Tag: Lucknow University Notes

The tax invoice is a standard format required under the GST system. Sec 31 of the CGST Act 2017 mandates the issuance of an invoice or a bill of supply for every supply of Goods or Services.

Section 31; Tax Invoice:

(1) A registered person supplying taxable goods shall, before or at the time, of:

(a) Removal of goods for supply to the recipient, where the supply involves movement of goods; or

(b) Delivery of goods or making available thereof to the recipient, in any other case.

Issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by notification, specify the categories of goods or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed

(2) A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period; issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which:

(a) Any other document issued in relation to the supply shall be deemed to be a tax invoice; or

(b) Tax invoice may not be issued.

(3) Notwithstanding anything contained in sub-sections (1) and (2):

(a) A registered person may, within one month from the date of issuance of certificate of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period beginning with the effective date of registration till the date of issuance of certificate of registration to him;

(b) A registered person may not issue a tax invoice if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;

(c) A registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and, in such manner, as may be prescribed:

Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed;

(d) A registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing such particulars as may be prescribed, evidencing receipt of such payment;

(e) Where, on receipt of advance payment with respect to any supply of goods or services or both the registered person issues a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment

(f) A registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue an invoice in respect of goods or services or both received by him from the supplier who is not registered on the date of receipt of goods or services or both;

(g) A registered person who is liable to pay tax under sub-section (3) or sub-section (4) of section 9 shall issue a payment voucher at the time of making payment to the supplier.

Bill of supply: A bill of supply as per section 31(3)(c) is required to be issued in the following two cases:

(a) Where the supplier is a registered person who has opted for composition tax under section 10 of the Act (and shall not charge tax on the bill of supply); or

(b) Where the goods / Services being supplied by any registered person are wholly exempted.

Documents required to be issued in respect of supplies liable to tax under reverse charge mechanism [Section 31(3)(f) & (g)]

(a) Where tax is payable on reverse charge basis in terms of Section 9(3) or 9(4), or the corresponding provisions of the IGST Act, 2017, the recipient of supply is required to pay tax on reverse charge basis. In this regard, the following may be noted:

There are two cases:

Supplier is registered: Tax Invoice not required and payment voucher required.

Supplier is not registered: Tax Invoice required and payment voucher required.

Tax Invoice in respect of Goods:

Tax Invoice in respect of Services:

Rule 46 Contents of Tax invoice:Tax invoice issued by the registered person in respect of goods and services shall be containing the following particulars:

Invoices for Exports or Supplies to SEZ

Section 32: Prohibition of unauthorised collection of tax

(1) A person who is not a registered person shall not collect in respect of any supply of goods or services or both any amount by way of tax under this Act.

(2) No registered person shall collect tax except in accordance with the provisions of this Act or the rules made there under.

Section 33: Amount of tax to be indicated in tax invoice and other documents

Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form part of the price at which such supply is made.

EWay Bill is an Electronic Way bill for movement of goods to be generated on the eWay Bill Portal. A GST registered person cannot transport goods in a vehicle whose value exceeds Rs. 50,000 (Single Invoice/bill/delivery challan) without an e-way bill that is generated on ewaybillgst.gov.in.

Alternatively, Eway bill can also be generated or cancelled through SMS, Android App and by site-to-site integration through API.

When an eway bill is generated, a unique Eway Bill Number (EBN) is allocated and is available to the supplier, recipient, and the transporter.

E-Way Bill under GST

E-way bill is an electronic document generated on the GST portal evidencing movement of goods. It has two Components

Part A comprising of details of GSTIN of recipient, place of delivery (PIN Code), invoice or challan number and date, value of goods, HSN code, transport document number (Goods Receipt Number or Railway Receipt Number or Airway Bill Number or Bill of Lading Number) and reasons for transportation; and

Part B comprising of transporter details (Vehicle number). As per Rule 138 of the CGST Rules, 2017, every registered person who causes movement of goods (which may not necessarily be on account of supply) of consignment value more than Rs. 50000/- is required to furnish above mentioned information in part A of e-way bill. The part B containing transport details helps in generation of e-way bill.

Bill Generators:

Registered Person: Eway bill must be generated when there is a movement of goods of more than Rs 50,000 in value to or from a registered person. A Registered person or the transporter may choose to generate and carry eway bill even if the value of goods is less than Rs 50,000.

Unregistered Persons: Unregistered persons are also required to generate e-Way Bill. However, where a supply is made by an unregistered person to a registered person, the receiver will have to ensure all the compliances are met as if they were the supplier.

Transporter: Transporters carrying goods by road, air, rail, etc. also need to generate e-Way Bill if the supplier has not generated an e-Way Bill.

Modes of e-way bill generation

Using Web based system:

Using SMS based facility: The taxpayer has to register the mobile numbers through which he intends to generate the e-way bill on the e-way bill system. For further details, please see the user manual for SMS based e-way bill generation.

Using Android App: The mobile app is available only for the taxpayers and enrolled transporters. It is not available in Play Store. The main user has to login and select the ‘for mobile app’ under registration menu. The system asks to select the user/sub-user and enter the IMEI number of the user. Once it is entered, the concerned user gets the link in his registered mobile to download the app through SMS. Now, the user has to download the app by clicking that link and enable it to get installed on the mobile.

Bulk generation facility: Through this facility, user can upload multiple invoices and generate multiple e-Way bill at one go. This facility can be used by the taxpayers or transporters who have automated their invoice generation system. In one go, they can prepare bulk requests for e-way bills in a file from their automated system, and upload it on the common portal and generate e-way bill in one go. This avoids duplicate data entry into e-way bill system and avoids data entry mistakes also. Any taxpayer or transporter can use the bulk generation facility.

Using Site-to-Site integration: The integration between e-way bill system and registered persons’ system can be done through APIs. For availing this facility, the registered person should register the server details of his/her systems (through which he wants to generate the e-way bill using the APIs of e-way bill system) with e-way bill system. For further details, please go through the user manual.

Using GSP ( Goods and Services Tax Suvidha Provider)

Exceptions to e-way bill requirement

• Goods being transported by a non-motorised conveyance.
• Goods being transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs.
• Transport of goods as specified in Annexure to Rule 138 of the CGST Rules, 2017.
• In respect of movement of goods within such areas as are notified under rule 138(14) (d) of the SGST Rules, 2017 of the concerned State.
• Consignment value less than Rs. 50,000/-

Latest News and Updates

Updated as on 29th August 2021

From 1st May 2021 to 18th August 2021, the taxpayers will not face blocking of e-way bills for non-filing of GSTR-1 or GSTR-3B (two months or more for monthly filer and one quarter or more for QRMP taxpayers) for March 2021 to May 2021.

Update as on 4th August 2021

Blocking of e-way bills due to non-filing of GSTR-3B resumes from 15th August 2021.

Update as on 22nd December 2020

1. The CBIC increased the distance per day in case of goods transported through vehicles, other than the over-dimensional cargo, for determining the validity, as follows:
2. It is one day: For a distance of up to 200 km as against earlier 100 km
3. An additional day is taken- For every additional 200 km or part thereof, as against previously notified additional 100 km or part thereof
4. Regarding blocking of the e-way bill where a taxpayer fails to file GSTR-3B, the provision has been amended to replace two or more months with two or more tax periods. The same has been changed to include the quarterly return filers.

Statement of outward Supply [ Section-37]

1. A registered taxable person shall furnish electronic statement of the details of outward supplies of goods and services for the tax period on or before the 10thof succeeding tax period other than the following:

• Input service distributor
• Non resident taxable person
• Taxable person u/s 10 [ Composition Scheme]
• Person who is deducting at source
• Person collecting tax at source

Statement of Inward Supplies [ Section-38]

• A registered person shall furnish the detail of inward supplies of goods and services other than the following person including the goods and services under reverse charge basis and goods and services received under IGST. RP can rectify, modify, add or delete the detail of outward supply furnished under point 1 of Section 37.
• Input service distributor
• Non resident taxable person
• Taxable person u/s 10 [ Composition Scheme]
• Person who is deducting at source
• Person collecting tax at source

Returns [ Section- 39]

• A registered person shall furnish the return electronically of inward and outward supplies of goods and / or services, input tax credit, tax payable , tax paid and other particular as may be prescribed other than the following person:
• Input service distributor
• Non-resident taxable person
• Taxable person u/s 10 [Composition Scheme]
• Person who is deducting at source
• Person collecting tax at source

First Return [ Section 40 ]

Every RTP who has made outward supply in the period between the date of liability to date of registration shall file the first return after grant of registration.

Claim of input tax credit and provisional acceptance [ Section 41]

Every RP shall claim input tax credit as per the condition and restriction thereof on self-assessed basis and take credit in his electronic credit ledger.

The above credit can be utilized against self-assessed outward tax liability.

Matching, reversal and reclaim of input tax credit [Section 42]

• Every RTP who has furnished inward supply [recipient] return shall be matched with return of supplier.
• The credit of input tax shall be matched with the return of outward supply of supplier.
• Where ITC is in excess of the tax declare by the supplier in his return, the same shall be communicated to both supplier and recipient. If the discrepancy is not rectified by supplier, the same shall be added to outward tax liability of the recipient in the next return.
• If there is duplication of ITC, same shall be added to outward tax liability of recipient in the month of communication.
• If the supplier rectifies the mistake in due time in his return, the recipient can reduce his outward tax liability.
• If any amount is added to outward tax liability shall also attract interest u/s 50. Interest shall be computed from the date taking credit to date of adding to outward liability.
• If there is reduction in outward tax liability and interest is also paid on the same, both shall be refunded to his electronic cash ledger.

Matching, reversal and reclaim of reduction in output tax liability [ Section 43]

• Credit note issued by supplier of goods and/ or services shall be matched.

with

1. The corresponding reduction in input tax credit by recipient
2. For duplication of claim for reduction in tax liability

• Above claim will be matched and accepted shall be communicated to supplier and recipient. If outward tax liability reduction is found to be in excess of reduction in input tax credit shall be informed to both.
• Duplication of claim for reduction in output tax liability shall be communicated to supplier.
• If the discrepancy has not been rectified by recipient in his return of month in which it is communicated, the amount shall be added to the outward tax liability of supplier. This addition shall be along with interest u/s 50.
• If the credit note is accepted and corresponding reduction is done by recipient in his inward return. Interest shall be refunded to supplier.

Annual Return [ Section 44]

1. Every RP except the following shall furnish annual return on or before 31stDecember in GSTR –9 following the end of financial year.

• Input service distributor
• Non-resident taxable person
• Casual Taxable Person
• Person who is deducting at source under section 51
• Person collecting tax at source under section 52

2. Every RP who has to get his account audited under Section 35[5] (whose aggregate turnover in the financial year exceed Rs. 2 Crore shall furnish the annual return GSTR-9C under point no.1 electronically for every financial year along with audited financial statement and reconciliation thereof.
3. Casual Tax person will file the annual return on GSTR-9A.
4. Electronic commerce operator shall file GSTR-9B.

Final Return [ Section 45]

Every RP who applied for the cancellation of registration shall file return in GSTR-10 within three months from the date of cancellation or cancellation order whichever is later.

Late Fees [ Section 47]

1. Any person who fails to furnish the detail u/s 37 and 38 or return u/s 39 and 45 by due date shall pay late fees of Rs. 100 per day subject to maximum of Rs. 5000.
2. Any person who fails to furnish the return u/s 44 shall pay late fees of Rs. 100 per day subject to maximum of 0.25% of turnover of state or union territory.

Section 48: Goods and Services tax practitioners. CGST ACT 2017

(1) The manner of approval of goods and services tax practitioners, their eligibility conditions, duties and obligations, manner of removal and other conditions relevant for their functioning shall be such as may be prescribed.

(2) A registered person may authorize an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 1 “and to perform such other functions” in such manner as may be prescribed.

(3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars furnished in the return or other details filed by the goods and services tax practitioners shall continue to rest with the registered person on whose behalf such return and details are furnished.

Input Tax Credit (ITC) means the amount of tax paid on purchase of Input Goods, Input Services and Capital Goods and includes tax paid under Reverse charge. Then at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount. This mechanism is called utilization of input tax credit. Due to this mechanism Input Tax Credit is the backbone of GST regime because these provisions of ITC makes GST a value added tax i.e. collection of tax at all points after allowing credit for inputs.

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and, in the manner, specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless:

(a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

(b) He has received the goods or services or both. Explanation. For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(c) Subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and

(d) He has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed.

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

No ITC if Depreciation is claimed on Tax component of Capital Goods: When the registered person claims the Depreciation on tax component of cost of Capital Goods and Plant & Machinery, then the Input Tax Credit on said component shall not be allowed.

Time limit for availing ITC: A registered person shall not be entitled to take Input tax Credit in respect of Invoice or Debit Note for supply of goods or services or both

• After the “Due Date of furnishing of Return u/s 39 for the month of September following the end of Financial Year to which such Invoice pertains” or
• “Date of furnishing of relevant Annual Return”, whichever is earlier.

Section 2(59): “Input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.

Section 2(60): “Input Service” means any service used or intended to be used by a supplier in the course or furtherance of business.

Section 2(19): 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 or furtherance of business.

Input Tax Credit on Capital Goods

To avail input tax credit for the Capital Goods the following conditions, in addition to conditions as stated under section 16(2) of the CGST Act, are to be fulfilled.

1. The Capital Goods has been capitalised in books of account of the person and
2. The Capital Goods are used or intended to be used in the course or furtherance of business.
3. The conditions as stated under section 16(2) of the CGST Act are as under:

3.1 The registered person is in possession of Tax Invoice;

3.2 The registered person has received Capital Goods;

3.3 The tax charged on such capital goods has been paid and

3.4 The GST Return has been filed in regard of such of Capital Goods by the Supplier.

4. The further condition as stated in section 16(3) is that where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.
5. Blocked Input Tax Credit: Input Tax Credit is blocked on Motor Vehicles, Vessels and Aircrafts subject to exceptions as per section 17(5) of the CGST Act.
6. Total amount of Input Tax Credit is allowed on purchase of capital goods. It is not like with provisions of VAT, Service Tax etc. where input Tax Credit was allowed in instalments year wise.

Treatment of Availed Input Tax Credit on Sale of Capital Goods

In case of supply of used Capital Goods on which input tax credit has been availed, we should consider provisions of section 18(6) of the CGST Act read with rule 44(6). The higher amount of tax shall be paid out of tax charged on transaction value or pro rata input tax credit pertaining to unused period. The following example would help for more clarification in regard of this matter.

Input Tax Credit not allowed on Capital Goods

The Input Tax Credit is not allowed on Capital Goods on following circumstances:

1. If the Capital Goods are not capitalised in the books of account.
2. If the Capital Goods are purchased for non business purpose.
3. If the Capital Goods are purchased to be used exclusively for exempt supply.

Circumstances when availed Input Tax Credit against Capital Goods shall be paid.

The Registered Person shall have to pay input tax credit against availed input tax against purchase of Capital Goods in following cases:

1. When the Registered Person shifts from regular registration to Composition Scheme and
2. When the Registered Person gets his registration cancelled.

Input Tax Credit (ITC) is the core concept of GST as GST is destination-based tax. ITC avoids cascading effect of taxes and ensures that tax is collected in the State in which goods or services or both are consumed.

“Input 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 (3) and (4) of section 9;

(c) The tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;

(d) The tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or

(e) The tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy.

Input tax to Output tax set off / Utilization methodology:

Document requirements & conditions for claiming input tax:

The input tax credit shall be availed by a registered person, including the Input Service Distributor (ISD), on the basis of any of the following documents; Rule 36 of CGST and SGST Rules, 2017:

(a) An invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31 [Invoice of supplier of goods or services or both]

(b) An invoice issued in accordance with the provisions of section 31(3)(f), subject to payment of tax [tax paid on reverse charge basis]

(c) A debit note issued by a supplier in accordance with the provisions of section 34.

(d) A bill of entry or similar document prescribed under Customs Act or Rules for assessment of IGST

(e) An invoice or credit note issued by an ISD in accordance with rule 54(1) of CGST Rules, 2017. ITC only if invoice complete in all respects ITC shall be availed by a registered person only if all the applicable particulars as prescribed in Invoice Rules are contained in the said document, and the relevant information, as contained in the said document, is furnished in form GSTR-2 by such person; Rule 36(2) of CGST and SGST Rules, 2017.

Time duration to entitle input credit:

A taxable person shall not be entitled to take input tax credit in respect of any supply of goods and/or services to him after the expiry of one year from the date of issue of tax invoice relating to such supply section 18(2) of CGST Act.

Requirements for availing input Tax Credit

As per section 16(2) of CGST Act, registered taxable person shall not be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless following conditions are satisfied:

(a) He is in possession of a tax invoice or debit note issued by a supplier registered under GST Act or such other taxpaying document as may be prescribed,

(b) He has received the goods or services or both,

(c) Subject to section 41 of CGST Act, the tax charged in respect of such supply has been actually paid to the credit of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply [section 41 of CGST Act allows taking input tax credit in electronic credit ledger on self assessment basis], and

(d) He has furnished the return under section 39 [every taxable person is required to file electronic return every month as per section 39 of CGST Act].

Section 15 of the CGST Act provides common provisions for determining the value of goods and services. It provides the mechanism for determining the value of a supply which is made between unrelated persons and when price and only the price is the sole consideration of the supply. When value cannot be determined under section 15, the same is determined using Chapter IV: Determination of Value of Supply of CGST Rules.

Section: 15 Value of Taxable Supply

Section 15(1): The value of goods or services or both shall be the transaction value, which is 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.

Section 15(2): Inclusion to Transaction Value

a) Duties and taxes: All taxes levied under any law for time being in force other than GST Acts if charged separately.

b) 3rd Party Payments: Any payment incurred by the recipient for which supplier is liable to pay.

Second proviso to rule 37(1) of CGST Rules, inserted w.e.f. 13-6-2018 stating that Payment by the recipient on behalf of supplier is deemed to be paid to the supplier and reversal of proportionate credit (for non-payment in 180 days) is not required.

c) Incidentals Expenses: Any incidental expenses charged by supplier & any amount charged for anything done by the supplier at the time of supply or before delivery. For e.g.- Packing, labelling, designing, Excise Duty, Royalty, warranty charges etc.

d) Interest, Late Fees, Penalty: for delay payment of consideration.

e) Subsidy: Subsidy directly linked to the price excluding subsidies directly provided by Central and State Government.

Section 15(3): Deduction of Discount

The value of supply shall not include any discount which is given:

a) Any discount is given before or at the time of supply: Deductible from value.

b) Any discount is given after supply:

Agreed at the time of supply or before supply; Deduction allowed if:

• Linked to the Invoice
• ITC Reversed by the recipient.

Not Agreed at the time of supply or before supply; Not Deductible from value.

Section 15(4): Where the value of supply of goods or services or both cannot be determined under subsection (1), the same shall be determined in such a manner as may be prescribed. (i.e. GST RULES,2017).

Section 15(5): Notwithstanding anything contained in subsection (1) or subsection (4), the value of such supplies as may be notified by the Govt. on the recommendation of the council shall be determined in such manner as may be prescribed.

Determination of Value of Supply

1. Open Market Value: Of a supply of goods or services or both means the full value in money, excluding GST payable by a person in a transaction,

• Where the supplier and recipient of supply are not related
• Price is the sole consideration

To obtain such a supply at the same time when the supply being valued is made.

2. Supply of Goods or Services of Like Kind and Quality: Means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional components, materials and the reputation of the goods or services or both is mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both.
3. Sec 2(5) Agent: means a person, including a factor, broker, commission agent, arhatia, del credere 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;
4. Sec 2(88) Principal: Means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both.

CGST rules 2017

RULE 27: When consideration is not wholly in money

a) Open market value (OMV)

b) If (a) is not available,

VALUE = Consideration in money + FMV of consideration not in money

c) If (a) & (b) not determinable,

VALUE = Value of Like, Kind & Quality

d) If (a), (b) & (c) not determinable then apply Rule 30 & Rule 31 in that order. (Discussed latter)

RULE 28: Supply Between Distinct or Related Person

a) Open market value (OMV)

b) If (a) is not available,

VALUE = Value of Like, Kind & Quality

c) If (a) & (b) not determinable, then apply Rule 30 & Rule 31 in that order. (Discussed latter).

PROVISO 1: if the further supply of goods is as such by the recipient at the option of the supplier,

VALUE= 90% OF THE PRICE CHARGED FOR LIKE, KIND & QUALITY BY THE RECIPIENT.

PROVISO 2: If the recipient is eligible for full ITC then,

OMV= Value declared in the invoice for the supply of goods or services.

RULE 29: Supply Between Principal and Agent

a) Open market value (OMV)

OR

90% of the price of like, kind and quality by the recipient. Where such goods are intended for further supply.

b) If (a) is not available then Rule 30 or 31 in order.

RULE 30 & 31 are applicable in order in the following cases:

• If the situation is covered under Rule 27, 28, 29 and valuation cannot be determined by applying the principal mentioned in respective rules.
• If the Situation is not covered by aforesaid rules.

RULE 30: Value of Supply Based on Cost

VALUE = 110% OF

• Cost of production
• Cost of acquisition
• Cost of the provision of Services.

RULE 31: Residual method or best judgment by using reasonable means

Consistent with principles & general provision of Sec 15

Provisions of Rule 27 to Rule 30 of CGST Rules

PROVISO: In case of the supply of services suppliers may opt for rule 31 instead for rule 30.

Where goods are sent on approval basis, an invoice would not be required at the time of removal of goods, and shall be issued only at the time of receipt of approval from the recipient.

Notwithstanding anything contained in sub-section (1), where the goods being sent or taken on approval for sale or return are removed before the supply takes place, the invoice shall be issued before or at the time of supply or six months from the date of removal, whichever is earlier.

Section 31 A: Facility of digital payment to recipient

The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed.

“Continuous Supply” in context of GST laws in India and discuss about how GST shall be levied on goods & services which falls under the continuous supply. The term “Continuous Supply” has been defined by Section 2(32) & 2(33) of the CGST Act, 2017.

In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received.

As per Section 2(32) of CGST Act, ‘Continuous Supply of Goods’ means:

• A supply of goods which is provided or agreed to be provided, continuously or on recurrent basis.
• Under a contract
• Whether or not by means of a wire, cable, pipeline or other conduit.
• For which the supplier invoices the recipient on a regular or periodic basis.
• Includes supply of goods as notified by the Government.

‘Continuous Supply of Goods’ have five important elements:

(a) There should be a supply of goods on a continuous or recurrent basis. The word ‘recurrent’ means frequently or regularly. Thus, we can interpret that where there is an agreement to supply an agreed quantity of goods over a period of time in multiple consignments to a customer, it would be treated as continuous supply of goods.

(b) The supply should be under a contract. However, the contract need not be in writing.

(c) Supply of goods may be done by means of a wire, cable, pipeline or conduit. The words “Whether or not” in the definition shows that the above list is only illustrative. The supplier may deliver goods through other transport means to be treated as a continuous supply.

(d) The supplier invoices the customer on a regular or a periodic basis as agreed between them.

(e) The Government may notify or specify any goods supply of which shall be treated as continuous supply of goods.

Continuous Supply of Services Under GST:

“Continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes a supply notified as being a continuous supply of services. In case of continuous supply of goods, the invoice has to be issued before or at the time of each of the successive statements is issued or each of the successive payments are received. Similarly, in case of a continuous supply of services the invoice has to be issued.

• Where the due date of payment is ascertainable from the contract, the invoice must be issued on or before the due date of payment;
• Where the due date of payment is not ascertainable from the contract, the invoice must be issued before or at the time when supplier of service receives payment;
• Where the payment is linked to the completion of an event, the invoice should be issued on or before the date of completion of that event.

Time of issuing of tax invoice for continuous supply of services

When the due date of payment can be identified from the contract

The invoice will be issued before or after the payment is to be made by the recipient but within specified time. Invoice will be issued, whether or not any payment has been received by the supplier. For example, telecom service provider sends telephone bill every month. This is mentioned in the contract with the telecom company.

When the due date of payment is cannot be identified from the contract

The invoice shall be issued before or after each time when the supplier of service receives the payment but within specified time.

When the payment is linked to the completion of an event

The invoice shall be issued before or after the time of completion of that event but within specified time.

When the supply of services ceases under a contract before the completion of the supply

The invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the service provided before stopping. For example, a works contract starting on 1st August 2017 was due for completion in March 2018. But it was stopped on 11th Nov 2017. The contractor will issue an invoice on 11th November 2017 to the extent of work performed.

Specified Time

The invoice must be issued within 30 days from the date when each event, specified in the contract and requiring the recipient to make any payment, is completed.

If the supplier of service is a bank/financial institution/NBFC

The invoice must be issued within 45 days from the date of supply of service. The Centre or a State Government may notify the supply of goods or services to be treated as continuous supply of goods or services.