Category: Supply

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Exemption to small suppliers of goods from payment of tax on advance received against supply of goods by Notification 40/217 dated 13-10-2017

Section 148 of the CGST Act allows the government to notify certain classes of registered persons, and the special procedures to be followed by such persons including those with regard to registration, furnishing of return, payment of tax and administration of such persons.

 

The notification applies to :

  1. Registered person whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees

OR

  1. The registered person whose aggregate turnover in the year in which such person has obtained registration is likely to be less than one crore and fifty lakh rupees

AND

who did not opt for the composition levy under section 10 of the said Act

 

 

In pursuance of powers u/s 148, payment of tax for above class of persons has  been confined to outward supply of goods at the time of supply u/s 12(2)(a) i.e. the date of issue of invoice by the supplier or the last date on which he is required to issue the invoice with respect to the supply.

 

Section 12(2)(b) which declares the date on which the supplier receives the payment with respect to the Supply as time of supply, where date of receipt falls before the date of supply,  has been dispensed for small suppliers.

 

Note:

  1. Hence persons covered by composition levy shall continued to be taxed for advance payment against supply
  2. Further supplier of services shall also pay tax on advance payments .

Where turnover is likely to be lesser but actually exceeds 1.5 crore, whether such person is required to pay tax on advance payments after crossing 1.5 crore ?

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Time of supply in case of mixed supplies?

In terms of Section 2(74) of the CGST Act, 2017 ‘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 appended to the definition of ‘mixed supply’ reads 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. Section 8(b) provides that the mixed supply whether involves supply of goods or services shall be ascertained on the basis of a particular supply forming part of the mixed supply which attracts highest rate of tax. In other words, the mixed supply, if involves supply of any service liable to tax at the higher rate than any goods covered therein, such mixed supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, the mixed supply, if involves supply of any goods liable to tax at the higher rate than services covered therein, such mixed supply would qualify as supply of goods and
accordingly the provisions relating to time of supply of goods would be applicable.
E.g.: During an exhibition, the package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices are supplied by the organizer of exhibition. This would qualify as mixed supply since exhibition of services and other goods are supplied in conjunction. The rate of tax applicable (presumed) to each of the
goods and services:

(Review Illustration)
Exhibition services – 18%
Dry fruits and fruit juices – 5%
Canned foods, sweets, chocolates, cakes and aerated drink – 12%
Nature of supply (highest rate) Supply of services – 18%

(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 25)

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What will be the time of supply in case of supply of vouchers

In terms of Section 12(4) of the CGST Act, 2017, time of supply of vouchers shall be the earliest of the following:
(a) date of issue of voucher, if the supply is identifiable at that point; or
(b) date of redemption of voucher, in all other cases. Eg: Mr. A buys vouchers from Lifestyle of worth ` 1,000/- for a shirt dated August 01, 2017. Mr. A gifts such vouchers to Mr. B who redeems such vouchers with Amazon India on August 31, 2018. – Time of supply is the date of issue of vouchers viz., August 01, 2017.

(ICAI FAQ PUBLICATIONS 06-09-2017 TIME FOR SUPPLY OF GOODS: FAQ NO. 7)

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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)