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From provisions with highlights for catch words, critical words having special significance. { }are used when clause is divided in parts which are long.
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Observations / remarks
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CENTRAL GOODS AND SERVICES TAX ACT, 2017
Dated: 12th April 2017
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This enactment is for levy of tax by the Central Government on sales within a state. The respective state Government also levy tax. Generally levies by CG and SG are equal.
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An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto.
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“Intra-State” in simple terms means within a state boundary. That is not outside the state.
The supply and delivery both are in the same state.
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BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:–
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CHAPTER I PRELIMINARY
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Short title, extent and commencement.
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{1. (1) This Act may be called the Central Goods and Services Tax Act, 2017.
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(2) It extends to the whole of India. 1[***]
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J & K covered wef 08.07.2017
1. Omitted vide THE CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ACT, 2017 NO. 26 OF 2017 w.e.f. 8-7-2017, before it was read as, "except the State of Jammu and Kashmir."
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(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:
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Notifications and effective dates are very important and one need to keep a track and record for use.
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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.}
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Definitions.
2. In this Act, unless the context otherwise requires,––
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In definition clauses we find use of words ‘means’ (at 102 places), ‘includes’ ( at 18 places)
‘shall have’ ( at eight places) is used when definition from any other enactment is adopted.
When opening word ‘means’ is used, it must be definite meaning and not subject to context.
When there is adoption of definition in another enactment, the scope of that expression shall be as used in that enactment and shall also be changed if there is change in that enactment.
In some definitions other provisions of CGST itself are adopted/ referred for meaning.
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(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882);
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Adopted meaning
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(2) “address of delivery” means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both;
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(3) “address on record” means the address of the recipient as available in the records of the supplier;
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(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the 2[Central Board of Indirect Taxes and Customs], the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, 9[the National Appellate Authority for Advance Ruling,] 3[the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171];
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In GST law we find peculiar features that shows that at first place attempt is made to include all or so many things or aspects then we find many exclusions. This feature is found in many provisions.
All this makes provisions difficult to understand and apply and lead to litigation.
Attempt need to be made to write GST laws in simple and clear language.
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(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;
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Various type of agents acting for buyer / recipient and seller / supplier both are covered.
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(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
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Here also we find peculiar feature of drafting of wider scope then narrowed down by some exceptions.
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(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land–
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;
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Only individuals and HUF are covered. Other AOP, BOI, partnership firms, company , society etc. are not covered even if they are cultivating land owned by them.
Supervisions can also be only personal supervision of owner himself and in case of HUF by any member of the family and not necessarily Karta.
Dispute may arise if managers are appointed for supervision of servants or hired labour.
Whether, plea that manager is just to assist owner and he is also under supervision of owner therefore , all persons acting under manager are also supervised by the owner.
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(8) “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section 107;
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S.107
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(9) “Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;
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S.109
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(10) “appointed day” means the date on which the provisions of this Act shall come into force;
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We need to keep check for different appointed dates.
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(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment;
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Meaning expanded by adding inclusions of various types of assessment. The list, as on date seems exhaustive because reassessment will include reassessment or re computation under different circumstances and proceedings.
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(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961 (43 of 1961);
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As per S. 92A of the Income-tax Act, 1961 (43 of 1961);
The meaning is taken as per IT Act, it will apply irrespective of whether transactions between two associated enterprises are effected or not due to association.
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(13) “audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder;
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The meaning of “audit” has been provided.
Audit can be under any enactment in force including GST laws.
However, as per meaning provided GST authorities including appellate authorities while working for GST laws are basically concerned with assessment of net tax payable and compliances etc. under GST laws. Any other audit having a bearing on such aspects can also be considered and used by authorities under GST laws.
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(14) “authorised bank” shall mean a bank or a branch of a bank authorised by the Government to collect the tax or any other amount payable under this Act;
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(15) “authorised representative” means the representative as referred to in section 116;
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A.116
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(16) “Board” means the 1[Central Board of Indirect Taxes and Customs] constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);
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Central Boards of Revenue Act, 1963 (54 of 1963);
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(17) “business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
4[(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and]
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
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Inclusive definition is very wide in scope.
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5[(18) *****]
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5. Omitted vide Central Goods and Services Tax (Amendment) Act, 2018 w.e.f 01-02-2019 before it provided definition of “business vertical”
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(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;
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Many capital expenses like deferred revenue expenses , if incurred for capital goods may also allowable as revenue expenses under the income tax Act, in spite of capitalization in books of account. Many expenses charged in revenue may be treated as capital expenditure in assessment under IT Act.
However, for GST purposes capitalization in books of account is necessary.
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(20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business;
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Even a single transaction is enough in some situations and for some provisions.
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(21) “central tax” means the central goods and services tax levied under section 9;
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CGST levied u.s. 9
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(22) “cess” shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States) Act;
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Adopted meaning.
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(23) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949).
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Adopted meaning.
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(24) “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act;
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Commissioner under CGST and IGST both are covered. This logically is because both these taxes are levied and collected by the Central Government of India.
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(25) “Commissioner in the Board” means the Commissioner referred to in section 168;
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S.168
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(26) “common portal” means the common goods and services tax electronic portal referred to in section 146;
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S.146
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(27) “common working days” in respect of a State or Union territory shall mean such days in succession which are not declared as gazetted holidays by the Central Government or the concerned State or Union territory Government;
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If any day is declared as gazetted holiday by CG but not by SG / UT or vice versa then such days will not be common working days.
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(28) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980).;
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ICSI Act.
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(29) “competent authority” means such authority as may be notified by the Government;
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Notification and its effective dates are very important.
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(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;
Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.
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The expressions “which are naturally bundled and supplied in conjunction with each other in the ordinary course of business,...” coupled with the ilustration given makes restricted meaning of composite supply and is likely to raise disputes in various circumstances of combined supplies.
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{(31) “consideration” in relation to the supply of goods or services or both includes––
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(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
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On reading of clauses (a) , (b) and proviso we find that very wide and inclusive definition is given which includes even third party payments, for supply , inducement for supply and also damages and compensation etc. and exclusion is provided for any subsidy given by the Central Government or a State Government;
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(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
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Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;}
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A ‘deposit’ is excluded and will be included in consideration only if it is appropriated towards value of services.
Disputes are likely to arise about advance payments which may not be considered as ‘deposit’.
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(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;
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(33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;
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(34) “conveyance” includes a vessel, an aircraft and a vehicle;
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(35) “cost accountant” means a cost accountant as defined in 6[clause (b)] of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959);
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ICWAI Act.
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