Author: abhishek

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How to ascertain the taxable value for levy of CGST & SGST/UTGST

Section 15 of the CGST Act, 2017 specifies that the value of supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. Further, Section 15 provides for certain inclusions which will form part of the value viz., incidental expenses, commission, interest, penalty etc. In cases where the supplier and recipient are related persons or where the price is not the sole consideration, the provisions and method for ascertaining the value of taxable supply as prescribed in the Central Goods and Services Tax Rules (“the CGST Rules” or “the CGST Rules, 2017”) (Rules 27 – 35) shall apply.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 14)

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What are the taxes that are levied on an intra-State supply

In terms of Section 9 of the CGST Act, 2017, intra-State supplies are liable to CGST. In terms of Section 7 of UTGST Act, 2017, intra-State supplies effected by a taxable person located in Union Territory (within the Union Territory) will be liable to UTGST. Therefore, in case of intra-State supplies in case of State or Union Territory, CGST and SGST or CGST and UTGST will be applicable respectively.

(ICAI FAQ PUBLICATION 06-09-2017 LEVY AND COLLECTION:  FAQ NO. 13)

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What is Mixed Supply

In terms of Section 2(74), mixed supply means two or more individual supplies of goods or services or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. The illustration of mixed supply appended to Section 2(74) is as follows:
A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.

(ICAI FAQ PUBLICATION 06-09-2017 TAX LIABLITY ON COMPOSITE AND MIXED SUPPLY : FAQ NO. 11)

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What is composite supply

In terms of Section 2(30) of CGST Act, 2017, 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. The illustration of composite supply appended to Section 2(30) is as follows:
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.

(ICAI FAQ PUBLICATION 06-09-2017 TAX LIABLITY ON COMPOSITE AND MIXED SUPPLY : FAQ NO. 9)

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Whether import of services will be liable to tax under GST regime

The following import of service will qualify as supply under the CGST Act, 2017:
1. As per Section 7, import of service for a consideration whether or not in the course or furtherance of business is a supply;
2. As per Schedule I, import of service by a taxable person, even if made without consideration, from a related person or from any of his other establishments outside India, in the course or furtherance of business.

(ICAI FAQ PUBLICATIONS 06-09-2017 SCOPE OF SUPPLY : FAQ NO. 8)

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Whether supply of goods by principal to his agent or by agent to his principal is taxable in the absence of consideration

In terms of Section 7 read with Schedule I, following would qualify as supply:
1. Supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
2. Supply of goods by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

(ICAI FAQ PUBLICATIONS 06-09-2017 SCOPE OF SUPPLY : FAQ NO. 7)

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Whether gifts given by employer to employee will also qualify as supply

In terms of Explanation appended to Section 15 it is clarified that employer and employee will be deemed to be related persons. Accordingly, in terms clause 2 of Schedule I, gift exceeding ` 50,000/- by an employer to employee will be a supply, when made in the course or furtherance of business and will be liable to tax. As, in terms of proviso to clause 2 of Schedule I, any gifts for a value not exceeding 50,000/- in a financial year will not qualify as supply and as such will not be liable to tax.

Further, as per press release dated 10th July, 2017, if services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer. The relevant extract aforesaid press release is as under:
“Another issue is the taxation of perquisites. It is pertinent to point out here that the services by an employee to the employer in the course of or in relation to his employment is outside the scope of GST (neither supply of goods or supply of services). It follows therefrom that supply by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST. Further, the input tax credit (ITC) scheme under GST does not allow ITC of membership of a club, health and fitness centre [section 17(5)(b)(ii)]. It follows, therefore, that if such services are provided free of charge to all the employees by the employer then the same will not be subjected to GST, provided appropriate GST was paid when procured by the employer. The same would hold true for free housing to the employees, when the same is provided in terms of the contract between the employer and employee and is part and parcel of the cost-to-company (C2C).”

(ICAI FAQ PUBLICATIONS 06-09-2017 SCOPE OF SUPPLY : FAQ NO. 6)

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Whether transfer of goods to another branch located outside the State is taxable

In terms of Section 25(4) of the CGST Act, 2017, every person who is required to obtain separate registration for every branch located in different state or union territory shall be treated as distinct persons. Accordingly, the supply of goods (stock transfers) to a branch located outside the State would qualify as supply, liable to tax in terms of clause 2 to Schedule I of the CGST Act, 2017. Further, it is important to note that, supply of goods to a branch / unit located within the same State having separate registration would also be liable to tax since both such units (supplying unit and recipient unit) would qualify as distinct person in terms of Section 25(4).

(ICAI FAQ PUBLICATIONS 06-09-2017 SCOPE OF SUPPLY : FAQ NO. 5)