- As per section 2(53) of the CGST Act, 2017, ‘Government’ means the Central Government.
- As per clause (23) of section 3 of the General Clauses Act, 1897 the ‘Government’ includes both the Central Government and any State Government.
- As per clause (8) of section 3 of the saidAct, the ‘Central Government’, in relation to anything done or to be done after the commencement of the Constitution, means the President.
- As per Article 53 of the Constitution,
the executive power of the Union shall be vested in the
President and shall be exercised by him either directly or
indirectly through officers subordinate to him in accordance
with the Constitution. - Further, in terms of Article 77 of the Constitution, all executive actions of the Government of India shall be expressed to be taken in the name of the President.
Therefore, the Central Government means the President and
the officers subordinate to him while exercising the executive
powers of the Union vested in the President and in the name
of the President. - Similarly, as per clause (60) of section 3 of the General Clauses Act,1897, the ‘State Government’,as respects anything done after the commencement of
the Constitution, shall be in a State the Governor, and in an Union Territory the Central Government. As per Article 154 of the Constitution, the executive power of the State shall be vested in the Governor and shall be exercised by him either directly or indirectly through officers subordinate to him in
accordance with the Constitution. Further, as per article 166 of the Constitution, all executive actions of the Government of State shall be expressed to be taken in the name of Governor. Therefore, State Government means the Governor or the officers subordinate to him who exercise the executive powers of the State vested in the Governor and in the name
of the Governor.
Are Government or local authority or governmental authority liable to pay tax?
- Yes, the Government or a local authority or a
governmental authority is liable to pay tax on supply of
services other than the services notified as exempt or
notified as neither a supply of goods nor a supply of services
under clause (b) of sub-section (2) of section 7 of the CGST
Act, 2017. - In respect of services other than –
(i) renting of immovable property;
(ii) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; and
(iii) services in relation to an aircraft or a vessel, inside or outside the precincts of an airport or a port,
the service recipients are required to pay the tax under reverse charge
mechanism.
Are all services provided by the Government or local authority exempted from payment of tax ?
- No, all services provided by the Government or
a local authority are not exempt from tax. - As for instance,services, namely,
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or
outside the precincts of an airport or a port;
(iii) transport of goods or passengers; or
(iv) any service, other than servicescovered under (i) to (iii) above, provided to business entities are not exempt and that these services are liable to tax.
That said, most of the services provided by the Central
Government, State Government, Union Territory or local
authority are exempt from tax.
These include services provided by government or a local authority or governmental authority by way of any activity in relation to any function
entrusted to a municipality under Article 243W of the Constitution and services by a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.
[FAQ1: Government Services
When we issue gold as raw material to our Job Worker for Job Work and he returns that gold as finished goods,what GST treatment will be done and how to calculate the value
- The job worker, if registered, would be required to pay GST at the rate of 5% on job charges only.
- The jewellery manufacturer would in turn take credit of GST paid on such
job work and may utilize the same for payment of GST on his outward supply of manufactured jewellery. - However, if the job worker is exempted from registration, the jewellery
manufacturer would be required to pay GST on his input supply from the job worker [of jewellery made out of precious metal given by him] on reverse charge basis. - Nonetheless, he would be eligible to avail input credit of the tax so paid under
reverse charge mechanism.
( FAQ 8: GEMS AND JEWELLERY)
When we are selling Gold, Diamond or Silver Jewellery to the end consumer (Customer) like a Gold Chain weighing10gm at a total value of Rs. 30,000/- (gold value is Rs. 28000/- and making charges on that gold chain is Rs 2000/-), can we charge GST @3% on the total value or @3% on the gold value and @5% on making charges
GST is payable at the rate of 3% of the total transaction value of jewellery, whether the making charge is shown separately or not.
( FAQ 7: GEMS AND JEWELLERY)
Banks pay provisional VAT currently at the time of delivery of gold on the basis of ongoing market prices. When customer fixes the price of metal, Banks pay actual VAT on the maturity date of the Gold Loan. Banks must be allowed to set-off the excess provisional GST paid to the government against future fixation of prices. In case of excesspayment, the same should be refunded on Pan – India basis and not on the basis of States.
- Banks may claim refund in accordance with the provisions of section 54 of the CGST Act, 2017.
- Interest is payable in such cases as provided in section 56 of the CGST Act, 2017.
- In this connection, section 60(5) of the CGST Act, 2017 may be referred to.
( FAQ 6: GEMS AND JEWELLERY)
Banks lend gold in physical form for a period not exceeding 6 months. Banks receive interest on the gold ounces disbursed and the same is converted into Rupees after calculation of interest on the ounces and the USD/INR conversion. Will the same methodology continue in case of GST as well wherein Banks shall pay a provisional GST (i.e. IGST/SGST/CGST) on ongoing market prices and pay the final GST as and when the prices are fixed
Yes, Banks may avail of the benefit of provisional assessment provided under section 60 of the CGST Act, 2017.
( FAQ 5: GEMS AND JEWELLERY)
Gold and silver imported by banks/nominated agencies on consignment basis are lying in stock as on 1st July. Clarification is required on how to charge the customers in transition phase from VAT to GST. Will customers be liable to pay GST rates
GST is payable @ 3% with effect from 01.07.2017.
( FAQ 4: GEMS AND JEWELLERY)
Banks import gold / silver on consignment basis wherein the ownership of the metal is with the supplier of the bullion which maybe an overseas entity. Is the overseas entity required to have GST registration because currently they do not file returns and are governed by multi-nation treaties
- This amounts to an import in accordance with the definition of the word “import” in the IGST Act, 2017 which provides that “bringing into India of any goods from any place outside India” is an import of the goods.
- What is material in this definition is the mere act of bringing into India; the ownership is not material for determining whether an import has taken place. Banks, being registered entities, would be liable to pay IGST on such imports but not the overseas entities since they are not effecting the import.
( FAQ 3: GEMS AND JEWELLERY )
Currently Banks do not pay any VAT on import of precious metals. Banks/nominated agencies pay only customs duty on imports. In the new regime of GST, will the Banks have to pay IGST while importing?
- Yes, 3% IGST is payable on all imports of precious metals in addition to the basic customs duty.
- IGST paid can be taken as input tax credit by the banks.
( FAQ 2 : GEMS AND JEWELLERY )