not leviable to tax under this Act and must not be engaged in making any inter-State
outward supplies of goods, for being eligible to pay tax under said scheme.
A

In the given case, the aggregate turnover of Sultan & Sons does not exceed Rs. 1.5 Crore. Further, it is
engaged in making only intra-State supply of goods and Product P supplied by it is taxable and Product Q
C

supplied by it is leviable to tax though exempted by way of notification. Therefore, it is eligible for
composition levy under section 10(1) & 10(2) in the current year.

6.
MN Ltd. has two registered places of business in the State of Haryana. Its aggregate turnover
during the previous financial year for both the places of business was Rs 62 lakh. It wishes to
opt for composition levy for one of the place of business in the current year and wants to
continue with registration and pay taxes at the normal rate for the other place of business.
Can MN Ltd. do so? Explain with reason.
(ICAI study material-Similar)
Answer:
As per proviso to section 10(2), where more than one registered person are having the same PAN
issued under the Income-tax Act, 1961, the registered person shall not be eligible to opt for the
composition scheme unless all such registered persons opt to pay tax under composition scheme.
In the given case, since MN Ltd. has two places of business (they are not separate entities under
Income-tax Act, 1961), they would be registered under the same PAN. Therefore, MN Ltd. cannot opt for
composition levy for only one of the places of business and pay tax under regular scheme for other place
of business.
CA Ramesh Soni 4.7
 Composition levy – Q & A
7.
Mr. Prem is running a restaurant in New Delhi. In the preceding financial year, it has an
aggregate turnover of Rs. 120 lakhs from the restaurant services. In the current financial year,
apart from restaurant service, he also wants to provide food delivery services to other small
restaurants. He estimated the turnover of such services is up to Rs. 5 lakhs.
Mr. Prem wishes to opt for composition scheme under sub-sections (1) and (2) of section 10 in
the current financial year. You are required to advise him for same.
(ICAI study material)
Answer:
As per section 10(1) read with Notification No.14/2019 CT dated 07.03.2019, a registered
person, whose aggregate turnover in the preceding financial year did not exceed Rs. 1.5 crore, may opt
to pay, in lieu of the tax payable by him, an amount calculated at the specified rates if, inter alia, he is
not engaged in the supply of services other than restaurant services.
However, the scheme permits supply of other marginal services for a specified value along with the
supply of goods and restaurant service, as the case may be. Such marginal services can be supplied for a
value up to 10% of the turnover in the preceding year or Rs. 5 lakhs, whichever is higher.
In the present case, since the aggregate turnover of Mr. Prem was Rs. 120 lakhs in preceding financial
year (i.e., it did not exceed Rs. 1.5 crore), he is eligible for composition scheme in the current financial
year. Further, in the current financial year, he can also supply services other than restaurant services for

I
N
a value up to Rs. 12 lakhs (10% of Rs. 120 lakh) or Rs. 5 lakhs, whichever is higher. Thus, till the time
his turnover from food delivery services does not exceed Rs. 12 lakhs, he is eligible for the scheme.

SO
8.
Mr. Ajay has a registered repair centre where electronic goods are repaired/serviced. His
repair centre is located in State of Rajasthan and he is not engaged in making any inter-State
H
supply of services. His aggregate turnover in the preceding financial year (FY) is Rs. 45 lakhs.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt for
ES

the composition scheme under section 10(1) & 10(2) of the CGST Act, 2017 in the current
financial year? Or whether he is eligible to avail benefit of composition scheme under section
10(2A)? Considering the option of payment of tax available to Mr. Ajay, compute the amount of
tax payable by him assuming that his aggregate turnover in the current financial year is Rs. 35
M

lakhs. Will your answer be different if Mr. Ajay procures few items required for providing
repair services from neighboring State of Madhya Pradesh?
A

(ICAI study material)

Answer:
R

Section 10(1) provides that a registered person, whose aggregate turnover in the preceding financial
year did not exceed Rs. 1.5 crore (Rs. 75 lakhs in Special Category States except Assam, Himachal
A

Pradesh and Jammu and Kashmir), may opt to pay, in lieu of the tax payable by him, an amount
calculated at the specified rates. However, as per proviso to section 10(1), person who opts to pay tax
C

under composition scheme may supply services other than restaurant services, of value not exceeding
10% of the turnover in a State or Union territory in the preceding financial year or Rs. 5 lakhs, whichever
is higher.
In the given case, since Mr. Ajay is an exclusive supplier of services other than restaurant services [viz.
repair services], he is not eligible for composition scheme under section 10(1) & 10(2).
However, section 10(2A) provides an option to a registered person (subject to certain conditions) whose
aggregate turnover in the preceding financial year is up to Rs. 50 lakhs and who is not eligible to pay tax
under composition scheme under section 10(1) & 10(2), to pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] of the turnover of supplies of goods and services in the State or Union territory.
Thus, in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the composition
scheme under section 10(2A) as his aggregate turnover in the preceding FY does not exceed Rs. 50 lakhs
and he is not eligible to opt for the composition scheme under section 10(1) & 10(2).
Thus, the amount of tax payable by him as per the composition scheme under section 10(2A) is Rs.
2,10,000 [6% of Rs. 35 lakhs].
A registered person cannot opt for composition scheme under section 10(2A), if, inter alia, he is engaged
in making any inter-State outward supplies. However, there is no restriction on inter-State procurement
of goods. Hence, answer will remain the same even if Mr. Ajay procures few items from neighboring State
of Madhya Pradesh.
CA Ramesh Soni 4.8
 Composition levy – Q & A
9.
M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in
the State of Karnataka. Their aggregate turnover in the preceding financial year by way of
supply of appliances was Rs. 120 Lakh. The firm also expects to provide repair and
maintenance service of such appliances from the current financial year.
With reference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section 10(1) & 10(2) of the
CGST Act, for the current FY, as the turnover may include supply of both goods & services?
(ii) If yes, up to what amount, the services can be supplied?
(ICAI study material)
Answer:
(i) The registered persons, whose aggregate turnover in the preceding financial year did not exceed Rs.
1.5 crore, may opt to pay tax under composition levy, under section 10(1) and 10(2). The scheme
can be availed by an intra-State supplier of goods and supplier of restaurant service.
However, the composition scheme permits supply of marginal services (other than restaurant
services) for a specified value along with the supply of goods and restaurant service, as the case may
be.
Thus, M/s United Electronics can opt for composition scheme for the current financial year as its

I
aggregate turnover is less than Rs. 1.5 crore in the preceding financial year and it is not engaged in

N
inter-State outward supplies.

SO
(ii) The registered person opting for composition scheme, under section 10(1) and 10(2), can
also supply services (other than restaurant services) for a value up to 10% of the turnover in the
preceding year or Rs. 5 lakhs, whichever is higher, in the current financial year.
Thus, M/s United Electronics can supply repair and maintenance services up to a value of Rs. 12
H
lakhs [10% of Rs. 120 lakh or Rs. 5 lakhs, whichever is higher] in the current financial year.
ES

10.
Gokhale & Sons is registered in Karnataka and paying GST under composition scheme,
provides the following details for the tax period ended on 31st December, 2018:
S. No Particulars Amount (Rs)
M

I. Taxable turnover of goods within state 25,00,000

II. Exempted turnover of goods within state 27,00,000
A

Calculate the total GST without bifurcation between CGST and SGST to be paid by Gokhale &
R

Sons for the tax period ended on 31st December, 2018 in following independent situation on
the basis of details of turnover as given:
(i) If Gokhale & Sons is Manufacturer
A

(ii) If Gokhale & Sons is Trader

(CS)
C

Answer:
Effective rate of tax under composition scheme applicable for manufacturers as well as traders is 1% of
turnover.
Further, it has been provided that composition suppliers (other than manufacturers and restaurants), i.e.
traders would pay composition tax as a percentage of turnover of taxable supplies of goods.
Hence, total tax will be as follow:
(i) Rs. 52000 (1% of 52,00,000) (if Gokhale & Sons is a Manufacturer)
(ii) Rs. 25000 (1% of 25,00,000) (if Gokhale & Sons is a Trader)

Section 10(2A): Composition scheme for person ineligible under 10(1) & 10(2)

11.
Taxpayer ‘Padmavati’ is a salon stylist, who has opted for composition levy for services, having
one branch – B1 in Vasant Kunj, Delhi and another branch – B2 in Gurgaon, Haryana. Total
turnover of the two branches in last FY was Rs. 45 lakhs (Rs. 25 lakhs + Rs. 20 lakh
respectively). The turnover of branches B1 and B2 in the first quarter of current financial year
is Rs. 5 lakhs and Rs. 10 lakh respectively. Compute the amount payable under composition

CA Ramesh Soni 4.9

 Composition levy – Q & A
levy under section 10(2A) of the CGST Act, 2017 by ‘Padmavati’.
(ICAI study material)
Answer:
Unit Location Turnover in PY Turnover in 1st Quarter of this year Total tax (@6%)
B1 Delhi Rs. 25 lakhs Rs. 5 lakhs Rs. 30,000
B2 Haryana Rs. 20 lakhs Rs. 10 lakhs Rs. 60,000
Total Rs. 45 lakhs Rs. 15 lakhs Rs. 90,000

12.
“Wedding Bells”, a wedding photographer, has commenced providing pre-wedding shoot
services in Jaipur from the beginning of current financial year 2020-2021. It has provided the
following details of turnover for the various quarters till December, 2020: -
S. No. Quarter Amount (in lakhs)
1 April,2020-June,2020 20
2 July,2020-September,2020 30
3 October,2020-December,2020 40
You may assume the applicable tax rate as 18%. Wedding Bells wishes to pay tax at a lower
rate and opts for the composition scheme. You are required to advise whether it can do so and

I
calculate the amount of tax payable for each quarter?

N
(RTP May 21)
Answer:

SO
Section 10(2A) of the CGST Act, 2017 provides the turnover limit of Rs. 50 lakhs in the preceding
financial year for becoming eligible for composition levy for services. Wedding Bells has started the supply
of services in the current financial year (FY), thus, it’s aggregate turnover in the preceding FY is Nil.
Consequently, in the current FY, Wedding Bells is eligible for composition scheme for services. A
H
registered person opting for composition levy for services shall pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] of the turnover of supplies of goods and services in the State.
ES

Further, Wedding Bells becomes eligible for the registration when the aggregate turnover exceeds Rs. 20
lakhs (the threshold limit of obtaining registration). While registering under GST, Wedding Bells can opt
for composition scheme for services.
M

The option of a registered person to avail composition scheme for services shall lapse with effect from the
day on which his aggregate turnover during a financial year exceeds the threshold limit of Rs. 50 lakhs.
A

However, for the purposes of determining the tax payable under composition scheme, the expression
“turnover in State” shall not include the value of supplies from the first day of April of a FY up to the date
R

when such person becomes liable for registration under this Act.
Thus, for determining the turnover of the State for payment of tax under composition scheme for
services, turnover of April 2020–June,2020 quarter [Rs. 20 lakhs] shall be excluded. On next Rs. 30 lakhs
A

[turnover of July,2020 – September, 2020 quarter], it shall pay tax @ 6% [3% CGST and 3% SGST].
For the purposes of computing aggregate turnover of a registered person for determining his eligibility to
C

pay tax under this section, aggregate turnover includes value of supplies from the 1st April of a FY up to
the date of his becoming liable for registration.
Thus, while computing aggregate turnover for determining Wedding Bells’s eligibility to pay tax under
composition scheme, value of supplies from the first day of April of a financial year up to the date when it
becomes liable for registration under this Act (i.e., turnover of April–June 2020 quarter), are included.
By the end of July, 2020 – September, 2020 quarter, the aggregate turnover reaches Rs. 50 lakhs.
Consequently, the option to avail composition scheme for services shall lapse by the end of July, 2020 –
September, 2020 quarter and thereafter, it is required to pay tax at the normal rate of 18%.
Considering the above provisions, the tax payable for each quarter is as under: -
S. Quarter GST rate Turnover GST payable
No. [CGST + SGST] (Rs. in lakh) (Rs. in lakh)
1 April, 2020 – June, 2020 - 20 -
2 July, 2020 – September, 2020 6% 30 1.8
3 October, 2020 – December, 2020 18% 40 7.2
Section 10(3): Composition levy shall lapse with effect from the day RP crosses ATO

13.

CA Ramesh Soni 4.10

 Composition levy – Q & A
A person availing composition scheme in Haryana during a financial year crosses the turnover
of Rs 1.5 crore during the course of the year i.e., he crosses the turnover of Rs 1.5 crore in
December? Will he be allowed to pay tax under composition scheme for the remainder of the
year, i.e., till 31st March?
(ICAI study material)
Answer:
No. The option to pay tax under composition scheme lapses from the day on which the aggregate
turnover of the person availing composition scheme during the financial year exceeds the specified limit
(Rs 1.5 crore/75 lakhs). Once he crosses the threshold, he is required to file an intimation for withdrawal
from the scheme in prescribed form within 7 days of the occurrence of such event.
Every person who has furnished such an intimation, may electronically furnish at the common portal, a
statement in prescribed form containing details of the stock of inputs and inputs contained in semi-
finished or finished goods held in stock by him on the date on which the option is withdrawn, within a
period of 30 days from the date from which the option is withdrawn.

Section 10(4): A taxable person (under composition) not to collect tax, nor take ITC

14.
Explain by giving brief reasons in the context of provisions contained under the CGST Act, 2017

I
N
pertaining to composition scheme:
1. Can a registered person, who purchases goods from a supplier paying tax under the

SO
Composition Scheme, avail credit of tax paid on purchases made from composition dealer?
2. Can a person paying tax under the Composition Scheme issue a tax invoice under GST?
3. Can a person who has opted to pay tax under the Composition Scheme avail Input Tax
Credit on his inward supplies?
H
(CS)
Answer:
ES

1. No, as the composition dealer cannot collect tax paid by him on outward supplies from his customers,
the registered person making purchases from a taxable person paying tax under the composition
scheme cannot avail credit of tax.
2. No, the person shall be issuing a bill of supply in lieu of tax invoice.
M

3. No, as per section 10(4) of CGST Act, 2017 person opting to pay tax under the composition scheme
cannot avail credit on his inward supplies.
A
R

Miscellaneous – Returns & Intimation

15.
A

The due date for payment of tax by a person paying tax under section 10 of the CGST Act,
2017, i.e., a composition supplier is aligned with the due date of return to be filed by the said
C

person. Discuss the correctness or otherwise of the statement.

(RTP Nov 20)
Answer:
The statement is not correct. Every registered person paying tax under section 10, i.e., a composition
supplier, is required to file a return annually in Form GSTR-4. Form GSTR-4 for a financial year should be
furnished by 30th June of the succeeding financial year. However, a composition supplier is required to
pay his tax on a quarterly basis. A quarterly statement for payment of self-assessed tax in GST CMP-08 is
required to be furnished by 18th day of the month succeeding such quarter. Therefore, while the return is
to be furnished annually, payment of tax needs to be made on a quarterly basis, by a composition
supplier.

Note: For FY 2024-25 & onwards the due date for GSTR-4 has been amended to 30th June.
Hence for May 25 & onwards attempt students should remember due date as 30th June.
Whereas students writing exam in Jan 25 should remember due date for filing GSTR 4 as 30 th
April.

CA Ramesh Soni 4.11

 Composition Levy - MCQ
4. Composition Levy - MCQ

Section 10 of CGST Act: Composition levy composition scheme during the year
2018-19 crosses threshold limit?
1. Harish Trading Company situated in (a) He can continue under composition scheme
Haryana, is a dealer of seeds (exempt by till the end of the financial year
exemption notification) & chemical (b) He will be liable to pay tax at normal rates
fertilizers (taxable). He is about to cross of GST on the entire turnover for the
the threshold limit of registration under financial year 2018-19
GST and wants to opt for Composition (c) He will cease to remain under the
Scheme under section 10(1) and 10(2) of composition scheme with immediate effect
the CGST Act. His entire supply is made (d) He will cease to remain under the
exclusively within the State of Haryana. composition scheme from the quarter
You being his Chartered Accountant, following the quarter in which the
advise whether he can do so or not? aggregate turnover exceeds threshold limit
(a) Yes, since aggregate turnover is less than
Rs. 1.5 crore. 5. Whether tax will be paid under reverse
(b) No, a person effecting supply exempted by charge by a composition dealer:

I
N
way of exemption notification cannot opt (a) RCM is applicable, tax payable under RCM
for composition scheme under section @ 1%

SO
10(1) and 10(2) of the CGST Act. (b) RCM is not applicable to composition dealer
(c) No, a trader cannot opt for composition (c) RCM is applicable but tax payable at the
scheme. rate applicable to those services
(d) No, a supplier of chemical fertilizer cannot (d) None of the above
opt for composition scheme.
H
6. What is the threshold limit of turnover in
2. What is the threshold limit of turnover in the preceding financial year to be eligible
ES

the preceding financial year to be eligible for composition levy in Uttarakhand?

for composition levy in Delhi? (a) Rs 50 lakh
(a) Rs 50 lakh (b) Rs 75 lakh
M

(b) Rs 75 lakh (c) Rs 80 lakh

(c) Rs 80 lakh (d) Rs 1.5 crore
A

(d) Rs 1.5 crore

7. What is the threshold limit of turnover in
R

3. Mr. Fardeen Khan, is the owner of a the preceding financial year to be eligible
proprietorship firm (located in the State for composition levy in Assam?
of Arunachal Pradesh), which is engaged (a) Rs 50 lakh
A

in trading of ice-cream (not containing (b) Rs 75 lakh

C

cocoa) and supplies the same locally (c) Rs 80 lakh

within the same State itself. (d) Rs 1.5 crore
The turnover details of his firm are as
under: 8. What is the threshold limit of turnover in
For the period April, 20XX to March, 20XX: the preceding financial year to be eligible
Rs. 70,00,000/- for composition levy in Karnataka?
He wants to opt for Composition Scheme. (a) Rs 50 lakh
State the composition turnover limit for (b) Rs 75 lakh
the State of Arunachal Pradesh and (c) Rs 80 lakh
whether he is eligible to opt for (d) Rs 1.5 crore
Composition Scheme.
(a) Rs. 75,00,000/-: Yes 9. Which are the three special category
(b) Rs. 75,00,000/-: No states allowing a limit of 1.5 crores under
(c) Rs. 1,00,00,000/-: Yes composition scheme?
(d) Rs. 80,00,000/-: Yes (a) Assam, Arunachal Pradesh, Sikkim
(b) Assam, Arunachal Pradesh, J&K
4. What happens if the turnover of a (c) Assam, Himachal Pradesh, J&K
registered person paying taxes under (d) Assam, Himachal Pradesh, Sikkim

CA Ramesh Soni 4.12

 Composition Levy - MCQ
14. Which of the following is not eligible for
10. What is the specified value of service opting composition scheme under sub-
[other than restaurant services] allowed sections (1) and (2) of section 10 of the
to registered person opting for CGST Act, 2017?
composition scheme u/s 10(1)? (a) M/s ABC, a firm selling garments solely in
(a) Higher of: 10% of TO in state/UT in CFY or Ahmedabad, having aggregate turnover of
5 lakhs Rs. 78 lakhs in the preceding F.Y.
(b) Lower of: 10% of TO in state/UT in PFY or (b) A start-up company exclusively operating
10 lakhs a restaurant in Delhi, having aggregate
(c) Higher of: 10% of TO in state/UT in PFY or turnover of Rs. 98 lakh in the preceding
5 lakhs F.Y.
(d) Lower of: 10% of TO in state/UT in PFY or (c) A courier service company operating solely
5 lakhs in Mumbai having aggregate turnover of
Rs. 90 lakhs in the preceding F.Y.
11. Which of the following persons can opt (d) A trader selling grocery items solely in
for the composition scheme under sub- Orissa having an aggregate turnover of Rs.
sections (1) and (2) of section 10 of the 95 lakhs in the preceding F.Y.
CGST Act, 2017?

I
1. RP whose aggregate turnover in the Section 10(2) of CGST Act

N
preceding FY did not exceed Rs. 75 lakhs.
2. RP whose aggregate turnover in the 15. RP shall not be eligible to opt for

SO
preceding FY did not exceed Rs. 1.5 crore. composition levy u/s 10(1) if such person
3. A person engaged in manufacture of pan is manufacturer of _____________
masala, tobacco & tobacco substitutes. (a) Ice cream, aerated water, Tobacco and
4. A person engaged in the manufacture of manufactured tobacco substitutes.
H
ice cream, other edible ice, whether or not (b) Ice cream, Pan masala, Tobacco and
containing cocoa. manufactured tobacco substitutes.
ES

5. A person engaged exclusively in providing (c) Ice cream, Pan masala, Aerated water,
restaurant service. Tobacco and manufactured tobacco
6. A person engaged exclusively in supply of substitutes.
M

medicines. (d) All of the above.

(a) 1, 2, 3, 5
A

(b) 1, 2, 5, 6 16. Which of the following is/are correct with

(c) 2, 3, 4, 5 respect to person ineligible to opt for
R

(d) 3, 4, 5, 6 composition scheme?

(a) He is engaged in the supply of services and
12. X & Co., a supplier registered under GST in supply of goods or service which are not
A

in Meghalaya, wants to opt for leviable to tax

composition levy. The aggregate (b) He is engaged in making any supply of
C

turnover limit for composition levy is- services through an ECO, liable to deduct
(a) Rs. 50 lakh TCS.
(b) Rs. 75 lakh (c) He is not engaged in the supply of services
(c) Rs. 1.5 crore and in supply of goods or service which are
(d) none of the above not leviable to tax
(d) Both a & b
13. Can a registered person under
composition scheme collect GST on his 17. C & Co., a registered supplier in Delhi,
outward supplies from recipients? opted for composition levy under sub-
(a) Yes, in all cases sections (1) and (2) of section 10 of the
(b) Yes, only on such goods as may be CGST Act, 2017. It sold goods in the fourth
notified by the Central Government quarter of a financial year for Rs.
(c) Yes, only on such services as may be 15,00,000 (exclusive of GST). The
notified by the Central Government applicable GST rate on these goods is
(d) No 12%. C & Co. purchased goods from
Ramesh & Co., registered in Delhi, for Rs.
9,55,000 on which Ramesh & Co. had

CA Ramesh Soni 4.13

 Composition Levy - MCQ
charged CGST of Rs. 57,300 and SGST of Which of the following options are
Rs. 57,300. C & Co. had also purchased available to her?
goods from E & Co., registered in Haryana, (a) She can pay tax @ 18%, charge it from
for Rs. 2,46,000 on which E & Co. had the customer and avail full input tax credit
charged IGST of Rs. 29,520. GST liability on procurements made.
of C & Co. for the fourth quarter of the (b) She can pay tax @ 6% under composition
financial year is- scheme for service providers but she
(a) CGST Rs. 7,500 & SGST Rs. 7,500 cannot charge GST from customers and
(b) CGST Rs. 3,180 & SGST Rs. 32,700 also cannot avail input tax credit.
(c) CGST Rs. 32,700 & SGST Rs. 3,180 (c) She is not liable for registration since her
(d) CGST Nil and SGST Nil aggregate turnover is less than Rs
40,00,000/-
18. A registered person ______ is not eligible (d) Either (a) or (b)
for composition scheme even though his
aggregate turnover does not exceed Rs. 20. Which of the following statements is not
1.5 crore in preceding FY. correct for a taxpayer who has opted for a
(a) trading in pan masala composition scheme?
(b) manufacturing aerated waters (a) A registered person supplying goods under

I
(c) receiving any inter-State inward supplies of the composition scheme shall issue a bill

N
goods of supply.
(d) making supply of goods exempted by way (b) Last date for payment of liability towards

SO
of a notification tax, interest, penalty, fee or any other
sum is the 20th day of each month.
Section 10(2A) of CGST Act (c) A composition dealer shall mention the
words “Composition taxable person, not
H
19. Miss. Raksha is engaged in providing eligible to collect tax on supplies” at the
private coaching services in Noida, Uttar top of the bill of supply issued by him.
ES

Pradesh and is not registered under GST (d) Last date for payment of liability towards
till 25-Sep-20XX. Her aggregate turnover tax, interest, penalty, fee or any other
is Rs 19,00,000/- on 30-Sep-20XX. She sum is the 18th day of the month following
M

got GST registration on 30-Sep-20XX. each quarter.

A

Answers:
Qs Ans Reason
R

1. a An eligible RP, whose aggregate turnover in the PFY does not exceed 1.5 crores in states
other than Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand, Arunachal
Pradesh, may opt to pay tax under composition scheme.
A

In the given case, Harish Trading Company situated in Haryana, is eligible to opt for
composition since his turnover has crossed registration limit but not 1.5 crores which is limit
C

up to which a person is eligible for composition.

2. d An eligible RP, whose aggregate turnover in the PFY does not exceed 1.5 crores in states
other than Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand,
Arunachal Pradesh, may opt to pay tax under composition scheme.
3. a An eligible RP, whose aggregate turnover in the PFY does not exceed Rs.75 lakh in the state
of Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand, Arunachal
Pradesh, may opt to pay tax under composition scheme.
Further, manufacturers of Ice cream shall not be eligible but traders of ice cream shall
be eligible to pay tax under composition scheme.
Since Fardeen Khan has not crossed the threshold limit of Rs. 75 lakhs and he is a trader in
ice-cream; hence he is eligible for composition scheme.
4. c If the turnover of a registered person paying taxes under composition scheme during the
year crosses the threshold limit, He will cease to remain under the composition scheme with
immediate effect and shall file an intimation in GST CMP 04 within 7 days of the event.
5. c As per Rule 5, a person opting for composition scheme shall pay tax under section 9(3)/9(4)
on inward supply of goods or services or both at the rate applicable to those services.

CA Ramesh Soni 4.14

 Composition Levy - MCQ
Qs Ans Reason
6. b An eligible RP, whose aggregate turnover in the PFY does not exceed Rs.75 lakh in the state
of Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand, Arunachal
Pradesh, may opt to pay tax under composition scheme.
7. d An eligible RP, whose aggregate turnover in the PFY does not exceed 1.5 crores in states
other than Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand,
Arunachal Pradesh, may opt to pay tax under composition scheme.
8. d An eligible RP, whose aggregate turnover in the PFY does not exceed 1.5 crores in states
other than Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand,
Arunachal Pradesh, may opt to pay tax under composition scheme.
9. c An eligible RP, whose aggregate turnover in the PFY does not exceed 1.5 crores in states
other than Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand,
Arunachal Pradesh, may opt to pay tax under composition scheme.
10. c A person who opts to pay tax under composition scheme may supply services of value not
exceeding 10% of turnover in a State/ UT in the PFY or Rs.5 Lakhs, whichever is higher.
11. b As per section 10(1), RP with ATO upto 75 lacs/1.5 cr shall be eligible under composition
scheme.
As per section 10(2), RP shall not be eligible to opt for composition scheme if he is engaged

I
N
in the manufacture of Ice cream and other edible ice, whether or not containing cocoa, pan
masala, tobacco & tobacco substitutes and aerated water.

SO
12. b An eligible RP, whose aggregate turnover in the PFY does not exceed Rs.75 lakh in the state
of Manipur, Mizoram, Nagaland, Sikkim, Meghalaya, Tripura, Uttarakhand, Arunachal
Pradesh, may opt to pay tax under composition scheme.
13. d Section 10(4) of CGST act: A taxable person to whom the provisions of sub-section (1) or,
as the case may be, sub-section (2A) apply shall not collect any tax from the recipient
H
on supplies made by him nor shall he be entitled to any credit of input tax.
ES

14. c (a) M/s ABC, a firm selling garments solely in Ahmedabad, having aggregate
turnover of Rs. 78 lakhs in the preceding F.Y.: Intrastate supplier of goods is eligible
for composition up to a turnover of Rs. 1.5 crore.
(b) A start-up company exclusively operating a restaurant in Delhi, having
M

aggregate turnover of Rs. 98 lakhs in the preceding F.Y.: supplier of restaurant

services is eligible for composition up to a turnover of Rs. 1.5 crore.
A

(c) A courier service company operating solely in Mumbai having aggregate

turnover of Rs. 90 lakhs in the preceding F.Y.: Supplier of services are not eligible
R

for composition u/s 10(1) & (2) of the CGST act.

(d) A trader selling grocery items solely in Orissa having an aggregate turnover of
A

Rs. 95 lakhs in the preceding F.Y.: Intrastate supplier of goods is eligible for
composition up to a turnover of Rs. 1.5 crore.
C

15. d RP shall not be eligible to opt for composition scheme if he is engaged in the
manufacture of Ice cream and other edible ice, whether or not containing cocoa, pan masala,
tobacco & tobacco substitutes and aerated water.
16. d RP shall be eligible to opt for composition scheme if he is not engaged in the supply of
services and in supply of goods or service which are not leviable to tax, is not engaged in
making any supply of services through an ECO, is not engaged in making interstate outward
supplies of goods or services.
17. a GST liability of C & Co. for the fourth quarter of the financial year is-
CGST = Rs. 15,00,000 x 0.1%= Rs. 7,500
SGST = Rs. 15,00,000 x 0.1%= Rs. 7,500
No ITC is available to a person under composition scheme.
18. b As per section 10(2), manufacturers of aerated water are ineligible for composition scheme.
19. d As per Section 10(2A) a RP, not eligible to opt to pay tax under 10(1) and 10(2), whose
aggregate turnover in PFY does not exceed Rs. 50 lakhs, may opt to pay tax u/s 9(1) or an
amount of tax calculated at such rate as may be prescribed, but not exceeding 6%.
20. b Last date for payment of liability is the 18th day of the month following each quarter.

CA Ramesh Soni 4.15

 Registration
5. Registration

Relevant definitions

Section 2(94): Registered person (RP)

Registered person means

 a person who is registered under section 25
 but does not include a person having a Unique Identity Number.

Section 2(107): Taxable person (TP)

Taxable person means a person

 Who is registered or
 liable to be registered under section 22 or section 24

Section 2(108): Taxable Supply (TS)

I
Taxable supply means a supply of goods or services or both which is leviable to tax under this Act;

N
Section 2(78): Non- taxable Supply (NTS)

SO
Non-taxable supply means a supply of goods or services or both which is not leviable to tax under this Act
or under the Integrated Goods and Services Tax Act;
H
Example: Supply of AL for human consumption and 5 petroleum products (HPMAN).
ES

Section 2(47): Exempt supply

Exempt supply means supply of any goods or services or both

M

 which attracts nil rate of tax or

 which may be wholly exempt from tax under section 11, or under section 6 of the IGST Act, and
 includes non-taxable supply;
A
R

Section 2(6): Aggregate Turnover (ATO)

Aggregate turnover means

A

- the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis),
C

- 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 all India basis
- but excludes central tax, State tax, Union territory tax, integrated tax and cess;

Author’s comments:
1. ATO means PAN-wise turnover
2. ATO is relevant for knowing
 Whether a person requires registration u/s 22(1) (threshold limit of up to 40/20/10 lakhs)
 If a person is eligible for composition scheme
 To know if a person needs audit of accounts under GST (compulsory audit if ATO > 2 crores)
3. Activities which are out of scope of supply, will not form part of ATO. Since they are not supply at all.
For example: Salary received for rendering service to employer will not be supply at all.
4. Outward supplies on which tax payable under RCM to be included.

CA Ramesh Soni 5.1

 Registration
Section 2(83): Outward supply

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;

Section 2(89): Principal place of business (PPOB)

PPOB means the place of business specified as the PPOB in the certificate of registration;

Section 22 - Persons liable for registration

Section 22(1): Registration on crossing applicable aggregate turnover

Every supplier shall be liable to be registered under this act in state/UT, (other than special category
states) from where he makes taxable supply of goods or services or both, if his aggregate turnover (ATO)
in a FY exceeds 20 lakh rupees:

I
N
Provided that where such person makes taxable supplies of goods or services or both from any of the

SO
special category states (SCS), he shall be liable to be registered if his aggregate turnover in a financial
year exceeds ten lakh rupees:

Explanation. - For the purposes of this sub-section, a person shall be considered to be engaged
H
exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of
extending deposits, loans or advances in so far as the consideration is represented by way of interest or
ES

discount.

Author’s comment:
• Power to increase the threshold limit for registration from Rs 20 to 40 lakhs on request of a state & on
M

the recommendations of the Council by notification has now been incorporated u/s 22(1), however no
notification has been issued using this power yet. Currently, NN. 10/2019 issued u/s 23(2) exempts
A

exclusive supplier of goods in some states from registration upto Rs 40 lacs.

• A person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in
R

exempt supply of services where consideration is interest or discount.

A

Explanation. — For the purposes of this section, —

(i) ATO shall include all supplies made by the taxable person (TP), whether on his own account or made
C

on behalf of all his principals;

Example on calculating ATO of Agent
Supplier Nature of supply Invoice in Value ATO
(In lakhs)
Mr Ram Sale on own account Tax invoice in own name 10 15
Sale on behalf of Principal Tax invoice in own name 5 lakhs
Mr Sale on own account Tax invoice in own name 10 10
Shyam Sale on behalf of Principal Tax invoice raised by Principal 5 lakhs
(ii) the expression “special category States” shall mean the States as specified 279A(4)(g) of the
Constitution except the State of Jammu & Kashmir and States of Arunachal Pradesh, Assam,
Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.

Crux: SCS for section 22 means the states of Manipur, Mizoram, Nagaland and Tripura (MNT).

Steps for calculating if registration applicable

1. Compute the Aggregate turnover.
2. Check applicable Aggregate turnover.

CA Ramesh Soni 5.2

 Registration
Note: ATO limit applicable will be Rs 10 lakhs if person making TAXABLE SUPPLIES from SCS.
3. IF ATO > 40/20/10 lakhs, registration in all states/UT from where TAXABLE SUPPLIES are made

Notification No. 10/2019 CT dated 07.03.2019:

In exercise of the powers conferred by section 23(2) of the CGST Act, 2017, the Central
Government, on the recommendations of the Council, hereby specifies the following category of persons,
as the category of persons exempt from obtaining registration under the said Act, namely:
Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the
financial year does not exceed forty lakh rupees, except,
(a) persons required to take compulsory registration u/s 24;
(b) persons engaged in making supplies of the goods, as specified in the Table below:
Sl No. Description
1 Ice cream and other edible ice, whether or not containing cocoa
2 Pan masala
3 All goods, i.e., Tobacco and manufactured tobacco substitutes
4 Fly ash bricks or fly ash aggregates; Fly ash blocks
5 Bricks of fossil meals or similar siliceous earths
6 Building bricks

I
7 Earthen or roofing tiles

N
(c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur,
Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and

SO
(d) persons exercising voluntary registration u/s 25(3), or such RPs who intend to continue with their
registration.

State-wise registration limit - Crux:

H
Turnover Limit States Mnemonic
10 Lacs for Both SOG/SOS Manipur, Mizoram, Nagaland, Tripura M2NT
ES

20 Lacs for Both SOG/SOS Puducherry, Uttarakhand, Meghalaya, PUMAS of

Arunachal Pradesh, Sikkim, Telangana Telangana
40 Lacs - SOG, 20L – SOS Other states, Assam, J&K, HP OAK of HP
M

Examples for practice:

A

Supplier Supplying ATO Applicable Registration

ATO
R

Ram of Exclusively in supply of Furniture 25 lakhs 40 lakhs No

Assam Exclusively in supply of Tobacco 25 lakhs 20 lakhs Yes
Exclusively in supply of taxable services 25 lakhs 20 lakhs Yes
A

Supplying both taxable goods & services 25 lakhs 20 lakhs Yes

C

Shyam of Exclusively in supply of Chairs 25 lakhs 20 lakhs Yes

Puducherry Exclusively in supply of Ice cream 25 lakhs 20 lakhs Yes
Exclusively in supply of taxable services 25 lakhs 20 lakhs Yes
Supplying both Goods and Services 25 lakhs 20 lakhs Yes
Kashi of Exclusively in supply of Electronics 15 lakhs 10 lakhs Yes
Mizoram Exclusively in supply of Pan masala 15 lakhs 10 lakhs Yes
Exclusively in supply of taxable services 15 lakhs 10 lakhs Yes
Supplying both taxable goods & services 15 lakhs 10 lakhs Yes

Illustration on Registration requirement and Applicable ATO:

Supplier State Turnover (in ATO ATO Remarks
lakhs) applicable
Ram Assam Sale of Goods: 38 43 40 lakhs ATO shall include interest/discount
Interest Income: lakhs income, but such income cannot
5 make him ineligible for higher limit
of Rs 40 lacs. Ram shall be deemed
to be exclusive supplier of goods

CA Ramesh Soni 5.3

 Registration
Supplier State Turnover (in ATO ATO Remarks
lakhs) applicable
even if he is engaged in exempt
supply of services where
consideration is interest or discount.
He shall be required registration
Shyam Assam Sale of Goods: 38 39 40 lakhs Shyam shall not be required
Interest Income: lakhs registration since ATO did not
1 exceed Rs 40 lacs.

Section 22(2): Under old Law (existing law) registered persons:

Every person who, on the day immediately preceding the appointed day, is registered/holds a license
under an existing law, shall be liable to be registered under this Act with effect from the appointed day.

Example: Ram ltd a manufacturer was registered under VAT and Excise, now with the coming of GST on
appointment day, Ram ltd is liable to register. Ram ltd is required to migrate from OLD to GST.

I
Section 22(3): Transfer/Succession of business as going concern:

N
Where a business carried on by a taxable person registered under this Act is transferred, whether on

SO
account of succession/otherwise, to another person as a going concern, the transferee/the successor, as
the case may be, shall be liable to be registered with effect from the date of such transfer or succession.

Author’s comment: Unutilized ITC in the transferor e-credit ledger to get transferred to
H
transferee/successor.
ES

Example: Ram registered under GST transfers his business as going concern to Shyam, Shyam is liable
to be registered from the date of such transfer without considering any threshold limit for registration.
M

Section 22(4): Amalgamation/Demerger pursuant to a court/tribunal order:

A

Notwithstanding anything contained in sub-sections (1) and (3),

 in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as
R

the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal
or otherwise,
 the transferee shall be liable to be registered,
A

 with effect from the date on which the Registrar of Companies (ROC) issues a certificate of
C

incorporation (COI) giving effect to such order of the High Court or Tribunal.

Crux: Transferee liable register, with effect from the date on which the ROC issues a COI giving effect to
court/tribunal order.

Section 23 – Persons not liable for registration

Notwithstanding anything to the contrary contained in section 22(1) or section 24,––

Section 23(1): The following persons shall not be liable to registration, namely:

(a) any person engaged exclusively in the business of supplying goods or services or both that are not
liable to tax or wholly exempt from tax under this Act or under the IGST Act;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land

Author’s comments:
 Person supplying exclusively Nil rated, wholly exempt or non-taxable supplies are not liable.
 Agriculturist supplying anything which is cultivation of land, he will not be liable
CA Ramesh Soni 5.4
 Registration
 Agricultural Land can be own land, leased land or taken on rent, important to note is it should be
produced out of cultivation of land and supplier should be agriculturist.

Section 2(7): Agriculturist means an individual/HUF who undertakes cultivation of land—

- by own labour/labour of family, or
- by servants on wages payable in cash/kind or
- by hired labour under personal supervision/the personal supervision of any member of the family.

Examples:
SN Particulars Registration?
1 Petrol bunks selling only petrol & diesel Not required
2 Petrol pumps selling Engine oil or food items along with petrol. Required
3 Shops supplying Alcoholic liquor for human consumption Not required
4 Shops supplying Alcoholic liquor for human consumption plus snacks Required
5 Agriculturist owns land and does cultivation Not required
6 Agriculturist takes land on rent and does cultivation Not required
7 Agriculturist takes land on rent & cultivation done by servants on wages Not required
8 Agriculturist does cultivation plus also runs a dairy. Required

I
N
Example: (ICAI study material)

SO
Deshbandhu is an agriculturist engaged in cultivation of wheat in his field in the State of Punjab. He was
exclusively engaged in supply of wheat cultivated in his field in the previous year. Thus, he was not liable
to registration as he was exclusively engaged in supply of produce out of cultivation of land.
In the current year, he decides to start trading in rice apart from supplying his wheat produce. His
turnover in the current year is Rs 32 lakh from supply of wheat produced and Rs 9 lakh from trading of
H
rice.
ES

Since he is engaged in trading of rice also, he is not covered under section 23 above. The threshold limit
for registration applicable to a person exclusively engaged in supply of goods in the State of Punjab is Rs
40 lakh. The aggregate turnover of Deshbandhu in the current year is Rs 41 lakh [Rs 32 lakh + Rs 9 lakh]
which exceeds the threshold limit. Thus, he will be liable to registration.
M

Section 23(2): Notified category of persons exempted from obtaining registration:

A

Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section

R

24, the Government may, on the recommendations of the Council, by notification, subject to such
conditions and restrictions as may be specified therein, specify the category of persons who may be
A

exempted from obtaining registration under this Act.

C

Note: There are various notifications issued under this section which has been explained along with
section 22 and Section 24.

Circular: Registration requirement of a commission agent selling agricultural produce on behalf

of agriculturist.

Liability to register in respect of services provided by the commission agent for sale/ purchase
of agricultural produce

Scenario: Mr A sells agricultural produce by utilizing the services of Mr B who is a commission agent as
per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr B identifies the buyers
and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A. As
per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on behalf
of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and
receives, by way of remuneration, a commission or percentage upon the amount involved in such
transaction.

CA Ramesh Soni 5.5

 Registration
In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Schedule
I. However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission agent (Mr.
B) does not fall under the category of agent covered under Schedule I.
In respect of commission agents in above Scenario, notification No. 12/2017 Central Tax (Rate) dated
24.06.2017 has exempted “services by any APMC or board or services provided by the commission agents
for sale or purchase of agricultural produce” from GST.

Thus, the “services‟ provided by the commission agent for sale or purchase of agricultural produce is
exempted. Such commission agents (even when they qualify as agent under Schedule I) are not liable to
be registered according to section 23(1)(a) of the CGST Act, if the supply of the agricultural produce, and
/or other goods or services supplied by them are not liable to tax or wholly exempt under GST.

Further, according to clause (vii) of section 24 of the CGST Act, a person is liable for mandatory
registration if he makes taxable supply of goods or services or both on behalf of other taxable persons.

Accordingly, the requirement of compulsory registration for commission agent, under the said
clause shall arise when both the following conditions are satisfied, namely: -
(a) the principal should be a taxable person; and
(b) the supplies made by the commission agent should be taxable.

I
N
Generally, a commission agent under APMC Act makes supplies on behalf of an agriculturist. Further, as

SO
per provisions of section 23(1)(b) of the CGST Act an agriculturist who supplies produce out of cultivation
of land is not liable for registration and therefore does not fall within the ambit of the term “taxable
person‟. Thus, a commission agent who is making supplies on behalf of such an agriculturist, who is not a
taxable person, is not liable for compulsory registration under clause (vii) of section 24 of the CGST Act.
H
However, where a commission agent is liable to pay tax under reverse charge, such an agent will be
required to get registered compulsorily under section 24 (iii) of the CGST Act.
ES

Section: 24 – Compulsory Registration in certain cases

Notwithstanding anything contained in section 22(1), the following categories of persons shall be
M

required to be registered under this Act,

A

(i) Persons making any inter-State taxable supply;

Notification u/s 23(2): Following categories of person exempted u/s 23(2) if ATO upto
R

20/10 lacs (SCS)

A

1. Interstate supplier of notified handicraft goods & notified craftsmen products when
made by craftsmen predominantly by hand even though some machinery may also be used
C

in the process: However, such persons have obtained a PAN and have generated an e- way bill.
2. Interstate supplier of taxable services. [NNo. 10/2017 IT dated 13.10.2017]

(ii) Casual taxable persons making taxable supply;

Section 2(20): Casual taxable person means

 a person who occasionally undertakes transactions involving supply of g/s/b
 in the course or furtherance of business,
 whether as principal, agent or in any other capacity,
 in a State/UT where he has no fixed place of business.

Notification u/s 23(2): CTPs making inter-State taxable supplies of notified handicraft/craftsmen
goods exempted up to Rs 20/10 lakhs. However, they should have obtained a PAN & have
generated an e- way bill.

(iii) Persons who are required to pay tax under reverse charge;

CA Ramesh Soni 5.6

 Registration
Notification No. 5/2017-CT: The persons who are only engaged in making supplies of
taxable goods/services/both, the total tax on which is liable to be paid on reverse charge basis
by the recipient u/s 9(3) of the said Act as the category of persons exempted from obtaining
registration under the aforesaid Act.

Example: If RS Ltd is registered under GST and it pays an amount to its directors, on which RCM is
applicable, since it is already registered no new registration required.

(iv) Person who are required to pay tax u/s 9(5);

(v) Non-resident taxable persons making taxable supply;

Section 2(77): Non-resident taxable person means:

 any person who occasionally undertakes transactions involving supply of g/s/b,
 whether as principal or agent or any other capacity,
 but who has no fixed place of business or residence in India.

(vi) Persons who are required to deduct tax u/s 51, whether or not separately registered

I
under this Act;

N
(vii) Persons who make taxable supply of g/s/b on behalf of other taxable persons whether as

SO
an agent or otherwise;

Author’s comment: Agent supplying on behalf of principals, and if the principal is a taxable
person, agent is required to take compulsory registration.
H
(viii) [NA for CA Intermediate]
ES

(ix) Persons who supply g/s/b, other than supplies specified u/s 9(5), through such ECO who
is required to collect tax at source under section 52;
M

Notification No. 65/2017 – Central Tax dated 15.11.17

In exercise of the powers conferred by section 23(2) of the CGST act, the Central
A

Government, on the recommendations of the Council, hereby specifies

R

 the persons making supplies of services, other than supplies specified u/s 9(5) through an ECO
who is required to collect tax at source u/s 52, and having an ATO, to be computed on all India
basis, not exceeding an amount of twenty lakh rupees in a financial year,
A

 as the category of persons exempted from obtaining registration under the said Act:
C

Provided that the aggregate value of such supplies, to be computed on all India basis, should not
exceed an amount of ten lakh rupees in case of “special category States” as specified in the first
proviso to section 22(1), read with clause (iii) of the Explanation to the said section.

Crux: Supplier of goods through ECO (who is required to collect TCS) are required compulsory
registration, whereas supplier of services (intra/interstate) through an ECO (who is required to
collect TCS) exempt upto ATO Rs 20/10 lakhs.

Notification u/s 23(2): Supplier exempted from the requirement of mandatory

registration u/s 24(ix) for person supplying goods through ECOs, subject to certain
conditions.

The CG, on the recommendations of the Council, hereby specifies the persons making supplies of
goods through an ECO who is required to collect tax at source u/s 52 and having an aggregate
turnover in the preceding FY and in the current FY not exceeding the amount of aggregate turnover
above which a supplier is liable to be registered in the State/UT in accordance with the provisions of

CA Ramesh Soni 5.7

 Registration
section 22(1), as the category of persons exempted from obtaining registration under the said Act,
subject to the following conditions, namely:—
(i) such persons shall not make any inter-State supply of goods;
(ii) such persons shall not make supply of goods through ECO in more than one State/UT;
(iii) such persons shall be required to have a PAN issued under the Income Tax Act;
(iv) such persons shall, before making any supply of goods through ECO, declare on the common
portal their PAN issued under the Income Tax Act, 1961, address of their place of business
and the State/UT in which such persons seek to make such supply, which shall be subjected
to validation on the common portal;
(v) such persons have been granted an enrolment number on the common portal on successful
validation of the PAN declared as per clause (iv);
(vi) such persons shall not be granted more than one enrolment number in a State/UT;
(vii) no supply of goods shall be made by such persons through ECO unless such persons have
been granted an enrolment number on the common portal; and
(viii) where such persons are subsequently granted registration u/s 25, the enrolment number shall
cease to be valid from the effective date of registration.

(x) Every electronic commerce operator who is required to collect tax at source u/s 52.

I
N
(xi) [NA for CA Intermediate]

SO
(xii) Such other person or class of persons as may be notified by the Government on the
recommendations of the Council.

Registration procedures - Part II

H
Section 25: Procedure for Registration
ES

Section 25(1): Person liable to be registered shall apply within 30 days

Every person who is liable to be registered u/s 22/24 shall apply for registration in every such State/UT
M

in which he is so liable within thirty days from the date on which he becomes liable to registration, in
such manner and subject to such conditions as may be prescribed
A

Provided that a casual taxable person or a non-resident taxable person shall apply for registration at
R

least 5 days prior to commencement of business

A

Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a
SEZ or being a SEZ developer shall have to apply for a separate registration, as distinct from his place of
C

business located outside the Special Economic Zone in the same State or Union territory.

Explanation: Every person who makes a supply from the TWI shall obtain registration in the
coastal State/UT where the nearest point of the appropriate base line is located.

Rule 8: Application for registration

(1) Every person who is liable to be registered under sub-section (1) of section 25 and every person
seeking registration under section 25(3) (hereafter in this Chapter referred to as "the applicant"),
except–,
(i) a non-resident taxable person;
(ii) a person required to deduct tax at source under section 51;
(iii) a person required to collect tax at source under section 52;
(iv) a person supplying OIDAR services from a place outside India to a non-taxable online recipient
referred to in section 14 or a person supplying online money gaming from a place outside India
to a person in India referred to in section 14A under the IGST Act, 2017,

CA Ramesh Soni 5.8

 Registration
shall, before applying for registration, declare his Permanent Account Number, State or Union territory
in Part A of FORM GST REG-01 on the common portal, either directly or through a Facilitation Centre
notified by the Commissioner

Proviso: Input service distributor shall make separate registration application for registration as such
Input Service Distributor.

(2) (a) The Permanent Account Number shall be validated online by the common portal from the database
maintained by the Central Board of Direct Taxes and shall also be verified through separate one-time
passwords sent to the mobile number and e-mail address linked to the Permanent Account Number.

(3) On successful verification of PAN, mobile no and Email - a temporary reference number (TRN) shall
be generated and Communicated to the applicant on the said mobile no. & e-mail address.

(4) Submission of Application - in Part B of GST REG-01 duly signed/verified through EVC, along with
the documents specified in the said Form at the common portal, either directly or through a
Facilitation Centre notified by the Commissioner.

I
(4A) Where an applicant, other than a person notified under section 25(6D), opts for authentication of

N
Aadhaar number, he shall, while submitting the application under sub-rule (4), undergo authentication

SO
of Aadhaar number and the date of submission of the application in such cases shall be
- the date of authentication of the Aadhaar number, or
- fifteen days from the submission of the application in Part B of FORM GST REG-01 under sub-rule
(4),
whichever is earlier.
H
Provided that every application made under sub-rule (4) by a person, other than a person notified
ES

under section 25(6D), who has opted for authentication of Aadhaar number and is identified on the
common portal, based on data analysis and risk parameters, shall be followed by biometric-based
Aadhaar authentication and taking photograph of the applicant where the applicant is an individual or
M

of such individuals in relation to the applicant as notified under section 25(6C) where the applicant is
not an individual, along with the verification of the original copy of the documents uploaded with the
A

application in FORM GST REG-01 at one of the Facilitation Centres notified by the Commissioner for the
purpose of this sub-rule and the application shall be deemed to be complete only after completion of
R

the process laid down under this proviso.

A

Provided further that every application made under sub-rule (4) by a person, other than
a person notified under section 25(6D), who has not opted for authentication of Aadhaar
C

number, shall be followed by taking photograph of the applicant where the applicant is an
individual or of such individuals in relation to the applicant as notified under sub-
section 25(6C) where the applicant is not an individual, along with the verification of
the original copy of the documents uploaded with the application in FORM GST REG-01 at
one of the Facilitation Centers notified by the Commissioner for the purpose of this sub-rule
and the application shall be deemed to be complete only after successful verification as laid
down under this proviso.

Note: Amendment which is bold and underlined is not applicable to Jan 25 exams.

(4B) The CG may, on the recommendations of the Council, by notification specify the States or Union
territories wherein the provisio to sub-rule (4A) shall not apply.

Notification: the provisions of sub-rule (4A) of rule 8 of the said rules shall not apply in all the States
and Union territories except the States of Andhra Pradesh, Gujarat and Puducherry.

Author: This notification is only applicable for Jan 25, not applicable from May 25 Exam
onwards attempt. Meaning thereby that for May 25 onwards attempt, students should

CA Ramesh Soni 5.9

 Registration
remember that Bio metric based Aadhaar authentication can be done of a person from any
state if the person is identified on the common portal, based on data analysis and risk
parameters.

(5) On receipt of an application under sub-rule (4) or sub-rule (4A), an acknowledgement shall be issued
electronically to the applicant in FORM GST REG-02.

(6) A person applying for registration as a casual taxable person shall be given a temporary reference
number by the common portal for making advance deposit of tax in accordance with the provisions of
section 27 and the acknowledgement under sub-rule (5) shall be issued electronically only after the
said deposit.

Rule 9 - Verification of the application and approval

(1) The Application shall be forwarded to PO - PO to examine application & accompanying

documents – if found to be in order, approve the grant of registration to the applicant within 7 WDs
from submission of the application:
Provided that where-

I
(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo

N
authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for
authentication of Aadhaar number; or

SO
(aa)a person, who has undergone authentication of Aadhaar number as specified in sub-rule (4A) of
rule 8, is identified on the common portal, based on data analysis and risk parameters, for
carrying out physical verification of places of business; or
H
(b) the proper officer, with the approval of an officer authorised by the Commissioner not below the
ES

rank of Assistant Commissioner, deems it fit to carry out physical verification of places of
business,
the registration shall be granted within thirty days of submission of application, after physical
verification of the place of business, in the manner provided under rule 25 and verification of such
M

documents as the proper officer may deem fit.

A

(2) Where the application submitted under rule 8 is found to be deficient, either in terms of any
information or any document required to be furnished under the said rule, or where the proper officer
R

requires any clarification with regard to any information provided in the application or documents
furnished therewith, he may issue a notice to the applicant electronically in FORM GST REG-03 within
A

a period of seven working days from the date of submission of the application and the applicant shall
furnish such clarification, information or documents electronically, in FORM GST REG-04, within a
C

period of seven working days from the date of the receipt of such notice:

Provided that where-

(a) a person, other than a person notified under sub-section (6D) of section 25, fails to undergo
authentication of Aadhaar number as specified in sub-rule (4A) of rule 8 or does not opt for
authentication of Aadhaar number; or

(aa) a person, who has undergone authentication of Aadhaar number as specified in sub-rule (4A) of
rule 8, is identified on the common portal, based on data analysis and risk parameters, for
carrying out physical verification of places of business; or

(b) the proper officer, with the approval of an officer authorised by the Commissioner not below the
rank of Assistant Commissioner, deems it fit to carry out physical verification of places of
business,
the notice in FORM GST REG-03 may be issued not later than thirty days from the date of submission
of the application.

CA Ramesh Soni 5.10

 Registration
Explanation - For the purposes of this sub-rule, the expression "clarification" includes
modification/correction of particulars declared in the application for registration, other than PAN,
State, mobile number and e-mail address declared in Part A of GST REG-01.
(3) PO Satisfied, approve grant of registration within 7 WDs from date of receipt of such CID.
(4) No reply/PO not satisfied - he may record reasons & reject application & inform applicant in GST
REG 05.

(5) If the proper officer fails to take any action, -

(a) within a period of seven working days from the date of submission of the application in cases
where the person is not covered under proviso to sub-rule (1); or
(b) within a period of thirty days from the date of submission of the application in cases where a
person is covered under proviso to sub-rule (1); or
(c) within a period of seven working days from the date of the receipt of the clarification,
information or documents furnished by the applicant under sub-rule (2),
the application for grant of registration shall be deemed to have been approved.

Rule 10 - Issue of registration certificate

(1) Application approved under rule 9 – a certificate of registration in GST REG-06 showing

I
N
Principal place of Business (PPOB) & additional place or places of Business (APOB) shall be made
available to the applicant on the common portal & a Goods and Services Tax Identification Number

SO
(GSTIN) shall be assigned (15 characters) namely:
2 9 C C B P S 7 7 0 0 R 1 Z (default) 1
State PAN No. of Reg. in Code for checksum
code State (1-9) regular reg. character (1-9)
H
(2) If application submitted within 30 days of becoming liable – it is effective from date person
ES

becomes liable.
(3) If registration applied after 30 days of becoming liable, it is effective from date of the grant.
(4) Every registration certificate to be duly signed/verified through electronic verification code (EVC) by
PO.
M

(5) Where the registration has been granted under rule 9(5), the applicant shall be communicated the
registration number, and the certificate of registration under sub-rule (1), duly signed or verified
A

through EVC, shall be made available to him on the common portal, within a period of three days
after the expiry of the period specified in rule 9(5).
R

Rule 25: Physical verification of business premises in certain cases

A

(1) Where the proper officer is satisfied that the physical verification of the place of business of a person
C

is required after the grant of registration, he may get such verification of the place of business
done and the verification report along with the other documents, including photographs, shall be
uploaded in GST REG-30 on the common portal within a period of fifteen working days following the
date of such verification.

(2) Where the physical verification of the place of business of a person is required before the grant of
registration in the circumstances specified in the proviso to sub- rule (1) of rule 9, the proper officer
shall get such verification of the place of business done and the verification report along with the
other documents, including photographs, shall be uploaded in FORM GST REG-30 on the common
portal at least five working days prior to the completion of the time period specified in the said
proviso.

Form GST Reg 30: Form for field visit report.

Rule 10A: Furnishing of Bank Account Details

After a certificate of registration in FORM GST REG-06 has been made available on the common portal
and a GSTIN has been assigned,
CA Ramesh Soni 5.11
 Registration
 the registered person, except those who have been granted registration under rule 12/16, shall
 within a period of thirty days from the date of grant of registration, or before furnishing the details
of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using invoice
furnishing facility, whichever is earlier, furnish information with respect to details of bank account on
the common portal

Just for Knowledge

Rule 12: Grant of registration to persons required to deduct tax at source or to collect tax at source
Rule 16: Suo moto registration by PO

Crux:
1. Maximum time limit to furnish bank account details: Earlier of:
(a) 30 days from the date of grant of registration
(b) before furnishing the details of outward supplies in FORM GSTR-1/using invoice furnishing facility
2. Non-furnishing of bank account details: May lead to suspension & registration.
3. Relaxation of furnishing bank account post registration not available to TDS deductor/TCS
collector and the person whose registration was done by PO suo-moto (i.e., they should furnish a/c
details at the time of registration).

I
N
Rule 10B: Aadhaar authentication for registered person

SO
The registered person, other than a person notified u/s 25(6D), who has been issued a certificate of
registration under rule 10 shall, undergo authentication of the Aadhaar number
 of the proprietor, in the case of proprietorship firm, or
 of any partner, in the case of a partnership firm, or
H
 of the karta, in the case of a Hindu undivided family, or
 of the Managing Director or any whole time Director, in the case of a company, or
ES

 of any of the Members of the Managing Committee of an Association of persons or body of individuals
or a Society, or
 of the Trustee in the Board of Trustees, in the case of a Trust and of the authorized signatory,
in order to be eligible for the purposes as specified in column (2) of the Table below:
M

S. No. Purpose
1. For filing of application for revocation of cancellation of registration in FORM GST REG-21 under
A

Rule 23
2. For filing of refund application in FORM RFD-01 under rule 89
R

3. For refund under rule 96 of the integrated tax paid on goods exported out of India
A

Provided that if Aadhaar number has not been assigned to the person required to undergo
authentication of the Aadhaar number, such person shall furnish the following identification documents,
C

namely: –
(a) her/his Aadhaar Enrolment ID slip; and
(b)
(i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988:

Provided further that such person shall undergo the authentication of Aadhaar number within a period
of thirty days of the allotment of the Aadhaar number.

Rule 18: Display of RC and GSTIN on the name board

(1) Every RP shall display his certificate of registration in a prominent location at his principal place of
business (PPOB) & at every additional place of business (APOB)/APOBs.
(2) Every RP shall display his Goods and Services Tax Identification Number (GSTIN) on the name board
exhibited at the entry of his PPOB & at every APOB/APOBs.

CA Ramesh Soni 5.12

 Registration

Section 25(2): A person seeking registration under this Act shall be granted a single
registration in a State or Union territory

Provided that a person having multiple place of business (POB) in a State/UT may be granted a
separate registration for each such POB, subject to such conditions as may be prescribed.

Rule 11: Separate registration for multiple POBs within a State/UT.

(1) Person having Multiple POBs within ST/UT requiring separate registration may obtain
separate registration and shall be granted separate registration subject to the following conditions:
(a) such person has more than one POBs (warehouse/godown/place where books are maintained
etc.);
(b) such person shall not pay tax under composition for any of his POB if he is paying tax under
normal levy for any other POBs;
(c) Pay tax on supply made between registered POBs & issue a tax invoice/ a bill of supply (BOS), for
such supply.

Explanation. - For the purposes of clause (b), it is hereby clarified that where any POB of a RP that

I
N
has been granted a separate registration becomes ineligible to pay tax u/s 10, all other registered
places of business of the said person shall become ineligible to pay tax under the said section.

SO
(2) Separate application in FORM GST REG-01 in respect of such place of business.
(3) Rule 9 and rule 10 relating to the verification & the grant of registration shall apply mutatis mutandis.
H
Example: (ICAI study material)
Meethalal & Sons - a supplier in Maharashtra - has three branches in Mumbai, Pune and Mahabaleshwar.
ES

Mumbai and Pune branches are engaged in supply of garments and Mahabaleshwar branch engaged in
supply of shoes. Either it can obtain single registration for Maharashtra declaring one of the branches as
PPOB (let’s say Mumbai) and other two branches (Pune and Mahabaleshwar) as APOB or it can obtain
separate GST registration for each of the three branches in Mumbai, Pune and Mahabaleshwar as
M

separate places of business.

In case Meethalal & Sons opts to have separate registrations for its all three branches and Mumbai branch
A

sends some garments [subject to GST] for sale to Pune branch, Mumbai branch must raise a tax invoice
and pay tax on such transfer of garments to Pune branch.
R

Section 25(3): Voluntary registration (VR)

A

A person, though not liable to be registered u/s 22/24 may get himself registered voluntarily, and all
C

provisions of this Act, as are applicable to a registered person, shall apply to such person.

Section 25(4): Distinct person

Person who has obtained/required to obtain multiple Registration, in one state/multiple states – Such
person w.r.t each registration be treated as distinct person

Section 25(5): Distinct person

Person who has obtained/required to obtain registration in 1 state/UT in respect of an establishment, has
establishment in another state/UT then such establishments shall be treated as establishments of distinct
persons.

Section 25(6): PAN is mandatory for grant of Registration

Every person shall have a PAN issued under the IT Act, 1961 in order to be eligible for grant of
registration.

CA Ramesh Soni 5.13

 Registration
Section 25(6A):

Every registered person shall undergo authentication, or furnish proof of possession of Aadhaar number,
in such form and manner and within such time as may be prescribed:

Provided that
 if an Aadhaar number is not assigned to the registered person,
 such person shall be offered alternate and viable means of identification
 in such manner as Government may, on the recommendations of the Council, prescribe:

Provided further that

 in case of failure to undergo authentication or furnish proof of possession of Aadhaar number or
furnish alternate and viable means of identification,
 registration allotted to such person shall be deemed to be invalid and
 the other provisions of this Act shall apply as if such person does not have a registration.

Section 25(6B):

On and from the date of notification,

I
N
- every individual shall,
- in order to be eligible for grant of registration,

SO
- undergo authentication, or furnish proof of possession of Aadhaar number,
- in such manner as the Government may, on the recommendations of the Council, specify in the said
notification:
H
Provided that if an Aadhaar number is not assigned to an individual, such individual shall be offered
alternate and viable means of identification in such manner as the Government may, on the
ES

recommendations of the Council, specify in the said notification.

Notification No. 18/2020 – Central Tax dated 23.03.2020 (Effective 01.04.20)

M

In exercise of the powers conferred by section 25(6B) of the CGST Act, 2017, the CG, on the
recommendations of the Council, hereby notifies the date of coming into force of this notification as the
date, from which an individual shall undergo authentication, of Aadhaar number, as specified in rule 8 of
A

the CGST Rules, 2017, in order to be eligible for registration:

R

Provided that if Aadhaar number is not assigned to the said individual, he shall be offered alternate and
viable means of identification in the manner specified in rule 9 of the said rules.
A

Section 25(6C):
C

On and from the date of notification,

- every person, other than an individual,
- shall, in order to be eligible for grant of registration,
- undergo authentication, or furnish proof of possession of Aadhaar number of the
 Karta,
 Managing Director,
 whole time Director,
 such number of partners,
 Members of Managing Committee of Association,
 Board of Trustees,
 authorised representative,
 authorised signatory and
 such other class of persons,

in such manner, as the Govt may, on the recommendation of the Council, specify in the said notification:

CA Ramesh Soni 5.14

 Registration
Provided that where such person or class of persons have not been assigned the Aadhaar Number, such
person or class of persons shall be offered alternate and viable means of identification in such manner as
the Government may, on the recommendations of the Council, specify in the said notification.

Notification No. 19/2020 – Central Tax dated 23.03.20 (Effective 01.04.20)

In exercise of the powers conferred by section 25(6C) of the CGST Act, 2017, the CG, on the
recommendations of the Council, hereby notifies the date of coming into force of this notification as the
date, from which the –
(a) authorised signatory of all types;
(b) Managing and Authorised partners of a partnership firm; and
(c) Karta of a Hindu undivided family,
shall undergo authentication of possession of Aadhaar number, as specified in rule 8 of the CGST Rules,
2017, in order to be eligible for registration under GST:

Provided that if Aadhaar number is not assigned to the said persons, they shall be offered alternate and
viable means of identification in the manner specified in rule 9 of the said rules.

Section 25(6D):

I
N
The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to
such person or class of persons or any State or Union territory or part thereof, as the Government may,

SO
on the recommendations of the Council, specify by notification.

Notification: The provisions of section 25(6A)/(6B)/(6C) shall not apply to a person who is, ___
(a) not a citizen of India; or
H
(b) a department or establishment of the Central Government or State Government; or
(c) a local authority; or
ES

(d) a statutory body; or

(e) a Public Sector Undertaking; or
(f) a person applying for registration under the provisions of section 25(9) of the said Act.
M

Section 25(7): NRTP

A

Notwithstanding anything contained in sub-section (6), a NRTP may be granted registration under sub-
section (1) on the basis of such other documents as may be prescribed.
R

Rule 13: Grant of registration to NRTP

A

(1) Application in GST REG 09, along with a self-attested copy of his valid passport, at least 5 days
C

prior to the commencement of business

Proviso: If business entity incorporated o/s India, the application shall be submitted along with its
tax identification number/unique no. on the basis of which the entity is identified by Govt. of that
country/it’s PAN, if available.
(2) He shall be given a temporary reference number for making an advance deposit of tax &
after deposit of tax acknowledgement shall be issued.
(3) The provisions of rule 9 & 10 shall apply mutatis mutandis.
(4) The application for registration made by a NRTP shall be duly signed/verified through EVC by his
authorized signatory who shall be a person resident in India having a valid PAN.

Section 25(8): If a person liable but fails, PO may proceed to register

Where a person who is liable to be registered under this Act fails to obtain registration, the PO may,
without prejudice to any action which may be taken under this Act or under any other law for the time
being in force, proceed to register such person in such manner as may be prescribed.

CA Ramesh Soni 5.15

 Registration
Rule 16: Suo-moto registration (by PO)

(1) PO during survey/enquiry/inspection/search, finds that a person liable has failed to apply for
registration, PO may register the said person on a temporary basis & issue an order in GST REG-12.
(2) The registration granted under sub rule (1) shall be effective from the date of such order
granting registration.
(3) Every person to whom a temporary registration has been granted under sub rule (1) shall within 90
days of grant of such registration,
 Submit an application for registration in the form and manner provided in rule 8/12: or
 File an appeal against such temporary registration
In appeal case the application for registration shall be submitted within 30 days from the date of the
issuance of the order upholding the liability to registration by the Appellate Authority.

Section 25(9): Specialised Agency of UNO, MFIO, Consulate and Embassy

(a) any specialised agency of the UNO/any Multilateral Financial Institution and Organisation notified
under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign
countries; and

I
(b) any other person or class of persons, as may be notified by the Commissioner,

N
shall be granted a Unique Identity Number (UIN) in such manner and for such purposes, including
refund of taxes on the notified supplies of g/s/b received by them, as may be prescribed.

SO
Rule 17: Assignment of Unique Identity Number to certain special entities

(1) Submit an application electronically in FORM GST REG- 13,

H
(1A) UIN granted to a person shall be applicable to the territory of India.
(2) The PO, upon submission of an application/receiving a recommendation from the Ministry of External
ES

Affairs, Government of India, assign a UIN & issue a RC within a period of 3 working days
(WDs) from the date of the submission of the application.

Section 26: Deemed Registration

M

(1) Grant of RC/UIN under SGST/UTGST act - deemed grant of Registration/UIN under CGST act
A

(2) Any Rejection of application under SGST/UTGST act - Deemed rejection of application under CGST
act.
R

Section 27: Special provisions relating to CTP and NRTP

A

(1) The certificate of registration issued to CTP/NRTP shall be valid for period specified in the application
C

for registration/ 90 days from the effective date of registration, whichever is earlier & such person
shall make taxable supplies only after the issuance of the certificate of registration:
Proviso: The PO may extend the said period of 90 days by a further period not exceeding 90 days.

(2) A CTP/a NRTP shall, at the time of application to deposit estimated tax liability in advance
Proviso: In case of extension, additional estimated advance tax liability to be deposited.

(3) Amount of tax deposited, to be credited to E-cash ledger.

Rule 15: Extension in period of operation by CTP/NRTP

(1) Application in FORM GST REG-11 before the end of the validity of registration granted to him.
(2) The application shall be acknowledged only on payment of additional estimated tax liability.

Note: CTP will submit the application for registration in the normal form for application for registration
i.e., Form GST REG 01 and his registration of CTP will be a PAN based registration.

CA Ramesh Soni 5.16

 Registration
Section 28: Amendment of registration

(1) Every RP and UIN holder shall inform PO of any changes in form GST REG-14 and within 15 days of
change.
(2) PO may, on the basis of information furnished approve/reject amendments in the registration
particulars in such manner and within a period of 15 WDs.
Proviso:
1. Approval of the PO shall not be required in respect of amendment of such particulars as may be
prescribed.
2. PO shall not reject the application for amendment in the registration particulars without giving
opportunity of being heard.
(3) Any rejection/approval of amendments under SGST/UTGST shall be deemed to be a
rejection/approval under CGST Act.

Rule 19: Amendment of registration

(1) Where there is any change in any of the particulars furnished in the application for registration in
 FORM GST REG-01 or
 FORM GST REG-07 or

I
N
 FORM GST REG-09 or
 FORM GST REG-10 or

SO
 for Unique Identity Number in FORM GST REG-13,
 either at the time of obtaining registration or Unique Identity Number or as amended from time
to time, the RP shall, within a period of 15 days of such change, submit an application in GST
REG-14 along with the documents relating to such change at the common portal.
H
Provided that:
ES

(a) Where: Change relates to core fields

(i) Legal name of business;
(ii) Address of the PPOB/APOBs or
(iii) Addition/deletion/retirement of partners/directors, Karta, Managing Committee, Board of
M

Trustees, CEO/equivalent, responsible for the day-to-day affairs of the business –

which does not warrant cancellation of registration,
A

 the PO shall, after due verification, approve amendment within 15 working days from date of
receipt of application in GST REG-14 &
R

 Issue an order in GST REG-15 electronically &

 Such amendment shall take effect from the date of the occurrence of the event warranting
A

such amendment;
(b) the change relating to sub-clause (i) and (iii) of clause (a) in any State/UT shall be applicable for
C

all registrations of the registered person obtained under the provisions of this Chapter on the
same PAN;
(c) Change in non-core areas, PO approval not required
where the change relates to any particulars other than those specified in clause (a), the
certificate of registration shall stand amended upon submission of the application in FORM GST
REG-14 on the common portal;
(d) Change in PAN, no amendment-fresh registration to be obtained
where a change in the constitution of any business results in the change of the PAN of a
registered person, the said person shall apply for fresh registration in FORM GST REG-01

Proviso: Any change in mobile no./e-mail address of the authorised signatory, shall be carried out
only after online verification through OTP.

(1A)Amendment to be prospective unless specific orders from commissioner

Notwithstanding anything contained in sub-rule (1),
Any particular of the application for registration shall not stand amended with effect from a date
earlier than the date of submission of the application in FORM GST REG-14 except with the order of

CA Ramesh Soni 5.17

 Registration
the Commissioner for reasons to be recorded in writing and subject to such conditions as the
Commissioner may, in the said order, specify.

(2) PO is of the opinion that the amendment is either not warranted/documents furnished are
incomplete/incorrect
- he may, within 15 WDs from the date of the receipt of the application,
- serve a notice in FORM GST REG-03 requiring the RP to show cause, within 7 WDs of the service
of notice, as to why the application submitted shall not be rejected.

(3) The RP shall furnish a reply in FORM GST REG-04 within 7 WDs from the date of the service of the
said notice.

(4) Where the reply furnished is found to be not satisfactory/no reply, PO shall reject the application &
pass an order in FORM GST REG-05.

(5) If the proper officer fails to take any action, -

(a) within 15 WDs from the date of submission of the application, or
(b) within 7 WDs from the date of the receipt of the reply to the SCN under sub-rule (3),

I
the certificate of registration shall stand amended to the extent applied for and the amended

N
certificate shall be made available to the registered person on the common portal.

SO
Section 29: Cancellation or Suspension of registration

Section 29(1): The PO may, either

 on his own motion (Suo-moto) or on an application filed by the RP/by his legal heirs, in case of death
H
of RP,
 cancel the registration, in such manner and within such period as may be prescribed, having regard to
ES

the circumstances
where, -
(a) the business has been discontinued, transferred fully for any reason including death/
M

amalgamation/demerger or otherwise disposed of; or

(b) there is any change in the constitution of the business; or
(c) the taxable person, is no longer liable to be registered under section 22 or section 24 or intends to opt
A

out of the registration voluntarily made under section 25(3).

R

Provided that during pendency of the proceedings relating to cancellation of registration filed by the RP,
the registration may be suspended for such period and in such manner as may be prescribed.
A

Rule 20 - Application for cancellation of registration – RP seeking cancellation

C

A RP, (other than TDS Deductor/TCS collector or a person holding a UIN) seeking cancellation of
registration u/s 29(1) shall electronically submit an application in FORM GST REG-16, including therein
 the details of inputs held in stock /inputs contained in SFGs/FGs held in stock and of capital goods
held in stock
 on the date from which the cancellation of registration is sought,
 liability thereon, the details of the payment, if any, made against such liability &
 may furnish, along with the application, relevant documents in support thereof,
 within a period of 30 days of the occurrence of the event warranting the cancellation.

Section 29(2): The PO may cancel the registration of a person from such date, including any
retrospective date, as he may deem fit, where, ––
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may
be prescribed; or

CA Ramesh Soni 5.18

 Registration
Rule 21-Registration to be cancelled in certain cases

The registration granted to a person is liable to be cancelled, if the said person, -

(a) does not conduct any business from the declared place of business; or
(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of
the Act, or the rules made thereunder; or
(c) violates the provisions of section 171 of the Act or the rules made thereunder.
(d) violates the provision of rule 10A (furnishing of Bank account details on portal)
(e) avails input tax credit in violation of the provisions of section 16 of the Act or the rules made
thereunder; or
(f) furnishes the details of outward supplies in FORM GSTR-1 as amended in FORM GSTR-1A if
any, under section 37 for one or more tax periods which is in excess of the outward supplies
declared by him in his valid return under section 39 for the said tax periods; or
(g) violates the provision of rule 86B.
(ga) violates the provisions of third or fourth proviso to sub-rule (1) of rule 23; or
(h) being a registered person required to file return under section 39(1) for each month or part
thereof, has not furnished returns for a continuous period of six months;
(i) being a registered person required to file return under proviso to subsection (1) of section 39 for

I
each quarter or part thereof, has not furnished returns for a continuous period of two tax periods.

N
Note: Amendment in rule 21(f) and (ga) which is bold and underlined is not applicable to

SO
Jan 25 exams but applicable to May 25 & onwards attempt.

(b) a person paying tax under section 10 (Composition supplier) has not furnished the return for a
financial year beyond three months from the due date of furnishing the said return; or
H
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such
continuous tax period as may be prescribed (Rule 21); or
ES

(d) any person who has taken voluntary registration has not commenced business within 6 months from
the date of registration.
(e) Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.
M

Provided that the PO shall not cancel without giving OBH.

A

Provided further that during pendency of cancellation, the PO may suspend the registration for such
period and in such manner as may be prescribed.
R

Rule-22: Cancellation of registration – PO has reason to believe that registration is liable to be

cancelled
A

(1) PO shall issue a notice in REG-17, to show cause, within 7 WDs from the date of the service of
C

notice, as to why his registration shall not be cancelled.

(2) Reply to SCN shall be furnished in Form REG–18 within 7 WDs.
(3) Where a person who has submitted an application for cancellation of his registration is no longer liable
to be registered or his registration is liable to be cancelled, the proper officer shall
- issue an order in FORM GST REG-19,
- within a period of thirty days from the date of application submitted under rule 20 or,
- as the case may be, the date of the reply to the show cause issued under sub-rule (1),
- or under sub-rule (2A) of rule 21A
- cancel the registration, with effect from a date to be determined by him and
- notify the taxable person, directing him to pay arrears of any tax, interest or penalty including
the amount liable to be paid under sub section (5) of section 29.

(4) Where the reply furnished under sub-rule (2), or in response to the notice issued under sub-rule (2A)
of rule 21A is found to be satisfactory, the proper officer shall drop the proceedings and pass an order
in FORM GST REG -20:

CA Ramesh Soni 5.19

 Registration
Proviso: the PO shall drop the proceedings & pass an order in REG 20
Provided that where the person instead of replying to the notice served under sub-rule (1) for
contravention of the provisions contained in clause (b)/(c) of section 29(2), furnishes all the pending
returns and makes full payment of the tax dues along with applicable interest and late fee, the proper
officer shall drop the proceedings and pass an order in GST REG 20.

(5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased
proprietor, as if the application had been submitted by the proprietor himself.

Section 29(3): Person liable to pay dues relating to prior period even if registration cancelled.
The cancellation of registration under this section shall not affect the liability of the person to pay tax and
other dues under this Act or to discharge any obligation under this Act or the rules made thereunder for
any period prior to the date of cancellation whether or not such tax and other dues are determined before
or after the date of cancellation.

Section 29(4): Cancellation of registration under SGST/UTGST act, deemed cancellation under
CGST Act.

Section 29(5): Payment of liability upon cancellation of registration

I
N
Every RP whose registration is cancelled shall pay an amount, by way of debit in e-credit/e-cash ledger,
Equivalent to

SO
 the ITC in respect of inputs held in stock & inputs in SFs/FGs held in stock or capital goods or plant
and machinery on the day immediately preceding the date of such cancellation or
 the output tax payable on such goods,
whichever is higher, calculated in such manner as may be prescribed.
H
Proviso: in case of capital goods or plant and machinery, the taxable person shall pay an amount
ES

equal to the ITC taken on the said CGs or p & m,

 reduced by such percentage points as may be prescribed or
 the tax on the transaction value
whichever is higher.
M

Section 29(6): The amount payable under sub-section (5) shall be calculated in such manner as may be
A

prescribed.
R

Rule 21A: Suspension of registration

A

(1) Where a RP has applied for cancellation – Pending cancellation, the registration shall be deemed to be
suspended:
C

- from the date of submission of the application or

- the date from which the cancellation is sought,
whichever is later.

(2) Where the PO has reason to believe that registration is liable to be cancelled under section 29 or
under rule 21, he may, suspend the registration with effect from a date to be determined by him,
pending the completion of the proceedings for cancellation.

(2A) Where,-
(a) a comparison of the returns furnished by a registered person under section 39 with the details of
outward supplies furnished in GSTR-1 as amended in FORM GSTR-1A if any, or the details of
inward supplies derived based on the details of outward supplies furnished by his suppliers in
their FORM GSTR-1 or in FORM GSTR-1A of the previous tax period, if any, or such other
analysis, as may be carried out on the recommendations of the Council, show that there are
significant differences or anomalies indicating contravention of the provisions of the Act or
the rules made thereunder, leading to cancellation of registration of the said person, or

(b) there is a contravention of the provisions of rule 10A by the registered person,

CA Ramesh Soni 5.20

 Registration
the registration of such person shall be suspended and the said person shall be intimated in GST
REG-31, electronically, on the common portal, or by sending a communication to his e-mail address
provided at the time of registration or as amended from time to time, highlighting the said
differences, anomalies or non-compliances and asking him to explain, within a period of thirty days,
as to why his registration shall not be cancelled.

Note: Amendment which is bold and underlined is not applicable to Jan 25 exams but
applicable to May 25 & onwards attempt.

(3) A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), or
sub-rule (2A) shall not make any taxable supply during the period of suspension and shall not be
required to furnish any return under section 39.
Explanation. -For the purposes of this sub-rule, the expression "shall not make any taxable supply"
shall mean that the registered person shall not issue a tax invoice and, accordingly, not charge tax on
supplies made by him during the period of suspension.

(3A) A RP, whose registration has been suspended under sub-rule (2) or sub-rule (2A), shall not be
granted any refund under section 54, during the period of suspension of his registration.

I
N
(4) The suspension of registration under sub-rule (1) or sub-rule (2) or sub-rule (2A) shall be deemed to
be revoked upon completion of the proceedings by the proper officer under rule 22 and such

SO
revocation shall be effective from the date on which the suspension had come into effect:

Provided that the suspension of registration under this rule may be revoked by the proper officer,
anytime during the pendency of the proceedings for cancellation, if he deems fit.
H
Provided further that where the registration has been suspended under sub-rule (2A) for
ES

contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29
and the registration has not already been cancelled by the proper officer under rule 22, the
suspension of registration shall be deemed to be revoked upon furnishing of all the pending returns.
M

Provided also that where the registration has been suspended under sub-rule (2A) for contravention
of provisions of rule 10A and the registration has not already been cancelled by the proper officer
A

under rule 22, the suspension of registration shall be deemed to be revoked upon compliance with the
provisions of rule 10A.
R

(5) Where any order having the effect of revocation of suspension of registration has been passed, the
A

provisions of clause (a) of sub-section (3) of section 31 and section 40 in respect of the supplies made
during the period of suspension and the procedure specified therein shall apply.
C

Section 30: Revocation of cancellation of registration

(1) Subject to such conditions as may be prescribed, any RP, whose registration is cancelled by the PO on
his own motion, may apply to such officer for revocation of cancellation of the registration in such
manner, within such time and subject to such conditions and restrictions, as may be prescribed.

(2) The PO in such manner and within such period as may be prescribed, by order, either revoke
cancellation of the registration or reject the application:
Provided that the application for revocation of cancellation of registration shall not be rejected
unless the applicant has been given an opportunity of being heard.

(3) The revocation of cancellation of registration under the SGST Act or the UTGST Act, as the case may
be, shall be deemed to be a revocation of cancellation of registration under this Act.

CA Ramesh Soni 5.21

 Registration
Rule 23: Revocation of cancellation of registration

(1) A RP, whose registration is cancelled by the PO on his own motion, may, subject to the provisions
of rule 10B, submit an application in REG-21, to such PO, within a period of ninety days from the
date of the service of the order of cancellation of registration,

Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in
writing, be extended by the Commissioner or an officer authorised by him in this behalf, not below the
rank of Additional Commissioner or Joint Commissioner, as the case may be, for a further period not
exceeding one hundred and eighty days:

Provided further that no application for revocation shall be filed, if the registration has been
cancelled for the failure of the registered person to furnish returns, unless such returns are furnished
and any amount due as tax, in terms of such returns, has been paid along with any amount payable
towards interest, penalty and late fee in respect of the said returns:

Provided also that all returns due for the period from the date of the order of cancellation of
registration till the date of the order of revocation of cancellation of registration shall be furnished by
the said person within a period of thirty days from the date of order of revocation of cancellation of

I
N
registration:

SO
Provided also that where the registration has been cancelled with retrospective effect, the
registered person shall furnish all returns relating to period from the effective date of cancellation of
registration till the date of order of revocation of cancellation of registration within a period of thirty
days from the date of order of revocation of cancellation of registration
H
(2) (a) If PO is satisfied, that there are sufficient grounds for revocation, he shall revoke the cancellation
ES

by an order in REG-22 within a period of 30 days from the date of the receipt of the application.
(b) The PO may, for reason in writing, by an order in REG- 05, reject the application for revocation of
cancellation.
M

(3) The PO shall, before passing rejection order, issue a notice in GST Reg 23 requiring the applicant to
show cause as to why the application submitted for revocation should not be rejected and the
A

applicant shall furnish the reply within a period of seven working days from the date of the service of
the notice in FORM GST REG-24.
R

(4) Upon receipt of the information or clarification in FORM GST REG-24, the proper officer shall proceed
A

to dispose of the application in the manner specified in sub-rule (2) within a period of thirty days from
the date of the receipt of such information or clarification from the applicant.
C

CA Ramesh Soni 5.22

 Registration – Q & A
5. Registration – Q & A

Basics

1.
What are the advantages of taking registration in GST?
(ICAI study material)
Answer:
Registration will confer following advantages to the business:
 Legally recognized as supplier of goods or services.
 Proper accounting of taxes paid on the input goods or services which can be utilized for payment of
GST due on supply of goods or services or both by the business.
 Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the
goods or services supplied to purchasers or recipients.
 Become eligible to avail various other benefits and privileges rendered under the GST laws.

2.
Can a person without GST registration collect GST and claim ITC?

I
(ICAI study material)

N
Answer:
No, a person without GST registration can neither collect GST from his customers nor can claim any

SO
input tax credit of GST paid by him.

3.
Can a person having multiple places of business in a State obtain separate registrations for
H
each place of business?
(ICAI study material)
ES

Answer:
Yes. In terms of the proviso to sub-section (2) of section 25, a person having multiple places of business
in a State may obtain a separate registration for each place of business, subject to such conditions as
M

may be prescribed.
A

4.
If a person is making taxable supplies from different States, with the same PAN number, can
R

he operate with a single registration?

(ICAI study material)
Answer:
A

No. Every person who is liable to take a registration will have to get registered separately for each of the
States where he has a business operation (and making taxable supplies) provided his aggregate turnover
C

exceeds applicable threshold limit.

5.
Whether the registration granted to any person is permanent?
(ICAI study material)
Answer:
Yes, the registration certificate once granted is permanent unless surrendered, cancelled, suspended or
revoked.

6.
Is there an option to take centralized registration for services under GST Law?
(ICAI study material)
Answer:
No, the tax paper has to take separate registration in every State from where he makes taxable
supplies.

CA Ramesh Soni 5.23

 Registration – Q & A
7.
At the time of registration, will the assesses have to declare all his places of business?
(ICAI study material)
Answer:
Yes. The principal place of business and place of business have been separately defined under section
2(89) & 2(85) of the CGST Act respectively. The taxpayer will have to declare the principal place of
business as well as the details of additional places of business in the registration form.

Aggregate Turnover

8.
List the inclusions and exclusions for computing the "Aggregate Turnover" under CGST Act.
(CA Inter May 18)
Answer:
Aggregate turnover includes the aggregate value of all:
(i) taxable supplies,
(ii) exempt supplies,
(iii) exports of goods and/or services and
(iv) inter-State supplies of persons having the same PAN., to be computed on all India basis

I
N
Aggregate turnover excludes: -
(i) value of inward supplies on which tax is payable by a person on reverse charge basis,

SO
(ii) central tax, State tax, Union territory tax, integrated tax and
(iii) cess

9.
H
Rajesh Dynamics, having its head office in Chennai, carries on the following activities with
respective turnovers in a financial year
ES

Particulars Amount
Supply of petrol at Chennai 18,00,000
Value of inward supplies on which tax is payable on reverse charge basis 9,00,000
Supply of transformer oil at Chennai, Tamil Nadu (taxable @ 18%) 2,00,000
M

Value of branch transfer from Chennai to Bengaluru without payment of 1,50,000

consideration
A

Value of taxable supplies at Manipur branch 11,50,000

R

It argues that it does not have taxable turnover crossing threshold limit of Rs 40,00,000 either
at Chennai or Bengaluru and including turnover at Manipur branch. It believes that the
determination of aggregate turnover is not required for the purpose of obtaining registration
A

but is required for determining composition levy.

Decide based on the above facts:
C

(i) The aggregate turnover of Rajesh Dynamics.

(ii) All conditions that fulfil the requirements for registration under CGST Act, 2017 in the
given circumstances.
(ICAI study material)
Answer:
Computation of aggregate turnover of Rajesh Dynamics
Particulars Rs
Supply of petrol at Chennai [Being a non-taxable supply, it is an exempt supply & 18,00,000
thus, includible in aggregate turnover vide section 2(6) of CGST Act, 2017]
Value of inward supplies on which tax is payable on reverse charge basis Nil
Supply of transformer oil at Chennai, Tamil Nadu 2,00,000
Value of branch transfer from Chennai to Bengaluru without payment of consideration 1,50,000
[Being a taxable supply, it is includible in aggregate turnover]
Value of taxable supplies of Manipur Branch 11,50,000
Aggregate turnover 33,00,000
Rajesh Dynamics is not liable to be registered in Chennai, Tamil Nadu, if his aggregate turnover in a
financial year does not exceeds Rs. 40 lakhs. However, since Rajesh Dynamics also makes taxable

CA Ramesh Soni 5.24

 Registration – Q & A
supplies from Manipur, a specified Special Category State, the threshold exemption gets reduced to Rs.
10 lakhs in terms of section 22(1) [Notification No.10/2019-CT dated. 07.03.2019].
Rajesh Dynamics’ argument that it is not liable to registration since the threshold exemption of Rs. 40
lakhs is not being crossed either at Chennai, Tamil Nadu, Bengaluru, Karnataka or Manipur is not correct
as firstly, the aggregate turnover to be considered in its case is Rs. 10 lakhs and not Rs. 40 lakhs and
secondly, the same is computed on all India basis and not State-wise.
Further, Rajesh Dynamics is also wrong in believing that aggregate turnover is computed only for the
purpose of determining the eligibility limit for composition levy since the aggregate turnover is required
for determining the eligibility for both registration and composition levy.
Further, Rajesh Dynamics is compulsorily required to register under section 24 irrespective of the
turnover limit as it is liable to pay tax on inward supplies under reverse charge and it also makes inter-
State taxable supply.

10.
Gopal Das & Co., Kolkata is a manufacturer and is a registered supplier (under regular
scheme). It furnishes the following details for the tax period ended on 31st March, 19:
Particulars Amount (Rs)
Intra-State supply of goods (includes GST @ 18%) 70,80,000

I
Goods exported 32,00,000

N
Inward supplies liable for reverse charge 6,00,000
Transfer of goods to Branch at Delhi (without GST) 50,00,000

SO
Compute the ‘aggregate turnover’ under section 2(6) of the CGST Act, 2017.
(CS)
Answer:
Section 2(6) of the CGST Act, 2017 defines the term “aggregate turnover” so as to mean the aggregate
H
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
ES

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
In light of the above definition, the computation of aggregate turnover is as below:
M

Particulars Amount
Intra-State supply of goods Rs.70,80,000 x 100/118 excludes CGST, SGST, IGST 60,00,000
Export Supplies [to be included as per section 2(6)] 32,00,000
A

Inward supplies under reverse charge [not to be included] Nil

R

Transfer of goods to branch / distinct person is categorized as supply under section 7 of 50,00,000
the CGST Act. [No adjustment needed as GST is already excluded]
Aggregate turnover 1,42,00,000
A

Section 22, 23 & 24: Person liable & not liable for Registration
C

11.
Answer the following, after reading the below given two paragraphs:
(i) Briefly discuss the relevant provision
(ii) decide the correct conclusion and
(iii) determine the validity of the given advice (Correct/Incorrect)
Dharun provides service as a business facilitator to Zio Bank Limited by facilitating in opening
of bank accounts to villagers in its rural branches in Punjab and earned a commission of Rs. 22
lakh in the month of April, 2022. So far he is not registered under GST. Dharun's tax consultant
advised him that he is liable for registration under GST as his gross receipts exceeded Rs. 20
lakh. Dharun has no other receipt / business activity other than the above.
(CA Inter Nov 22-2 marks)
Answer:
Services by a business facilitator to a banking company with respect to accounts in its rural area branch is
exempt from GST.
Since in the given case, Dharun is engaged exclusively in providing the exempt services, it is not liable
to obtain registration even though his aggregate turnover exceeds Rs. 20 lakh.

CA Ramesh Soni 5.25

 Registration – Q & A
Thus, the advice given by his tax consultant is not correct.

12.
Nesamani started his business activities in the month of February 2022 in the State of Orissa.
He provided the following details:
Sl No. Particulars Amount
(i) Outward supply of petrol (Intra State) 4,00,000
(ii) Transfer of exempt goods to his branch in Rajasthan (Inter-State) 2,00,000
(iii) Outward supply of taxable goods by his branch in Uttar Pradesh (Intra 5,00,000
State)
(iv) Outward supply of services on which tax is payable under RCM by the 6,00,000
recipient of services (Intra-State)
(v) Inward supply of services on which tax is payable under RCM (Intra- 2,00,000
State)
From the information given above, compute the aggregate turnover of Nesamani and also
decide whether he is required to get registration under GST. Assume that the amounts given
above are exclusive of taxes.
(CA Inter Nov 22-5 marks)

I
Answer: Computation of aggregate turnover of Nesamani

N
Particulars Amount
Outward supply of petrol 4,00,000

SO
[Supply of petrol being a non-taxable supply is an exempt supply. Value of exempt
supply is includible in aggregate turnover.]
Transfer of exempt goods to his branch in Rajasthan 2,00,000
[Supply of taxable/exempt goods between distinct persons is includible.]
H
Outward supply of taxable goods by his branch in Uttar Pradesh 5,00,000
[Value of outward supplies under same PAN are includible.]
ES

Outward supply of services on which tax is payable under RCM by the recipient 6,00,000
of services
[Includible in aggregate turnover.]
M

Inward supply of services on which tax is payable under RCM --

[Excludible from the aggregate turnover.]
A

Aggregate turnover 17,00,000

For a supplier engaged in supply of goods and services from the States of Orissa and Uttar Pradesh, the
R

threshold limit of aggregate turnover to obtain registration is Rs. 20 lakh. However, a person required to
pay tax under reverse charge has to obtain registration compulsorily irrespective of the quantum of
turnover.
A

Since in the given case, Nesamani is required to pay tax under reverse charge, it is liable to obtain
registration compulsorily irrespective of his quantum of turnover.
C

13.
Q Ltd. is engaged exclusively in supply of taxable goods from the following states. The
particulars of intra-state supplies for the month of May 2021 are as follows:
State Turnover
Madhya Pradesh 5,00,000
Gujarat 14,00,000
Tripura 12,00,000
(i) Q Ltd. seeks to know whether it is liable for registration under GST. Give your explanation.
(ii) Will your answer be different if Q Ltd. supplies only petrol & diesel from Tripura instead of
any other taxable goods?
(CA Inter Dec 21)
Answer:
Every person engaged in making a taxable supply is required to obtain registration if his aggregate
turnover exceeds Rs. 20 lakhs in a financial year. An enhanced threshold limit for registration of Rs. 40
lakhs is available to persons engaged exclusively in intra-State supply of goods in specified States.
However, the applicable threshold limit for registration gets reduced to Rs. 10 lakhs in case a person is
CA Ramesh Soni 5.26
 Registration – Q & A
engaged in making supply from a specified Special Category State provided such supply is a taxable
supply.
(i) Since Q Ltd. is making supply of taxable goods from Tripura – a specified Special Category State, the
applicable threshold limit will get reduced to Rs. 10 lakhs.
Thus, it is liable to be registered under GST as its aggregate turnover [Rs. 31 lakhs] exceeds the said
threshold limit.
(ii) In case Q Ltd. is making supply of non-taxable goods [petrol and diesel] from Tripura, the applicable
threshold limit will not be reduced to Rs. 10 lakhs; enhanced threshold limit of Rs. 40 lakhs will be
applicable.
Thus, it is not liable to be registered under GST as its aggregate turnover [Rs. 31 lakhs] does not
exceed the said threshold limit.

Assumption: It has been assumed that Q Ltd. is not engaged in making supplies of ice cream and other
edible ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco
substitutes Fly ash bricks or fly ash aggregates; Fly ash blocks, Bricks of fossil meals or similar siliceous
earths, building bricks, Earthen or roofing tiles.

14.

I
Mr. Q, a casual taxable person of Gujarat state is a trader of taxable notified handicraft goods.

N
It makes supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh. Turnover for
October, 2021 is Rs. 18 Lakh.

SO
(i) Explain the provisions of registration for casual taxable person under GST. Examine
whether Mr. Q is liable for registration or not?
(ii) What will be the answer if Mr. Q makes trading in taxable notified products instead of
taxable notified handicraft goods which involves 75% making on machine and 25% by
H
hand?
(CA Inter Dec 21)
ES

Answer:
(i) A casual taxable person is required to obtain compulsory registration under GST irrespective of the
quantum of its aggregate turnover.
However, a threshold limit of Rs. 20 lakhs (Rs. 10 lakhs in case of specified Special Category States)
M

is available for registration to a casual taxable person who:

(i) is making inter-State taxable supplies of notified handicraft goods and notified hand-made goods,
A

(ii) is availing the benefit of exemption from registration available to inter-State supply of above-
mentioned goods upto the aggregate turnover of Rs. 20 lakhs (Rs. 10 lakh in case of specified
R

Special Category States), and

(iii) has obtained a PAN and
A

(iv) has generated an e-way bill.

In the given case, since Mr. Q is engaged in supplying notified handicraft goods and its aggregate
C

turnover does not exceed Rs. 20 lakhs, he will not be liable to registration provided he fulfills other
conditions specified herein.

(ii) In case Mr. Q is engaged in trading of notified products which are predominantly made by machine,
he will not be eligible for the exemption from registration under aforesaid provisions and needs to
take compulsory (mandatory) registration.

15.
Examine whether the supplier of goods is liable to get registered in the following independent
cases:
(i) Rudra Builders of Rohini, Delhi is exclusively engaged in intra-State taxable supply of
building bricks. It’s aggregate turnover in the current financial year is Rs. 23 lakhs.
(ii) Heera of Himachal Pradesh is exclusively engaged in intra-State taxable supply of
footwear. His turnover in the current financial year (FY) from Himachal Pradesh showroom
is Rs. 32 lakhs. He has another showroom in Nagaland with a turnover of Rs. 11 lakhs in
the current FY.
(RTP Nov 22)
Answer:
CA Ramesh Soni 5.27
 Registration – Q & A
As per section 22 of the CGST Act, 2017 read with Notification No. 10/2019 CT dated 07.03.2019, a
supplier is liable to get registered in the State/Union territory from where he makes a taxable supply of
goods and/or services, if his aggregate turnover in a financial year exceeds the threshold limit. The
threshold limit for a person making exclusive intra-State taxable supplies of goods is as under: -
(a) Rs. 10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakhs for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) Rs. 40 lakhs for rest of India except persons engaged in making supplies of fly ash
bricks/blocks/aggregates, building bricks, bricks of fossil meals, earthen/roofing tiles, ice cream and
other edible ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco
substitutes.
In the light of the afore-mentioned provisions, the answer to the independent cases is as
under:
(i) The benefit of enhanced threshold limit of registration of Rs. 40 lakhs is not applicable for Rudra
brothers even though it is exclusively engaged in intra-State taxable supply of goods in Delhi as it is
engaged in making supplies of building bricks. Thus, the applicable threshold limit for registration for
Rudra Builders in the given case is Rs. 20 lakhs. Thus, it is liable to get registered under GST as its
turnover is more than the threshold limit.
(ii) Heera could have been eligible for enhanced threshold limit of turnover for registration, i.e. Rs. 40

I
N
lakhs as he is exclusively engaged in intra-State supply of goods. However, since Heera is engaged in
supplying footwear from a Special Category State i.e. Nagaland, the threshold limit gets reduced to

SO
Rs. 10 lakhs. Thus, Heera is liable to get registered under GST as his turnover exceeds Rs.10 lakhs.
Further, he is required to obtain registration in both Himachal Pradesh and Nagaland as he is making
taxable supplies from both the States.
H
16.
Examine, with reason, whether registration is required, under CGST Act, in the following
ES

independent cases:
(i) Aadhav Computers of Gujarat is providing computer maintenance service. Aggregate
turnover of Aadhav Computers is Rs. 15 lakhs which comprises both inter-State and intra-
State supply.
M

(ii) Soft Wings of West Bengal, exclusively trading in garments, supplies its taxable goods in
various States of India from its outlet in West Bengal. Aggregate turnover of Soft Wings is
A

Rs. 35 lakhs.
(ICAI study material)
R

Answer:
(i) Registration is compulsory for suppliers engaged in inter-State supply. However, as per Notification
A

No. 10/2017 IT dated 13.10.2017, threshold exemption of Rs. 20 lakhs [Rs. 10 lakhs in case of
Special Category States of Mizoram, Tripura, Manipur and Nagaland] is available in case of inter-
C

State supply of taxable services.

Therefore, Aadhav Computers (aggregate turnover Rs. 15 lakhs) is not required to obtain registration
even though it is engaged in inter-State supply of taxable services.

(ii) The threshold limit for registration in the State of West Bengal for the persons engaged exclusively in
supply of goods, is Rs. 40 lakhs. However, registration is compulsory if the supplier is engaged inter-
State supply of goods irrespective of the quantum of aggregate turnover. The threshold exemption is
not available in case of inter-State supply of taxable goods. Thus, Soft Wings is required to obtain
registration.

17.
Examine whether the liability to register compulsorily under section 24 arises in each of the
independent cases mentioned below:
(1) Meenu, a supplier in Maharashtra, is exclusively engaged in supply of potatoes produced
out of cultivation of her own land, within Maharashtra and also outside Maharashtra.
(2) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Further, it
provides services of refining of oil to customers. Total turnover of supply of machine oil is

CA Ramesh Soni 5.28

 Registration – Q & A
Rs. 10 lakhs, supply of petrol is Rs. 5 lakh and supply of services is Rs. 6 lakhs.
(3) Tilu is working as an agent, he is supplying taxable goods as an agent of Tiku (who is
registered taxable person) and its aggregate turnover does not exceed Rs. 20 lakhs
during the financial year.
(ICAI study material) & (Similar question in RTP Nov 21)
Answer:
(1) Section 24 of the CGST Act provides that persons making any inter-State taxable supply of goods
are required to obtain registration compulsorily under GST laws irrespective of the quantum of
aggregate turnover.
However, as per section 23, an agriculturist, to the extent of supply of produce out of cultivation of
land, is not liable to registration.
Meenu is exclusively engaged in cultivation and supply of potatoes. Thus, she is not liable to
registration irrespective of the fact that she is engaged in making inter-State supply of goods.
Further, Meenu will not be liable to registration, in the given case, even if her turnover exceeds the
threshold limit.

(2) Section 24 of the CGST Act specifies the categories of persons who are required to be mandatorily
registered under GST irrespective of the quantum of their aggregate turnover.
In the given case, Jinu Oils does not fall in any of the specified categories. Therefore, it is not

I
N
required to obtain registration compulsorily under GST.
However, as per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is

SO
liable to be registered in the State/Union territory from where he makes a taxable supply of goods
and/or services, if his aggregate turnover in a financial year exceeds the threshold limit. The
threshold limit for a person making supply of both goods and services is Rs. 10 lakhs for the States of
Mizoram, Tripura, Manipur and Nagaland and Rs. 20 lakhs for the rest of India. Thus, the applicable
H
threshold limit for the State of Gujarat is Rs. 20 lakhs for supply of both goods and services. Further,
aggregate turnover includes exempted turnover of goods or services.
ES

Accordingly, Jinu Oils is liable obtain registration since its aggregate turnover [Rs. 21 lakhs (including
turnover of exempt supply of petrol)] exceeds the threshold limit of Rs. 20 lakhs.

(3) Section 24 of the CGST Act provides that persons who make taxable supply of goods and/or
M

services on behalf of other taxable persons whether as an agent or otherwise are required to obtain
registration compulsorily under GST laws irrespective of the quantum of aggregate turnover.
A

Therefore, Tilu will be mandatorily required to obtain registration.

R

18.
Examine whether the supplier is liable to get registered in the following independent cases: -
A

(i) Ankit of Assam is exclusively engaged in intra-State supply of taxable services. His
aggregate turnover in the current financial year is Rs. 25 lakhs.
C

(ii) Sanchit of Assam is engaged in intra-State supply of both taxable goods and services. His
aggregate turnover in the current financial year is Rs. 30 lakhs.
(ICAI study material)
Answer:
As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to
be registered in the State/Union territory from where he makes a taxable supply of goods and/or
services, if his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a
person making exclusive taxable supply of services or supply of both goods and services is as under: -
(a) Rs. 10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakhs for the rest of India.

(i) Though Ankit is dealing in Assam, he is not entitled for higher threshold limit for registration as the
same is applicable only in case of exclusively supply of goods and he is exclusively engaged in
providing services. Thus, the applicable threshold limit for registration in this case is Rs. 20 lakhs and
hence, Ankit is liable to get registered under GST.

(ii) Since Sanchit is engaged in supply of both taxable goods and services, the applicable threshold limit

CA Ramesh Soni 5.29

 Registration – Q & A
for registration in his case is Rs. 20 lakhs. Thus, Sanchit is liable to get registered under GST as his
turnover is more than the threshold limit.

19.
State which of the following suppliers are liable to be registered:
(a) Agent supplying goods on behalf of some other taxable person and its aggregate turnover
does not exceed threshold limit applicable for registration during the financial year.
Note: Invoices are issued to customers in the name of agent.
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land and its
aggregate turnover exceeds the applicable threshold limit during the financial year.
(ICAI study material)
Answer:
(a) Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds the
applicable threshold limit in a financial year. However, as per section 24, a person making taxable
supply of goods/services or both on behalf of other taxable persons whether as an agent or not is
liable to be compulsorily registered even if its aggregate turnover does not exceed the applicable
threshold limit during the financial year.

(b) As per section 23, an agriculturist who is only engaged in supply of produce out of cultivation of

I
N
land is not required to obtain registration even if his turnover exceeded the applicable threshold
limit for registration.

SO
20.
State with brief reason, whether following suppliers of taxable goods are required to register
under the GST Law:
H
(i) Mr. Raghav is engaged in wholesale cum retail trading of medicines in the State of Assam.
His aggregate turnover during the financial year is Rs 9,00,000 which consists of Rs
ES

8,00,000 as Intra-State supply and Rs 1,00,000 as Inter-State supply.

(ii) Mr. S.N Gupta of Rajasthan is engaged in trading of taxable goods on his own account and
also acting as an agent of Mr. Rishi (a registered person) of Delhi. His turnover in the
financial year 2017-18 is of Rs 12 lakhs on his own account and Rs 9 lakhs on behalf of
M

principal. Both turnovers are Intra-State supply.

(CA IPCC May 19)
A

Answer:
(i) Person making any inter-State taxable supply of goods is required to obtain registration compulsorily
R

under GST laws irrespective of the quantum of aggregate turnover. Thus, in the given case Mr.
Raghav is required to obtain registration compulsorily under GST laws even though his aggregate
A

turnover does not exceed the threshold limit for registration.

C

(ii) Persons who make taxable supply of goods on behalf of other taxable persons whether as an agent or
otherwise are required to obtain registration compulsorily under GST laws irrespective of the
quantum of aggregate turnover. Aggregate turnover includes all supplies made by the taxable
person, whether on his own account or made on behalf of all his principals. Since Mr. S.N Gupta is
also acting as an agent of Mr. Rishi of Delhi, he is required to obtain registration compulsorily under
GST laws.

21.
Examine whether the supplier of goods is liable to get registered in the following independent
cases: -
(i) Raghav of Assam is exclusively engaged in intra-State taxable supply of readymade
garments. His turnover in the current FY from Assam showroom is Rs. 33 lakhs. He has
another showroom in Tripura with a turnover of Rs. 11 lakhs in the current FY.
(ii) Pulkit of Panjim, Goa is exclusively engaged in intra-State taxable supply of shoes. His
aggregate turnover in the current financial year is Rs. 22 lakhs.
(iii) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala.
His aggregate turnover in the current financial year is Rs. 24 lakhs.
(ICAI study material)
CA Ramesh Soni 5.30
 Registration – Q & A
Answer:
As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to
be registered in the State/Union territory from where he makes a taxable supply of goods and/or
services, if his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a
person making exclusive intra-State taxable supplies of goods is as under: -
(a) Rs. 10 lakhs for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakhs for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) Rs. 40 lakhs for rest of India except persons engaged in making supplies of ice cream and other edible
ice, whether or not containing cocoa, Pan masala and Tobacco and manufactured tobacco substitutes
Fly ash bricks or fly ash aggregates; Fly ash blocks, Bricks of fossil meals or similar siliceous earths,
building bricks, Earthen or roofing tiles.
In the light of the afore-mentioned provisions, the answer to the independent cases is as
under: -
(i) Raghav is eligible for higher threshold limit of turnover for registration, i.e., Rs. 40 lakhs as he is
exclusively engaged in intra-State supply of goods. However, since Raghav is engaged in supplying
readymade garments from a Special Category State i.e., Tripura, the threshold limit gets reduced to
Rs. 10 lakhs. Thus, Raghav is liable to get registered under GST as his turnover exceeds Rs.10

I
lakhs. Further, he is required to obtain registration in both Assam and Tripura as he is making

N
taxable supplies from both the States.
(ii) The applicable threshold limit for registration for Pulkit in the given case is Rs. 40 lakhs as he is

SO
exclusively engaged in intra-State taxable supply of goods in Goa. Thus, he is not liable to get
registered under GST as his turnover is less than the threshold limit.
(iii) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold limit of
Rs.40 lakhs. The applicable threshold limit for registration in this case is Rs.20 lakhs. Thus, Harshit
H
is liable to get registered under GST.
ES

22.
Pure Oils, Delhi has supplied machine oil and high-speed diesel in the month of April as per the
details given in table below. Pure Oils is not yet registered.
Sl No. Particulars Amount (Rs.)
M

(i) Supply of machine oil in Delhi 15,00,000

(ii) Supply of high speed diesel in Delhi 10,00,000
A

(iii) Supply of machine oil made in Punjab by Pure 10,00,000

R

Oils from its branch located in Punjab

*excluding GST
Determine whether Pure Oils is liable for registration.
A

(ICAI study material)

Answer:
C

As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to
be registered in the State/Union territory from where he makes a taxable supply of goods and/or
services, if his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a
person making exclusive intra-State taxable supplies of goods is as under:-
(a) Rs. 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakh for the States, namely, States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) Rs. 40 lakh for rest of India except persons engaged in making supplies of ice cream and other edible
ice, whether or not containing cocoa, pan masala and tobacco and manufactured tobacco substitutes,
fly ash bricks; fly ash aggregates; fly ash blocks, bricks of fossil meals or similar siliceous earths,
building bricks, earthen or roofing tiles.

The threshold limit for a person making exclusive taxable supply of services or supply of both
goods and services is as under:-
(a) Rs. 10 lakh for the Special Category States of Mizoram, Tripura, Manipur and Nagaland.
(b) Rs. 20 lakh for the rest of India.

CA Ramesh Soni 5.31

 Registration – Q & A
As per section 2(6), aggregate turnover includes the aggregate value of:
(i) all taxable supplies,
(ii) all exempt supplies,
(iii) exports of goods and/or services and
(iv) all inter-State supplies of persons having the same PAN.
The above aggregate turnover is computed on all India basis. Further, the aggregate turnover excludes
central tax, State tax, Union territory tax, integrated tax and cess. Moreover, the value of inward supplies
on which tax is payable under reverse charge is not taken into account for calculation of ‘aggregate
turnover’.
Section 9(2) provides that CGST is not leviable on five petroleum products i.e. petroleum crude, motor
spirit (petrol), high speed diesel, natural gas and aviation turbine fuel. As per section 2(47), exempt
supply includes nontaxable supply. Thus, supply of high speed diesel in Delhi, being a nontaxable supply,
is an exempt supply and is, therefore, includible while computing the aggregate turnover.
In the backdrop of the above-mentioned discussion, the aggregate turnover of Pure Oils for
the month of April is computed as under:
Sl No. Particulars Amount (Rs.)
(i) Supply of machine oil in Delhi 15,00,000
(ii) Add: Supply of high speed diesel in Delhi 10,00,000

I
(iii) Add: Supply of machine oil made in Punjab by Pure Oils from its branch 10,00,000

N
located in Punjab
Aggregate Turnover 35,00,000

SO
Pure Oils is making exclusive supply of goods and hence the threshold limit for registration would be Rs.
40,00,000. Since the aggregate turnover does not exceed Rs. 40,00,000, Pure Oils is not liable to be
registered till April. However, if in remaining months of the financial year, its turnover exceeds the said
limit, then it would be liable to be registered.
H
23.
ES

What will be your answer if in question 4 above, in S.No. (ii), Pure Oils supplies the high speed
diesel in Delhi in the capacity of an agent of Mixed Oils Ltd., where invoices to customers are
issued in name of Pure Oils?
M

(ICAI study material)

Answer:
A

In case Pure Oils makes the supply in capacity of an agent of Mixed Oils Ltd.:
Section 24 provides that an agent who is engaged in making taxable supplying of goods on behalf of
R

other taxable persons, shall be liable to obtain registration irrespective of the threshold turnover limit.
However, in the present case, if Pure Oils supply high speed diesel on behalf of Mixed Oil Ltd. in Delhi as
its agent where invoices to customers are issued in name of Pure Oils, it shall still not be liable to obtain
A

registration in Delhi since section 24 comes into play only when agent is making taxable supply of goods
on behalf of principal whereas in the given case, Pure Oils is supplying nontaxable goods on behalf of
C

Mixed Oils Ltd.

24.
What could be the liabilities (in so far as registration is concerned) on transfer of a business?
(ICAI study material)

Answer:
The transferee or the successor shall be liable to be registered with effect from the date of such transfer
or succession and he will have to obtain a fresh registration with effect from the date of such transfer or
succession [Section 22(3)].

Section 25: Procedure for Registration

25.
“Aadhaar authentication is not required for persons who are already registered under GST.”
Examine and discuss the correctness of the statement. You are required to elaborate the
relevant legal provisions.

CA Ramesh Soni 5.32

 Registration – Q & A
(CA Inter RTP Nov 22)
Answer:
The given statement is incorrect. Aadhaar authentication has been made mandatory for the new
registrants as well as for the existing registrants. With regard to existing registrants, section 25(6A) of
the CGST Act, 2017 stipulates that every registered person shall undergo authentication, or furnish proof
of possession of Aadhaar number, in the prescribed form, manner and time. New rule 10B of the CGST
Rules, 2017 prescribes the manner in which aadhaar authentication needs to be done by a registered
person.
A registered person, who has been issued a certificate of registration under GST, shall undergo
authentication of the Aadhaar number of: -
 Proprietor, in the case of proprietorship firm,
 Any partner, in the case of a partnership firm,
 Karta, in the case of a Hindu undivided family,
 Managing director or any whole-time director, in the case of a company,
 Any of the Members of the Managing Committee of an Association of persons or
body of individuals or a Society, or
 Trustee in the Board of Trustees, in the case of a Trust;
and of the Authorized Signatory, in order to be eligible for the following purposes:
 for filing of application for revocation of cancellation of registration [Rule 23]

I
N
 for filing of refund application in Form RFD-01 [Rule 89]
 for refund of the IGST paid on goods exported out of India [Rule 96]

SO
First proviso to section 25(6A) of the CGST Act, 2017 provides that if an Aadhaar number is not
assigned to an existing registered person, such person shall be offered alternate and viable means of
identification in the prescribed manner. Such manner has been prescribed by rule 10B of the CGST Rules,
2017 as follows:
H
If Aadhaar number has not been assigned to the person required to undergo authentication of the
ES

Aadhaar number, such person shall furnish the following identification documents, namely: –
(a) his/ her Aadhaar Enrolment ID slip; and
(b)
(i) Bank passbook with photograph; or
M

(ii) Voter identity card issued by the Election Commission of India; or

(iii) Passport; or
A

(iv) Driving license issued by the Licensing Authority

However, once Aadhaar number is allotted to such person, he shall undergo the authentication of Aadhaar
R

number within a period of 30 days of the allotment of the Aadhaar number.

The afore-said rule 10B shall not be applicable to persons notified under section 25(6D) of the CGST Act,
A

2017, i.e. to persons exempt from aadhaar authentication.

C

26.
BBD Pvt. Ltd. of Gujarat exclusively manufactures and sells product 'Z' which is exempt from
GST vide notifications issued under relevant GST legislations. The company sells 'Z' only within
Gujarat and is not registered under GST laws. The turnover of the company in the previous
year 2018-19 was Rs. 50 lakhs. The company expects the sales to grow by 10% in the current
year 2019-20.
However, effective 01.01.2020, exemption available on 'Z' was withdrawn by the Central
Government and GST@ 5% was imposed thereon. The turnover of the company for the nine
months ended on 31.12.2019 was Rs. 42 lakhs.
BBD Pvt. Ltd. is of the opinion that it is not required to get registered under GST for current
financial year 2019-20.
(CA Inter Nov 20)
Answer:
For a supplier exclusively engaged in intra-State supply of goods, the threshold limit of turnover to obtain
registration in the State of Gujarat is Rs. 40 lakhs. However, a person exclusively engaged in the business
of supplying goods and/or services that are not liable to tax or are wholly exempt from tax is not liable to
registration.
Therefore, since BBD Pvt. Ltd. was engaged exclusively in supplying exempted goods till 31.12.2019, it
CA Ramesh Soni 5.33
 Registration – Q & A
was not required to be registered till that day; though voluntary registration was allowed.
The position, however, will change from 01.01.2020 as the supply of goods become taxable from that day
and the turnover of BBD Pvt. Ltd. is more than Rs. 40 lakhs. Since the aggregate turnover limit of Rs. 40
lakh includes exempt turnover also, turnover of ‘Z’ till 31.12.2019 will be considered for determining the
threshold limit even though the same was exempt from GST. Therefore, BBD Pvt. Ltd. needs to register
within 30 days from 01.01.2020.

27.
Pari & Sons is an unregistered dealer of goods in the state of Puducherry. On 10th August,
20XX aggregate turnover of Pari & Sons exceeded Rs 20,00,000. The firm applied for
registration on 27th August, 20XX and was granted the registration certificate on 1st
September, 20XX.
Under CGST Rules, 2017, you are required to advise Pari & Sons as to what is the effective date
of registration in its case. It has also sought your advice regarding period for issuance of
revised tax invoices.
(ICAI study material)
Answer:
Section 22(1) of the CGST Act, 2017 provides that every supplier is liable to be registered under this
Act in the State or Union territory, other than special category States, from where he makes a taxable

I
N
supply of goods or services or both, if his aggregate turnover in a financial year exceeds Rs 20 lakh.
Section 25(1) of the CGST Act, 2017 provides that a supplier whose aggregate turnover in a financial

SO
year exceeds Rs 20 lakh in a State/UT is liable to apply for registration within 30 days from the date of
becoming liable to registration (i.e., the date of crossing the threshold limit of Rs 20 lakh).
Where the application is submitted within the said period, the effective date of registration is the date on
which the person becomes liable to registration vide rule 10(2) of the CGST Rules, 2017; otherwise, it is
H
the date of grant of registration in terms of rule 10(3) of the CGST Rules, 2017.
In the given case, since Pari & Sons have applied for registration on 27.08.20XX which is within 30 days
ES

from the date of becoming liable to registration (10.08.20XX), its effective date of registration is
10.08.20XX.
Further, every registered person who has been granted registration with effect from a date earlier than
the date of issuance of registration certificate to him, may issue revised tax invoices in respect of taxable
M

supplies effected during this period within 1 month from the date of issuance of registration certificate.
In view of the same, Pari & Sons may issue revised tax invoices against the invoices already issued
A

during the period between effective date of registration (10.08.20XX) and the date of issuance of
registration certificate (01.09 20XX), on or before 01.10.20XX.
R

28.
A

Determine the effective date of registration in following cases:

(a) The aggregate turnover of Dhampur Footwear Industries of Delhi has exceeded the
C

applicable threshold limit of Rs. 40 lakh on 1st September. It submits the application for
registration on 20th September. Registration certificate is granted to it on 25th
September.
(b) Mehta Teleservices is an architect in Lucknow. Its aggregate turnover exceeds Rs. 20 lakh
on 25th October. It submits the application for registration on 27th November.
Registration certificate is granted to it on 5th December.
(ICAI study material) & (CA Inter May 18-Similar)
Answer:
(a) Every supplier becomes liable to registration if his turnover exceeds the applicable threshold limit
[Rs. 40 lakh in this case] in a finacial year [Section 22 read with Notification No. 10/2019 CT dated
07.03.2019].
Since in the given case, the turnover of Dhampur Industries exceeded Rs. 40 lakh on 1st September,
it becomes liable to registration on said date.
Further, since the application for registration has been submitted within 30 days from such date, the
registration shall be effective from the date on which the person becomes liable to registration
[Section 25 read with rule 10]. Therefore, the effective date of registration is 1st September.

(b) Since in the given case, the turnover of Mehta Teleservices exceeds the applicable threshold limit
CA Ramesh Soni 5.34
 Registration – Q & A
[Rs. 20 lakh] on 25th October, it becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date such
person becomes liable to registration, the registration shall be effective from the date of grant of
registration. Therefore, the effective date of registration is 5th December.

29.
In order to be eligible for grant of registration, a person must have a Permanent Account
Number issued under the Income- tax Act, 1961. State one exception to it.
(ICAI study material) & (CBIC FAQ)
Answer:
A Permanent Account Number is mandatory to be eligible for grant of registration. One exception to this
is a non-resident taxable person. A non- resident taxable person may be granted registration on the
basis of other prescribed documents instead of PAN. He has to submit a self-attested copy of his valid
passport along with the application signed by his authorized signatory who is an Indian Resident having
valid PAN and application will be submitted in a different prescribed form [Section 25(6) & (7)].

30.
Can the Department, through the proper officer, Suo-moto proceed to register of a person?
(ICAI study material)

I
N
Answer:
Yes. In terms of sub-section (8) of section 25, where a person who is liable to be registered under GST

SO
law fails to obtain registration, the proper officer may, without prejudice to any action which may be
taken under CGST Act, or under any other law for the time being in force, proceed to register such
person in the manner as is prescribed in the CGST Rules, 2017.
H
31.
Is it necessary for the UN bodies to get registration under GST?
ES

(ICAI study material)

Answer:
Yes. In terms of section 25(9) of the CGST Act, all notified UN bodies, Consulate or Embassy of foreign
countries and any other class of persons so notified would be required to obtain a unique identification
M

number (UIN) from the GST portal.

The structure of the said ID would be uniform across the States in conformity with GSTIN structure and
A

the same will be common for the Centre and the States. This UIN will be needed for claiming refund of
taxes paid on notified supplies of goods and services received by them, and for any other purpose as
R

may be notified.
A

32.
What is the responsibility of the taxable person making supplies to UN bodies?
C

(ICAI study material)

Answer:
The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices and
treat such supplies as supplies to another registered person (B2B) and the invoices of the same will be
uploaded by the supplier.

33.
Is there a provision for a person to get himself voluntarily registered though he may not be
liable to pay GST?
(ICAI study material)
Answer:
Yes. In terms of sub-section (3) of section 25, a person, though not liable to be registered under sections
22 or 24 may get himself registered voluntarily, and all provisions of the GST law, as are applicable to a
registered person, shall apply to such person.

CA Ramesh Soni 5.35

 Registration – Q & A
Section 27: CTP & NRTP

34.
What is the validity period of the registration certificate issued to a casual taxable person and
non- resident taxable person?
(ICAI study material)
Answer:
In terms of section 27(1) read with proviso thereto, the certificate of registration issued to a “casual
taxable person” or a “non-resident taxable person” shall be valid for a period specified in the application
for registration or 90 days from the effective date of registration, whichever is earlier. However, the
proper officer, at the request of the said taxable person, may extend the validity of the aforesaid period
of 90 days by a further period not exceeding 90 days.

Section 28: Amendment of Registration

35.
Discuss the procedure for amendment of registration under CGST Act and rules thereto?
(MTP march 18) & (ICAI study material)
Answer:

I
N
The procedures for amendment of registration are contained in section 28 read with rule 19 of
CGST Rules. The significant aspects of the same are discussed hereunder:

SO
1. Where there is any change in the particulars furnished in registration application/UIN application,
registered person shall submit an application in prescribed manner, within 15 days of such change,
along with documents relating to such change at the Common Portal.
2. In case of amendment of core fields of information, the proper officer may, on the basis of
H
information furnished or as ascertained by him, approve or reject amendments in the registration
particulars in the prescribed manner. Such amendment shall take effect from the date of occurrence
ES

of event warranting such amendment.

3. However, where change relates to non-core fields of information, registration certificate shall stand
amended upon submission of the application for amendment on the Common Portal.
4. Where a change in the constitution of any business results in change of PAN of a registered person,
M

the said person shall apply for fresh registration. The reason for the same is that GSTIN is PAN
based. Any change in PAN would warrant a new registration.
A

Section 29: Cancellation or suspension of registration

R

36.
A

Mr. X of Haryana intends to start business of supply of building material to various

construction sites in Haryana. He has taken voluntary registration under GST in the month of
C

April. However, he has not commenced the business till December due to lack of working
capital. The proper officer suo-motu cancelled the registration of Mr. X. You are required to
examine whether the action taken by proper officer is valid in law?
Mr. X has applied for revocation of cancellation of registration after 40 days from the date of
service of the order of cancellation of registration. Department contends that application for
revocation of cancellation of registration can only be made within 30 days from the date of
service of the order of cancellation of registration. You are required to comment upon the
validity of contentions raised by Department.
(CA Inter RTP May 22-updated)
Answer:
As per section 29 of the CGST Act, 2017, the proper officer may cancel the registration of a person
from such date, including any retrospective date, as he may deem fit, where, -
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may
be prescribed (rule 21); or
(b) a person paying tax under section 10 (Composition supplier) has not furnished the return for a
financial year beyond three months from the due date of furnishing the said return; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such
continuous tax period as may be prescribed (Rule 21); or
CA Ramesh Soni 5.36
 Registration – Q & A
(d) any person who has taken voluntary registration under sub-section (3) of section 25 has not
commenced business within six months from the date of registration; or
(e) registration has been obtained by means of fraud, wilful misstatement, or suppression of facts:
Thus, in view of the above-mentioned provisions, suo-motu cancellation of registration of Mr. X by proper
officer is valid in law since Mr. X, a voluntarily registered person, has not commenced his business within
6 months from the date of registration.
Further, where the registration of a person is cancelled suo-motu by the proper officer, such registered
person may apply for revocation of the cancellation to such proper officer, within 90 days from the date of
service of the order of cancellation of registration.
However, the said period of 90 days may, on sufficient cause being shown and for reasons to be recorded
in writing, be extended for a period not exceeding 180 days by Commissioner or an officer authorised by
him in this behalf.
Thus, considering the above provisions, the contention of Department is not valid in law as application for
revocation can be made within 90 days.

37.
State any five circumstances under which the proper officer can cancel the registration on his
own under the CGST Act, 2017. or
Explain the circumstances under which proper officer can cancel the registration on his own of

I
N
a registered person under CGST Act, 2017.
(RTP CA INTER-NOV 2018), (CA Inter May 22) & (CA Inter Jan 21)

SO
Answer:
The circumstances under which proper officer can cancel the registration on his own of a
registered person under the CGST Act, 2017 are as under: -
(a) a registered person has contravened such provisions of the Act or the rules made thereunder as may
H
be prescribed; or
Rule 21-Registration to be cancelled in certain cases
ES

The registration granted to a person is liable to be cancelled, if the said person, -

(a) does not conduct any business from the declared place of business; or
(b) issues invoice or bill without supply of goods or services or both in violation of the provisions of
the Act, or the rules made thereunder; or
M

(c) violates the provisions of section 171 of the Act or the rules made thereunder.
(d) violates the provision of rule 10A (furnishing of Bank account details on portal)
A

(e) avails input tax credit in violation of the provisions of section 16 of the Act or the rules made
R

thereunder; or
(f) furnishes the details of outward supplies in FORM GSTR-1 as amended in FORM GSTR-1A if
any, under section 37 for one or more tax periods which is in excess of the outward supplies
A

declared by him in his valid return under section 39 for the said tax periods; or
(g) violates the provision of rule 86B.
C

(ga) violates the provisions of third or fourth proviso to sub-rule (1) of rule 23; or
(h) being a registered person required to file return under section 39(1) for each month or part
thereof, has not furnished returns for a continuous period of six months;
(i) being a registered person required to file return under proviso to subsection (1) of section 39 for
each quarter or part thereof, has not furnished returns for a continuous period of two tax periods.

Note: Amendment in rule 21(f) and (ga) which is bold and underlined is not applicable to
Jan 25 exams but applicable for May 25 & onwards attempt.

(b) a person paying tax under section 10 (Composition supplier) has not furnished the return for a
financial year beyond three months from the due date of furnishing the said return; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such
continuous tax period as may be prescribed (Rule 21); or
(d) any person who has taken voluntary registration has not commenced business within 6 months from
the date of registration.
(e) Registration has been obtained by means of fraud, wilful misstatement or suppression of facts.

CA Ramesh Soni 5.37

 Registration – Q & A
38.
Under the provision of section 29(1) of CGST Act, 2017 read with rule 21A of CGST Rules, 2017
related to suspension of registration if the registered person has applied for cancellation of
registration, what is the period and manner of suspension of registration?
(RTP CA INTER-NOV 2018) & (CA Inter Jan 21)
Answer:
Where a registered person has applied for cancellation of registration, the registration shall be deemed to
be suspended from:
(a) the date of submission of the application or
(b) the date from which the cancellation is sought, whichever is later, pending the completion of
proceedings for cancellation of registration.
Such person shall not make any taxable supply during the period of suspension and shall not be required
to furnish any return.
The expression “shall not make any taxable supply” mean that the registered person shall not issue a tax
invoice and, accordingly, not charge tax on supplies made by him during the suspension period.

39.
Does cancellation of registration impose any tax obligations on the person whose registration
is so cancelled?

I
N
(ICAI study material)
Answer:

SO
Yes, as per section 29(5), every registered taxable person whose registration is cancelled shall pay an
amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit
of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock or capital goods or plant and machinery on the day immediately preceding the date of
H
such cancellation or the output tax payable on such goods, whichever is higher, calculated in prescribed
manner.
ES

40.
What happens when the registration is obtained by means of willful mis-statement, fraud or
suppression of facts?
M

(ICAI study material)

Answer:
A

In such cases, the registration may be cancelled with retrospective effect by the proper officer [Section
29(2)(e)].
R

41.
A

Briefly enumerate the contraventions which make a registered person liable to cancellation of
registration, as prescribed under rule 21 of the CGST Rules, 2017.
C

(CA Inter RTP May 23)

Answer:
Rule 21 of the CGST Rules, 2017 prescribes the contraventions which make a registered person
liable to cancellation of registration. As per said rule, the registration granted to a person is
liable to be cancelled, if the said person -
(a) does not conduct any business from the declared place of business.
(b) issues invoice/bill without supply of goods/services in violation of the provisions of this Act, or the
rules made thereunder.
(c) violates the provisions of section 171 of the CGST Act. Section 171 contains provisions relating to
anti-profeetering measure.
(d) violates the provision of rule 10A of the CGST Rules relating to furnishing of bank account details.
(e) avails input tax credit in violation of the provisions of section 16 of the CGST Act or the rules made
thereunder.
(f) furnishes the details of outward supplies in Form GSTR-1 as amended in FORM GSTR-1A if any,
under section 37 of the CGST Act for one or more tax periods which is in excess of the outward
supplies declared by him in his valid return under section 39 for the said tax periods.

CA Ramesh Soni 5.38

 Registration – Q & A
(g) being a registered person required to file return under section 39(1) of the CGST Act for each month
or part thereof (i.e. monthly return filer), has not furnished returns for a continuous period of 6
months.
(ga) violates the provisions of third or fourth proviso to sub-rule (1) of rule 23; or
(h) being a registered person required to file return under proviso to section 39(1) of the CGST Act for
each quarter or part thereof (i.e. quarterly return filer), has not furnished returns for a continuous
period of 2 tax periods.

Note: Amendment in rule 21(f) and (ga) which is bold and underlined is not applicable to Jan
25 exams but applicable for May 25 & onwards attempt.

Section 30. Revocation of cancellation of registration

42.
Explain the procedure for revocation of cancellation of registration where the registration of a
person is cancelled suo-motu by the proper officer as per the provisions of CGST Act, 2017.
(CA Inter Nov 23 - 5 Marks - amended)
Answer:

I
Where the registration of a person is cancelled suo-motu by the proper officer, such registered person

N
may apply for revocation of the cancellation of registration to such proper officer, within 90 days (or
within extended time period) from the date of service of the order of cancellation of registration.

SO
If the proper officer is satisfied that there are sufficient grounds for revocation of cancellation, he may
revoke the cancellation of registration, by an order within 30 days of receipt of application and
communicate the same to applicant.
Otherwise, he may reject the revocation application. However, before rejecting the application, he has to
H
first issue SCN to the applicant who shall furnish the clarification within 7 working days of service of SCN.
The proper officer shall dispose the application (accept/reject the same) within 30 days of receipt of
ES

clarification.

43.
M

Ranmo Limited, a registered entity under GST has demerged its operations with effect from
31st October, 2023. The registration of Ranmo Limited has been cancelled suo-motu by the
A

Proper Officer. The order of cancellation of registration was passed on 4th November, 2023 and
was served on 7th November, 2023.
R

Ranmo Limited wishes to apply for revocation of cancellation of registration on 4th February,
2024. The tax consultant of Ranmo Limited advised that application for revocation of
cancellation or registration is time barred and hence not valid in law.
A

You are required to examine the technical veracity of the advice given by Tax Consultant of
Ranmo Limited.
C

(CA Inter RTP Sep 24)

Answer:
A registered person, whose registration is cancelled by the proper officer on his own motion, may, subject
to the provisions of rule 10B of the CGST Rules, 2017, submit an application for revocation of cancellation
of registration, in prescribed form, to such proper officer, within a period of 90 days from the date of the
service of the order of cancellation of registration.
However, such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be
extended by the Commissioner or an officer authorised by him in this behalf, not below the rank of
Additional Commissioner or Joint Commissioner, as the case may be, for a further period not exceeding
180 days.
Thus, in the given case, Ranmo Limited can apply for revocation of cancellation of registration within a
period of 90 days from the date of the service of the order of cancellation of registration, i.e. within 90
days from 7th November, 2023.
The application submitted for revocation of cancellation of registration is valid in law as the same has been
submitted within the prescribed time limits.
Thus, the advice given by Tax Consultant of Ranmo Limited is not valid in law.

CA Ramesh Soni 5.39

 Registration - MCQ
5. Registration - MCQ

Aggregate Turnover Intra-State taxable outward Rs 8

supply lakhs
1. An exempt supply includes- Inter-State exempt outward Rs. 5
(i) Supply of goods or services or both supply lakhs
Turnover of exported goods Rs 10
which attracts Nil rate of tax
lakhs
(ii) Non-taxable supply
Payment made for availing Rs
(iii) Supply of goods or services or both GTA services 80,000
which are wholly exempt from tax Note: GTA not paying tax under
under section 11 of the CGST Act or forward charge
under section 6 of IGST Act Calculate the aggregate turnover of Rama
(a) (i) Ltd.
(b) (i) and (ii) (a) Rs. 8,00,000
(c) (ii) and (iii) (b) Rs. 23,80,000
(d) (i), (ii) and (iii) (c) Rs. 23,00,000
(d) Rs. 18,00,000
2. Aggregate turnover includes:

I
Section 22, 23, 24: Person liable for

N
(a) Taxable supplies
(b) Exempt supplies registration

SO
(c) Exports
(d) All of the above 5. Ram, an individual, based in Gujarat, is in
employment and earning Rs. 10 lakhs as
3. How the aggregate turnover is calculated salary. He is also providing consultancy
for determining threshold limit of services to different organizations on
H
registration? growth and expansion of business. His
(a) Aggregate value of all taxable supplies turnover from the supply of such services
ES

(excluding the value of inward supplies on is Rs. 12 lakhs. Determine whether Ram is
which tax is payable by a person on reverse liable for taking registration as per
charge basis and inter-State supplies), provisions of the Act?
M

exempt supplies and export of (a) Yes, as his aggregate turnover is more than
goods/services. Rs. 20 lakhs.
A

(b) Aggregate value of all taxable supplies (b) No, as his aggregate turnover is less than
(excluding the value of inward supplies on Rs. 40 lakhs.
R

which tax is payable by a person on reverse (c) No, as services in the course of
charge basis), exempt supplies, export of employment does not constitute supply
goods/services and inter-State supplies of and therefore, aggregate turnover is less
A

a person computed for each State than Rs. 20 lakhs.

C

separately. (d) Yes, since he is engaged in taxable supply

(c) Aggregate value of all taxable intra-State of services.
supplies, export of goods/services and
exempt supplies of a person having same 6. Xylo & Co. has three branches, in
PAN computed for each State separately. Jalandhar, Amritsar and Ludhiana, in the
(d) Aggregate value of all taxable supplies State of Punjab. Amritsar and Ludhiana
(excluding the value of inward supplies on branches are engaged in supply of
which tax is payable by a person on reverse garments and Jalandhar branch engaged
charge basis), exempt supplies, export of in supply of shoes. Which of the following
goods/services and inter-State supplies of options is/are legally available for
a person having same PAN computed on all registration to Xylo & Co.?
India basis and excluding taxes if any (i) Xylo & Co. can obtain single
charged under CGST Act, SGST Act and registration for Punjab state
IGST Act. declaring any one of the branches as
principal place of business and other
4. Rama Ltd. has provided following two branches as additional place of
information for the month of September: business.
Particulars Amount

CA Ramesh Soni 5.40

 Registration - MCQ
(ii) Xylo & Co. can obtain separate GST (iii) Inter-State supply of taxable goods
registration for each of the three amounting to Rs. 1 lakh
branches - Amristar, Jalandhar and Whether he is required to obtain
Ludhiana. registration, if the aforesaid goods are not
(iii) Xylo & Co. can obtain one GST handicraft goods or predominantly hand-
registration for shoe business made products, as notified?
(Jalandhar branch) and another GST (a) Mr. Z is liable to obtain registration as the
registration which is common for threshold limit of Rs. 10 lakhs is crossed.
garments business (Amritsar and (b) Mr. Z is not liable to obtain registration as
Ludhiana). he makes exempted supplies.
(a) ii (c) Mr. Z is liable to obtain registration as he
(b) Either i, ii or iii makes the inter-State supply of goods.
(c) Either i or ii (d) Mr. Z is not liable to obtain registration as
(d) Either ii or iii
the threshold limit of Rs. 20 lakhs is not
crossed.
7. The person making inter-State supplies
from Madhya Pradesh which is not
10. Mr. A has started intra-State supply of
notified handicraft goods or
goods from Delhi. He is required to obtain

I
predominantly hand-made notified
registration if his aggregate turnover

N
products, is compulsorily required to get
exceeds _______ during a financial year.
registered under GST, _______________
(a) Rs 10 lakh

SO
(a) if his aggregate turnover exceeds Rs. 40
(b) Rs 20 lakh
lakhs in a financial year
(c) Rs 30 lakh
(b) if his aggregate turnover exceeds Rs. 20
(d) Rs 40 lakh
lakhs in a financial year
H
(c) if his aggregate turnover exceeds Rs. 10
11. Which of the statements is correct?
lakhs in a financial year
(a) Person making any inter-State taxable
ES

(d) Irrespective of the amount of aggregate

supply of goods is required to obtain
turnover in a financial year.
registration compulsorily.
(b) A person to whom a UIN has been granted
8. Mr. X, a casual taxable person, is not
M

cannot apply for cancellation of

involved in making taxable supplies of
registration.
notified handicraft goods or
A

(c) The cancellation of registration under

predominantly hand-made notified
either SGST Act/UTGST Act shall be
products. Which of the following
R

deemed to be a cancellation of registration

statements is true for Mr. X - a casual
under CGST Act
taxable person?
(d) All of the above
A

(a) Mr. X is not required to take registration

under GST under any circumstances.
12. Mrs. Reena is a consultant. She has
C

(b) Mr. X is required to get registration under

provided the following details relating to
GST if the aggregate turnover in a financial
services provided and received by her:
year exceeds Rs. 20 lakhs.
Supply of management consultancy
(c) Mr. X is required to get registration under
services for Rs. 500,000/- p.a.
GST if the aggregate turnover in a financial
Supply of accounting services for Rs.
year exceeds Rs. 40 lakhs.
200,000/- p.a.
(d) Mr. X has to compulsorily get registered
Renting of immovable property for
under GST irrespective of the threshold
residential purposes for Rs. 10,000/- p.m.
limit.
Management consultancy services
provided to a hospital for Rs. 50,000/-
9. Mr. Z of Himachal Pradesh starts a new
one time
business and makes following supplies in
Services provided to a client outside India
the first month-
for Rs. 50,000/- p.m.
(i) Intra-State supply of taxable goods
Services received from a lawyer for Rs.
amounting to Rs. 17 lakh
100,000/-
(ii) Supply of exempted goods
Note: Assume that amounts given above
amounting to Rs. 1 lakh
are exclusive of GST, wherever applicable.

CA Ramesh Soni 5.41

 Registration - MCQ
What shall be her aggregate turnover for (d) No registration required
the financial year under GST provided her
aggregate turnover during previous 16. Mr. Manjot is a trader supplying goods
financial year was Rs. 24 lakhs? from his firm M/s. Singh Traders. The
(a) Rs. 9,10,000 office of the firm is located in Delhi
(b) Rs.15,70,000 whereas its godowns are located in the
(c) Rs. 14,70,000 State of Uttar Pradesh, Punjab and
(d) Rs. 8,20,000 Jammu & Kashmir (J & K) respectively.
M/s. Singh Traders made following intra-
13. Mr. Dev Anand is engaged in providing State supplies from different States
services of facilitating sale and purchase during the current financial year:
of securities to various clients. He is also (i) Delhi - Taxable supplies: Rs.
engaged in trading of securities. His 21,00,000
turnover details are as follows: (ii) Punjab – Exempted supplies: Rs.
Trading of securities Rs 40,00,000/- 6,00,000
Brokerage on account of facilitating (iii) Uttar Pradesh – Taxable and
transactions in securities Rs 30,00,000/- exempted supplies: Rs. 3,00,000
You are required to ascertain aggregate each respectively.

I
turnover of Mr. Dev Anand under GST: (iv) J & K – Taxable and exempted

N
(a) Rs 30,00,000/- supplies: Rs. 8,00,000 and Rs.
(b) Rs 40,00,000/- 3,00,000 respectively.

SO
(c) Rs 70,00,000/- Ascertain the States in which Mr. Manjot
(d) Rs NIL. is required to take registration under GST:
(a) Delhi, Punjab, Uttar Pradesh and J & K
14. Mr. Pappu Singh, commenced his business (b) Delhi, Uttar Pradesh and J & K
H
in Feb 20XX. He has established following (c) Delhi and Uttar Pradesh
units: (d) Delhi
ES

(i) Unit A (in SEZ) and Unit B (non-SEZ)

in the State of Maharashtra 17. Which of the following persons are not
(ii) Unit C in Delhi liable for registration?
M

(iii) Unit D and E in the State of Goa (a) Any person engaged exclusively in
Mr. Pappu Singh has approached you to supplying services wholly exempt from tax.
A

help him in determining the States and (b) Persons making any inter-State taxable
number of registrations he is required to supply of goods
R

take under GST (presuming the fact that (c) Both (a) and (b)
he is making taxable supply from each (d) None of the above
State and his aggregate turnover exceeds
A

the threshold limit): 18. A person is not liable for registration

(a) Maharashtra-2: Delhi-1, Goa–Optional 1 or under GST Act if
C

2 (a) Non-resident person making a taxable

(b) Maharashtra-Optional 1 or 2: Delhi-1, Goa- supply.
Optional 1 or 2 (b) An agriculturist selling produce out of
(c) Maharashtra-1: Delhi-1, Goa-1 cultivation of land.
(d) Maharashtra-2: Delhi-1, Goa-2 (c) Dealer engaged in inter-state trade above
the threshold limit for registration.
15. Raghav of Assam is exclusively engaged (d) Casual taxable person making taxable
in intra-State taxable supply of supply.
readymade garments. His turnover in the
current financial year (FY) from Assam 19. A casual taxable person is required to
showroom is Rs 28 lakh. He has another obtain registration where he makes
showroom in Tripura with a turnover of Rs (a) Exempt supply.
11 lakh in the current FY. He is required (b) Taxable Intra state or inter-State Supply.
registration in the state of (c) Taxable inter-State or intra-State supply
(a) Assam whose proposed value exceeds Rs. 20
(b) Tripura lakhs.
(c) Assam and Tripura both (d) In none of the above situations.

CA Ramesh Soni 5.42

 Registration - MCQ
(d) Within 90 days from the date he becomes
20. Byomkesh Mukherjee & Sons, a registered liable for registration.
person located in the state of West
Bengal, is engaged in the supply of 24. A non-resident taxable person is required
taxable goods. He desires to take part in a to apply for registration:
trade fair to be held in the State of Gujarat (a) within 30 days from the date on which he
for supply of such goods. He does not becomes liable to registration
have a fixed place of business in Gujarat. (b) within 60 days from the date on which he
Which of the following statement(s) is becomes liable to registration
correct in the context of obtaining (c) at least 5 days prior to the commencement
registration in Gujarat? of business
(a) He has to obtain registration as regular tax (d) None of the above
payer under section 22 of the CGST Act
(b) He has to obtain registration as 25. Lakshmi became liable to be registered
composition tax payer under section 10 of under GST law on 10th November, 2018.
the CGST Act She submitted the application for
(c) He has to obtain registration as casual registration on 18th November, 2018. The
taxable person as defined u/s 2(20) of the registration certificate was issued on 9th

I
CGST Act December, 2018. The effective date of

N
(d) He is not required to obtain registration if registration will be
his ATO does not exceed Rs. 40 lakhs. (a) 10th November, 2018

SO
(b) 18th November, 2018
21. Mr Ram, a jeweller registered under GST (c) 9th December, 2018
in Mumbai, wants to sell his jewellery in a (d) None of these
Trade Expo held in Delhi. Which of the
H
following statements is false in his case? 26. Under GST Act the term UIN stands for
(a) He needs to get registration in Delhi as (a) User Identification Number
ES

casual taxable person. (b) Utility Identification Name

(b) He needs to pay advance tax on estimated (c) Unique Identification Number
tax liability. (d) Unique Individual Number
M

(c) He needs to mandatorily have a place of

business in Delhi. Section 27: CTP/NRTP
A

(d) He needs to file GSTR-1/ IFF and GSTR-3B

for Delhi GSTIN for the month or quarter, 27. Which of the following is/are incorrect?
R

as the case may be, when he gets (a) CTP shall pay net estimated tax liability in
registered in Delhi. advance.
(b) CTP shall pay gross estimated tax liability
A

Section 25: Procedures for registration in advance.

(c) Extension of registration of CTP beyond 90
C

22. What is the validity of the registration days can be by further by 180 days.
certificate granted under GST for a normal (d) (b) & (c)
tax payer?
(a) One year 28. The registration certificate granted to
(b) Two years CTP/non-resident taxable person is valid
(c) Valid till it is cancelled for __ days from the effective date of
(d) Five years. registration or period specified in
registration application, whichever is
23. Within how many days a person should earlier.
apply for registration under GST, apart (a) 30
from provisions of voluntary registration? (b) 60
(a) Within 60 days from the date he becomes (c) 90
liable for registration. (d) 120
(b) Within 30 days from the date he becomes
liable for registration. 29. A non-resident taxable person is required
(c) No time limit to apply for registration:

CA Ramesh Soni 5.43

 Registration - MCQ
(a) within 30 days from the date on which he (d) From the date from which the cancellation
becomes liable to registration is sought.
(b) within 60 days from the date on which he
becomes liable to registration Section 30: revocation of cancellation of
(c) at least 5 days prior to the commencement registration
of business
(d) within 180 days from the date on which he 32. Prem & Sons had taken GST registration
becomes liable to registration on 1st January, but failed to furnish GST
returns for the next 6 months. Owing to
Section 29: Cancellation/suspension of this, the proper officer cancelled its
registration registration on 25th July and served the
order for cancellation of registration on
30. Which one of the following cannot be a 31st July. Now, Prem & Sons wants to
reason for cancellation of registration? revoke the cancellation of registration.
(a) There is a change in the constitution of Upto which date an application for
business from partnership firm to revocation of cancellation of registration
proprietorship. can be filed assuming no extension to said
(b) The business has been discontinued. time-limit has been granted?

I
(c) A composition taxpayer has not furnished (a) 30th August

N
returns beyond three months from due (b) 31st August
date.

SO
(c) 25th August
(d) A registered person, other than (d) 29th October
composition taxpayer, has not furnished
returns for continuous three months/ one 33. Within how many days an application for
quarter. revocation of cancellation of registration
H
can be made provided no extension to
31. Where a RP has applied for cancellation, said time-limit has been granted?
ES

pending cancellation, the registration (a) Within 7 days from the date of service of
shall be deemed to be suspended _____. the cancellation order.
(a) From the date of submission of the (b) Within 15 days from the date of the
M

applicant OR the date from which the cancellation order.

cancellation is sought, whichever is later. (c) Within 45 days from the date of the
A

(b) From the date of submission of the cancellation order.

applicant OR the date from which the (d) Within 90 days from the date of service of
R

cancellation is sought, whichever is the cancellation order.

earlier.
(c) From the date of submission of the
A

applicant.
C

Answers:
Qs Ans Reason
1. d Section 2(47): 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 u/s 6 of the IGST Act, and
• includes non-taxable supply;
2. d Aggregate Turnover means value of all taxable supplies (excluding value of inward
supplies on which tax is paid under RCM), exempt supplies, export of goods or services or
both, inter-state supplies, but excludes CGST, SGST, UTGST, IGST and cess.
3. d 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,
- export of goods/services and
- inter-State supplies of a person having same PAN computed on all India basis and
- excluding taxes if any charged under CGST Act, SGST Act and IGST Act.

CA Ramesh Soni 5.44

 Registration - MCQ
Qs Ans Reason
4. c Particulars Rs. Included/Excluded in Aggregate turnover
Intra-State taxable 8 lakhs Included
outward supply
Inter-State exempt 5 lakhs Included
outward supply
Turnover of exported goods 10 lakhs Included
Payment made for availing - Inward supplies on which tax is paid
GTA services under RCM is not included in ATO.
Note: GTA not paying tax
under FCM
ATO 23 lakhs
5. c In Gujrat the aggregate turnover limit applicable for registration for a supplier of
service is Rs. 20 lakhs.
Computation of Aggregate turnover
Particulars Amount Remark
Consultancy services Rs. 12 lakhs Taxable supply, hence included in
Aggregate turnover
Salary - Not a supply at all hence not included in

I
turnover.

N
Aggregate turnover Rs 12 lakhs
Since the ATO did not exceed the turnover limit applicable, Ram is not liable for

SO
taking registration.
6. c Option no. (iii) is incorrect because a common registration for 2 branches cannot be taken,
this option would have been correct if it is written in the following manner:
(iii) Xylo & Co. can obtain one GST registration for shoe business (Jalandhar branch) and
another GST registration for garment business in Amritsar and show it as the principal place
H
of business and show the Ludhiana branch as additional place of business.
ES

7. d As per section 24(i): Person making interstate persons making any inter-State taxable
supply are required compulsory registration irrespective of turnover.
8. d As per section 24(ii): Casual taxable persons making taxable supply are required
compulsory registration, irrespective of their turnover. Hence, Mr. X has to compulsorily get
M

registered under GST irrespective of the threshold limit.

9. c As per section 24(i): Person making any inter-State taxable supply of goods is required to
A

obtain registration compulsorily.

10. d As per Section 22 read with notification issued u/s 23(2), Every supplier shall be liable
R

to register under this act in state/UT where he makes taxable supply of goods, if his
aggregate turnover exceeds 20 lakhs, however exclusive supplier of goods have been
A

exempted from registration upto 40 lakhs. Hence Mr. A shall be required to obtain registration
if his ATO exceeds 40 lakhs during a FY.
C

11. d (a) Person making any inter-State taxable supply of goods is required to obtain
registration compulsorily: Correct, refer section 24(i).
(b) A person to whom a UIN has been granted cannot apply for cancellation of
registration: Correct, refer rule 20. Rule 20 w.r.t. cancellation of registration is not
applicable to a TDS deductor, TCS collector and a person granted UIN.
(c) The cancellation of registration under either SGST Act/UTGST Act shall be
deemed to be a cancellation of registration under CGST Act: Correct, refer section 29(4).
12. c Aggregate Turnover means value of all taxable supplies (excluding value of inward
supplies on which tax is paid under RCM), exempt supplies, export of goods or services
or both, inter-state supplies, but excludes CGST, SGST, UTGST, IGST and cess.
Services received from a lawyer for Rs. 100,000/- is inward supply on which tax is
payable under RCM, it is not to be included in ATO.
Therefore, ATO = 5,00,000 + 2,00,000 + 1,20,000 (Rs. 10,000*12) + 50,000 +
6,00,000(Rs. 50,000 * 12) = Rs. 14,70,000.
13. a Aggregate Turnover means value of all taxable supplies (excluding value of inward
supplies on which tax is paid under RCM), exempt supplies, export of goods or services or
both, inter-state supplies, but excludes CGST, SGST, UTGST, IGST and cess.

CA Ramesh Soni 5.45

 Registration - MCQ
Qs Ans Reason
Further, goods mean every kind of movable property other than money, securities but
services include facilitating/arranging transactions in securities.
Hence,
Trading in securities: shall not be included in ATO.
Brokerage on account of facilitating transactions in securities: Included in ATO.
14. a Every supplier shall be liable to be registered under this act in state/UT, (other than special
category states) from where he makes taxable supply of goods or services or both, if his
aggregate turnover (ATO) in a FY exceeds 20 lakh rupees.
Its already presumed in the question that Pappu is making taxable supply from each
State and his aggregate turnover exceeds the threshold limit,
Hence, he is required to register in Maharashtra Delhi & Goa.
Further as per proviso to section 25(1), a person having a SEZ unit or being a SEZ
developer shall have to apply for a separate registration, as distinct from his place of business
located outside the SEZ in the same State or Union territory.
Hence Pappu is required 2 registrations in Maharashtra.
Section 25(2): A person seeking registration under this Act shall be granted a single
registration in a State or Union territory.

I
Provided that a person having multiple place of business (POB) in a State/UT may be

N
granted a separate registration for each such POB, subject to such conditions as may be

SO
prescribed.
Hence for Unit D and E in the State of Goa: It is optional to apply for separate registration
as per proviso to section 25(2).
15. c Section 22(1) ready with notification u/s 23(2): Threshold limit for registration
applicable to a person supplying goods from Assam & Tripura shall be Rs. 10 lakhs.
H
ATO of Raghav: Rs (28 + 11) lakhs = Rs 39 lakhs.
Since ATO exceeds applicable threshold, Raghav is required registration from all
ES

the states he is making taxable supplies: hence he is required registration from Assam
& Tripura both.
16. b Section 22 read with notification under section 23(2): Aggregate Turnover (ATO)
M

limit applicable to Mr. Manjot is Rs. 40 lakhs.

ATO = Rs 21,00,000 + 6,00,000 + 3,00,000 + 3,00,000 + 8,00,000 + 3,00,00) = Rs. 44
A

lakhs.
Since ATO exceed Rs 40 lakhs, Manjot is required to take registration from each state he is
R

making taxable supplies. Hence, he is required to take registration from Delhi, UP and J&K.
Registration is not required to be taken from Punjab since he is supplying only exempt
supplies from Punjab. (Refer section 23(1)).
A

17. a (a) Any person engaged exclusively in supplying services wholly exempt from tax:
C

as per section 23, any person exclusively engaged in supplying of goods/services /both
that are not liable to tax or wholly exempt shall not be liable for registration.
(b) Persons making any inter-State taxable supply of goods: Required compulsory
registration as per Section 24.
18. b As per Section 23, an agriculturist to the extent of supply of produce out of cultivation of
land either by own/family members or by hired labour shall not be liable for registration.
As per section 24, Interstate trade, CTP & NRTP are required compulsory registration.
19. b As per Section 24, Casual Taxable persons making taxable supply are required
compulsory registration. Taxable supply can be intra-state or inter-state.
20. c Section 24: Byomkesh Mukherjee will be a CTP (as defined u/s 2(20) of the CGST Act ) in
the state of Gujarat and hence required to take compulsory registration.
21. c (a) He needs to get registration in Delhi as casual taxable person: True
(b) He needs to pay advance tax on estimated tax liability: True
(c) He needs to mandatorily have a place of business in Delhi: This statement is false;
he can be a CTP without having a place of business.
(d) He needs to file GSTR-1/ IFF and GSTR-3B for Delhi GSTIN for the month or
quarter, as the case may be, when he gets registered in Delhi: True.
22. c GST registration is valid lifetime, unless its cancelled.
CA Ramesh Soni 5.46
 Registration - MCQ
Qs Ans Reason
23. b Section 25(1): Every person who is liable to be registered u/s 22/24 shall apply for
registration in every such State/UT in which he is so liable within thirty days from the date
on which he becomes liable to registration.
24. c As per Section 25, a casual taxable person or a non-resident taxable person shall apply for
registration at least 5 days prior to the commencement of business.
25. a As per rule 10 of CGST rules, If application submitted within 30 days of becoming liable,
it is effective from date person becomes liable.
If registration applied after 30 days of becoming liable, it is effective from date of the grant.
Applying rule 10, in the present case, since application is submitted within 30 days of
becoming liable, it is effective from date person becomes liable i.e., 10.11.18.
26. c UIN stands for Unique Identification Number.
27. d (a) CTP/NRTP shall pay net estimated tax liability in advance: correct
(b) CTP shall pay gross estimated tax liability in advance: Incorrect, CTP pays net
estimated tax liability in advance.
(c) Extension of registration beyond 90 days can be by further 180 days: Incorrect,
further extension only 90 days is possible.
28. c As per section 27(1): The certificate of registration issued to CTP/NRTP shall be valid for

I
N
period specified in the application for registration/ 90 days from the effective date of
registration, whichever is earlier.

SO
29. c As per first proviso to Section 25(1): A casual taxable person or a non-resident taxable
person shall apply for registration at least 5 days prior to commencement of business.
30. d As per Section 29(2), Registration shall be cancelled where a registered person other than
composition taxpayer has not furnished returns for a continuous period of 6 months.
31. a Where a RP has applied for cancellation, pending cancellation, the registration shall be
H
deemed to be suspended from the date of submission of the application or from the date from
ES

which the cancellation is sought, whichever is later.

32. D Section 30: Revocation of cancellation of registration
Subject to such conditions as may be prescribed, any RP, whose registration is cancelled by
the PO on his own motion, may apply to such officer for revocation of cancellation of the
M

registration in the prescribed manner within 90 days from the date of service of the
cancellation order.
A

Applying section 30(1)

Date of service of cancellation order = 31st July
R

90 days from 31st July = 29th October.

33. d Section 30: Revocation of cancellation of registration
A

(1) Subject to such conditions as may be prescribed, any RP, whose registration is cancelled
by the PO on his own motion, may apply to such officer for revocation of cancellation of
C

the registration in the prescribed manner within 90 days from the date of service of the
cancellation order.

CA Ramesh Soni 5.47