GST-Goods and Services Tax in India - GST Model Law 2016 - Made easy to understand by Abhivirthi

GOODS AND SERVICES TAX IN INDIA

GST MODEL LAW 2016

MADE EASY TO UNDERSTAND

ONE NATION ONE TAX 
EVERYTHING IS POSSIBLE

The Honorable Finance Minister of India under the esteemed leadership of Honorable Prime Minister has published and made available on public domain the draft model of Goods and Services Tax Law on 14.6.2016 which comprises of the following:

v   Model Goods and Services Tax Act, 2016

v   The Integrated Goods and Services Tax Act, 2016 (with Schedules)

v   Goods and Services Tax Valuation (Determination of Value of Supply of Goods and Services) Rules, 2016.

The Goods and Services Tax Model Law, which has 162 clauses and 4 schedules has also suggested a jail term of up to 5 years and fine for violation of the provisions of the statute.

The Goods and Services Tax would replace the following taxes currently levied and collected by the  Centre:

v   Central Excise Duty

v   Duties of Excise (Medicinal and Toilet Preparations)

v   Additional Duties of Excise (Goods of Special Importance)

v   Additional Duties of Excise (Textiles and Textile Products)

v   Additional Duties of Customs (commodity known as CVD)

v   Special Additional Duty of Customs (SAD)

v   Service Tax

State taxes that would be subsumed under GST are:

v   Value Added Tax

v   Central Sales Tax

v   Luxury Tax

v   Entry Tax in lieu of octroi

v   Entertainment Tax (not levied by the local bodies)

v   Taxes on Advertisements

v   Purchase Tax

v   Taxes on lotteries, betting and gambling

v   State cesses and Surcharges in so far as they relate to supply of goods and services

The Goods and Services Tax Act, 2016 will be applicable all over India including Jammu and Kashmir.

GOODS AND SERVICES TAX UNDER THE CONTROL OF CENTRAL GOVERNMENT (CGST)
Central	Goods and Services Tax Act, 2016 Goods and Services Tax Rules, 2016
The Integrated	Goods and Services Tax Act, 2016 Goods and Services Tax Rules, 2016

GOODS AND SERVICES TAX UNDER THE CONTROL OF STATE GOVERNMENTS AND UNION TERRITORIES (SGST)
Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu and Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Odisha Punjab Rajasthan Sikkim Tamil Nadu Telengana Tripura Uttar Pradesh Uttarakhand    West Bengal	Goods and Services Tax Act, 2016 Goods and Services Tax Rules, 2016
Andaman and Nicobar Islands Chandigarh Dadra and Nagar Haveli Daman and Diu Lakshadweep    Puducherry	Goods and Services Tax Act, 2016 Goods and Services Tax Rules, 2016
Delhi	Goods and Services Tax Act, 2016 Goods and Services Tax Rules, 2016

The Act and Rules shall come into force on such date as the Central or a State Government may, by notification in the Official Gazette, appoint in this behalf:

Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

The Goods and Services Tax will be applicable on the supply of goods or services as against the present concept of tax on the manufacture and sale of goods or provision of services.  It would be a destination based consumption tax.

The important points covering main aspects about Goods and Services Tax Act and Rules were narrated below:

Description	Details
Compulsory for Registration	PAN CARD
How will be the GSTIN Number Structure in future?	The Goods and Services Tax Registration Number i.e. GSTIN will contain 15 digits of Alphanumeric. 1.   First 2 digits – State-wise 2.   Next 10 digits – Based on PAN 3.   13th digit – Business Verticals of entities with same PAN in the State (A-Z & 1-9) 4.   14th digit – Will be left blank for future use 5.   15th digit – Checksum     Example: 3 3 A M M A A 1 2 3 4 S A9 Q The Taxpayer Identification Number will be allotted afresh under Goods and Services Tax Act based on PAN instead of present 11 digit number.
Threshold Turnover limit for Registration	In North Eastern States (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim Tripura)                                             Rs. 9 Lakhs In States other than North Eastern States                                 Rs. 19 Lakhs
Voluntary Registration	Available. Any person who has taken voluntary registration under sub-section (3) of section 19 has not commenced business within six months from the date of registration, the registration will be cancelled.
Mandatory Registration  Categories	1) Persons making any inter-State taxable supply irrespective of the threshold turnover 2) Casual taxable persons, irrespective of the threshold turnover 3) Persons who are required to pay tax under reverse charge irrespective of the threshold turnover 4) Non-resident taxable persons, irrespective of the threshold turnover 5) Persons who are required to deduct tax under Section 37 6) Persons who supply goods and / or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold turnover 7) Input Service distributor 8) Persons who supply goods and / or services, other than branded services, through electronic commerce operator, irrespective of the threshold turnover 9) Every electronic commerce operator, irrespective of the threshold turnover; (10) An aggregator who supplies services under his brand name or his trade name, irrespective of the threshold turnover; (11) Agents; and (12) Such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council. (Option available for separate registration for each business verticals. i.e. a place where a taxable person is engaged in business through an agent, by whatever name called which means separate registration is required for every place i.e. branches, godowns, warehouses etc. The Government of Tamil Nadu has already fixed the fee for Registration under Tamil Nadu Value Added Tax Act, 2006 with effect from 29.1.2016 at Rs. 1000.00 for head office, branches, godowns etc without any difference.)
Casual Dealer Registration	Available. Casual Dealer Registration Period 90 days with advance Tax Deposit. Extension of time available on extra Advance Tax Deposit payment.
Registration not necessary cases	The supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.
Application for new Registration	Every person who is liable to be registered under Schedule III of the Goods and Services Tax Act shall apply for registration under the CGST Act / SGST Act within thirty days from the date on which he becomes liable to registration.
Existing dealers registration validity under  GST Act	Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day. If the person, other than an Input Service Distributor, is registered under an earlier law, it shall not be necessary for him to apply for fresh registration under Goods and Services Tax Act Registration. A certificate of registration on a provisional basis will be issued which will be valid for a period of  6 months from the date of issue and every person to whom a certificate of registration has been issued shall furnish certain information within a period of six months and Certificate of registration under CGST Act and SGST Act will be granted on final basis by the Central/State Government.
What is place of business?	“Place of business” includes (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, provides or receives goods and/or services; or (b) a place where a taxable person maintains his books of account; or (c) a place where a taxable person is engaged in business through an agent, by whatever name called;
What is business and what is   service?	(a) any trade, commerce, manufacture, profession, vocation or any other similar activity, whether or not it is for a pecuniary benefit; (b) any transaction in connection with or incidental or ancillary to (a) above; (c) any transaction in the nature of (a) above, whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, as the case may be; (f) admission, for a consideration, of persons to any premises; and (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
What are the services and exemptions if any?	“Services’’ means anything other than goods; Explanation: Services include intangible property and actionable claim but does not include money. Activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person were available in Schedule IV.
What will be the services?	1) Supplier of Services, 2) Restaurant Services, 3) Personal Grooming Services 4) Transportation of Goods Services (LSP) 5) Transportation of Passengers Services, 6) Supply of Home Television Services (DTH) 7) Banking and Financial Services 8) Insurance Services 9) Courier / Postal Agency 10) Right to use any goods 11) Works Contract etc. (Under Value Added Tax Act Works Contract turnover assessed on deemed sale value and under GST Works Contracts comes under the category of Services)
Who is Input Service Distributor?	"Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices issued under section 23 towards receipt of input services and issues tax invoice or such other document as prescribed for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above; Explanation.- For the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST, Input Service Distributor shall be deemed to be a supplier of services.
What are the Capital Goods under GST Act?	“Capital Goods” means: - (A) the following goods, namely:- (i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the Schedule to this Act; (ii) pollution control equipment; (iii) components, spares and accessories of the goods specified at (i) and (ii); (iv) moulds and dies, jigs and fixtures; (v) refractories and refractory materials; (vi) tubes and pipes and fittings thereof; (vii) storage tank; and (viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis but including dumpers and tippers used- (1) at the place of business for supply of goods; or (2) outside the place of business for generation of electricity for captive use at the place of business; or (3) for supply of services, (B) motor vehicle designed for transportation of goods including their chassis registered in the name of the supplier of service, when used for (i) supplying the service of renting of such motor vehicle; or (ii) transportation of inputs and capital goods used for supply of service; or (iii) supply of courier agency service; (C) motor vehicle designed to carry passengers including their chassis, registered in the name of the supplier of service, when used for supplying the service of- (i) transportation of passengers; or (ii) renting of such motor vehicle; or (iii) imparting motor driving skills; (D) Components, spares and accessories of motor vehicles which are capital goods for the taxable person. (Under Value Added Tax Act, only machineries for use in manufacture of Taxable and Exempted Goods were treated as Capital Goods and Input Tax Credit allowed only to the extent of manufacture of Taxable items)
Threshold Turnover for Taxation	In North Eastern States Including Sikkim                              Rs.  5 Lakhs In States other than North Eastern States                      Rs.10 Lakhs
Return filing options	1) Monthly 2) Quarterly (for Compounding options) 3) Annual
Disclosure of sales / outward turnover under CGST / SGST Acts. (Monthly)	Every registered taxable person, other than an input service distributor and a person paying tax under the provisions of section 8 or section 37, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of goods and/or services effected, during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within the time and in the manner as may be prescribed: Provided that the Board / Commissioner may, for valid and sufficient reasons, by notification, extend the time limit for furnishing such details: Provided further that any extension of time limit by the Board/Commissioner of State Goods and Services Tax shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board: Explanation.- For the purposes of this section, the expression “details of outward supplies” shall include details relating to zero-rated supplies, inter-state supplies, return of goods received in relation to/ in pursuance of an inward supply, exports, debit notes, credit notes and supplementary invoices issued during the said tax period. (2) Any registered taxable person, who has furnished the details under sub-section (1) for any tax period and which have remained unmatched under section 29, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period: Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after filing of the return under section 27 for the month of September following the end of the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.
Disclosure of inward supplies  turnover under CGST / SGST Acts. (Monthly)	Furnishing details of inward supplies (1) Every registered taxable person, other than an input service distributor and a person paying tax under the provisions of section 8 or section 37, shall verify, validate, modify or, if required, delete the details relating to outward supplies and credit or debit notes communicated under sub-section (1) of section 25 to prepare the details of his inward supplies and credit or debit notes and may include therein, the details of inward supplies and credit or debit notes received by him in respect of such supplies that have not been declared by the supplier under sub-section (1) of section 25. (2) Every registered taxable person shall furnish, electronically, the details of inward supplies of taxable goods and/or services, including inward supplies of services on which the tax is payable on reverse charge basis under this Act and inward supplies of goods and/or services taxable under the IGST Act, and credit or debit notes received in respect of such supplies during a tax period on or before the fifteenth day of the month succeeding the tax period in such form and manner as may be prescribed: Provided that the Board/Commissioner may, for valid and sufficient reasons, by notification, extend the time limit for furnishing such details: Provided further that any extension of time limit by the Board/Commissioner of State Goods and Services Tax shall be deemed to be approved by the Commissioner of State Goods and Services Tax/Board. (3) Any registered taxable person, who has furnished the details under sub-section (2) for any tax period and which have remained unmatched under section 29, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period: Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after filing of the return under section 27 for the month of September following the end of the financial year to which such details pertain, or filing of the relevant annual return, whichever is earlier.
Filing of Returns. (Monthly)	(1) Every registered taxable person shall, for every calendar month or part thereof, furnish, in such form and in such manner as may be prescribed, a return, electronically, of inward and outward supplies of goods and/or services, input tax credit availed, tax payable, tax paid and other particulars as may be prescribed within twenty days after the end of such month: Provided further that a registered taxable person shall not be allowed to furnish return for a tax period if valid return for any previous tax period has not been furnished by him (2) Every registered taxable person, who is required to furnish a return under subsection (1), shall pay to the credit of the appropriate Government the tax due as per such return not later than the last date on which he is required to furnish such return. (3) A return furnished under sub-section (1) by a registered taxable person without payment of full tax due as per such return shall not be treated as a valid return for allowing input tax credit in respect of supplies made by such person. (4) Every registered taxable person shall furnish a return for every tax period under sub-section (1), whether or not any supplies of goods and/or services have been effected during such tax period. (5) Every registered taxable person required to deduct tax at source shall furnish a return, electronically, in such form and in such manner as may be prescribed, for the month in which such deductions have been made along with the payment of tax so deducted, within ten days after the end of such month. (6) Every Input Service Distributor shall, for every calendar month or part thereof, furnish a return, electronically, in such form and in such manner as may be prescribed, within thirteen days after the end of such month. (7) Subject to the provisions of sections 25 and 26, if any taxable person after furnishing a return under sub-section (1) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be filed for the month or quarter, as the case may be, during which such omission or incorrect particulars are noticed, subject to payment of interest, where applicable and as specified in the Act: Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for filing of return for the month of September or second quarter, as the case may be, following the end of the financial year, or the actual date of filing of relevant annual return, whichever is earlier. (At present revised returns were filed within 6 months and the same will apply with certain modifications under Goods and Services Tax Act and Rules.)
Option to pay tax at compounded rates (Quarterly Return Basis)	Rs. upto 50 Lakhs at 1% compounded rate of tax. A registered taxable person will be permitted, whose aggregate turnover in a financial year does not exceed [fifty lakhs of rupees], to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than one percent of the turnover during the year: Provided that no such permission shall be granted to a taxable person who effects any inter-State supplies of goods and/or services. Provided further that no such permission shall be granted to a taxable person unless all the registered taxable persons, having the same PAN as held by the said taxable person, also opt to pay tax under the provisions of this sub-section. (2) A taxable person to whom the provisions of sub-section (1) 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. Provided that a registered taxable person paying tax under the provisions of section 8 of this Act shall furnish a return for each quarter or part thereof, electronically, in such form and in such manner as may be prescribed, within eighteen days after the end of such quarter. Switch over options from monthly to compounded rate and from compounded rate to monthly available with certain conditions. (Under Value Added Tax Act the Turnover limit is between 10 Lakhs to 50 Lakhs for compounding dealers and returns filed each month with payment of tax. But under the GST Act the Compounding tax payment option is upto 50 Lakhs (without minimum turnover limit) and hence the dealers whose turnover is below 10 lakhs (exempted dealers) and not availing Input Tax Credit adjustment has to opt for (Quarterly) Compounding tax payment option and there may not be any exemption for the dealers whose aggregate turnover is below Rs. 10 Lakhs.)
Filing Annual Returns	Annual return (1) Every registered taxable person, other than an input service distributor, a deductor under section 37 (Tax deduction at source), a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and in such manner as may be prescribed on or before the thirty first day of December following the end of such financial year.
Filing Annual Accounts and Reconciliation Statements	Every taxable person who is required to get his accounts audited under subsection (4) of section 42 shall furnish, electronically, the annual return along with the audited copy of the annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the year with the audited annual financial statement, and such other particulars as may be prescribed.
Penalty for belated submission of Return i.e. Levy of Late Fee.	Levy of late fee (1) Any registered taxable person who fails to furnish the details of outward or inward supplies required under section 25 or section 26, as the case may be, or returns required under section 27 or section 31 by the due date shall be liable to a late fee of rupees one hundred for every day during which such failure continues subject to a maximum of rupees five thousand. (2) Any registered taxable person who fails to furnish the return required under section 30 by the due date shall be liable to a late fee of rupees one hundred for every day during which such failure continues subject to a maximum of an amount calculated at a quarter percent of his aggregate turnover. Under Value Added Tax Act the due date for filing of return with all annexures is on or before 20th day of succeeding month and for any delay Compounding Fee will be levied. But under the Goods and Services Tax Act due dates will be calculated in three parts.  1) Furnishing of Sales/outward Details on 10th of succeeding month  2) Furnishing of Purchases/inward Details on 15th of succeeding month and  3) Date of filing of Return on 20th of succeeding month Belated submission of particulars mentioned in 1 and 2 and return mentioned in 3 will be dealt with separately and late fee will be calculated separately for each default in three categories.
Filing of returns in case of application made for cancellation of registration. (i.e. stopped business cases)	Every registered taxable person who applies for cancellation of registration shall furnish a final return within three months of the date of cancellation or date of cancellation order, whichever is later, in such form and in such manner as may be prescribed. Every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit or 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 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: Provided that in case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be prescribed in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher. The amount payable under sub-section (7) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed. The cancellation of registration under this section shall not affect the liability of the taxable person to pay tax and other dues under the Act 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. The cancellation of registration under the CGST Act / SGST Act shall be deemed to be a cancellation of registration under the SGST Act/CGST Act. Every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic credit or 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 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: Provided that in case of capital goods, the taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be prescribed in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher. The amount payable under sub-section (7) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed.
What is the rate of tax under IGST / CGST / SGST?	The Tax rate has not been fixed now. The Tax rates will be fixed at the time of coming into force of Acts and Rules on notified dates after passing the Bill in the Parliament. (The Bill has since been passed in Rajya Sabha on 4.7.2016.)
Mode of Payment of Taxes	Tax amount may be paid online by e-payment or through Credit Card or Debit Card or through National Electronic Fund Transfer (NEFT) or through Real Time Gross Settlement (RTGS).
Who can prepare and file returns?	Tax Return Preparers (1) The appropriate Government may, by rules, prescribe the manner of approval of Tax Return Preparers, their eligibility conditions, duties and obligations, manner of removal and such other conditions as may be relevant for their functioning as a Tax Return Preparer. (2) A registered taxable person may, in the manner prescribed, authorise an approved Tax Return Preparer to furnish the details of outward supplies under section 25, the details of inward supplies under section 26 and the return under section 27, 30 or section 31, as the case may be, and such other tasks as may be prescribed. (3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars furnished in the return and/or other details filed by the Tax Return Preparer shall continue to rest with the registered taxable person on whose behalf such return and details are filed.
Offences and Penalties under GST Act.	Offences and penalties (1) Where a taxable person who – (i) supplies any goods and/or services without issue of any invoice or issues an incorrect or false invoice with regard to any such supply; (ii) issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder; (iii) collects any amount as tax but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due; (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due; (v) fails to deduct the tax in terms of sub-section (1) of section 37, or deducts an amount which is less than the amount required to be deducted under the said subsection, or where he fails to pay to the credit of the appropriate Government under subsection (2) thereof, the amount deducted as tax; (v-a) fails to collect tax in terms of sub-section (1) of section 43C, or collects an amount which is less than the amount required to be collected under the said sub-section, or where he fails to pay to the credit of the appropriate Government under sub-section (4) thereof, the amount collected as tax; (vi) takes and/or utilizes input tax credit without actual receipt of goods and/or services either fully or partially, in violation of the provisions of this Act, or the rules made thereunder; (vii) fraudulently obtains refund of any CGST/SGST under this Act; (viii) takes or distributes input tax credit in violation of section 17, or the rules made thereunder; (ix) falsifies or substitutes financial records or produces fake accounts and/or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; (x) is liable to be registered under this Act but fails to obtain registration; (xi) furnishes any false information with regard to particulars specified as mandatory, either at the time of applying for registration, or subsequently; (xii) obstructs or prevents any officer in discharge of his duties under the Act; (xiii) transports any taxable goods without the cover of documents as may be specified in this behalf; (xiv) suppresses his turnover leading to evasion of tax under this Act; (xv) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder; (xvi) fails to furnish information and/or documents called for by a CGST/SGST officer in accordance with the provisions of this Act or rules made thereunder or furnishes false information and/or documents during any proceedings under this Act; (xvii) supplies, transports or stores any goods which he has reason to believe are liable to confiscation under this Act; (xviii) issues any invoice or document by using the identification number of another taxable person; (xix) tampers with, or destroys any material evidence; (xx) disposes off or tampers with any goods that have been detained, seized, or attached under this Act; shall be liable to a penalty of rupees ten thousand or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, as the case may be, whichever is higher. (2) Any registered taxable person who repeatedly makes short payment of tax shall be liable to a penalty of rupees ten thousand or ten percent of the tax short paid, whichever is higher. Explanation.- For the purposes of this sub-section, a taxable person shall be deemed to have made short payments ‘repeatedly’, if there were short payments in three returns during any six consecutive tax periods. (3) Any person who (a) aids or abets any of the offences specified in clauses (i) to (xx) of sub-section (1) above; (b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reason to believe are liable to confiscation under this Act or the rules made thereunder; (c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reason to believe are in contravention of any provisions of this Act or the rules made thereunder; (d) fails to appear before the CGST/SGST officer, when issued with a summon for appearance to give evidence or produce a document in an enquiry; (e) fails to issue invoice in accordance with the provisions of this Act or rules made thereunder, or fails to account for an invoice in his books of account; shall be liable to a penalty which may extend to rupees twenty five thousand. General penalty Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to rupees twenty five thousand.
Offences For which Prosecution will apply.	Prosecution (1) Whoever commits any of the following offences, namely— (a) supplies any goods and/or services without issue of any invoice or issues an incorrect or false invoice with regard to any such supply; (b) issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder; (c) collects any amount as tax but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due; (d) collects any tax in contravention of the provisions of this Act but fails to pay the same to the credit of the appropriate Government beyond a period of three months from the date on which such payment becomes due; (e) takes and/or utilizes input tax credit without actual receipt of goods and/or services either fully or partially, in violation of the provisions of this Act, or the rules made thereunder; (f) fraudulently obtains refund of any CGST/SGST; (g) falsifies or substitutes financial records or produces fake accounts and/or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (h) obstructs or prevents any officer in the discharge of his duties under this Act; (i) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reason to believe are liable to confiscation under this Act or the rules made thereunder; (j) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reason to believe are in contravention of any provisions of this Act or the rules made thereunder; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission of, any of the offences mentioned in clauses (a) to (k) of this section; shall be punishable – (i) in cases where the amount of tax evaded exceeds two hundred and fifty lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded exceeds fifty lakh rupees but does not exceed two hundred and fifty lakh rupees, with  imprisonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded exceeds twenty five lakh rupees but does not exceed fifty lakh rupees, with imprisonment for a term which may extend to one year and with fine. (2) If any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine: Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, the imprisonment referred to in sub-sections (1) and (2) shall not be for a term of less than six months. (3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under this Act, except the offences referred to in sub-section (4) shall be non-cognizable and bailable. (4) The offences relating to taxable goods and/or services where the amount of tax evaded exceeds two hundred and fifty lakh rupees shall be cognizable and non-bailable. (5) A person shall not be prosecuted for any offence under this section except with the previous sanction of the designated authority.
What are the Commodity Codes under GST Act?	HSN (Harmonised System of Nomenclature) Code shall be used for classifying the goods under the GST Regime.  Taxpayers whose turnover is above Rs. 1.5 Crores but below Rs. 5 Crores shall use 2 digit code and the taxpayers whose turnover is Rs.5 Crores and above shall use 4 digit Code.
What is IGST?	“Integrated Goods and Services Tax” (IGST) means the tax levied under the Integrated Goods and Services Tax Act, 2016 on the supply of any goods and/or services in the course of inter-State trade or Commerce. Explanation 1.- A supply of goods and/or services in the course of import into the territory of India shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. Explanation 2.- An export of goods and/or services shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce.
What is CGST and What is SGST? i.e. Categories of Taxes	CGST / SGST on all intra-state supply of goods and/or services Tax shall be levied on reverse charge basis on supply of certain specified services and goods Compounded lower rate of tax at minimum 1% proposed for compounded opted taxable persons upto Rs. 50 Lakhs with conditions.
What is reverse charge basis?	“Reverse charge’’, means the liability to pay tax by the person receiving goods and / or services instead of the person supplying the goods and / or services in respect of such categories of supplies as the Central or a State Government may, on the recommendation of the Council, by notification, specify;
What are the conditions for availing (input tax credit) reverse charge basis?	In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely— (a) the date of the receipt of goods, or (b) the date on which the payment is made, or (c) the date of receipt of invoice, or (d) the date of debit in the books of accounts. Explanation.- For the purpose of clause (b) of sub-section (5), “the date on which the payment is made” shall be the date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier.
Input Tax Credit to be utilized details.	The Input Tax Credit should be utilized in the following chronological Order:
	IGST	CGST	SGST
	IGST	CGST	SGST
	CGST	IGST	IGST
	SGST
Accounts to be maintained	Accounts and other records to be maintained (1) Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of production or manufacture of goods, of inward or outward supply of goods and/or services, of stock of goods, of input tax credit availed, of output tax payable and paid, and such other particulars as may be prescribed in this behalf: Provided that where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept at such places of business concerned: Provided further that the registered person may keep and maintain such accounts and other particulars in the electronic form in the manner as may be prescribed. (2) The [Commissioner/Chief Commissioner] may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified. (3) Where the [Commissioner/ Chief Commissioner] considers that any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed. (4) Every registered taxable person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit to the proper officer a copy of the audited statement of accounts, the reconciliation statement under sub-section (2) of section 30 and such other documents in the form and manner as may be prescribed in this behalf.
Accounts to be retained	Period of retention of accounts (1) Every registered taxable person required to keep and maintain books of account or other records under sub-section (1) of section 42 shall retain them until the expiry of sixty months from the last date of filing of Annual Return for the year pertaining to such accounts and records: Provided that a taxable person, who is a party to an appeal or revision or any other proceeding before any Appellate Authority or Tribunal or Court, whether filed by him or by the department, shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceeding for a period of one year after final disposal of such appeal or revision or proceeding, or for the period specified under sub-section (1), whichever is later.
“Audit” i.e. Shop Inspection	Audit by tax authorities (1) The [Commissioner of CGST/Commissioner of SGST] or any officer authorised by him, by way of a general or a specific order, may undertake audit of the business transactions of any taxable person for such period, at such frequency and in such manner as may be prescribed. (2) The tax authorities referred to in sub-section (1) may conduct audit at the place of business of the taxable person and/or in their office. (3) The taxable person shall be informed, by way of a notice, sufficiently in advance, not less than fifteen working days, prior to the conduct of audit in the manner prescribed. (4) The audit under sub-section (1) shall be carried out in a transparent manner and completed within a period of three months from the date of commencement of audit: Provided that where the [Commissioner] is satisfied that audit in respect of such taxable person cannot be completed within three months from the date of commencement of audit, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months. Explanation.- For the purposes of this sub-section, ‘commencement of audit’ shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the taxable person or the actual institution of audit at the place of business, whichever is later. (5) During the course of audit, the authorised officer may require the taxable person, (i) to afford him the necessary facility to verify the books of account or other documents as he may require and which may be available at such place, (ii) to furnish such information as he may require and render assistance for timely completion of the audit. (6) On conclusion of audit, the proper officer shall without delay inform the taxable person, whose records are audited, of the findings, the taxable person’s rights and obligations and the reasons for the findings. (7) Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit erroneously availed, the proper officer may initiate action under section 51.
Special Audit	If at any stage of scrutiny, enquiry, investigation or any other proceedings before him, any officer not below the rank of [Deputy/Assistant Commissioner] having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may, with the prior approval of the [Commissioner], direct such taxable person by notice in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the [Commissioner] in this behalf. (2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said [Deputy / Assistant Commissioner] mentioning therein such other particulars as may be specified: Provided that the proper officer may, on an application made to him in this behalf by the taxable person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by another ninety days. (3) The provision of sub-section (1) shall have effect notwithstanding that the accounts of the taxable person have been audited under any other provision of this Act or any other law for the time being in force or otherwise. (4)The taxable person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings under this Act or rules made thereunder. (5) The expenses of, and incidental to, the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the [Commissioner] and that such determination shall be final. (6) Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit erroneously availed, the proper officer may initiate action under section 51.
Test purchase of Goods and / or Services under GST Act, 2016.	Test purchase of goods and/or services: The [Commissioner] of CGST/SGST or an officer authorized by him may cause purchase of any goods and/or services by any person authorized by him from the business premises of any taxable person, to check issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount paid towards the goods after cancelling any tax invoice or bill of supply issued.
Drawal of Samples	The [Commissioner] of CGST/SGST or an officer authorized by him may take samples of goods from the possession of any taxable persons, where he considers it necessary, and provide a receipt for any samples so taken.
Burden of Proof	If any person claims that he is not liable to pay tax under the Act in respect of any supply of goods and/or services, or that he is eligible for input tax credit under section 16, the burden of proving such claim or claims shall lie on him.

There are 4 schedules published in the public domain and the Schedules as displayed in the Goods and Services Tax Model Law were given below:

SCHEDULE I

MATTERS TO BE TREATED AS SUPPLY WITHOUT CONSIDERATION

1. Permanent transfer/disposal of business assets.

2. Temporary application of business assets to a private or non-business use.

3. Services put to a private or non-business use.

4. Assets retained after deregistration.

5. Supply of goods and / or services by a taxable person to another taxable or non-taxable person in the course or furtherance of business.

Provided that the supply of goods by a registered taxable person to a job-worker in terms of section 43-A shall not be treated as supply of goods.

SCHEDULE II

MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES

1. Transfer

(1) Any transfer of the title in goods is a supply of goods.

(2) Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services.

(3) Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, is a supply of goods.

2. Land and Building

(1) Any lease, tenancy, easement, licence to occupy land is a supply of services.

(2) Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

3. Treatment or process

Any treatment or process which is being applied to another person’s goods is a supply of services.

4. Transfer of business assets

(1) 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, whether or not for a consideration, such transfer or disposal is a supply of goods by the person.

(2) Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.

(3) Where any goods, forming part of the business assets of a taxable person, are sold by any other person who has the power to do so to recover any debt owed by the taxable person, the goods shall be deemed to be supplied by the taxable person in the course or furtherance of his business.

(4) Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him 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, unless—

(a) the business is transferred as a going concern to another person; or

(b) the business is carried on by a personal representative who is deemed to be a taxable person.

5. The following shall be treated as “supply of service”

(a) renting of immovable property;

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where

required, by the competent authority or before its first occupation, whichever is earlier.

Explanation.- For the purposes of this clause-

(1) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:–

(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or

(ii) a chartered engineer registered with the Institution of Engineers (India); or

(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;

(2) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure;

(c) temporary transfer or permitting the use or enjoyment of any intellectual property right;

(d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software;

(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;

(f) works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(g) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; and

(h) 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 consumption), where such supply or service is for cash,

deferred payment or other valuable consideration.

6. The following shall be treated as supply of goods

(a) supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

SCHEDULE III

LIABILITY TO BE REGISTERED

1. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds [Rs nine lakh]:

1. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds [Rs. four lakh]:

[This threshold of four lakh will apply only if the taxable person conducts his business in any of the NE States including Sikkim.]

Provided that the supplier shall not be liable to registration if his aggregate turnover consists of only goods and/or services which are not liable to tax under this Act.

Explanation 1.- The taxable threshold shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.

Explanation 2.- The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the “principal” referred to in section 43A, and the value of such goods shall not be included in the aggregate turnover of the

registered  job worker.

2. Subject to the provisions of paragraph 1, every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effect from the appointed day.

3. Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall be liable to be

registered with effect from the date of such transfer or succession.

4. Notwithstanding anything contained in paragraph 1 and 2 above, in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court, the

transferee shall be liable to be registered, where required, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court.

5. Notwithstanding anything contained in paragraph 1 and 2 above, the following categories of persons shall be required to be registered under this Act:

(i) persons making any inter-State taxable supply, irrespective of the threshold specified under paragraph 1;

(ii) casual taxable persons, irrespective of the threshold specified under paragraph 1;

(iii) persons who are required to pay tax under reverse charge, irrespective of the threshold specified under paragraph 1;

(iv) non-resident taxable persons, irrespective of the threshold specified under paragraph 1;

(v) persons who are required to deduct tax under section 37;

(vi) persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise, irrespective of the threshold specified under paragraph 1;

(vii) input service distributor;

(viii) persons who supply goods and/or services, other than branded services, through electronic commerce operator, irrespective of the threshold specified in paragraph 1;

(ix) every electronic commerce operator, irrespective of the threshold specified in paragraph 1;

(x) an aggregator who supplies services under his brand name or his trade name, irrespective of the threshold specified in paragraph 1; and

(xi) such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council.

SCHEDULE IV

Activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person

(Indicative List)

1. Services provided by a Government or local authority to another Government or local authority excluding the following services:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services;

(ii) services in relation to an aircraft or a vessel , inside or outside the precincts of a port or an aircraft; or

(iii) transport of goods or passengers.

2. Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as-

(i) issuance of passport, visa, driving licence, birth certificate or death certificate; and

(ii) assignment of right to use natural resources to an individual farmer for the purpose of agriculture.

3. Services provided by a Government or local authority or a governmental authority by way of:

(i) any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution;

(ii) any activity in relation to any function entrusted to a Panchayat under article 243 G of the Constitution;

(iii) health care; and

(iv) education.

4. Services provided by Government towards-

(i) diplomatic or consular activities;

(ii) citizenship, naturalization and aliens;

(iii) admission into , and emigration and expulsion from India;

(iv) currency , coinage and legal tender , foreign exchange;

(v) trade and commerce with foreign countries , import and export across customs frontiers , interstate trade and commerce; or

(vi) maintenance of public order.

5. Any services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.

6. Services provided by a Government or a local authority by way of -

(i) tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract; or

(ii) assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016:

Provided that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural

resource:

Explanation.- Periodic payment required to be made not exempt.

7. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import or export of cargo on payment of Merchant Overtime Charges (MOT).

8. Services provided by Government or a local authority by way of-

(i) registration required under any law for the time being in force; or

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

Definitions:

1. Governmental Authority means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function

entrusted to a municipality under article 243W or a Panchayat under article 243G of the Constitution.

2. Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and

from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

3. Education services means services by way of—

i) pre-school education and education up to higher secondary school or equivalent;

ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; or

iii) education as a part of an approved vocational education course.

To view the Goods and Services Model Law please click the link given below:

http://www.finmin.nic.in/reports/ModelGSTLaw_draft.pdf 

or

http://www.cbec.gov.in/resources//htdocs-cbec/deptt_offcr/model-gst-law.pdf

To view Goods and Services Tax GST Law an overview draft in ctd.tn.gov.in portal please click the link given below:

https://ctd.tn.gov.in/documents/10184/21494/Goods+and+Service+Tax+GST+Law++An+overview++draft/45751cfc-dbc4-4459-aa32-090ff874c953?version=1.0

To view Registration structure please click the link given below:

http://finmin.nic.in/reports/Report_on_GST_Registration.pdf

To view HSN Code List please click the link given below:

https://www.tinxsys.com/TinxsysInternetWeb/DraftHSNCodingforCommodities.pdf

To view Revised Model GST Law issued November, 2011 please click the link given below:

http://www.cbec.gov.in/resources//htdocs-cbec/gst/draft-model-gst-law-25-11-2016.pdf

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