8
CHAPTER
PAYMENT OF GST AND REFUNDS UNDER GST
HIGHLIGHTS OF THE TOPIC
u Sections involved for payment of GST: 49 to 53 of CGST Act. Payment of Tax interest, penalty and other amounts
a . A mo unt of GS T pai d i s cr e di t e d t o E- Cas h Le dger.
b . I np ut t ax cr e di t as s el f- ass ess e d i s cr e di t e d t o E- Cr e di t Le dger.
c . A mo unt i n E- cr e di t l e dger c a n be us e d o nl y f or payi ng Out p ut Tax a nd i n t he ma nner a nd s e q ue nce gi ve n her e. ( Al s o c o nsi der pr ovi si o ns of s ecti o ns 49 A a nd 49 B of C GS T Act r e a d w i t h Rul e 88 A of C GS T Rul es).
d . Di s c har ge of t ax a nd ot her d ues under t hi s Act or r ul es ma de t her e under i s i n f oll o w i ng or der :
i . Sel f- ass ess e d t ax a nd ot her d ues r el at e d t o r et ur ns of pr e - vi o us t ax peri o d;
ii . Sel f- ass ess e d t ax a nd ot her d ues r el at e d t o r et ur n of c urr e nt t ax peri o d;
iii . Any ot her a mo unt paya bl e under t hi s Act or r ul es ma de t her e under i ncl udi ng t he de ma nd det er m i ne d under s ecti o n 73 or s ecti o n 74.
Interest on delayed payment of tax
u Rate of interest: 18% p.a.
u However, where taxable person makes an undue or excess claim of Input Tax Credit or undue or excess reduction in output tax liability, the rate of interest shall be 24% p.a.
Tax Deducted at source (TDS)
u Appli c a bili t y o nl y i n li m i t e d c as es
u TDS at 1% i f t ot al val ue of t axa bl e s uppl y ( e xcl udi ng t axes) e xcee ds
` 2,50,000 ( Ther ef or e, t ot al T DS i s at 2 % , 1 % bei ng C GS T a nd 1 % bei ng
S GS T)
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No de d ucti o n s hall be ma de i f l oc ati o n of s uppli er a nd t he pl ace of s uppl y i s i n a st at e or uni o n t erri t or y whi c h i s di ff er e nt f r o mt he st at e or as t he c as e may be, Uni o n Terri t or y of r e gi st r ati o n of t he r eci pi e nt.
Ti me li m i t f or de posi t of T DS : Upt o 10t h of ne xt mo nt h.
It i s ma ndat or y t o o bt ai n r e gi st r ati o n f or pers o ns li a bl e t o de d uct t ax at s o ur ce.
Tax Collection at Source (TCS)
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E- c o mmer ce oper at or t o c oll ect t ax at s o ur ce of t he net val ue of t axa bl e s uppli es ma de t hr o ug h i t by ot her s uppli ers.
Curr e nt Rat e of T CS : 1 % of net val ue of t axa bl e s uppli es ( 0. 5 % : C GS T & 0. 5 % S GS T).
Ti me li m i t f or de posi t of t ax - Upt o 10t h of ne xt mo nt h.
E- st at e me nt t o be fil e d upt o 10t h of ne xt mo nt h.
Ann ual St at e me nt t o be fil e d upt o 31st Dece mber of s uccee di ng fi na nci al ye ar.
Recti fi c ati o n of m i st a ke i n mo nt hl y st at e me nt by EC O .
T CS will be cl ai me d by s uppli er.
u Mat c hi ng of det ail s f ur ni s he d by EC O w i t h det ail s f ur ni s he d by t he s uppli er.
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Co mmuni cati on of di s cr e pa ncyi n det ail s f ur ni s he d by t he E- c o mmer ce Oper at or a nd t he s uppli er.
u No n- r ecti fi c ati o n of di s cr e pa nc y l e a ds t o a ddi ti o n of a mo unt of di scr e pa nc y t o t he o ut p ut t ax li a bili t y of s uppli er.
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I nt er est i s paya bl e o n a mo unt a dde d t o o ut p ut t ax li a bili t y of t he s uppli er.
I ss ua nce of noti ce t o f ur ni s h det ail s of s uppli es a nd st oc k.
I nf or mati o n t o be f ur ni s he d w i t hi n 15 days f r o m s er vi ce of noti ce.
u Pe nal t y f or f ail ur e t o f ur ni s h i nf or mati o n: upt o ` 25, 000.
u Non-applicability of TCS provisions:
a GS T i s paya bl e under r e vers e c har ge
b Exe mpt Suppl y
c . I mport of g oo ds or s er vi ces
u Sections involved for REFUND: 54 to 58 of CGST Act
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Co nce pt of “ Unj ust Enri c h me nt”
u Si t uati o ns t hat may necessi t at e r ef und cl ai ms.
u Cas es wher e r ef unda bl e a mo unt s hall be pai d t o t he a ppli c a nt i nst e a d of bei ng cr e di t e d t o c o ns u mer wel f ar e f und.
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Pr ovi si o ns r el ati ng t o r ef und of t he a mo unt of a dva nce t ax de posi t e d by a Cas ual Taxa bl e Pers o n/ No n- Resi de nt Taxa bl e Pers o n.
Pr ovi si o ns r e gar di ng r ef und of un utili s e d I np ut Tax Cr e di t gr a nt e d t o r e gi st er e d pers o n.
Co mp ut ati o n of maxi mu m a mo unt of r ef und i n c as e of z er o- r at e d s uppl y of g oo ds or s er vi ces.
Co mp ut ati o n of maxi mu ma mo unt of r ef und of I T Ci n c as e of I nvert e d d ut y st r uct ur e.
Pr ovi si o ns r el ati ng t o “ Pr ovi si o nal Ref und”.
u Ref und t o UN Bo di es, e mbassi es.
u Interest on delayed refunds Rat e: 6 % p. a. i f r ef und i s not pai d w i t hi n 60 days f r o m r ecei pt of a ppli c ati o n.
Ho we ver, i f r ef und i s as a c o ns e q ue nce of a dj udi c ati ng/a ppell at e a ut hori t y or der, t he n i nt er est i s at 9 % p. a. i f r ef und i s not pai d w i t hi n 60 days f r o m r ecei pt of a ppli c ati o n.
Pr ovi si o ns r el ati ng t o Co ns u mer wel f ar e Fund a nd i t s utili s ati o n.
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UTILISATION OF INPUT TAX CREDIT TO PAY OUTPUT TAX & DETERMINING NET GST PAYABLE:
Q1. Hiyakash Ltd. is a producer of certain products. The tax rate applicable on the supply of goods by them is 18,%. (SGST 9% and CGST 9%). The company purchased goods worth ` 47,200 (inclusive of Tax 18%) which is fully utilized in the manufacture of final products. The company sold the goods for ` 25,000 within the State and also exported the goods worth ` 8,000. The invoices are properly uploaded and matched in GSTN Portal. Calculate the tax payable by the company assuming there was no opening or closing stock of inputs or final products.
[CS Professional, December 2018, 5 Marks]
Ans. Computation of tax payable by Hiyakash Ltd.
Q2. Balaram, a registered supplier, furnishes the following details pertaining to the month of October, 2017 (First month of starting of business):
Compute the GST payable by the supplier Balaram for the month of October, 2017 [CS Professional, June 2018, 5 Marks]
Ans. Computation of Net GST payable for Mr. Balaram for the month of October, 2017
Less: Input tax Credit
IGST (First used to pay output tax of IGST)
Notes:
1. On I nt er- st at e s uppl y, I GS T s hall be paya bl e.
2. On I nt r a- st at e s uppl y, C GS T + S GS T s hall be paya bl e.
3 I np ut Tax Cr e di t of I GS T s hall be fi rst utili s e d t o pay o ut p ut t ax of I GS T a nd bal a nce, i f a ny t o pay o ut p ut t ax of C GS T & S GS T i n a ny or der a nd pr oporti o n. I n t hi s c as e, bal a nce of I T C of I GS T a mo unti ng t o ` 48, 000 aft er payi ng Out p ut t ax of I GS T has bee n utili s e d e q uall y t o pay o ut p ut t ax of C GS T & S GS T . [ Secti o n 49( 5) of C GS T Act r e a d w i t h Rul e 88 A of C GS T Rul es]
4. I T C of C GS T s hall be utili s e d t o pay o ut p ut t ax of C GS T a nd bal a nce, i f a ny t o pay o ut p ut t ax of I GS T .
5. I T C of S GS T s hall be utili s e d t o pay o ut p ut t ax of S GS T a nd bal a nce, i f a ny t o pay o ut p ut t ax of I GS T .
Q3. Nargis Agro Traders located at Jaipur and engaged in the business as retail traders provides the following details of its purchases and sales made during the month of July, 2020:
The rate of tax under GST on the items are 5%, 12%, 12% and 18% respectively. You are required to calculate the amount of GST payable and the date by which the due tax is to be paid by the trader for the month of July, 2020 after availing the Input Credit.
[CS Professional, December 2017, 5 Marks]
Ans. Not e: Si nce GS T Act s r e q ui r e t hat GS T i s t o be c har ge d s e par at el y, he nce, all pri ces ar e t a ke n as ‘ val ue ’ bef or e t axes.
Computation of net amount of tax payable by Nargis Agro Traders on sales during July, 2020:
mo nt h of J ul y.
TDS & TCS
Q4. Mudit Enterprises, registered in the State of Maharashtra (Mumbai) is engaged in supply of various goods and services exclusively to persons notified under section 51 of the CGST Act, 2017.
Calculate the amount of TDS to be deducted by the recipient if any, from the details given below of three independent contracts for the month of November, 2018:
Figures in `
Particulars Contract I Contract II Contract III
Place of Supply Mumbai Mumbai Mumbai
Registered Place of recipient Mumbai Mumbai Delhi
Total Contract value (inclusive of GST)
2018 (exclusive of GST)
Note: Take the rate of CGST, SGST and IGST as 6%, 6% and 12% respectively. Ans. The t ax at s o ur ce ( T DS) wo ul d be de d uct e d @1 % under C GS T Act a nd 1 % under S GS T/ UT GS T Act or 2 % under I GS T Act as t he c as e may be, of t he pay me nt ma de t o t he s uppli er wher e t he t ot al val ue of s uc h s uppl y,
under a c ont r act, excee ds ` 2, 50, 000 ( excl udi ng t he a mo unt of GSTi ndi cat e d i n t he i nv oi ce). Th us, i ndi vi d ual s uppli es may be l ess t ha n ` 2, 50, 000 b ut i f t he val ue of s uppl y under a c o nt r act i s mor e t ha n ` 2, 50, 000, T DS will have t o be de d uct e d as per r at es pr es cri be d
Contract I : Gi ve n c o nt r act val ue i s i ncl usi ve of GS T , t her ef or e t o c al c ul at e c o nt r act val ue f or T DS p ur pos e t he s a me i s c al c ul at e d e xcl usi ve of GS T ( C GS T a nd S GS T) ` 2, 75, 000 × 100/112
= ` 2, 45, 535. 71 or ` 2, 45, 536 ( r o unde d off).
Si nce t he t ot al val ue of s uppl y under t he c o nt r act does not e xcee d ` 2, 50, 000, t ax i s not r e q ui r e d t o be de d uct e d o n a mo unt of ` 55, 000.
Contract II: The c o nt r act val ue e xcl usi ve of GS T s hall be:
` 3, 10, 000 × 100/112
= ` 276785 71 or ` 2, 76, 786 ( r o unde d off)
Si nce t he t ot al val ue of s uppl y under t he c o nt r act e xcee d ` 2, 50, 000, t ax i s r e q ui r e d t o be de d uct e d o n ` 60, 000 @1 % under C GS T Act a nd 1 % under S GS T Act bec a us e t hi s i s a n i nt r a- st at e t r a ns acti o n (i.e . pl ace of s uppl y a nd l oc ati o n of s uppli er i s i n t he s a me St at e).
He nce, T DS wo ul d be 1 % of 60, 000 = ` 600 ( C GS T) a nd ` 600 ( S GS T)
Contract III : The pr ovi s o t o s ecti o n 51( 1) of C GS T Act, 2017 l ays do wn t hat whe n t he l oc ati o n of t he s uppli er a nd t he pl ace of s uppl y i s i n a St at e whi c h i s di ff er e nt f r o mt he St at e / Uni o n t erri t or y of r e gi st r ati o n of t he r eci pi e nt, t her e will be no T DS .
Si nce t he l oc ati o n of t he s uppli er a nd t he pl ace of s uppl y i s Mu mbai a nd t he St at e of r e gi st r ati o n of t he r eci pi e nt i s Del hi, no t ax i s li a bl e t o be de d uct e d i n t he gi ve n c as e o n a mo unt of ` 1, 20, 000.
Q5. State the rate of tax for collection of tax at source applicable to electronic commerce operator under CGST Act, under SGST Act and under IGST Act, 2017. Also specify when and on what value the rate of tax for collection at source will be applicable.
[CS Professional, December 2019, Old Syllabus, 3 Marks]
Ans. Tax Collected at Source (TCS) under GST law
Under Section 52 of the CGST Act, 2017 , e ver y el ect r o ni c c o mmer ce oper at or, not bei ng a n age nt, s hall c oll ect a n a mo unt c al c ul at e d at s uc h r at e not e xcee di ng o ne per ce nt, as may be noti fi e d by t he Gover n me nt o n t he r ec o mme ndati o ns of t he Co uncil
Ho we ver, o n t he r ec o mme ndati o ns of t he Co uncil, t he Gover n me nt has i ss ue d noti fi c ati o ns wher e by i t has fi xe d r at e of TCS @ 0.5% under CGST
Act and 0.5% under SGST Act , i n c as e of i nt r a- st at e s uppli es, a nd @1 % under I GS T Act, i n c as e of i nt er- st at e s uppli es.
T CS wo ul d be c al c ul at e d o n t he net val ue of t axa bl e s uppli es ma de t hr o ug h t he el ect r o ni c c o mmer ce wher e t he c o nsi der ati o n w i t h r es pect t o s uc h s uppli es i s t o be c oll ect e d by t he el ect r o ni c c o mmer ce oper at or.
The net val ue of t axa bl e s uppli es i s t he aggr e gat e val ue of t axa bl e s uppli es of g oo ds or s er vi ces or bot h ma de d uri ng a ny mo nt h by all r e gi st er e d t axa bl e pers o ns t hr o ug h t he oper at or as r e d uce d by t he aggr e gat e val ue of t axa bl e s uppli es r et ur ne d t o t he s uppli ers d uri ng t he s ai d mo nt h.
It has al s o bee n cl ari fi e d t hat net val ue f or t he p ur pos e of Secti o n 52 s hall not i ncl ude T CS c oll ect e d under t he I nc o me Tax Act.
T CS s hall be c oll ect e d by t he Oper at or whil e payi ng t o t he s uppli er t he pri ce of t he pr o d uct /s er vi ces.
REFUND OF GST
Q6. Govinda Exports, a partnership firm, is registered under GST in the State of Gujarat. The firm exports goods without payment of tax under letter of undertaking in accordance with the provisions of section 16(3)(a) of the IGST Act, 2017.
The supplies made during a tax period are as under:
(i) Domestic supplies of taxable product ‘P’ during the period [excluding tax @ 5%]
[Inputs used in manufacturing of such goods are taxable @ 18%]
(ii) Export of product ‘Q’ to Austria for Euro 20,000. Assessable value under customs in Indian rupees. 12,00,000 [Export duty is levied on product ‘Q’ at the time of exports]
Product P is not notified as a product, in respect of which refund of unutilized ITC shall not be allowed under section 54(3)(ii) of the CGST Act, 2017.
The ITC available for the above tax period is as follows: Particulars
(i) On inputs (including ` 60,000 on export of exempt supplies)
(ii) On capital goods
(iii) On input services (including ` 18,000 on outdoor catering)
You are required to compute the maximum amount of refund admissible to the supplier for the given tax period.
[CS Professional, June 2019, Old Syllabus, 8 Marks]
Ans. Determination of maximum amount of refund admissible to Govind
Exports:
Particulars
Do mesti c s uppli es of t axa bl e pr o duct “ P” duri ng t he peri o d
Amount (`)
1, 45, 385
Ex port of Pr o duct “ Q” t o Aust ri a -
Tot al Ref und cl ai m a d m i ssi bl e t o t he s uppli er
Notes:
1, 45, 385
1. Ex port of g oo ds i s a z er o- r at e d s uppl y i n t er ms of s ecti o n 16( 1)( a ) of t he I GS T Act, 2017. Furt her, t he s uppli er e x port s g oo ds w i t ho ut pay me nt of t ax under l ett er of undert a ki ng i n acc or da nce w i t h t he pr ovi si o ns of s ecti o n 16( 3)( a ) of t he I GS T Act, 2017. Ther ef or e, as per cl a us e (i ) of fi rst pr ovi s o t o s ecti o n 54( 3) of t he C GS T Act, 2017, a r e gi st er e d pers o n may cl ai mr ef und, of a ny un utili z e d I T C i n t he c as e of z er o- r at e d s uppl y at t he e nd of a ny t ax peri o d. Ho we ver as per 1st pr ovi s o t o s ecti o n 54( 3) of t he C GS T Act, 2017 no r ef und of un utili s e d i np ut t ax cr e di t s hall be all o we d i n c as es wher e t he g oo ds e x port e d o ut of I ndi a ar e s ubj ect e d t o e x port d ut y.
2. Ref und of un utili s e d I T Ci s all o we d i n c as e of i nvert e d d ut y st r uct ur e, i.e . wher e t he cr e di t has acc u mul at e d o n acc o unt of r at e of t ax o n i np ut s bei ng hi g her t ha n t he r at e of t ax o n o ut p ut s uppli es ( ot her t ha n nil r at e d or f ull y e xe mpt s uppli es, e xce pt s uppli es of g oo ds or s er vi ces or bot h as may be noti fi e d by t he Gover n me nt o n t he r ec o mme ndati o ns of t he GS T Co uncil [ Cl a us e (ii ) of t he fi rst pr ovi s o t o s ecti o n 54( 3) of t he C GS T Act, 2017]
Rul e 89( 5) of t he C GS T Rul es, 2017 sti p ul at es t hat i n t he c as e of r ef und o n acc o unt of i nvert e d d ut y st r uct ur e, r ef und of I T C i s gr a nt e d as per t he f oll o w i ng f or mul a -
Maximum Refund Amount = Tur nover of i nvert e d r at e d s uppl y of g oo ds a nd s er vi ces × Net I T C Less ( A) Adj ust e d Tot al Tur nover
Wher e
A = Tax paya bl e o n s uc h i nvert e d r at e d s uppl y of g oo ds or s er vi ces
“ Net l T C” me a ns I T C avail e d o n i np ut s d uri ng t he r el e va nt peri o d ot her t ha n t he I T C avail e d f or whi c h r ef und i s cl ai me d under s ub- r ul e ( 4 A) or ( 4 B) or bot h.
“ Adj ust e d t ot al t ur nover” me a ns t he s u mt ot al of t he val ue of: (i ) t he t ur nover i n a St at e / Uni o n t erri t or y, as defi ne d under Secti o n 2( 112), e xcl udi ng t ur nover of s er vi ces; a nd
(ii ) t he t ur nover of z er o- r at e d s uppl y of s er vi ces det er m i ne d i n t er ms of s peci fi e d ma nner a nd no n- z er o- r at e d s uppl y of s er vi ces, e xcl udi ng:
( a ) val ue of e xe mpt s uppli es ot her t ha n z er o- r at e d s uppli es; a nd
(b ) t he t ur nover of s uppli es i n r es pect of whi c h r ef und i s cl ai me d under s ub- r ul e ( 4 A) or s ub- r ul e ( 4 B) or bot h, i f a ny, d uri ng t he r el e va nt peri o d.
Tax paya bl e o n i nvert e d r at e d s uppl y of g oo ds = ` 14, 00, 000 × 5 % = ` 70, 000
Her e, Net I T C = ` 4, 00, 000
Adj ust e d Tot al Tur nover = ` 26, 00, 000 [ ` 14, 00, 000 + ` 12, 00, 000]
Tur nover of i nvert e d r at e d s uppl y of g oo ds = ` 14, 00, 000
Th us, maxi mu m r ef und a mo unt under r ul e 89( 5) = [( ` 14, 00, 000 × ` 4, 00, 000) / ` 26, 00, 000]` 70, 000 = ` 1, 45, 385
Q7. Write a note on refund of tax under section 54 of CGST Act. Discuss the provisions relating to refund of balance of electronic cash ledger as per the GST law. [CS Professional, December 2019, 2 Marks]
Ans. Any pers o n cl ai m i ng r ef und of a ny t ax a ndi nt er est, i f a ny, pai d o n s uc h t ax or a ny ot her a mo unt pai d by hi m , may make a n appli cati on el ect r oni call y i n pr es cri be d f or m bef or e t he e x pi r y of 2 ye ars f r o mt he r el e va nt dat e.
A r e gi st er e d pers o n, cl ai m i ng r ef und of a ny bal a nce i n t he el ect r o ni c c as h l e dger i n acc or da nce w i t h pr ovi si o ns of s ecti o n 49( 6), may cl ai mr ef und i n t he r et ur n f ur ni s he d under s ecti o n 39, i n s uc h ma nner as may be pr es cri be d.
INTEREST FOR DELAYED PAYMENT OF GST:
Q8. Vaibhav, a registered supplier under GST law, has furnished the following details for the month of August, 2017:
a. Purchases of goods made from outside state: ` 8,00,000
b. Inter-state supply of goods: ` 10,00,000
c. Goods taken for personal use in above ` 20,000
The IGST was paid on 10th October, 2017.
Calculate the interest payable on delayed payment.
You are informed that the IGST rate for all goods dealt with by Vaibhav is 18%. [CMA Final, December 2018, 5 Marks]
Ans. Computation of IGST payable and interest thereon under GST for delayed payment:
@ 18% p.a. for delay (` 39,600 × 18% p.a. × 20/ 365)
Note: I np ut Tax Cr e di t i s bl oc ke d f or g oo ds t a ke n f or pers o nal us e. { Secti o n 17( 5) of C GS T Act }.
Q9. M/s Nose Ltd. reduced the amount of ` 2,25,000 from the output tax liability in contravention of the provisions of section 42(10) of the CGST Act, 2017 in the month of January 2018 (vide invoice dated 12th January, 2018), which is ineligible credit at invoice level. As a result, a show cause notice was issued by the Central Tax Department under section 74 of the CGST Act, 2017 along with interest. M/s Nose Ltd. paid the tax and interest on 5th March, 2018. Find the interest liability if any? Ignore penalty. [CS Professional, December 2018, 5 Marks]
Ans. As per s ecti o n 42( 10) r e a d w i t h s ecti o n 50( 3) of C GS T Act, 2017 a mo unt r e d uce d f r o mt he o ut p ut t ax li a bili t y i n c o nt r ave nti o n of t he pr ovi si o ns of s ecti o n 42( 7) s hall be a dde d t o t he o ut p ut t ax li a bili t y of t he r eci pi e nt i n hi s r et ur n f or t he mo nt h i n whi c h s uc h c o nt r ave nti o n t a kes pl ace a nd s uc h r eci pi e nt s hall be li a bl e t o pay i nt er est o n t he a mo unt s o a dde d at t he r at e s peci fi e d i n t he s ecti o n 50( 3) of C GS T Act, 2017.
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Ther ef or e, a ppli c a bl e i nt er est r at e s hall be 24 % per a nn u m .
J a n uar y mo nt h r et ur n d ue dat e i s 20t h of Fe br uar y, 2018.
I nt er est = ` 1, 923 ( ` 2, 25, 000 × 24 % × 13/365)
Fr o m 21st Fe br uar y 2018 t o 5t h Mar c h 2018 = 13 days
MISCELLANEOUS
Q10. Jogiram (P) Ltd. claimed ITC of ` 2,50,000 with an intention to defraud the Revenue. What is the rate of interest at which the liability could be discharged voluntarily? Can the Revenue levy penalty, if so, how much? Can the tax, interest, penalty and any payment due under reverse charge, be adjusted against ITC of a registered person?
[CS Professional, December 2019, New Syllabus, 5 Marks]
Ans. Utilisation of ITC
Secti o n 74 of t he C GS T Act, 2017 s ays t hat whe n a r e gi st er e d pers o n has not pai d t ax or s hort pai d or r ecei ve d err o ne o usl y r ef und or cl ai me d i np ut t ax cr e di t by r e as o n of f r a ud or a ny wil f ul m i s- st at e me nt or s uppr essi o n of f act s, he s hall be li a bl e t o pay s uc h t ax al o ng w i t h i nt er est paya bl e under s ecti o n 50 of t he Act. Pr es e ntl y, t he r at e of i nt er est noti fi e d under Secti o n 50 i s 24 % wher e und ue or e xcess cl ai m of I T Ci s do ne. Wher e t he r e gi st er e d pers o n pays s uc h t ax al o ng w i t h i nt er est v ol unt aril y bef or e t he s er vi ce of noti ce under Secti o n 74, i t s hall be li a bl e t o pay pe nal t y at t he r at e of 15 % of s uc h t ax i n t er ms of Secti o n 74( 5) of t he Act.
Secti o n 49( 4) of t he C GS T Act pr ovi des t hat t he a mo unt avail a bl e i n t he el ect r o ni c cr e di t l e dger may be us e d f or ma ki ng a ny pay me nt t o war ds o ut p ut t ax under t hi s Act or under t he I nt e gr at e d Goo ds a nd Ser vi ces Tax Act i n s uc h ma nner a nd s ubj ect t o s uc h c o ndi ti o ns a nd w i t hi n s uc h ti me as may be pr es cri be d.
Secti o n 2( 82) of t he C GS T Act defi nes t he t er m“ o ut p ut t ax” i n r el ati o n t o a t axa bl e pers o n, me a ns t he t ax c har ge a bl e under t hi s Act o n t axa bl e s uppl y of g oo ds or s er vi ces or bot h ma de by hi m or by hi s age nt b ut e xcl udes t ax paya bl e by hi m o n r e vers e c har ge basi s; Th us, t he a mo unt avail a bl e i n t he el ect r o ni c cr e di t l e dger
i.e. input tax credit can be used only towards payment of output tax and the definition of output tax includes only tax chargeable on taxable supplies and excludes tax chargeable under reverse charge.
I n li g ht of a bove, i np ut t ax cr e di t c a n be us e d o nl y f or t he pay me nt of t ax and cannot be used for payment of interest, penalty and tax under reverse charge.
Author’s Note: It i s a c o mbi ne d q uesti o n o n de ma nd a nd pay me nt.
Q11. PQR Ltd., of Mumbai having its business activities spread over different places/locations in India provides the following particulars/ details of its GST liabilities for the quarter ended on 30th Sept., 2018: (The balance in Electronic Cash Ledger available with PQR Ltd. was of ` 6,25,000) :
(1) Demand raised as per section 73 or section 74 under CGST Act, 2017 belonging to July, 2018.
(2) Demand raised as per the old provisions of Indirect Taxes being applicable on PQR Ltd.
(3) Tax liability of CGST, SGST/UGST, IGST for supplies made during August, 2018.
(4) Interest & Penalty on delayed payment and filing of returns belonging to August, 2018.
(5) Tax liability of CGST, SGST/UGST, IGST for supplies made during September, 2018.
(6) Interest & Penalty on delayed payment and filing of returns belonging to September, 2018.
Suggest the manner in which the company can utilise the balance amount available in the Electronic Cash Ledger for discharging the tax liability. [CS Professional, June 2019, 5 Marks] Ans. Balance in e-cash ledger can be used in the following manner to discharge tax liability by PQR Ltd. for quarter ended on 30.09.2018: [Section 49(8) of CGST Act]
8.14
Notes:
1. The bal a nce a mo unt of ` 2, 95, 000 ( ` 6, 00, 000 –` 3, 05, 000) t o war ds de ma nd r ai s e d under s ecti o n 73 or s ecti o n 74 under C GS T Act, 2017 t o be di s c har ge d fi rst.
2. The de ma nd of ` 1, 10, 000 r ai s e d under ol d pr ovi si o ns of I ndi r ect Taxes s hall be di s c har ge d aft er di s c har ge of de ma nd of ` 2, 95, 000
Q12. Pari Ltd. of Jodhpur, Rajasthan is a registered manufacturer of cosmetic products. Pari Ltd. has furnished following details for the month of April, 2020.
5. Premium paid on life insurance policies taken for specified employees. Life insurance policies for specified employees have been taken by Pari Ltd. to fulfil a statutory obligation in this regard. The Government has notified such life insurance service under section 17(5)(b)(iii)(A). The life insurance service provider is registered in Rajasthan.
All the above amounts are exclusive of all kinds of taxes, wherever applicable. However, the applicable taxes have also been paid by Pari Ltd.
The balance of Input Tax Credit (ITC) with Pari Ltd. as on 1st April, 2020 is
- CGST: ` 20,000
- SGST: ` 20,000
- IGST: ` 15,000
Assume CGST, SGST & IGST rates to be 9%, 9% and 18% respectively, wherever applicable.
Assume that all the other necessary conditions to avail Input Tax Credit have been complied with by Pari Ltd., wherever applicable.
Compute eligible Input Tax Credit and net GST payable by Pari Ltd. for the month of April, 2020. [CA Final, November 2018, 10 Marks]
Solution:
Computation of Eligible Input Tax Credit available with Pari Ltd. in the month of April, 2020:
poli ci es f or s peci fie d e mpl oyees ( ` 2, 00, 000 × 9 %)
Computation of net GST payable for the month of April, 2020
Notes:
1. Cr e di t of I np ut Tax ( C GS T & S GS T/I GS T) pai d o n r a w mat eri al s us e d i n t he c o urs e or f urt her a nce of b usi ness i s avail a bl e i n t er ms of s ecti o n 16 of C GS T Act.
2. All i nt r a- st at e pr oc ur e me nt s ma de by a r e gi st er e d pers o n f r o m a n unr e gi st er e d s uppli er have bee n e xe mpt e d f r o m GS T . Ther ef or e, si nce no GS T i s pai d o n s uc h r a w mat eri al s p ur c has e d, t her e does not ari s e a ny q uesti o n of I np ut Tax Cr e di t o n s uc h r a w mat eri al.
3. I GS T pai d o n i mport e d g oo ds q uali fi es as i np ut t ax i n t er ms of s ecti o n 2( 62) of C GS T Act, 2017. Ther ef or e, cr e di t of I GS T pai d o n i mport e d r a w mat eri al s us e di n t he c o urs e or f urt her a nce of b usi ness i s avail a bl e i n t er ms of s ecti o n 16 of C GS T Act.
4. I T C o n c o ns u ma bl es bei ng i np ut s us e d i n c o urs e or f urt her a nce of b usi ness i s avail a bl e. Ho we ver, si nce l e vy of GS T o n hi g h s pee d di es el has bee n def err e d till a dat e t o be noti fi e d by Gover n me nt, t her e c a nnot be a ny I T C o n t he s a me.
5. I T C o n mo nt hl y r e nt i s avail a bl e as t he s ai d s er vi ce i s us e d i n c o urs e or f urt her a nce of b usi ness.
6. Ser vi ces by e mpl oyees t o e mpl oyer i n t he c o urs e or i n r el ati o n t o hi s e mpl oy me nt i s not a s uppl y i n t er ms of s ecti o n 7 r e a d w i t h Sc he d ul e III t o t he C GS T Act. Ther ef or e, si nce no GS T i s pai d o n s uc h s er vi ces, t her e c a nnot be a ny I T C o n s uc h s er vi ces.
7. I T C o n li f e i ns ur a nce s er vi ces i s avail a bl e i f t he s a me i s noti fi e d by t he Gover n me nt as bei ng o bli gat or y f or a n e mpl oyer t o pr ovi de t o i t s e mpl oyee under a ny l a w f or ti me bei ng i n f or ce.
8. Ex port of g oo ds i s z er o r at e d s uppl y i n t er ms of s ecti o n 16 of I GS T Act. A z er o- r at e d s uppl y under bo nd i s ma de w i t ho ut pay me nt of I GS T .
9. Si nce e x port of g oo ds i s a z er o- r at e d s uppl y, t her e will be no a ppor
ti o n me nt of I T C a nd f ull cr e di t will be avail a bl e.
Author’s Note:
I CSI, till dat e has as ke d q uesti o ns i n GS T of maxi mu m5 mar ks e ac h under Ne w Syll a b us. Ho we ver, i n Ol d s yll a b us, t he y ha d o nce t est e d st ude nt s o n a 15 mar ks q uesti o n o n Pl ace of Suppl y. Co nsi deri ng t hat, we s ho ul d not ne gl ect possi bili t y of e xt e nsi ve q uesti o ns bei ng as ke d by I CSI. Kee pi ng t hat i n vi e w , a bove q uesti o n as ke d by I CAI i s i ncl ude d i n t hi s book. It i s al s o i mport a nt t o do a bove q uesti o n f or c o nce pt ual cl ari t y o n vari o us i ss ues a nd s o me part of t he q uesti o n may be as ke d i n e xa mf or 5 mar ks.
Q13. How will the IGST be paid? Discuss with the help of an example. [CS Professional, Practice Manual]
Ans. The I GS T pay me nt c a n be do ne utili zi ng I T C or by c as h. Ho we ver, t he us e of I T C f or pay me nt of I GS T will be do ne usi ng t he f oll o w i ng hi er ar c hy, -
u
u
u
Fi rst avail a bl e I T C of I GS T s hall be us e d f or pay me nt of I GS T ;
Once I T C of I GS T i s e x ha ust e d, t he I T C of C GS T s hall be us e d f or pay me nt of I GS T ;
I f bot h I T C of I GS T a nd I T C of C GS T ar e e x ha ust e d, t he n o nl y t he de al er wo ul d be per m i tt e d t o us e I T C of S GS T f or pay me nt of I GS T . Re mai ni ng I GS T li a bili t y, i f a ny, s hall be di s c har ge d usi ng pay me nt i n c as h
Example:
I GS T Li a bili t y: ` 1, 00, 000
I T C avail a bl e:
u
u
u
I GS T : ` 50, 000
C GS T : ` 20, 000
S GS T : ` 20, 000
Table showing order of setting off liability: Fi g ur es i n
Q14. Radhey Gobind & Co. engaged in the wholesale business particularly dealing in the product of which supply was exempt from tax under GST. Subsequently, tax was imposed on the sale of the product by a notification issued from 1-10-2019. Radhey Gobind & Co. continued to sell the product without making any change in the selling price of the product. Later, in
the month of March, 2020 they realised that because of no change in the selling price, they has paid higher quantum of tax and therefore decided to file an application for refund claim by stating that there was no change in the price before and after imposition of tax and hence the burden of tax had not been passed on to the buyer. Discuss and explain in the context of provision of the CGST Act, 2017 supported with a decided case law, if any, whether the stand taken for refund claim by Radhey Gobind & Co. shall be acceptable.
(Dec. 2020, 5 Marks)
As per s ecti o n 54 of C GS T Act, 2017, i n or der t o cl ai m r ef und, t he r e gi st er e d pers o n s ho ul d gi ve t he a ppli c ati o n f or r ef und whi c h s ho ul d be acc o mpa ni e d by doc u me nt ar y e vi de nce or ot her e vi de nce as t he a ppli c a nt may f ur ni s h t o est a bli s h t hat t he a mo unt of t ax a nd i nt er est, i f a ny, pai d o n s uc h t ax or a ny ot her a mo unt pai d i n r el ati o n t o whi c h s uc h r ef und i s cl ai me d was c oll ect e d f r o m , or pai d by, hi m a nd t he i nci de nce of s uc h t ax a nd i nt er est ha d not bee n pass e d o n t o a ny ot her pers o n.
Ans.
I n gi ve n c as e, Ra dhe y Go bi nd & Co. di d not s e par at el y c oll ect GS T f r o mt he r eci pi e nt of s uppl y as i s e vi de nt as s elli ng pri ce of t he pr o d uct whe n i t was e xe mpt f r o m GS T as well as s elli ng pri ce of t he pr o d uct aft er i t bec o m i ng li a bl e t o GS T i s s a me
I n s uc h c as es, i t i s dee me d t hat a mo unt c oll ect e d f r o mc ust o mer /r eci pi e nt of s uppl y i s i ncl usi ve of GS T a nd acc or di ngl y r e gi st er e d pers o n i s li a bl e t o pay GSTt o t he Gover n me nt. Regi st er e d pers on not c har gi ng GST s e par at el y does not wai ve off i t s li a bili t y.
He nce, c o nt e nti o n of Ra dhe y Go bi nd & Co. t o cl ai m r ef und of GS T by st ati ng t hat t her e was no c ha nge i n t he pri ce bef or e a nd aft er i mposi ti o n of t ax & he nce, b ur de n of t ax ha d not bee n pass e d o n t o t he b uyer will not be hel d as li a bili t y of Ra dhe y Go bi nd & Co. c o nti n ues under GS T l a w . Ther ef or e, i t will not be gr a nt e d r ef und.
Q15. Discuss and explain in brief the provisions relating to refund of the amount of advance tax deposited by a casual taxable person under section 27(2) of the CGST Act, 2017. (Dec. 2020, 4 Marks) Ans. As per s ecti o n 54 of C GS T Act, t he a mo unt of a dva nce t ax de posi t e d by Cas ual Taxa bl e Pers o n or No n- Resi de nt Taxa bl e Pers o n under s ecti o n 27( 2) s hall be r ef unde d o nl y whe n s uc h pers o n has, i n r es pect of t he e nti r e peri o d f or whi c h t he certi fic at e of r e gi st r ati o n gr a nt e d t o hi mha d r e mai ne d i n f or ce, f ur ni s he d all t he r et ur ns r e q ui r e d under s ecti o n 39.
Furt her, r ef und of a ny a mo unt, aft er a dj usti ng t he t ax paya bl e by t he a ppli c a nt o ut of a dva nce t ax de posi t e d by hi m under s ecti o n 27 at t he ti me
of r e gi st r ati o n, s hall be cl ai me d i n t he l ast r et ur n r e q ui r e d t o be f ur ni s he d by hi m . ( Rul e 89 of C GS T Rul es. )
Q16. State with reasons whether the following statement is true or false under GST Law : CGST Balance of one state can be adjusted to set off CGST Liability of another state. (June 2021, 1 Mark)
Ans. False: As st at e w i s e s e par at e r e gi st r ati o n i s t o be o bt ai ne d by a pers o n under GS T . Ther ef or e, e ve n a pers o n w i t h s a me PA N has t o o bt ai n di ff er e nt r e gi st r ati o ns i n di ff er e nt st at es a nd i s t her ef or e dee me d t o be a di sti nct pers o n under GS T . Ther ef or e, I T C bal a nce of C GS T i n o ne st at e will not be a bl e t o be us e d i n a not her st at e t o pay o ut p ut t ax of C GS T .
Q17. TCS is not required to be collected on supplies on which the recipient is liable to pay tax on Reverse charge basis. (June 2021, 1 Mark)
Ans. True: As t he e nti r e li a bili t y of GS T will be o n r eci pi e nt of s uppl y, t he E- Co mmer ce Oper at or ma ki ng pay me nt t o t he s uppli er s ho ul d pay t he e nti r e a mo unt w i t ho ut i mpli c ati o ns of T CS .
Q18. TDS under section 51 of CGST Act should be paid to the Government by the deductor within 15 days after the end of the month in which the deduction is made.
Ans. False: The a mo unt de d uct e d as t ax under s ecti o n 51 s hall be pai d t o t he Gover n me nt by t he de d uct or w i t hi n 10 days aft er t he e nd of t he mo nt h i n whi c h s uc h de d ucti o n i s ma de.
Q19. XYZ Ltd. a taxable person registered under GST is eligible to get refund from the proper authority. Manager Finance of the company seeks your opinion to know whether there is any provision under the Act for obtaining a provisional sanction of refund Advice the company suitably in the context of provisions contained under the CGST Act, 2017. (Dec. 2021, 5 Marks)
Ans. Provisional Sanction of Refund under GST:Pr ovi si o nal r ef und i s a ppli c a bl e i n c as e of Zer o- r at e d Suppli es. Zer o- r at e d s uppli es i ncl ude e x port of g oo ds or s er vi ces a nd s uppli es ma de t o Speci al Ec o no m i c Zo ne ( S EZ) uni t s a nd De vel opers.
I n t hes e c as es, The GS T offi cer s hall gr a nt t he pr ovi si o nal r ef und t o t he e xt e nt of 90 % of t he Ref und cl ai me d. The Ref und cl ai me d will be e xcl udi ng t he a mo unt of I T C t hat g ot a dj ust e d i f a ny i n t he El ect r o ni c Cr e di t Le dger o n a ppl yi ng f or t he r ef und i n RF D- 01 A/01.
Pr ovi si o nal Ref und s hall be gr a nt e d by t he i ss ue of For m RF D- 04 w i t hi n s e ve n days of gi vi ng t he Ac k no w l e dge me nt i n RF D- 02. Thi s Pr ovi si o nal Ref und a mo unt i s t o be cr e di t e d di r ectl y t o t he Ba nk acc o unt of t he Re - f und a ppli c a nt Pay me nt a dvi ce i n RF D- 05 i s s e nt al o ng f or t hi s pay me nt
Exception:
The Pr ovi si o nal Ref und i s not gr a nt e d i f t he a ppli c a nt was pr os ec ut e d f or t he off e nce under a ny I ndi a n La ws wher e t he t ax e va de d i s mor e t ha n
250 l a k hs a nyti me i n t he l ast fi ve ye ars pr ece di ng t he t ax peri o d f or whi c h r ef und i s cl ai me d.
Q20. State the rate of tax for collection of tax at source applicable to electronic commerce operator (ECO) under the CGST Act, under the SGST Act and under the IGST Act, 2017. Also specify when and on which of the value the rate of tax for collection at source be applicable. (Dec. 2021, 5 Marks)
Ans. Provisions of Tax Collection at Source (TCS) under GST (Section 52 of the CGST Act, 2017):-
1. The r at e of T CS under C GS T i s 0. 5 % of net val ue of i nt r a- St at e s up - pli es; under S GS T as well i t i s 0. 5 % of net val ue of i nt r a- St at e s uppli es. He nce, i t i s eff ecti vel y 1 % of t he s ai d val ue. Whil e under I GS T , i t s hall be 1 % of t he net val ue of i nt r a- St at e s uppli es.
2. T CS i s a ppli c a bl e whe n a s uppli er s uppli es t axa bl e g oo ds or s er vi ces t hr o ug h i t s port al a nd t he pay me nt f or t hat s uppl y i s c oll ect e d by t he e- c o mmer ce oper at or.
Ever y e- c o mmer ce oper at or, not bei ng a n age nt, has bee n ma ndat e d t o c oll ect t ax at s o ur ce o n t he net val ue of t axa bl e s uppli es ma de t hr o ug h i t by t he s uppli ers, wher e t he EC O c oll ect s t he c o nsi der ati o n o n be hal f of s uppli er f or s uc h s uppli es.
Q21. State few cases where refundable amount shall be paid to the applicant, instead of being credited to Consumer Welfare Fund under CGST Act, 2017. (June 2022, 5 Marks)
Ans. Cas es wher e r ef unda bl e a mo unt s hall be pai d t o t he a ppli c a nt, i nst e a d of bei ng cr e di t e d t o c o ns u mer wel f ar e f und under s ecti o n 54( 8) of C GS T Act, 2017 i.e. c as es wher e t he or y of unj ust e nri c h me nt i s i na ppli c a bl e ar e as f oll o ws:
1. Ref und of t ax pai d o n e x port of g oo ds or s er vi ces or o n i np ut s or i np ut s er vi ces us e d i n ma ki ng s uc h e x port s.
2. Ref und of un utili z e d I T C i n c as e of z er o- r at e d s uppli es ma de w i t ho ut pay me nt of t ax or acc u mul at e d I T C o n acc o unt of i nvert e d d ut y st r uct ur e.
