CHAPTER

2
GST Acts :
CGST ACT,
SGST ACT (KARNATAKA STATE)
IGST ACT
 SALIENT FEATURES OF CGST ACT, 2017
1. A state-wise single registration for a taxpayer for filing returns, paying
taxes, and to fulfil other compliance requirements.

2. Most of the compliance requirements would be fulfilled online.

3. A taxpayer has to file one single return state-wise to report all his
supplies, whether made within or outside the state or exported out of the
country and pay the applicable taxes on them.

4. A business entity with an annual turnover of upto Rs 20 lakh would not be

required to take registration in the GST regime.

5. A business entity with turnover upto Rs 50 lakh can avail the benefit of a
composition scheme under which it has to pay a much lower rate of tax

6. The Composition Scheme is available for all traders, select manufacturing

sectors and for restaurants in the services sector.
 SALIENT FEATURES OF SGST ACT, 2017
• Levied by the States for all the transactions of goods and
services made for a consideration.
• State GST would be paid to the accounts of the respective
State.
• Exceptions would be exempted goods and services,
goods kept out of GST and transactions below prescribed
threshold limits.
• Basic features of law such as chargeability, taxable event,
measure, valuation, classification would be uniform
across the State.
 SALIENT FEATURES OF IGST ACT, 2017
• IGST equals to CGST+SGST. IGST model that the centre
will levy tax at a rate approximately equal to CGST+SGST
on Inter-State supply of goods & services.
• It is a destination based tax and will accrue to importing
state.
• It will lower tax burden by taxing Inter-State transaction only
once.
• B2B transactions – tax will flow to the State where Purchaser
claims Input Tax Credit.
• B2C transactions – tax will flow to the State of Consumer,
otherwise tax will remain in the State of Seller.
 ADJUDICATING AUTHORITY
• Adjudication is the legal process by which an judge reviews
evidence and argumentation, including legal reasoning set forth by
opposing parties or litigants to come to a decision which determines
rights and obligations between the parties involved.
APPOINTMENT OF ADJUDICATING AUTHORITY
1. Central Government will appoint as many officers as
Adjudicating Authorities.
2. Against whom a complaint has been made under
sub-section and imposing any penalty
3. Adjudicating Authority shall hold an enquiry and
complaint in writing made by any officer authorized
by a general or special order by the Central
Government.
4. The said person may appear either in person or take
the assistance of a legal practitioner or a chartered
accountant of his choice for presenting his case
before the Adjudicating Authority
5. On the date fixed, the Adjudicating Authority shall explain to the
person against his legal practitioner or the chartered accountant, as
the case committed by such person indicating the provisions of
the Act or of rules, regulations, notifications, direction or orders
or any condition.

6. The Adjudicating Authority shall, then, given an opportunity to

such person to produce such documents or evidence as he may
consider relevant to the inquiry.

7. Every Adjudicating Authority shall have the same powers of a civil

court.
8. Every Adjudicating Authority shall deal with the compliant under
sub-section (2)
9. Adjudicating Authority shall record periodically.
ADJUDICATING AUTHORITIES, COMPOSITION, POWERS

1. The Central Government shall appoint one or more

Adjudicating Authorities to exercise jurisdiction, powers.

2. An Adjudicating Authority shall consist of a Chairperson and two other

Members: Provided that one Member each shall be a person having
experience in the field of law, administration, finance or accountancy.

3. A person shall in the field of law, is qualified for appointment as District

Judge;

4. Has been a member of the Indian Legal Service and has held a post in
Grade I of that service;

5. In the field of finance, accountancy or administration.

6. The Central Government shall appoint a Member to be the Chairperson
of the Adjudicating Authority.

7. Subject to the provisions of this Act,-

8. The jurisdiction of the Adjudicating Authority may be exercised

by Benches thereof;

9. a Bench may be constituted by the Chairperson of the Adjudicating

Authority with one or two Members as the Chairperson.

10.The Benches of the Adjudicating Authority shall ordinarily sit at New

Delhi.

11. Chairperson may transfer a Member from one Bench to another Bench.
12. The Chairperson and every Member shall hold office as for a
term of five years from the date on which he enters upon his
office: Provided that no Chairperson or other Member shall hold
office as such after he has attained the age of sixty-two years.

13.The salary and allowances payable to and the other terms and
conditions of service of the Member shall be such as may be
prescribed.

14.For reasons other than temporary absence, any vacancy occurs in

the office of the Chairperson or any other Member, then, the
Central Government shall appoint another person to fill the
vacancy.
15. The Chairperson or any other Member shall not be removed
from his office except by an order made by the Central
Government.

16.If Chairperson by reason of his death, resignation the senior-most

Member shall act as the Chairperson of the Adjudicating Authority
until the date on which a new Chairperson

17. The senior-most Member shall discharge the functions of the

Chairperson of the Adjudicating Authority until the date on
which the Chairperson of the Adjudicating Authority resumes his
duties.

18.Adjudicating Authority shall have powers to regulate its own

procedure.
 AGEN
• T term “agent” means a person,
As per Section 2(5) the
including a factor, broker, commission 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.
 BUSINES
1. any trade, commerce,Smanufacture, profession, vocation,
adventure, wager or any other similar activity.
2.supply or acquisition of goods including capital goods
and services in connection with commencement or
closure of business;
3.provision by a club, association, society, or any such
body of the facilities or benefits to its members;
 CAPITAL
• GOODS
As per Section 2(19) , the term “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 business.
 CASUALTAXABLE
PERSON
• As per Section 2(20) the term “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.
 COMPOSITE
• SUPPLY
As per Section 2(30) of the Central Goods and Services Tax
(CGST) Act, 2017,the term “composite supply” means a
supply made by a taxable person, consisting of two or more
taxable supplies of goods and services, which are naturally
bundled and supplied in conjunction with each other in the
ordinary course of business.

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.
 MIXED
• Section 2(66) defines SUPPLY
this term as “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.

• A supply of a package consisting of canned foods, sweets, chocolates,

cakes, dry fruits 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.
 OUTWARD
SUPPLY
• “outward supply” in relation to a taxable
person, means supply of goods or services or
both, whether by sale, transfer, exchange,
licence, rental, lease or disposal or any other
mode, made or agreed to be made by such
person in the course or furtherance of
business;
 PRINCIPAL
SUPPLY
• principal supply” means the supply of goods
or services which constitutes the predominant
element of a composite supply and to which
any other supply forming part of that
composite supply is ancillary;
 SUPPLIE
R
• “supplier” in relation to any goods or services
or both, shall mean the person supplying the
said goods or services or both and shall
include an agent acting as such on behalf of
such supplier in relation to the goods or
services or both supplied;
 TYPES OF SUPPLIERS
• Manufacturers and Vendors
• They produce the products and present them for
purchase in bulk. The products are purchased by
distributors, retailers, wholesalers, resellers, etc.
at cheap prices and are sold at a profit.
• Wholesalers and Distributors
• They buy in bulk from different manufacturers
and vendors; and keep the merchandise in
warehouses for reselling these goods to local
small distributors, wholesalers and retailers.
• Affiliate Merchants
• Affiliate merchants sell their products online through
banner ads and website links, which are posted on the
web through a chain of affiliates.
• Franchisors
• Franchisors are business owners who through an
agreement and at a price allow an individual for using
their name, trademark, training, business know how,
etc. the individual develops his own business with the
benefit of already established franchisor’s business
system.
• Importers and Exporters
• Such suppliers either purchase products from
manufacturers in a foreign country and import them to
their own country; or export products from their
country to some other country.
• Independent Crafts People…
• They are producers of self-designed or unique
products which are manufactured on a small scale.
These products are usually sold directly to retailers or
individual customers through agents or trade show
• Drop Shippers
• Drop shippers are in contact with one or more supply
companies and deliver their products directly to the
buyer after the purchase has been made.
 INPUT SERVICE
DISTRIBUTOR
• “Input Service Distributor” means an office of the supplier of
goods or services or both which receives tax invoices issued under
section 31 towards the receipt of input services and issues a
prescribed document for the purposes of distributing the credit of
central tax, State tax, integrated tax or Union territory tax paid on
the said services to a supplier of taxable goods or services or both
having the
same Permanent Account Number as that of the said office.
 MANUFACTUR
ER
• manufacture” means of
processing
material or inputs in any manner thatraw
results
in emergence of a new product having a
distinct name, character and use and the
term “manufacturer” shall be construed
accordingly;
 INPUT
• “input tax”
TAX
in relation to a registered person,
means the central tax, State tax, integrated tax or
Union territory tax charged on any supply of
goods or services or both made to him and
includes—
• (a) the integrated goods and services tax
charged on import of goods;
(b) the tax payable under the provisions of
sub- sections.
 INPUT TAX
CREDIT
• input tax credit is the credit manufacturer's
received for paying input taxes towards inputs
used in the manufacture of products.
Similarly, a dealer is entitled to input tax
credit if he has purchased goods for resale.
 PERS
ON
• (a) an individual;
(b)a Hindu Undivided Family;
(c)a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f)an association of persons or a body of
individuals, whether incorporated or not, in
India or outside India;
(g)Central Government or a State Government;
(h) trust; and
(i) every artificial juridical person, not
falling within any of the above;
 PLACE OF
• BUSINES
a) a place from where theSbusiness is ordinarily
carried on, and includes a warehouse, a godown
or any other place where a taxable person stores
his goods, supplies or receives goods or services
or both.
(b)a place where a taxable person maintains his
books of account;
(c)a place where a taxable person is engaged in
business through an agent, by whatever name
called;
 REVERSE
CHARGE
• reverse charge” means the liability to pay tax by
the recipient of supply of goods or services or
both instead of the supplier of such goods or
services or both under sub-section (3).
 WORKS
CONTRACT
• works contract” means a contract for building,
construction, completion , installation, fitting out,
improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any
immovable property wherein transfer of property
in goods.
 NON - RESIDENT PERSON /
NON- RESIDENT TAXABLE
• As per PERSON
Section 2(77) of the Central Goods and
Services Tax (CGST) Act, 2017, unless the context
otherwise requires, the term “non-resident
taxable person” means any person who
occasionally undertakes transactions involving
supply of goods or services or both, whether as
principal or agent or in any other capacity, but
who has no fixed place of business or residence
in India.
 EXPORT GOODS
• The OF
term export means
of goods or services producedsending
in one country to
another country. The seller of such goods and
services is referred to as an exporter; the foreign
buyer is referred to as an importer.
• Supplier of service is located in India
• Recipient of service is located outside India.
• The place of supply of service is outside India.
 INWARD
SUPPLY
• “Inward supply” in relation to a person, shall
mean receipt of goods or services or both
whether by purchase, acquisition or any
other means with or without consideration;
 PLACE OF SUPPLY
TYPES
• location of the recipient of
services
• location of the supplier of
services
GST IMPACT ON MANUFACTURING
SECTOR
• State incentives
• Area based incentives
• Increased working capital
• Free supplies
• Discounts
• Valuation of self – supplies
• MRP valuation – maximum retail price
• Reduction of cascading taxes
• Reduction of classification disputes
• Supply chain restructuring based on
economic factors
• Exclusion of petroleum from GST