Since 1985

exceeding expectations

GST TRAINING

Prepared for:
STEEL AUTHORITY OF INDIA LIMITED (SAIL)

February, 2017

NEW DELHI-MUMBAI - BENGALURU - CHENNAI - HYDERABAD - AHMEDABAD - PUNE - KOLKATA - CHANDIGARH - GURGAON – ALLAHABAD - GENEVA1- LONDON
Table of Contents

Concepts
 GST Overview  Transitional provisions

 Taxable event – SUPPLY  Registration

 Place of supply  Invoice requirements
 Time of Supply
 Misc. Transactions
 Input tax credit
 Blacklisting
 Job work
 GST returns  Practical Issues
 Valuation
 GSPs  Detailed Case studies
 Refund

2
GST Development - When will GST come?

GST Constitutional
Amendment Act, Passage of CGST
Formation of GST
2016 - 8th and IGST Laws by
Council Rollout of GST
September 2016 Centre and SGST
(Meetings Law by States (Expected Date
(Power to collect
scheduled till 22nd 1.7.2017)
taxes under (Expected by
November)
existing provisions March 2017)
till 16.9.2017)
Taxes to be subsumed under GST

Central Levies State Levies

 VAT/Sales tax
 Central excise duty
 Central Sales Tax (CST)
 Additional excise duties
 Entertainment tax (other than levied by
 ED under the Medicinal & Toiletries GST local bodies)
Preparation Act
CGST  Octroi and Entry tax
 Service tax
SGST
 Purchase tax
 Additional Customs Duty s(CVD) IGST
 Luxury tax
 Special additional duty (SAD)
 Taxes on lottery, betting, gambling
 Surcharges and cesses relating to
 State surcharges, cesses relating to
supply of goods and services.
supply of goods and services
Taxes - NOT subsumed under GST

 Basic Customs Duty

 Excise Duty / VAT on Petroleum Products for five years
 Excise Duty on Tobacco Products
 Electricity Duty by state
 Entertainment tax levied by local bodies
 State excise on Alcoholic Beverages
 Property tax, Stamp Duty and taxes on immovable properties
 Royalty on minerals, Environmental / regulatory taxes- e.g. vehicles tax
 GST – ONE STATE – ONE PAN – ONE REGISTRATION CONCEPT

• Presently SAIL has plants, mines and other place of business

located in the same State as well as in different States.
• To illustrate,
• Bokaro Steel Plant, SAIL Refractory Unitall Mines located in
the State of Jharkhand, BSO etc., may get covered under one
registration within the State of Jharkhand
• Durgapur, IISCO and Alloy Steel Plant along with other place
of business like CMO etc., may get covered one registration
in West Bengal
• Various offices and depots in Delhi can get covered under
one registration
6
GST – ONE STATE – ONE PAN – ONE REGISTRATION CONCEPT

Under GST it is only One State – One PAN – One Registration Concept.
Option
Multiple registration for different business verticals within the State also available
(Section 23(2):
Mines – Iron ore, Limestone and Dolomite
Plant / Factory premises
SAIL Refractory Unit
Branch Sales Office
Warehouses/Stockyards
Marketing / Sales /Regional Office
RDCIS, CET, Training Institute
Other premises within the State
7
 GST RATES
Rate of Tax
ED,VAT /CST continuing Four rate prescribed :
on 5 petroleum 5% , 12%, 18% and
Excise, Service Tax, VAT/CST, Entry
products namely Petrol, 28%. Cess may be
Tax, CVD/SAD will be subsumed.
diesel, natural gas, ATF levied on high end/
& Crude oil. luxury products.

• Exact list of taxes/cesses getting subsumed will be made available by GST Council/Legislation.
• Petroleum products may be purchased against Form C even in GST regime,. Further, clarity is expected.
• IT System shall have the provision of recording such taxes and making purchases of five petroleum
products against Form C.

• Further, rate of GST shall be mapped HSN wise. CGST and IGST Rate of a HSN may be same across India.
However, SGST rate will differ state to state. Further, clarity is expected.

• Expected rate on steel is 18%

SUPPLY

9
Taxable Event – Supply
All forms of supply

SUPPLY  Importation of Service, for a

Sec – 3 (1)(a) Of goods and/or services consideration whether or not in the
course of furtherance of business.
Made or agreed to be made
 Supplies without consideration
For a consideration
 Major concepts of composite supply,
mixed supply, Principal supply has
By a Person
been introduced under RMGL.
In the course or furtherance of
Business

Sale/ Transfer /Barter / Exchange /License

/ Rental / Lease / Disposal
10
Supply under GST
Supply

GST Supply Non GST Supply

Intra State Inter State

Import Export Supply to SEZ
Supply Supply E.g. Diesel

Goods and/or Goods and/or Goods and/or Goods and/or

Goods Services
Services Services Services Services

Basic Custom Physical

SGST IGST IGST Zero Rated
Duty Export

1. Pay IGST and Pay IGST and Refund to be

CGST IGST claimed by SEZ
Refund to be
claimed by Exporter
2. Sale without IGST

11
Supplies without consideration – Schedule I

Following transactions are liable to GST even without consideration:

 Permanent transfer/disposal of business assets where input tax credit has been availed
on such assets.
 Supply of goods or services between related persons, or between distinct persons as
specified in section 10, when made in the course or furtherance of business.
 Supply of goods between principal and agent.
 Importation of services by a taxable person from a related person or from any of his
other establishments outside India, in the course or furtherance of business.

12
Stock Transfer/ Inter Unit Transactions
Levy of GST on movement of goods from -

GST applicable! X • One plant to another plant located in the Same

State

 • One plant to another plant located in another

State
SAIL Bhilai
SAIL Bokaro  • One Plant to depot located in another State
Chhattisgarh Jharkhand
• One Plant to depot located in the same State
X
• One Depot to another depot within the Same
X State
• One Depot to another depot located in another

State
 TAXABLE TRANSACTIONS B/W REGISTRATIONS
Valuation Issues: Stock transfer & Services b/w
Comparable Value 2 GSTNs
OR GST will be leviable between movement
Computed Value (CAS-4) of goods from one plant/depot to
another plant/depot between two
registrations.
• Transfer of goods/inputs from
Bokaro plant to Bhilai Plant or
vice-versa.
• Transfer of finished goods to
SAIL CGST/SGST
stockyards outside the state.
• Transfer from one depot to
another
CGST/SGST Or IGST • Service by Head Office to Branch
• Any plant undertaking Job work
Or IGST for other plant

SAIL
 TAXABLE TRANSACTIONS B/W REGISTRATIONS
Following cases are Taxable:

Cost Allocation Mechanism

Required for Valuation Purpose.
Registration-1 Registration-2
R&D
Support
Centre And
Movement of Goods among Administrative
Services
different registrations

 Head office/Corporate Office provides support and administrative

Cost Allocation Mechanism
services to various plants/depots across India which will be
Required for Valuation Purpose. chargeable to GST. Cost allocation mechanism shall be build for
valuation purposes.

 SAIL team needs to be establish process for the same. i.e. to

Regional Office capture such transactions which are taxable now and raise GST
Marketing
invoices.
Services

15 17
 Supply without consideration – Practical issues?
• Sales order in the name and address of Regional Office Taxable Perquisites to
• Impact of central procurement advisory services, CMO, employees
RMD, MIT, CET • Rent Free Accommodation
• Representational offices outside India – providing services
to company in India – Import of services Non Taxable Perquisite to
• Corporate Guarantee provided to related company employees
• Laptop for official/personal
• Free issue of material by contractee to contractor
use
• Captive consumption of steel in Projects • Refreshment during office
• CSR by way of running schools/hospitals on FOC basis hours
• Government and PSU – Related Party? • Use of health club/sports
• Disposal of Flyash facilities

16
Consignment Sales

Commission Agent vs Consignment Agent

“Supply/Receiver on behalf of”

• Presently, goods supplied to consignment

agents are leviable to excise duty only and not
HR VAT/CST.
Consignment Agent
• In GST Regime, SAIL will raise GST Invoice on
Consignment Agent. Consignment agent will
take credit of the same and charge GST on
GST customer and raise GST invoice on customer.
Excise Duty VAT/CST • GST will also be applicable on Agent
commission.
• In Nutshell, there would be three supplies in
this transaction.
Goods / Services
Goods Services

• Movable property, actionable • Anything other than goods

claims
• Only includes transaction in money in
• Includes growing crops/grass
relation to currency conversion done
to be severed
for a consideration
Excludes Money, Securities Excludes Money, Securities

Whether goods or service?

 Immovable property?
 Software ? - (Schedule II)
 Electricity?
Schedule II
Deemed Goods Deemed Services
Transfer
 Works Contract including transfer of property in goods
– Any transfer of title in goods
 Services involving supply of food/drink (Not alcoholic
– Any transfer where property in goods will pass on liquor)
as per an agreement at a future date upon
payment of full consideration  Any transfer of goods or of right in goods or of
undivided share in goods without the transfer of title
Transfer of Business Assets
thereof, is a supply of services. (TRUG)
– Whether or not for consideration when business
 Refrain from an act, or to tolerate an act or a situation,
assets are transferred/ disposed off
or to do an act;
– Any transfer of goods when a person ceases to be
a taxable person unless  Any activity in the form of development, design,
• Business is transferred as a going concern; or
programming, customizing, adaption, upgradation,
• Business is carried out by a personal representative who is enhancement, implementation of Information
deemed to be taxable person Technology Software.
 Temporary transfer or permitting use of any IPR, etc.
Issue: whether transfer of business assets as going
concern would form part of supply ?
Works Contract under GST
Essentials of Works Contract

&

Works Contract has been deemed as a Service in entirety

Works contract- Practical Issues
 Under GST, works contract shall be considered as a deemed service. Accordingly, the entire activity of
supply, erection, installation and commissioning of immovable property shall be deemed service.
 Since works contract is a deemed service, provisions relating to services will apply to goods supplied
as part of works contract. In case of Service Contracts, the rate of GST is likely to be 18% (although not
yet announced). Therefore, even goods involved in case of supplies would be taxed @18% without any
scope of lower tax of 12%.

Issues:
I. Separate contracts (for goods and services) to be entered for such activities?
II. Whether accounting code of Services shall be mentioned in the invoice at the time of removal of
goods?
III. Whether single contract for repairs & maintenance of goods would form part of works contract ?
IV. What will be the procedure for transferring goods in case of works contract ? Whether invoice is to be
issued at time of transfer of goods?

21
Composite Supply vs Mixed Supply

Composite Supply is defined as Mixed Supply is defined as

Ex Factory Sale
A composite supply comprising A mixed supply comprising two +
two or more supplies, one of or more supplies for a single Transportation
which is a principal supply, price shall be treated as supply =
shall be treated as a supply of of that particular supply which Mixed Supply
such principal supply attracts the highest rate of tax Or
Composite
Supply
CASE STUDY
SAIL Customer

Transportation of steel Transportation by

Road
+
Transportation by
Railway
=
Mixed Supply
• Australian Goods and Services Tax Ruling No. 2001/8 explains the Or
terms “mixed supply” and “composite supply” Composite Supply
• Chapter 16 of HMRC VAT Guideline V1-3 deals with Single and
multiple supplies.
• More than 200 foreign jurisprudence on “COMPOSITE SUPPLY”
 Schedule III & Schedule IV – Negative List
Employment Courts Diplomats Funeral
(Schedule III) (Schedule III) (Schedule III) (Schedule III)
• Services by an • Services by any court • Services by a foreign • Services of funeral,
employee to an or tribunal established diplomatic mission burial, crematorium or
employer in the course under law for the time located in India mortuary including
of or in relation to his being in force transportation of the
employment deceased

• Functions performed by an MP, MLA, members of panchayats, municipalities

Elected Representatives/ and local authorities
Government officials • Person who hold post under constitution
(Schedule III) • Duty by any person as chairman/member/director in a body established by
CG/ SG or local authorities

Schedule IV • Activities or transactions undertaken by CG/ SG or local authority

PLACE OF SUPPLY

25
Destination Based Consumption Tax
• Destination based tax (consumption tax) are levied at places where goods and services
are consumed rather than at places were they get manufactured or from where they are
supplied i.e. production and the entire revenue relating to the goods or services should
accrue in the jurisdiction where they are being ultimately consumed.

Central Government

Goods and services

Haryana Uttar Pradesh
Consideration Including
Taxes
 Nature of Supply : Local / Inter State
Situation Place of Supply
Inter state Supplies ( Leviable to IGST) If location of supplier and place of supply are in
different States.

Intra State Supplies (Leviable to CGST / If location of supplier and place of supply are in same
SGST) State.

Import of services/goods Deemed to be interstate supply of goods and services

Export of services/goods Interstate

Supply to or from SEZ Interstate

 Tax wrongfully paid: Section 19 IGST/ 70 CGST :

• Taxable person paid IGST treating supply to be inter-state where supply is intra-

state, then:

• Claim refund of IGST wrongly paid

• Pay CGST+SGST without interest thereon

• Taxable person paid CGST + SGST on a inter-state supply wrongly, then:

• Pay IGST but claim refund of CGST and SGST

• Waiver from interest payment

Place of Supply of Goods (Sec. 7)
When movement Place where movement
1
involved terminates for delivery
When movement not Location at the time of
2
involved delivery

Person on whom bill

3 Bill to Ship to model
raised

Supplied on board a Place where goods

4
conveyance taken on board

Supply by way of Place of such

5
erection/ installation installation/ erection
TAXABILITY UNDER GST - ILLUSTRATION
Chhattisgarh Odisha
Supply to GST Liability
Customer A • CSGST + SGST
Payable as location
of supplier (LOS)
and place of
supply (POS) i.e. Customer A Customer B
state where goods
are deliver are in
same state
Customer B • IGST Payable
SAIL
SAIL Depot • No Tax Payable Bhilai
(same registration)
SAIL • IGST Payable as
Rourkela LOS and POS in
different states. SAIL Depot SAIL Rourkela
CASE STUDY -PLACE OF SUPPLY
• Whether CGST+SGST or IGST shall be charged on invoice issued for goods sold to buyer of
other state on Ex-works/ Ex- factory basis ?

Jharkhand Tamil Nadu

CASE STUDY – PLACE OF SUPPLY
Haryana Delhi

Consideration
Manufacturing

Company A Company B

Facts of Case:
- Company A have a place of business in Haryana.
- Company B is manufacturing goods for Company A wherein moulds have been used
by B (Moulds also made by Company B which are used for manufacture of goods)
- Consideration for development of moulds charged.
- Moulds are not removed from the factory of B.
ISSUES UNDER CONSIDERATION

• Place of supply of Moulds?

• Nature of Tax – IGST/CGST +

SGST ?

• How the credit will flow?

PLACE OF SUPPLY : BILL-TO/ SHIP-TO MODEL

First Supply
Place of supply
SAIL First purchaser
invoice First supply:
Principal place of business of first purchaser
Delivery invoice Second
of goods Supply Second supply:
Where delivery terminates i.e. location of
second purchaser
Second
purchaser
USE OF INVOICE REFERNCE NUMBER
TAXABILITY UNDER BILL TO SHIP TO MODEL - ILLUSTRATION

Odisha Chhattisgarh Supplier GST Impact

A Liable to Pay IGST for
Bill to B (Supply of goods) Supplies to B
B Liable to Pay CGST + SGST
Customer B for Supplies to C
SAIL Rourkela (A)

Bill to C (Supply  For first leg of transaction,

of goods) POS will be location of
GSTIN on whom invoice is
raised
 Invoice will be issued taking
the GSTIN of Customer B.

Consignee ( C )
TAXABILITY UNDER BILL TO SHIP TO MODEL - ILLUSTRATION

Odisha Chhattisgarh Supplier GST Impact

SAIL Rourkela A Liable to Pay CGST+ SGST
(A) for Supplies to C
B Liable to Pay IGST for
Supplies to C

 For first transaction, Place of Supply

will be the location of Person to
Consignee (C ) whom Goods have been Billed and
Accordingly GST will be charged
Bill to B (Supply
 Invoice will be issued taking the
of goods)
GSTIN of Customer B.

Customer B
PLACE OF SUPPLY - ILLUSTRATION
• Two taxable persons having same PAN are treated as distinct persons
• Can B2S2 Rules apply in such cases? How will credit move within the SAIL – i.e. Plant
to depot
Ship To

Issue separate
Bill To invoice ?

Company XYZ SAIL - Depot

Buyer: SAIL - Plant
PLACE OF SUPPLY – GOODS IMPORTED/ EXPORTED
Import India

The place of supply of goods imported into India shall be

the location of the importer
Export

The place of supply of goods exported from India shall be

location outside India
High Sea Sales
High Sea Sale by
SAIL to customer
2 Present GST

Customer
a) Import by client – a) Import by client –
BCD, CVD and SAD BCD + IGST
Supplier
(Outside
India)
b) High Sea sale by
b) High Sea sale by
SAIL to Customer -
SAIL to Customer - IGST
1 Exempt

SAIL
Customs Frontier
Sale in the course of Import
Import for pre – identified sale

Supplier Import Buyer Sale Final customer

(Outside India) (India) (India)

Present GST
a) Foreign vendor to Buyer– BCD, CVD and SAD a) Foreign vendor to Buyer – inter State – BCD and IGST

b) Buyer to final customer – Exempt b) Buyer to final customer – GST?

Place of Supply – Services [General Rule]

B2B Supply Location of Recipient

General Rule

Location of Recipient

Yes
Address
B2C Supply available
on record ?

No
Location of Supplier

Both supplier and recipient in India

Place of Supply – Services – Specific Rules

Service Place of Supply (B2B) Place of Supply (B2C)

Immovable Property Location of immovable Location of immovable
Property property
Restaurant and Catering, Personal Grooming, Location where services Location where services
Fitness, Beauty Treatment, Health including actually performed actually performed
Cosmetic and Plastic Surgery Services
Training and Performance Appraisal Location where service Location where services are
recipient is registered actually performed
Admission to cultural, artistic, sporting, Location where event is held Location where event is held
scientific, educational or entertainment or or such park situated or such park situated
amusement or any other place and ancillary
services
Organizing cultural, artistic, sporting, scientific, Location of registered Location where event is held
educational or entertainment and other service recipient
ancillary service

Both supplier and recipient in India

CASE STUDY
Gujarat Jharkhand

Accomodation

Hotel SAIL Bokaro Plant

ABC
Facts of Case:
- SAIL – having plant in Jharkhand.
- Company is holding its meeting in a Hotel in Gujarat.
- Hotel has issued an invoice to the company mentioning the address of Jharkhand
- Hotel has charged CGST/SGST of Gujarat – as POS and Location of supplier is in
Gujarat
Issues under Consideration

• Nature of Tax – IGST/CGST + SGST ?

• Availability of ITC?

• SAIL is required to take ISD registration in

Gujarat?

• Registration to pass on the ITC?

Place of Supply – Services – Specific Rules
Service
Transportation of Goods, including mail or
courier
Passenger transportation services
Services on Board a Conveyance
Banking and other Financial Services
Insurance Services
Advertisement Services to Central Govt,
State Govt, State Board or Local Authority
Both supplier and recipient in India
Place of Supply (B2B)
Location where service
recipient is registered
Location where service
recipient is registered
Location of the first scheduled
point of departure
Location of Service recipient on
record of supplier of service
Location where service
recipient is registered
Location shall be the recipient
states
Place of Supply (B2C)
Location where goods are
handed over for their
transportation
Location where passenger
embarks on the conveyance
for continuous journey
Location of the first scheduled
point of departure
Location of supplier of services
Location of Service recipient
on record of supplier of service
Location shall be the recipient
states
POS - Illustrations
POS: Transportation of Goods by Sea/Air by registered transporter:
Import Shipments
IMPORT OF GOODS
Current Regime GST Regime
INDIA

POPS is POS is
destination Location of
of Goods-
recipient -
Taxable
(Air- exempt) Taxable

Continues to be Taxable in GST Regime 46

POS - Illustrations
POS: Transportation of Goods by Sea/Air by registered transporter : Export Shipments

EXPORT OF GOODS
Current Regime GST Regime
INDIA

POPS is POS is
destinatio Location of
n of Goods recipient

Not Taxable TAXABLE

47
Place of Supply – Services [General Rule]

General Rule

If the location of recipient is not available,

Location of recipient of service
then location of supplier.

Either supplier or recipient is outside India

 Place of Supply – Services – Specific Rules
Service
Services in relation to an Immovable Property
Services supplied in respect of goods to be made
physically available by the recipient to the supplier
Admission to cultural, artistic, sporting, scientific,
educational or entertainment or amusement or any
other place and ancillary services
Organizing cultural, artistic, sporting, scientific,
educational or entertainment and other ancillary
service
Place of Supply
Location of immovable Property
Location where services actually performed
Exception - When services are supplied in respect of
goods temporarily imported into India and
exported there after.
Location where event is held or such park
situated
Location where event is held or such park
situated

If such services are provided in more than one location, including a location in the taxable territory,
POPS- Location where the greatest proportion of service is provided in the taxable territory.

Either supplier or recipient is outside India

Place of Supply – Services – Specific Rules
Service Place of Supply
Services supplied by banking company, financial institution,
or a non-banking financial company, to account holders
Intermediary services Location of Supplier of Service

Services of hiring of means of transport other than aircrafts

and vessels up to a period of one month
Transportation of Goods, other than by mail or courier
Passenger transportation services
Services on Board a Conveyance
Online database access or retrieval services
Place of destination of Goods
Location where passenger embarks
on the conveyance for continuous
journey
Location of the first scheduled point
of departure
Location of recipient of service

Either supplier or recipient is outside India

Case study – place of supply

4 Matches

4 Matches
2 Matches

Facts of Case:
- ICC Cricket World Cup is going to be played in Asia
- Out of the 12 matches, 4 is going to be played in Gujarat, 4 in Bangalore and 2 in Sri
Lanka
- Sponsorship Services in relation to event
 POS - Illustrations
POS: Transportation of Goods by Sea/Air by foreign transporter : Import Shipments

IMPORT OF GOODS
Current Regime GST Regime
INDIA

POPS is
destination POS is
of Goods- destinatio
Taxable (Air- n of Goods
exempt)

Continue to be taxable
52
POS - Illustrations
POS: Transportation of Goods by Sea/Air by foreign transporter : Export Shipments

EXPORT OF GOODS
Current Regime GST Regime
INDIA

POPS is POS is
destinatio destinatio
n of Goods n of Goods

Not Taxable
53
POS- ISSUES IN THE LOGISTICS

Air export, air import, ocean export and ocean imports

(i) CIF – Cost, Insurance and Freight
(ii) FOB – Free On Board
(iii)EXW – Ex-Works
(iv) DDP/ DDU – Delivered Duty Paid/ Delivered Duty Unpaid

End to End
Transportation Vs. Specific Services
TIME OF SUPPLY

55
Time of Supply of Goods
Taxable under Forward Charge Taxable under Reverse Charge

Earlier of Earlier of

Date of receipt of goods

Date of issuance of invoice

Date when payment is made

Last date on which invoice has to
be issued Date immediately following 30 days from
the date of invoice

Date of receipt of payment Date of entry in books of account of

recipient of supply, in case none of the
above apply
Time of Supply of Services
Taxable under Forward Charge
Earlier of
Date of issuance of invoice
Last date on which invoice has to
be issued
Date of receipt of payment
Taxable under Reverse Charge
Earlier of
Date of payment
Date immediately following 60 days from
the date of invoice
Date of entry in books of account of
recipient of supply, if none of above apply
In case of associated enterprises, date of
entry in the books of accounts of recipient
of supply
 ADVANCE RECEIPT
Money received in Advance or Instalments
At the time of receipt of advance, SAIL shall issue Receipt Voucher (format to be
prescribed) and pay GST. At the time of issuance of invoice, reference of receipt
voucher shall be given.

Receipt of Payment

When GST shall Earlier OR

be paid? of

Date of issue of invoice by the supplier

or
Due date on which invoice is to be issued.
1. GST payable on date of receipt of payment.
2. Invoice shall be raised at the time of removal of goods.

58
Advance adjusted against another product
Earlier of:-
a. Date of issue of invoice by supplier
b. Last date on which supplier is required to issue
invoice u/s 28; or
c. Date when Supplier receives payment.
Issue:
 Advance received for an order. At
time of supply, two products or
more than two products with
different rates supplied.
 Advance adjustable against which
product?
INPUT TAX CREDIT

60
Input Tax Credit - Definitions
Input Tax
• IGST/CGST/SGST charged on any supply of goods and/or services to Issues
taxpayer which are used or intended to be used in the course or
furtherance of business.

a. Telephone /
Inputs / • Goods/Service Courier /
Input • used or intended to be used Photocopier
Services • by a supplier Services
• in the course or furtherance of business; b. Office
equipment's
• Means the goods, the value of which is capitalized in
and materials
Capital the books of accounts of the person claiming the
Goods credit
• And which are used or intended to be used in the Credit taken ?
course or furtherance of the business.
Conditions for availing credit
7 1 No Credit available on
purchases from
*** ITC to be availed No Credit beyond unregistered suppliers
on any invoice prior to specified period Valid document
filing of return for the ***
month of September
following end of FY or
filing relevant annual
6 Buyer has filed 2
Receipt of Goods/
return, whichever is his returns Limiting
Services*
earlier. factors * Except in cases
involving Bill to Ship to
Buyer has paid (BTST) model of
** If recipient of services ITC on last Lot/
supplier of delivery.
fails to pay supplier of Installment
services within 3m of services**
date of invoice, credit 5 Supplier has 3 No depreciation on the tax
availed should be paid tax component is being
reversed along with claimed on capital goods
interest from first day 4 under Income Tax Act, 1961
ITC matching Process Flow
1 6 7
Supply by taxable person in In case of any mis- In case of duplication or
GSTR-1 match communication double credit only
sent to both parties recipient will be notified
2
Such Supply is auto- 5
populated in GSTR-2 If matching successful, 8
recipient will be intimated In case mismatch not
3 corrected in month of
In case the details of inward
supplies are not reflected or notification, excess ITC will
wrongly reflected, recipient 4 be added to output tax
shall modify, delete or add Matching of ITC will liability
the same in his GSTR-2. happen at System level
Credit of ITC can be taken based on GSTIN on tax
provisionally invoice, debit/credit notes
ITC matching Process Flow
9 10
The rectification of such
excess ITC or duplicated
ITC must be made either
by the recipient or by the
supplier within the time
period provided (i.e. on
or before 20th October or
Date of Filing of Annual
Return).
The recipient is left with
no choice but to pay
Interest on such excess
ITC claimed in the valid
returns.
After rectification of mis-
match, the interest
amount paid shall be
refunded
Input tax credit
• Manner of taking input tax credit (Section 16)
ITC as self-assessed in the return of a taxable person shall be
credited to his electronic ledger to be maintained in the GST
portal.

• Credit shall be utilised in the following manner:

IGST CGST SGST

IGST utilised in the CGST utilised in the SGST utilised in the
priority specified: priority specified priority specified
IGST CGST SGST
CGST IGST IGST
SGST
Input Tax Credit – Negative List of items
SL Negative list Item Exceptions
1 Motor vehicles and other conveyances a. Further supply
b. Transportation of passengers
c. Imparting training
d. Transportation of goods
2 F&B, outdoor catering, beauty treatment, health Providing outward taxable supply of same
services, cosmetic and plastic surgery category
3 Membership of a club, health and fitness center
4 Rent a cab, life insurance, health insurance Except where government notifies services
which are obligatory for an employer to
provide to his employees under law
5 Works contract services for construction of When it is used as an input service for
immovable property other than P&M further supply of works contract service
6 Goods or services used in construction of any
immovable property on his own account, even if
used for business
Input Tax Credit – Negative List of items
SL Negative list Item Exceptions
7 Goods and/or services on which tax has been paid -
under Composition Scheme
8 Goods lost, stolen, destroyed, written off or disposed -
of by way of gift or free samples
9 Taxes if any paid under following circumstances ; -
i. Wrongful utilization by reason of fraud, willful-
misstatement, credits wrongly utilized or availed,
erroneously refunded
ii. Detention, seizure and release of goods and
conveyances in transit
iii. Confiscation of goods and/or conveyances and
levy of penalty
Input tax credit -Practical Issues
• Whether ITC can be availed on advances paid as it triggers the Time of Supply?

• Whether ITC will be eligible for goods/services for which advance was made but
subsequently no supply was received?

• Credit on expenses incurred on Hotel Accommodation/Air Travel of employees.

• Can credit be availed on the basis of Endorsed Bill of Entry?

• Is credit available on constructive delivery?

• Whether ITC available on goods/services used in residential colony

 Case study – Input tax credit
Facts:
SAIL Chhattisgarh  SAIL HO has entered a contract with co. XYZ
for transportation of steel from plants to
SAIL Rourkela customers/depots etc.
 Co. XYZ has various branch offices in
HO will pass on ITC to different states from where it will provide
plants through ISD ? transportation services to SAIL’s plants.

Issue:
 Branch of XYZ will raise GST invoice on XYZ

Transportation services
– HO (supply under GST) for which HO will
pay GST under RCM*
Invoice raised on  HO doesn’t have taxable outward supplies,
SAIL HO hence it can’t take credit of tax paid under
RCM, which will increase its cost, that XYZ -
HO will try to pass on to SAIL.
Supply from Branch to HO Contract Restructuring:
 SAIL HO/Plants can directly enter into
transportation contract with branch of XYZ.
Transportation co.– XYZ (HO) Branch
Input Service Distributor

• ISD shall have to take separate registration under GST.

• ISD means an office of the supplier of goods and / or services

which receives tax invoices issued under Section 28 towards
receipt of input services and issues tax invoices u/s 28 for the
purpose of distributing credit of CGST / SGST and / or IGST paid on
the said services to a supplier of taxable goods and / or services
having the same PAN as that of the office referred above.

• ISD will have to distribute credit to depots also.

• ISD will have to file separate returns under GST – i.e. GSTR -6 is
to be filed.
 Input Service Distributor
Credit Distribution Mechanism
ISD
• For the purposes of
distributing credit of CGST
/ SGST and / or IGST, ISD Inter State Intra State
shall be deemed to be a Distribution Distribution
supplier of services.
• Credit to be distributed on SGST as SGST/ SGST as SGST
the basis of turnover of IGST
each taxable person. CGST as CGST/ CGST as CGST
IGST
IGST as IGST/ IGST as CGST/
CGST SGST
CASE STUDY – ISD vs Supply?
Company A
Company A
(Corporate office
(Plants in multiple States)
in State A )

Plant-1 Invoice
Transportation Services
(State B)
Company X
(Registered in U.P)
Plant-2
(State C) Facts of Case:
- Company X (registered in U.P.) providing transportation services to
Company A.
Plant-3 - Invoice raised by Company X on the corporate office of Company A
(State D) - Company A will pay under reverse charge?
- Will Company A HO in State will route through ISD or cross charge?
- If cross charge, then credit blockage for reverse charge services
JOB WORK

73
Job Work under GST – Section 55
Delhi Haryana Permission not required, only intimation to be given
on satisfaction of certain conditions to be laid down

It is possible to send inputs (bring back in 1 year)

and capital goods (bring back in 3 years) directly to
JWer. (Even in case of import)

Time limit not to apply for moulds & dies, jigs &
fixtures or tools when treated as capital goods by
Principal Manufacturer (PM) Job Worker (JW) B PM

If inputs/ capital goods not brought back within

timelines, it will be considered as supply from date
of removal for JW.
Send for JW
within or
outside state If JWer not registered, PM can register JWer place as
without additional place of business and supply from there
on payment of tax
payment of tax
Any waste/ scrap arising on JW can be supplied by
Job Worker (JW) A
JWer if he is registered else by PM
Job Work – Case study 1

Supply A,B and C in same A and B in one state

State and C in different
state
A B C
55 not 55 55 not 55
applicable Applicable applicable Applicable Supply 1 Delivery as
instructed
(Material)
by A
1 ? ? ? ?
Supply 3
Supply 2 (from A to C)
Job Worker
Customer
(service)
2 ? ? ? ?

3 ? ? ? ?
Job Work – Case study 2
Supply A in different state A, B and C in
and B, C in same different states
state
55 not 55 55 not 55 A B C
applicable Applicable applicable Applicable
Supply 1 Delivery as
instructed
1 ? ? ? ? Material
by A
Supply 3 (from
2 ? ? ? ?
Supply 2 A to C)
Job Worker
Customer
3 ? ? ? ? (service)
Job Work – Case study 3
A B
Sup A,B and C in same A and B in one state
ply State and C in different Supply 1
state Material
55 55
55 not 55 not
Applicable Applicable
applicable applicable Supply 2
Job Worker
1 ? ? ? ?

2 ? ? ? ?
C
3 ? ? ? ?

Customer
Job Work – Case study 4
A B
Sup A in different state A, B and C in
ply and B, C in same different states Supply 1
state Material
55 not 55 55 not 55
applicable Applicable applicable Applicable
Supply 2
Job Worker
1 ? ? ? ?

2 ? ? ? ?
C
3 ? ? ? ?

Customer
Case Study : Imported goods directly sent to Job Worker
International Border

BOE filed by PM Import GST Impact

Operating

Principal Manufacturer
Under Section 55
?
OR

Not Operating
under Section 55 ?
Imported Goods
directly sent for job
work from Port under
endorsed BOE Job Worker
VALUATION

80
Value of Taxable Supply (goods &/ services)-Section 15

Value of taxable
supply of goods • Transaction value
and/services
• The price actually paid or payable for the said
supply of goods and/or services
Transaction
• Where the supplier and the recipient of the supply
value is
are not related and
• Price is the sole consideration for the supply.
 Inclusions in transaction value:
• Any taxes, duties, cesses, fees and charges levied under any
statute, other than SGST Act, CGST Act, GST compensation Act,
Issues for valuation:
if charged separately by the supplier to the recipient.
• Any amount that the supplier is liable to pay in relation to • IGST in case of import
such supply but which has been incurred by the recipient of applicable which
the supply and not included in the price actually paid or value?
payable for the goods and/or services.
• Incidental expenses, such as, commission and packing, • FOC items supplied by
charged by the supplier to the recipient of a supply, including supplier includible in
any amount charged for anything done by the supplier in valuation?
respect of the supply of goods and/or services at the time of,
or before delivery of the goods or, as the case may be, supply • What kind of incidental
of the services.
expenses can be there?
• Interest or late fee or penalty for delayed payment of any
consideration for any supply.
• Valuation rules?
• Subsidies directly linked to the price excluding subsidies
provided by the Central and State governments.
Case study –Valuation
Delivery Terms- Ex Works
Invoice

Freight charged back to

Raises consumer

Arranges transport and

Manufacturer
pays for freight
Debit Note

When freight
included in
Freight invoice Value of freight – Addable to TV of goods
includible in under Section 15(2)(g)?
transaction Whether transportation is a separate supply
value? When freight of service- Pure Agent?
claimed by
debit note
 Exclusions from transaction value:
The value of the supply shall not include any discount that is given:

(a) before or at the time of the supply provided such discount has been duly recorded in the invoice
issued in respect of such supply. (Pre supply discount)

(b) after the supply has been effected (Post supply discount), provided that:
(i) such discount is established in terms of an agreement entered into at or before the time of such
supply and specifically linked to relevant invoices and
(ii) input tax credit has been reversed by the recipient of the supply as is attributable to the discount
on the basis of document issued by the supplier.

Treatment of discount for Valuation

Valuation – transaction value or valuation rules
Situations where Method under
Value value cannot valued
under Section 15(1) Valuation Rules
• Transaction • Consideration, • Method in which
whether paid/payable value can be
value (Section is not wholly/partly transaction value
15(1)) in money
• Value by comparison
• Inclusions • Supplier & Recipient
are related parties • Computed value
• Exclusions • Supplies notified by method
the Central • Residual Method
Govt./State Govt. in • Valuation for Pure
this behalf on the Agent & Money
recommendation of
the Council
changer
 Valuation

• Value of taxable supply

– Different value based on payment terms – Inherent interest component

• Valuation in case of transfer from one unit to another unit?

– Comparable value or cost of production ?

• Valuation in case of transfer to depot

– Comparable value or cost of production or depot value?
– Credit accumulation at depot in case of comparable value ?
REFUND

87
 Refunds- Scenarios
S. No. Scenarios
1 Unutilized input tax credit on account of inverted duty structure
2 Tax paid on export of goods/services
3 Tax paid on input/input services used in export of goods/services
4 Tax paid on purchases made by SEZ Unit/Developer
5 Tax paid on supply of goods regarded as deemed exports
6 Refund of tax payment on purchases made by Embassies or UN bodies
7 Tax wrongfully collected and deposited with the Central or State Government
8 Pre-deposit paid for filing appeal

To be filed within two years from the relevant date

Refund of ITC - Export w/o payment of tax

To be calculated according to the following Formula

Refund amount = (Export turnover of goods + Export turnover of services) * Net ITC
Adjusted Total Turnover

(Refund not allowed if the supplier avails drawback under applicable drawback rules or claims
rebate)
Grant of provisional refund (EXPORTS ONLY)

Provisional Refund upto in case of exports -within 7 days from acknowledgment

Condition 1 Condition 2 Condition 3

The Applicant has not
been prosecuted during
No proceeding of
the five years preceding
appeal/review/revision
the tax period relating to
GST compliance rating is is pending on any issues
the refund for any
not less than 5/10 relating to the refund
offence under the GST
and if so pending, has
Act or any earlier law
not been stayed.
where the amount of tax
evaded > INR 250 Lakh;
 Refund – Practical Issues

• Payment of IGST instead of CGST+SGST.

Can the payment be adjusted against the
CGST+SGST liability?
• Provisional refund of 90% not available for
inverted duty structure
• Refund not available in cases where
accumulation of credit is on account of
subsidy
TRANSITIONAL PROVISIONS

92
Credit carry forward – Inputs and input services
• Closing Balance of Credits in Transitional Credit - Eligibility
returns on appointed date
can be carried forward.
• Transitional Credit to be
admissible under GST Act. Excise
• Credit in respect of inputs Service Tax Transitional
GST
VAT Credit
used for effecting CST sales Entry Tax
(against C/F/H Form) to be
reversed if such forms are
not collected before
appointed date.
• Refund on collection of Credit must be eligible in Current law as well as GST law
Forms
Transitional situations – Practical Issues
• Inter-state sales in the months of May & June
2017. Due date for collection of form in
August and September 2017. Appointed date
July 2017. On appointed date no liability to
collect C Form?

• Entry Tax – Carry forward in return?

• Unutilized credit of other Cesses such as

Education Cess and SHE Cess – Can it be
carried forward?
 Credit carry forward – Capital Goods
Transitional Credit - Eligibility
• Unavailed CENVAT credit on capital
goods can be transitioned

• Unavailed CENVAT credit means the

credit remaining after subtracting
credit already availed under earlier Excise duty Transitional
GST
law. VAT Credit

• Capital Goods shall have the meaning

assigned to it in clause (a) of Rule 2 of
Cenvat Credit Rules, 2004.

Credit must be eligible in Current law as well as GST law

Transitional situations – Practical Issues
• What happens if 50% credit was not availed in the first year? Can entire
credit be availed under GST law?

• Credit of capital goods procured within last 2 years that were exclusively
used in the manufacture of exempted goods in current regime which have
now become taxable.

• Unavailed credit of capital goods not capitalized in

the books of accounts. Can credit be carried forward?
Inputs held in Stock – Allowed in certain situations

Any Person engaged in

A registered taxable person
manufacture of exempted
not liable for registration
goods or provision of
under earlier law
exempted services

Who is eligible ?

Person providing works

contract service and was First Stage dealer or Second
availing of the benefit of Stage dealer or Registered
Notification No. 26/2012-ST, importer
dated 20.06.2012
Credit availability to Dealers
Credit lying
in stocks

First Second Third Fourth Unregd.

SD SD SD SD Depots

Covered under Section 169
Issue:
Whether FSD and SSD are required
to be registered under Excise?
Not directly covered under Section 169
Issue:
• Whether covered under the phrase
“person not liable to be registered under
the earlier law”?
• Whether Regd. Depots are covered?

Whether credit of input services in respect of inputs can also be carried forward?
Inputs held in Stock – Allowed in certain situations
Such inputs and/or goods are used or intended to be used for making
taxable supplies under this act

The said taxable person passes on the benefit of such credit by way of
reduced prices to the recipient (anti profiteering)

The said taxable person is eligible for input tax credit on such inputs
under this Act
What are the
conditions ? Invoice or other duty paying document in respect of such inputs
should be available

Such invoices are not issued earlier than 12 months prior to the
appointed date

Supplier of services is not eligible for any abatement under

Taxes to be carried forward ?

Duties of Excise Additional Excise

Additional Excise
specified in First Duty (Goods of
Duty (Textile and
and Second Special
Textile Articles)
Schedule of CETA importance) Act

What taxes
National Calamity Special Additional
are available CVD
contingent duty Duty
as credit ?

Service Tax VAT Entry Tax

Credit on inputs or input services in transit
Credit eligible for goods in transit?

• Inputs or input services should have been received on or after the

appointed date

• Tax in respect of such inputs/ input services should have been paid
before the appointed date

• Invoice for such inputs/ input services should be accounted in the books
of accounts of the recipient within 30 days from appointed date
Practical Issues
• Capital goods in transit?

• Interpretation of words ‘ tax paid’?

Tax paid has been defined as tax paid under GST.

• Excise Duty is to be paid by 5th of next month. What if the goods

are in transit and Appointed date is 1st July?

• Credit on duty paid inputs in transit which are currently used in

the manufacture of exempted final product. Example – Packing
Material for Fertilizers
Special situations – Movement of goods
before appointed date and returned
Goods removed under earlier law

on or after appointed day

Inputs goods removed for

Job Work No tax payable if goods are returned
within 6 months of the appointed day.
The 6 months can be extended by the
Semi-finished goods competent authority for a period not
removed for Job Work exceeding 2 months. If not returned
within 6 months, GST payable by the
Finished goods removed for person returning the goods and ITC
carrying out certain will be required to be reversed by PM.
processes
 Price Revision

Price revised upwards

Supplementary Credit Note to be
invoice/Debit Note raised within 30
to be raised within days of price

Price revised downwards

30 days of price revision taking
revision taking place after
place after appointed day.
appointed day. Corresponding
This price revision reduction in tax
– Deemed to be liability only if the
issued for outward recipient has also
supply. reduced his ITC.

Issues:
 At what rate will GST have to paid when Supplementary Invoice is issued?
 Is interest liable to be paid on the issuance of Supplementary Invoice?
Pending claims/ refunds and outcome of proceedings

Pending Claims/
Proceedings

Appeal, revision,
Assessment or
CENVAT Credit claim/ review or reference
Refund claims adjudication Revision of returns
recovery relating to output
proceedings
duty liability

1) Pending claims/proceedings to be disposed off in accordance with the provisions of the earlier law.
2) Refund to be paid in cash only.
3) Any recovery – Treated as GST arrears.
4) Amount so recovered is not eligible as ITC.
Pending litigations

• Recoverable from SAIL: Any amount of tax, interest, fine or penalty, which
is recoverable from SAIL shall be recovered as an arrear of tax under GST
act and the same shall not be available as input tax credit under GST. SAIL
Tax Team to examine all the pending litigations where in paying the
disputed tax amount before GST regime is beneficial.

• Refundable to SAIL: Any amount of tax, interest, fine or penalty, which is

refundable to SAIL will be refunded in accordance with provision of earlier
law (and in cash in case of CGST) and shall not be available as input tax
credit under GST.

106
Import under AA/EPCG whose export obligation cannot be fulfilled under GST

• Under GST, if any earlier period tax is paid in GST regime as arrear of tax, the credit
of the same shall not be available.
• Accordingly, if export obligation is not fulfilled against an advance authorization /
EPCG license issued under earlier law, then the duty free imports shall be liable to
tax.
• Customs Duty (CVD & SAD) and Interest shall be recovered as an arrear of GST and
ITC of such payment will not be available. In other words, SAIL shall be liable to pay
taxes on duty free imports made against advance authorization/EPCG in addition to
BCD. Also, the taxes so paid shall not be eligible as input tax credit.
• Accordingly, SAIL to identify the cases, if any and appropriate remedial measures to
be taken considering the consequences of non-fulfillment of export obligation.

107
Pending Cenvat credit refund claim related to export

• As per Section 179 & 180, if any claim for refund has been filed after the appointed day
for any duty or tax which has been paid under earlier law and the goods or services are
exported before or after the appointed day, then such claim shall be disposed of as per
earlier law and any amount accruing to the assesse shall be refunded to SAIL in
accordance with the provisions of earlier law.

• If any claim for refund of cenvat credit is rejected fully or partially, then such rejected
amount shall lapse and also if any amount of cenvat credit has been carried forward
under this Act then refund claim shall not be allowed for such amount.

• SAIL shall streamline its refund applications related to refund of cenvat credit on exports
and in case of any possibility of rejection of refund claims, it shall withdraw such
applications and claim cenvat credit as it can be carried forward under GST

108
Sales Return- Summary

Dealer Returns Exempted Within six month No GST payable

goods After six month GST payable
Sold to Returns Dutiable Within or after six month GST payable
(upto 6m goods
prior to Customer Returns Exempted Within or after six month No GST payable
appointed goods
date)
Returns Dutiable Within six month Refund admissible
goods
Within or after six month No refund
Credit on tax paid goods/Capital Goods lying with Agent

Credit available to agent subject to following

conditions-

Agent is a registered taxable person.

Declaration by principal and agent of the details of

stock

Invoices issued within 12 months preceding the

appointed date

ITC in respect of goods/capital goods either not

availed or reversed by the principal.
 Miscellaneous
 Long term construction/ works contract entered prior to appointed date –Supplies
made after appointed day liable to tax under GST law.

 Periodic supply of goods or services – No GST to the extent consideration received and
tax paid under earlier law.

 Retention payments – No GST in case full duty or tax paid under earlier law.

 ISD credit distribution – ITC on services received prior to appointed date eligible for
distribution.

 Tax paid under earlier law – No GST payable in case point of taxation arouse under
earlier law
 Miscellaneous
 Credit distribution in case of centralized registration – Taxable person may transfer
credit to any registered taxable person having same PAN for which centralized
registration was availed under earlier law.

 Branch Transfers – Input tax credit reversed on branch transfer under VAT laws not
available as credit.

 TDS- No deduction on payments received after appointed day even if invoice raised
before the appointed day.

 Credit reversal for non payment – If there has been a credit reversal consequent to non
payment of invoice amount, such credit can be re-availed if payment made within 3
months from appointed date
REGISTRATION AND
TAXIBILITY
113
 Registration
• Every person shall be liable to be registered in the state from where he
intends to make a taxable supply of goods/services.
• Option to have separate registrations for multiple business verticals in
same state.
• ISD operator, person required to deduct tax at source, e-commerce
operator to register separately.
• Mandatory to display registration certificate and GSTIN in name board.
• No separate registration for SGST, CGST and IGST.
• No provision for centralized registration.

Note: For business vertical – reference can be made to Accounting Standard 17 issues by ICAI.
Persons required to be registered
Mandatory Registration (with
threshold)
• Aggregate turnover in a financial
year exceeds:
• INR 20 Lakhs – for other than
special category states.
• INR 10 lakhs - for north eastern
states including Sikkim.
Mandatory Registration (without
Voluntary Registration
threshold)
• Interstate Suppliers • Possible even if turnover below
• Person required to pay under threshold of 20 Lakhs / 10 Lakhs
Reverse Charge
• Input Service Distributors
• E-Commerce Operators /
Aggregators
• Persons supplying through E-
Commerce Operators
• Casual and Non-Resident Taxable
Persons Threshold to be calculated
• Persons required to deduct tax at on All India Basis and shall
source include taxable, exempted
• Persons supplying on behalf of and exports Supplies
other registered taxable persons
INVOICING REQUIREMENTS
UNDER GST

116
 Types of invoices
• Tax invoice: To be issued by the registered taxable person making
taxable supply of goods/services.

• Bill of supply: To be issued by the registered taxable person

making exempt supply/supplies under composition levy. If value of
supply less than Rs. 100 - Option to issue the bill of supply.

• Receipt voucher: To be issued be the registered taxable person on

receipt of advance payment.

• Invoice under RCM: To be issued by the person liable to pay tax on

reverse charge on the goods/services received by him from an
unregistered person.

Note: Tax invoice shall be deemed to include a revised invoice, document

to be issued by an ISD.
Time for issuance of Invoice

Goods

One time supply Continuous Supply RCM Other Cases

Involving movement – When successive On date of receipt of

before or at time of goods from a person For goods sent on sale
statements of accounts
removal of goods who is not required to on approval or such
or successive payments
register under this Act similar terms, invoice
are involved – earlier of
shall be issued earlier of
Other cases – Earlier of i. Issuance of each
i. Actual supply; or
i. Delivery of goods or statement
ii. 6m from date of
ii. Making goods ii. Receipt of each
removal
available to recipient payment
Time for issuance of Invoice
Services
One time supply RCM Other Cases
Cessation of supply of
Before such services before its
supply. If issued On date of receipt of completion - On
after supply, services from a person who cessation of supply and
then within 30 is not required to register to the extent of supply
days. under this Act effected before
cessation
Number of Invoice copies
Supply of Goods

Duplicate Copy - marked

Original Copy - marked as Triplicate Copy - marked
as ‘Duplicate for
‘Original for Recipient’ as ‘Triplicate for Supplier’
Transporter’

Original Copy - marked as Duplicate Copy - marked

Supply of Services
‘Original for Recipient’ as ‘Duplicate for Supplier’

Serial Number of the tax invoices for the year has to be informed in GSTR-1
Invoice Reference Number (IRN)
Need for IRN How to Obtain IRN Validity of IRN

By uploading a tax
invoice issued by
the registered
To avoid duplicate taxable person in
30 days from date
and triplicate Form GST INV-1
of uploading
copies of invoice which can be
produced for
verification by
proper officer
Practical Issues
 Invoice series – Whether separate series
possible for the following?

• Supply of Goods and Supply of Services

• Export Clearance and Domestic Clearance

• Products having different Rates

• Factory-wise in case many factories within the state

are covered under single registration
Practical Issues – For advances
 When advances are received
 If multiple supplies - rate of tax on which GST to be calculated?
 In case of return of advance – Document to be can be issued?
 In case of forfeiture – would amount to supply of service. Rate of tax on
services could be different.

 When advances are paid

 ITC cannot be claimed since goods/services not received and would thus
have an additional impact to cash flow.
 Incase goods/services received after furnishing of September return (in the
following financial year) – Whether ITC can be claimed in such cases.
MISCELLANEOUS
TRANSACTIONS
124
Supplies to SEZ
Supply to SEZ – Implications

• SAIL sell its product to SEZ which is

presently exempt from taxes.
• In GST, Supplies to SEZ has been covered
under zero rated supplies.
• However, definition of Zero Rated Supply
Supplies does not mean that tax Rate is
Taxable
NIL. It means that SEZ unit/ SEZ Developer
can take refund of GST paid on Inputs. SEZ
SAIL
• Hence, Supply to SEZ is taxable under GST.
• As supplies to SEZ is interstate supply,
IGST would be applicable on such
supplies.
Deemed Exports
Supply considered as deemed exports under existing regime – Implications

• Supplies to EOU/EPCG
Holder/EHTP/Advance authorization
holder etc. are deemed as exports and
no taxes are applicable under current
scenario. Supply
• Deemed exports situations have not
been notified under GST as of now.
• All such transactions would be taxable EOU/EHTP
SAIL
/EPCG etc.
under GST, hence IT System should
capture all such transactions and
generate GST Invoice.
• Await final law for more clarity.
 Supplies to Merchant Exporter
Supply to Merchant Exporter – India Australia
Implications
Delivery on the instruction of B
Direct Export
• SAIL must be selling its product to
Merchant Exporters which are
presently exempt from taxes Sells to Sells to
against ARE-1/CT-1/Form-H. Supply 1 Supply 2
• No provision under Model GST Law
regarding Sale to Merchant
Exporter.
A B C
• CGST+SGST/IGST will be applicable
on such sale depending on Place of SAIL Merchant Exporter Buyer in Australia
supply.
 FSD/SSD/IMPORTER
First stage dealer/second stage dealer/Importer registration concepts under GST
International Border
 Under Existing regime, various persons
registered themselves as
FSD/SSD/Importer to pass on the benefit
of duty to customer/own entity. FSD/SSD/Importer

 However, there is no such concept under

GST as of now.
 Now, Importer will file B/E and pay taxes OR
at the port to clear the goods and in
second leg importer would raise the
separate invoice on SAIL charging GST.
 SAIL would be able to avail the credit on
basis of importer’s invoice.
SAIL
MRP Based Valuation

 There are various products under existing regime on

which excise duty and other taxes are paid on basis of
MRP. i.e. MRP Valuation concept exists under current
regime.
 However, there is no such concept of MRP Valuation
under GST regime and normal transaction value would
be the basis for such transactions for charging GST.
 Valuation rules for determining value in case transaction
value is not applicable are yet to be notified.
 GST on MRP based products will be paid on transaction
value under GST regime.
Case Study – Sale Return Scenarios
Case 1
Where Customer has already recorded the purchase in its books of Accounts and then
returning the goods

Case 2
Where customer is returning the part quantity and has not recorded the purchase in its
books of Accounts of the said part quantity

Case 3
Where customer has not recorded purchases and is returning the complete material

Case 4
Where goods being returned due to damage without reaching the customer premise
POINT TO PONDER?
Credit of capital goods Captive consumption of
ITC to customer
used in captive power goods in further
plant POST SUPPLY DISCOUNTS construction (Whether immovable
property OR plant OR
( Impact of wheeling out (Self use of
machinery)
of electricity) ) TMT/Steel/Cement)

Head Office : Role of Deemed manufacture

ISD – To be distributed to
service provider and ISD. issues like bending and Rebate scheme under
depots / Distribution
Two Numbers? cutting of TMT bars at export to continue?
mechanism
Identification at PO level? depots

Imports Supplies to SEZ / Power

Input and Capital Goods
(Separate Value for BCD Projects / Existing FTP Purchase against Form C
used in Head Office
and IGST) benefits etc.
Procedural Aspects

To continue in the GST regime

Forms
Form C Form H Form F

No longer relevant under GST regime.

Transit Check Road

Pass Posts Permit
CONCEPT OF

BLACKLISTING
133
 Blacklisting
Defaults that result in Blacklisting

Continuous short reporting Continuous default Continuous default of three

of sales beyond a prescribed for three months in months or any three month
limit of 5% of total sales for paying ITC that has period over a duration of 12
a period of 6 months been reversed months in uploading sales

• Any fall in rating below a prescribed level would result in blacklisting a dealer
• Purchases from such dealer will no longer qualify for input tax credit (ITC)
• Details of defaulting dealers will be made available on a public domain to inform
potential buyers.
 Practical Issues
• What will happen if a particular vendor of SAIL is blacklisted? Will
the credits availed previously will also be denied?

• If the vendor files all the Return and subsequently comes out of
the blacklisting category, will the tax credit of the recipient be
regularized?

• How will an assesse know if any of his

vendors are blacklisted?
Basic Features of Returns

Invoice based Return

Concept of Auto population

Designed for system based matching

Settlement through data received in returns

No revised returns – changes through amendments to

original details
Returns Compliance Calendar
Sl Return/ Ledger Purpose To Be Filed By
1. GSTR–1 Outward supplies made by the Taxpayer (other than 10th of the next month
compounding taxpayer & ISD)
2. GSTR–2 Inward supplies received by the Taxpayer (other than 15th of the next month
compounding taxpayer & ISD)
3. GSTR–3 Monthly Return (other than compounding taxpayer & 20th of the next month
ISD)
4. GSTR–4 Quarterly Return for compounding Taxpayer 18th of the month next to the
quarter
5. GSTR–5 Period Return by Non–Resident Foreign Taxpayer Last day of Registration
6. GSTR–6 Return for Input Service Distributor (ISD) 13th of the next month
7. GSTR–7 Return for Tax Deducted at Source (TDS) 10th of the next month
8. GSTR–8 Tax collected at source (TCS) 10th of the next month
9. GSTR–9 Annual Return 31st December of the next FY
10. ITC Ledger of the Taxpayer Continuous
11. Cash Ledger of the Taxpayer Continuous
12. Tax Ledger of the Taxpayer Continuous
 Discussion Points– RETURNS/LEDGERS
 Critical Analysis of all returns format
 Discussions on every table and column including validations , upload of invoice details at
HSN/line item wise/invoice level

 Analysis of flows between GST returns Happy Path

 Flows from normal supplier taxpayer to normal receiver taxpayer and vice versa (GSTR 1
Partial
/ GSTR 2A / GSTR 2 / GSTR 1A / GSTR 3)
Happy Path
 Flows from normal supplier taxpayer to compounding receiver taxpayer and vice versa
(GSTR 1 / GSTR 4A / GSTR 4 / GSTR 1A) Unhappy
 Flows from normal supplier taxpayer to ISD and vice versa (GSTR 1 / GSTR 6A / GSTR 6)
path
 Flows from ISD unit to recipient unit and vice versa (GSTR 6 and GSTR 2)
 Flows from TDS Deductor to Deductee and vice versa (GSTR 7 and GSTR 2)
 Flows from normal supplier taxpayer to ecommerce taxpayer and vice versa (GSTR 1 /
GSTR 8) and other flows..

Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.

 Discussion Points– RETURNS/LEDGERS
 Analysis of Ledgers
 Analysis of ledger formats
 Analysis of linking between Returns and Ledgers
 Analysis of source of entries in Ledger from Returns as well as other forms/sources
 Analysis of utilization of cash and ITC provisions and restrictions

 Discussion on Input tax credit availment and reversal scenarios and impact on Returns
 Reversal of ITC at invoice level
 Reversal of ITC at consolidated level
 Rectification of wrong availment or wrong reversal entries
 Impact on credit on short / late receipt of goods, non payment to service vendor etc and how the
same has to be routed through returns

Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.

 Discussion Points– RETURNS/LEDGERS

 Discussion on methodology of rectification of errors

 Mechanism of rectification of every column of each and every table in the returns
 Analysis of critical scenarios – Rectification of wrong distribution of ISD credit, wrong
distribution of TDS credit, mentioning of wrong recipient GSTIN etc..
 Rectification of matched and unmatched invoices

 Critical Analysis of various kinds of business transactions/processes executed in industry

and how the same shall be routed through returns
 Stock transfer/Inter unit services/Job Work / Advances / Advance received but services not
provided/return of during because of in transit damage / post supply discounts / price
variations / Bill to Ship to transactions and many more..

Copyright (c) 2016. Lakshmikumaran & Sridharan / Confidential.

GSTR 1- Outward Supplies
• Return needs to be filed by 10th of the next month
• Reporting for B2B supplies – Auto-populate to Purchaser GSTR -2
– GSTIN of customer– Local sale or Intra state sale (CGST +SGST or IGST)
– POS / Reverse Charge for each supply required to be identified for purpose of filing returns
– HSN and line item wise reporting for each Tax Rate also a requirement

Invoice Level
GSTR 1- Outward Supplies
• All Outward supplies need to be captured - export, nil rated, exempted
• Credit Note/ Debit notes for each invoice

Tax
Invoice
Level

• Export – Shipping bill details not available

Shipping Bill
GSTR 1- Outward Supplies
• B2C reporting of supplies
– Invoice level reporting for supplies more than INR 2,50,000
– For invoice below INR 2,50,000 : State-wise summary of inter-state
supply covering those invoices where there is address on record i.e.
• Every invoice having a value of INR 50,000 or more : Address of the buyer has
to be mandatorily reflected on invoice
• Invoice for value less than INR 50,000 without address to be treated as intra-
state supply
• (Based on Joint Committee report)
• Details of amount received as advances and taxes already paid need
to be reported

• Differential liability/ adjustment due to credit / debit note

FORM GSTR-2A: specifies

Part A Part B Part C Part D

Inward supplies received
from registered taxable
persons and amendments
thereof ISD Credit received TDS Credit received TCS Credit received
Details of credit and debit
notes and amendments
thereof

FORM GST-1 FORM GST-6 FORM GST-7 FORM GST-8

GSTR -2 : Inward Supplies
To be prepared on the basis of details contained in FORM GSTR-
Due 2A.
Date Inclusions-
for 1. Modifications in relation to unmatched credits.
2. Details of invoice furnished by an ISD in FORM GSTR-6.
filing
3. Details of TDS in FORM GSTR-7.
by 15th 4. Details of TCS by an e-commerce operator in FORM
GSTR-8
GSTR 2- Inward Supplies

*GSTR 2 auto populated from GSTR 1 of supplier

GSTR- 1A: Outward supplies mismatch

• Details of inward supplies added, corrected or deleted by

the recipient in his FORM GSTR- 2 to be made available to
the supplier in Form GSTR- 1A .
• Supplier can accept or reject the modifications made and
FORM GSTR- 1 shall accordingly stand amended.
• Supplier to accept the changes by 17th
Interactive Returns

GSTR-1A
GSTR-1 GSTR-1
• Accept
• Uploading of Data • Auto Amended
• Reject

GSTR-2A GSTR-2
• Accept / Reject • Uploading of
• Modify / Add remaining data
GSTR 3- Monthly Consolidated Return
Form GSTR 3

PART A
PART B
• Electronically generated based on
• Details of tax, interest, penalty,
FORM GSTR-1, GSTR-2, electronic
fees or any amount paid.
credit/cash ledger and electronic
(Electronically generated from
tax liability register.
cash and ITC ledger)
• Details of Turnover,
outward/inward supplies,
• Refund of any balance in the
export/import, input tax, output
electronic cash ledger u/s 35(6).
tax.
Form GST PMT -2 ( E-Credit Ledger)
GST Returns - Highlights

• Unless tax is paid, the return does not go for

matching – ITC for invoices that have been uploaded
but tax not paid will get reversed.
• ITC claimed in a return that is not valid available only
for utilization for liability in that return.
• No tax payer can file a monthly return unless he has
filed a valid return for previous month’s return.
• No provision for revision of return under GST.

152
GST Suvidha Providers
GSPs
153
GST Suvidha Providers
 A way for taxpayers to interact with
the GST System through third party
applications developed by GSP.
 GSPs would simplify processes by
facilitating interface between the
taxpayer and the GST System.
 Registered companies in India in the IT
/ ITES / BFSI domain can register as a
GSP.
 Services to be Provided
• Assist in the registration of an entity.
• Upload GSTR-1 which will be created based on invoice data and some other
data provided by the taxpayer.
• Download data on inward supplies (receipts or purchase) in the form of Draft
GSTR-2 from GST Portal created by the Portal based on GSTR-1 filed by
corresponding suppliers.
• Do matching of purchases made. Finalize the same based on his own purchase
(inward supply data) and upload GSTR-2.
• File GSTR-3 created by GST Portal based on GSTR-1 and 2 and other info and tax
paid.
 How it would work?
GSP Ecosystem
Web Portal

Taxpayer
Mobile App

GSP-GST
ERP Server GST Server

Customised
Apps

Accounting
Package
List of GSPs is available at
http://www.gstn.org/ecosystem/pdf/Finals_from_Delhi_and_Bangalore.pdf
 THANK YOU

Copyright (c) 2017. Lakshmikumaran & Sridharan / Confidential. 157