Supply, Levy and Collection under GST Act, 2017 | Tax Law - CLAT PG PDF Download

Supply Under GST (Goods and Services Tax)

Supply is a crucial concept under GST as it determines when tax liability arises. Here are the key points:

Meaning and Scope of Supply

• Definition: Supply under GST includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease, or disposal of goods or services for consideration in the course or furtherance of business.
• Import of Services: Import of services for consideration, whether in the course of furtherance of business or not, is also considered a supply.
• Supply Without Consideration: Certain activities specified in Schedule I are treated as supply even if made without consideration.
• Activities Treated as Supply: Schedule II outlines activities to be treated as supply of goods or supply of services.
• Exclusions: Activities that are neither supply of goods nor supply of services are excluded as per Schedule III.

Composite Supply and Mixed Supply

• Composite Supply: A composite supply involves two or more taxable supplies of goods or services that are naturally bundled and supplied together, with one being the principal supply. For example, when goods are packed and transported with insurance, the supply of goods, packing materials, transport, and insurance is a composite supply.
• Mixed Supply: A mixed supply consists of two or more individual supplies of goods or services made together for a single price, where the supplies are not naturally bundled. For instance, a package of canned foods, sweets, chocolates, and drinks sold for a single price is a mixed supply.
• Tax Liability: For composite supplies, the tax is based on the principal supply. For mixed supplies, the supply attracting the highest tax rate determines the tax liability.

Time of Supply

• The time of supply determines when goods or services are considered supplied for GST purposes.
• Different rules apply to goods and services:
• Goods: Time of supply is when the supplier issues a tax invoice, or when the goods are removed or made available to the recipient.
• Services: Time of supply is when the services are provided, or when the invoice is issued, whichever is earlier.
• GST liability arises at the time of supply, and the applicable tax (CGST/SGST or IGST) must be paid then.

Time of Supply of Goods

• The time of supply of goods is determined by the earliest of the following:
• Date of issue of invoice
• Last date on which invoice should have been issued
• Date of receipt of advance/payment

Example:

• A supplies goods to B on 5th July and issues the invoice on the same date.
• B pays by cheque on 20th July, and the cheque is credited to A's account on 22nd July.
• A records the receipt of payment on 23rd July after confirmation of cheque clearance.
• The point of supply of the goods is 5th July.
• If B pays half of the consideration in advance on 2nd July, the point of taxation for that amount is the date of receipt of such payment, which is July 22.

Time of Supply for Services

• The time of supply of services is determined by the earliest of the following:
• Date of issue of invoice
• Date of receipt of advance/payment
• Date of provision of services (if invoice is not issued within the prescribed period)

Value of Supply

• The amount of GST payable is calculated by applying the rate of GST to the value of the supply.
• The value of a supply of goods or services shall be the transaction value, which is the price actually paid or payable for the supply where the supplier and the recipient are not related, and the price is the sole consideration for the supply.
• The value of supply shall include:
• Any taxes, duties, cesses, fees, and charges levied under any law other than the GST Acts if charged separately by the supplier.
• Any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient and not included in the price.
• Incidental expenses, including commission and packing, charged by the supplier to the recipient.
• Interest, late fee, or penalty for delayed payment of any consideration for any supply.
• Subsidies directly linked to the price, excluding subsidies provided by the Central and State Governments.

Place of Supply

• CGST and SGST are payable in case of intra-state trade or commerce (intra-state supply of goods and services).
• IGST is payable in case of inter-state trade or commerce (inter-state supply of goods and services).
• The principle behind place of supply provisions is that GST is a destination-based tax, meaning tax is payable where goods and services are consumed.
• For services, the location of the person receiving the service is relevant. If the recipient is registered under GST, their registration address is used. If not, the address on record of the recipient is used in some cases.
• However, for services related to immovable property and certain performance-based services, different criteria may apply.

Levy and Collection of GST on Supply

• Intra-state supply (supply within State) Basis of charge as per CGST Act, 2017 and Basis of charge as per respective SGST Act, 2017/UTGST Act, 2017 (Most of the provisions are same as CGST Act, 2017).
• Inter-state supply (supply from one state to another state) Basis of charge as per IGST Act, 2017.
• CGST along with SGST/UTGST is leviable on intra-State supplies. The maximum rate at which Government can levy CGST is 20%.
• Alcoholic liquor for human consumption is outside the ambit of GST. Further, petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, and aviation turbine fuel are also kept outside GST for the time being but can be brought under its regime from such date as may be notified.

Levy and collection as per CGST Act, 2017

• U/s 9(1) of CGST Act, 2017 there shall be levied a tax Called the Central Goods and Services Tax(CGST); On all the intra-state supplies of goods or services or both, except on supply of alcoholic liquor for human consumption; On the value determined u/s 15; and At such a rate (maximum 20%,) as notified by the Central Government on recommendation of GST Council; and Collected in such a manner as may be prescribed; and Shall be paid by the taxable person.
• GST is normally payable by the supplier of goods or services. However when the same is payable by the recipient of goods/services, it is called reverse charge. The term —reverse charge' is defined under section 2 (98) of CGST Act.
• U/s 9(3), CGST is to be paid on reverse charge basis by the recipient on notified goods/services or both (liability to pay tax by the recipient of supply of goods/services rather than supplier of goods/services under forward charge).
• U/s 9(4), CGST on taxable supply of goods/services to registered supplier from unregistered supplier is to be paid on reverse charge basis by the recipient.
• U/s 9(5), E-Commerce operator is liable to pay CGST on notified intra-state supplies.

Levy and collection as per IGST Act, 2017

• U/s 5(1) of IGST Act, 2017 there shall be levied a tax Called the Integrated Goods and Services Tax (IGST); On all the inter-state supplies of goods or services or both, except on supply of alcoholic liquor for human consumption; On the value determined u/s 15 of CGST Act, 2017; and At such a rate (maximum 40%,) as notified by the Central Government on recommendation of GST Council; and Collected in such a manner as may be prescribed; and Shall be paid by the taxable person. Provided further that IGST will be imposed on goods/ services imported into India.
• U/s 5(2) of IGST Act, 2017, the CGST of following supply shall be levied with the effect from such date as notified by the Central Government on recommendation of GST Council Petroleum crude High speed diesel Motor spirit (commonly known as petrol) Natural gas Aviation turbine fuel.
• U/s 5(3), IGST is to be paid on reverse charge basis by the recipient on notified goods/services or both (liability to pay tax by the recipient of supply of goods/services rather than supplier of goods/ services under forward charge).
• U/s 5(4), IGST on taxable inter-state supply of goods/services to registered supplier from unregistered supplier (agriculturist) is to be paid on reverse charge basis by the recipient.
• U/s 5(5), E-Commerce operator is liable to pay CGST on notified inter-state supplies.