This part of the series contains meanings of certain terms covered in Section 2 of the CGST Act, 2017. These are aggregate turnover, agriculturist, assessment, associated enterprise, audit and authorized representative.
Aggregate Turnover [Section 2(6)]
The aggregate turnover is used for the purpose of calculation of threshold limit of INR 20 lakhs / 10 lakhs for registration and also calculation of eligibility of composition levy under section 10 of the Act.
'Aggregate turnover' shall be total of the following amounts or sums in relation to a person carrying on business, i.e., aggregate of the following –
- Value of all taxable supplies of goods and services
- Value of exempt supplies of goods and services
- Value of all goods and services exported
- Value of inter-state supplies
However, aforementioned value of aggregate turnover would exclude taxes, if any, charged under the CGST Act, IGST Act and SGST Act. It will also not include non-taxable supplies and the value of supply on which tax is payable on reverse charge basis and value of inward supplies.
Aggregate turnover’ means ‘Value of all (taxable supplies + Exempt supplies + Exports+ Inter-state supplies) – (Taxes + Value of inward supplies + Value of supplies taxable under reverse charge+ Value of non-taxable supplies) of a person having the same PAN.
The input turnover on which tax has been paid on reverse charge basis will not be included in aggregate turnover. The value of return of inward supplies, for which tax is payable by the recipient will also not be included in the aggregate turnover. It is important to note that for the purpose of calculation of aggregate turnover, turnover of all the persons having the same PAN operating anywhere in India will be considered.
Agriculturist [Section 2(7)]
The definition of agriculture and agriculturist are important because of the fact that an agriculturist for the purpose of agriculture is not liable for registration under the Act.
Following stipulations are relevant for understanding the meaning of agriculturist:
- Only an individual or Hindu undivided family (HUF) can be considered as an agriculturist.
- Cultivation of land personally is the pre-condition for being an agriculturist.
- Agriculturist shall not be considered as a taxable person.
- Ownership of the land is not a factor to be considered. It is not important whether the land is owned or leased one.
- It is also not a condition that the agriculturist should be involved in agriculture for full time.
- Cultivation of land through own labour, by labour of own family or servants employed on wages in cash or kind will be considered as own cultivation.
- A person will be considered as an 'agriculturist' only when a person cultivates land personally. To cultivate personally would imply carrying on agricultural operations on his own account by employing own labour, family's labour or hired labour under own supervision or of his family. In case of HUF, it could be done by any member of HUF.
The exemption to agriculturist is provided only for the purpose of agriculture related activities. In case an agriculturist is engaged in some other activity along with the activity of agriculture. In case of other activities being carried out by him are taxable, he will have to be registered for his such other taxable activities.
Assessment [Section 2(11)]
'Assessment' means determination of tax liability under GST law and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment.
Assessments are covered under Chapter XII of the Act which provide for –
Such assessments are subject to adjudication procedure which involves observance of principles of natural justice. The person who is assessed is called assessee. (i.e., taxable person).
Associated Enterprise [Section 2(12)]
Associated enterprise, in relation to another enterprise, means an enterprise-
- which participates, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise; or
- in respect of which one or more persons who participate, directly or indirectly, or through one or more intermediaries, in its management or control or capital, are the same persons who participate, directly or indirectly, or through one or more intermediaries, in the management or control or capital of the other enterprise.
As per section 92A of the Income Tax Act, 1961,sub-section (2), for the purposes of sub-section (1), two or more enterprises shall be deemed to be associated enterprises if, at any time during the previous year,
- one enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in the other enterprise; or
- any person or enterprise holds, directly or indirectly, shares carrying not less than twenty-six per cent of the voting power in each of such enterprises; or
- a loan advanced by one enterprise to the other enterprise constitutes not less than fifty-one per cent of the book value of the total assets of the other enterprise; or
- One enterprise guarantees not less than ten per cent of the total borrowings of the other enterprise; or
- more than half of the board of directors or members of the governing board, or one or more executive directors or executive members of the governing board of one enterprise, are appointed by the other enterprise; or
- more than half of the directors or members of the governing board, or one or more of the executive directors or members of the governing board, of each of the two enterprises are appointed by the same person or persons; or
- the manufacture or processing of goods or articles or business carried out by one enterprise is wholly dependent on the use of know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, or any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process, of which the other enterprise is the owner or in respect of which the other enterprise has exclusive rights; or
- ninety per cent or more of the raw materials and consumables required for the manufacture or processing of goods or articles carried out by one enterprise, are supplied by the other enterprise, or by persons specified by the other enterprise, and the prices and other conditions relating to the supply are influenced by such other enterprise; or
- the goods or articles manufactured or processed by one enterprise, are sold to the other enterprise or to persons specified by the other enterprise, and the prices and other conditions relating thereto are influenced by such other enterprise; or
- Where one enterprise is controlled by an individual, the other enterprise is also controlled by such individual or his relative or jointly by such individual and relative of such individual; or
- Where one enterprise is controlled by a Hindu undivided family, the other enterprise is controlled by a member of such Hindu undivided family or by a relative of a member of such Hindu undivided family or jointly by such member and his relative; or
- where one enterprise is a firm, association of persons or body of individuals, the other enterprise holds not less than ten per cent interest in such firm, association of persons or body of individuals; or
- There exists between the two enterprises, any relationship of mutual interest, as may be prescribed.
Audit [Section 2(13)]
In CGST law, there are provisions for audit by tax authorities.
Audit implies:
- examination of records, returns and other documents –
- maintained / furnished by a taxable person
- under GST law / any other law or rules
- Verification of correctness of –
- turnover declared
- taxes paid
- refund claimed, and
- input tax credit availed
- Assessment of compliances with provisions of GST law and rules.
All the registered taxable persons having a turnover beyond the prescribed limit are required to get their accounts audited from a Chartered Accountant or a Cost Accountant and file the audit report and the reconciliation statement with the proper officer.
There are also provisions for a 'Special audit' to be carried out by a Chartered Accountant or a Cost Accountant. Such audit can be allotted after prior approval of Commissioner in the circumstances where a view is made by an officer not below the rank of Deputy Commissioner/Assistant Commissioner that considering the complexity of operations and interest of revenue, the detailed audit is required to be done.
Authorized Representative [Section 2(15)]
Authorized representative is the representative of the assessee / tax payer. Authorized representative can appear on behalf of the any person who is required to appear before tax authorities
Authoresses representative may be :
- his relative or regular employee; or
- an advocate who is entitled to practice in any court in India, and who has not been debarred from practicing before any court in India; or
- any chartered accountant, a cost accountant or a company secretary, who holds a certificate of practice and who has not been debarred from practice,
- a retired officer of the Commercial Tax Department of any State Government or Union territory or of the Board who, during his service under the Government, had worked in a post not below the rank than that of a Group-B Gazetted officer for a period of not less than two years, or
- any person who has been authorised to act as a goods and services tax practitioner on behalf of the concerned registered person.
(To be continued......)
