About the Author
I-5
Preface to Ninth Edition
It gives me immense pleasure to place before esteemed readers, the ninth edition of my book “GST & Customs Law”. The book is designed as per B. Com. (Hons.) syllabus of Delhi University and equivalent courses of other universities.
After the roll out of GST in India with effect from 1st July, 2017, there have been many changes in the GST laws. July 1, 2022 marked the completion of five years of this India’s ambitious law. Till date, the GST Council held 48 meetings to discuss the anomalies, approval of amendments, budget proposals and other practical issues in the implementation of GST laws. The latest GST Council’s 48th meeting was held on 17th December, 2022 virtually from New Delhi, under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman.
The Finance Act, 2022 has amended and substituted many sections of CGST Act. The law relating to ITC and Returns have been changed significantly. Those amendments which are covered in syllabus have been incorporated in the present edition at relevant places. The chapter on “Returns” has been revised thoroughly. Other changes have also been made, keeping in view the suggestions received from the colleagues and teaching fraternity. The practical illustrations have further been added and simplified.
I am thankful to dear students who have shared their problems with me through E-mail, which really helped me towards making the book more student-friendly. My thanks are due to the publishers and the editorial team of Taxmann publications with special thanks to Mr. Mitra Pal Yadav and Mr. Sumit Dwivedi.
I am grateful to CA Raj Chawla, member-Central Council (ICAI) for disseminating the practical aspects of the law. I am also thankful to my wife. My apologies are due to my lovely kids “Vatsla and Varad” as I have spent their ‘precious time of togetherness’ in writing this book, which cannot be compensated.
I am thankful for the comments and suggestions made by the colleagues from Delhi University and other professional institutes for the improvement of the book. Further comments and suggestions for improving the quality of the book are welcome and
I-7
will be gratefully acknowledged. In case of any query, I may be reached through e-mail given below.
Dated: CA. (Dr.) K.M. Bansal
1st January, 2023 kmbansaldu@gmail.com
I-8
Syllabus
B.COM. (HONS.) : SEMESTER VI
PAPER BCH 6.2 : GOODS & SERVICES TAX (GST) AND CUSTOMS LAW
COURSE OBJECTIVE
Course Learning Outcomes
COURSE CONTENTS
Unit 1: Introduction
Unit 2: Levy and collection of GST
Unit 3: Input Tax Credit
-
-
I-9
Unit 4: Procedures and Special Provisions under GST
Unit 5: Customs Law
Note:
B. COM. : SEMESTER V
PAPER BC 5.2 (b): GOODS & SERVICES TAX (GST) AND
COURSE CONTENTS
CUSTOMS LAW
Unit I: Introduction -
Unit II: Levy and collection of GST
Unit III: Input Tax Credit -
Unit IV: Procedures and Special Provisions under GST
Unit V: Customs Law
Note:
I-10
Contents PAGE About the Author I-5 Preface to Ninth Edition I-7 Syllabus I-9 Abbreviations used in the book I-13 Chapter 1 INDIRECT TAXES IN INDIA: PRE-GST ERA 1.1 Chapter 2 GST IN INDIA: AN INTRODUCTION 2.1 Chapter 3 REGISTRATION 3.1 Chapter 4 SUPPLY UNDER GST 4.1 Chapter 5 LEVY AND COLLECTION OF GST 5.1 Chapter 6 EXEMPTIONS FROM GST 6.1 Chapter 7 PLACE OF SUPPLY 7.1 Chapter 8 TIME OF SUPPLY 8.1 Chapter 9 VALUE OF SUPPLY 9.1 Chapter 10 INPUT TAX CREDIT 10.1 Chapter 11 PAYMENT OF TAXES 11.1 I-11
Chapter 12 JOB WORK 12.1 Chapter 13 REVERSE CHARGE MECHANISM 13.1 Chapter 14 TAX INVOICE, CREDIT AND DEBIT NOTES & E-WAY BILL 14.1 Chapter 15 RETURNS UNDER GST 15.1 Chapter 16 ACCOUNTS, RECORDS & AUDIT 16.1 Chapter 17 ASSESSMENT 17.1 Chapter 18 OFFENCES, PENALTIES & APPEALS 18.1 Chapter 19 MISCELLANEOUS PROVISIONS 19.1 Chapter 20 BASIC CONCEPTS OF CUSTOMS LAW 20.1 Chapter 21 TYPES OF CUSTOMS DUTY 21.1 Chapter 22 VALUATION UNDER CUSTOMS 22.1 Chapter 23 CUSTOMS PROCEDURE 23.1 Chapter 24 BAGGAGE AND EXEMPTIONS 24.1 CHAPTER-WISE PREVIOUS EXAM PAPERS AT A GLANCE P.1 PAGE I-12
Abbreviations used in the book
AA GSP AAAR GST AAR GSTIN AC GSTN ADD GSTR Amdt. HSN APoB IGST ARN IPC B/E ISD B/L ITC B2B MOU B2C MPS BCD NEFT BDF NIU BED NRTP BRC OIDAR CBDT PAN CBIC PO CBS POS CC PPoB CGST RCM CIF RCS CIN REG CTP RFD CVD RTGS DC SAC DSC SAD DTA SCN E/N SEZ E/O SGST EBN TCS ECO TDS EHTP TOS EOU TRN E-Payment TRP EPCG UIN FC UT FOB UTGST GAR-7 VAT
I-13
LEARNING OBJECTIVES
After studying this chapter, you shall be able to understand the following:
TAXMANN ® 10.1 INTRODUCTION10.2 MEANING OF INPUT TAX CREDIT 63 62 a b c 10 CHAPTER INPUT
TAX CREDIT
10.1
10.3
Burden of Proof for claiming ITC
10.4 LEGAL FRAMEWORK OF ITC
Section 16
Section 17
Section 18
Section 19
Section 41
Section 42
CGST RULES, 2017 RELATING TO ITC
Rule 36:
Rule 37:
Rule 38:
Rule 39:
TAXMANN ® d e Example 10.1: ` ` Inward Outward CGST ` ` ` ` SGST ` ` ` ` ` ` `
RATIONALE BEHIND ITC UNDER GST
Para 10.4 10.2
Rule 40: Rule 41: Rule 42: Rule 43: Rule 44: Rule 44A: Rule 45: Utilisation of ITC
10.5 ELIGIBILITY FOR AVAILING ITC [SECTION 16(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 business and the said amount shall be credited to the electronic credit ledger of such person
1. Registered Person:
Exception: -
2. In the course of or in furtherance of business: -
Explanation:
‘Intention to use’ implies
3. Credit Ledger:
4. Manner of Utilisation
TAXMANN ®
10.3 Para 10.5
5. Rules under CGST Rules, 2017
10.6 CONDITIONS TO BE SATISFIED FOR AVAILING ITC [SECTION 16(2)]
(a) Possession of Invoice:
Rule 36: Documentary requirements and conditions for claiming input tax credit 36(1)
(b) Furnishing and communication of details:
TAXMANN ®
-
(a) (b) (c) (d) (e) (f)
NOTE:
a
a b c d e 36(2)Provided -
aa Para 10.6 10.4
Author’s Comment
(
c) The ITC is not restricted:
(
d) Receipt of Goods or Services or both:
Now, in this example
When goods/Services are deemed to have been received: Statutory Provisions:
the Central GST (Amendment) Act, 2018
b for the purpose of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services— (
Analysis of the Provisions:
Bill to Ship to Model -
TAXMANN ® 36(4) a
FORM GSTR-1 b
aa
` `
b Example 10.2
` `
(
i)
ii)
10.5 Para 10.6
Example 10.3 [Deemed Receipt of goods]
Example 10.4 [Deemed Receipt of services]
(e) Payment of Tax to the Government
TAXMANN ® Bill to Ship to Model (a) i.e (b) i.e b
b i.e.
c (a) (b) Para 10.6 10.6
(f) Filing of valid Return: d
Solution:
Computation of admissible ITC to Nishant Limited for the month of July, 2018
Total admissible ITC for the month of July 2018 34,000
Working Notes:
TAXMANN ®
-
SN Particulars of Inward Supplies GST (`)
Example 10.5 [Based on section 16(1) & (2)]
SN Particulars of Inward Supplies WN ITC (`)-
(1) ` ` 10.7 Para 10.6
When Goods are received in instalments
TAXMANN ® (2)(3) (4) (5) (6) (7)
` i.e. `
Example: 10.6 Example: 10.7
i ii Solution: i Para 10.6 10.8
Example 10.8 [Based on section 16(2)(aa) and rule 36(4)]
TAXMANN ® In respect of Amount of ITC involved in the invoices (Rs.) Amount of ITC that can be availed (Rs.) Remarks aa ITC will not be available Total 10 lakhs 6 lakhs ITC available as per Rule 36(4) ii
Case Uploading of invoices by suppliers in their GSTR-1 Total (Rs.) Yes No No. of Invoices Corresponding ITC No. of Invoices Corresponding ITC Solution: Particulars Case I Case II Case III (A) (B) (C) section 16(2)(aa) read with rule 36(4) (D) (B) only (E) Note: 10.9 Para 10.6
Example 10.9 [Based on section 16(2)(aa) and rule 36(4)]
It has been discussed in detail in Chapter 11 under Para 11.10.
10.7 REVERSAL OF ITC IN CASE OF NON-PAYMENT OF CONSIDERATION
(1) ITC availed to be paid along with Interest [Second Proviso to Section 16(2)]:within 180 days
Related provisions as prescribed under Rule 37 of CGST Rules, 2017
As per Rule 37(1),
When supply is made without consideration:
As per Rule 37(2),
Please refer example 10.7 for computation of interest in case of reversal of ITC.
(2) Re-Entitlement when payment is made subsequently:
Related provisions as prescribed under Rule 37(4) of CGST Rules, 2017
TAXMANN ®
` ` ` ` ` `
Example 10.10: [Proportionate reversal of ITC]
Para 10.7 10.10
10.11
(3) Exceptions to the Limitation Period of 180 days:
10.8 NO ITC IF DEPRECIATION IS CLAIMED ON TAX COMPONENT [SECTION 16(3)]
Example 10.11 [No ITC if Depreciation is claimed on tax component]
10.9 TIME LIMIT FOR AVAILING THE INPUT TAX CREDIT [SECTION 16(4)]
30th November furnishing of the relevant annual return, earlier
Earlier of Example 10.12:
Solution: Particulars CASE I CASE II
Last date by which ITC can be claimed (Earlier of the above two dates) 30-11-2023
TAXMANN ®
a b c b c
` ` ` `
a b
5-9-2023 Para 10.9
Additional points as regards the time limits for claiming ITC
1. Relevant Date for Debit Note
2. No time limit for reclaiming ITC reversed due to non-payment within 180 days: As per rule 37 t
3. One Year from the date of Invoice in special cases: For
10.10 APPORTIONMENT OF INPUT TAX CREDIT
CGST Act, 2017
(1) Where goods or services are used partly for business purposes and partly for other purposes [Section 17(1)]
(2) Where goods or services are used partly for effecting taxable supply including zero rated supply and partly for exempted supply [Section 17(2)]
(3) Items included in exempted supplies [Section 17(3)
(4) Optional method for Banks for taking ITC [Section 17(4)]
(5) Blocked Credits [Section 17(5)]
CGST Rules, 2017
(1) ITC by a banking company or a financial institution [Rule 38]
(
2) Manner of determination of ITC in respect of Inputs or input services and reversal [Rule 42]
(3) Manner of determination of ITC in respect of Capital Goods and Reversal [Rule 43]
10.10.1 Where goods or services are used partly for business purposes and partly for other purposes [Section 17(1)]
1 “Where the goods and/or services are used by the registered person partly for the
TAXMANN ®
` i.e.
Example:
Para 10.10 10.12
purposes of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.”
For Example:
10.10.2 Where goods or services are used partly for effecting taxable supply including zero rated supply and partly for exempted supply [Section 17(2)]
TAXMANN ®
` 1 ``
Example 10.13 ` ` ` Solution: Common Input Credit = ` Total Turnover = ` Credit attributable to exempted supplies = ` × ` ` ` ` Example 10.14 ` Particulars ` Total 30,00,000 10.13 Para 10.10
Solution: Calculation of Taxable Supplies
Total Taxable Supplies 24,00,000
Total Supplies during the month `
Calculation of Taxable Supplies as a Percentage of total supplies = Taxable Supplies Total Supplies × 100 = 24,00,000 30,00,000 × 100 = 80%
ITC Available ` ` Rule 42 and Rule 43 of CGST Rules, 2017 [Apportionment of Common Credit]
10.10.3 Items included in exempted supplies [Section 17(3)]
Taxable supplies 108
Exempted supplies:
The Central GST (Amendment) Act, 2018
For the purposes of section 17 3 , the expression “Value of Exempt Supply” shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.”
TAXMANN ®
b i.e.
a. b. c. d. e. f.
b Para 10.10 10.14
10.10.4 Banking Company or Financial Institution [Section 17(4)]
(1) Availability of 50% of total ITC:
(2) Availability of 100% of total credit:
(3) Non-Availability of ITC for Non-Business use and of Blocked Credits:
(4) Option applicable for Financial Year:
TAXMANN ®
Example 10.15 Particulars ` ITC from supply inwards in respect of goods & services Total ITC 8,00,000 Solution: Calculation of ITC available ` ITC available 4,75,000 10.15 Para 10.10
TAXMANN ® Example 10.16 Total Input Credit on Inward Supplies ` Particulars Input Tax (`) (CGST & SGST) (a) (b) (c) (d) Solution: Total ITC ` 5,00,000 ` ` Same PAN Balance ` 3,80,000 ` 1,20,000 (Eligible for 100%) ` Balancing Figure Balance Eligible for 50% U/s 17(4) Blocked
Input Tax (`) (CGST & SGST (a) different PAN ` Input Tax (`) (CGST & SGST (b) same PAN ` ITC available under section 17(4) 2,95,000 Para 10.10 10.16
Calculation of ITC available
Example 10.17 [Comparison of section 17(2) and 17(4)]
Particulars Input Tax (`) (CGST & SGST
Alternative 1
Alternative 2
Solution:
Alternative 1: When the bank has opted section 17(2)
Total Supplies = `
Total ITC = ` `
Net ITC Available
CGST Available = Taxable Supplies Total Supplies × = 8,00,000 20,00,000 × ` `
SGST Available = `
Alternative 2: When the bank has opted section 17(4)
Total ITC Available = ( )
CGST Available = ` `
SGST Available = ` `
ITC [Section 17(5)]
10.10.5 Blocked Credits i.e. Ineligible Inputs/Capital Goods/Services for
TAXMANN ®
(a) (b) CGST (`) SGST (`) Total 39,240 39,240
i.e 10.17 Para 10.10
ITC is available ITC is Not available
The section 17(5) of CGST Act, 2017 has listed down specific goods and services, in respect of which ITC is not available, irrespective of their use in business. These are termed as Blocked Credits
(a) Motor vehicles
[As substituted by CGST (Amendment) Act, 2018]
(A)
(B)
(C)
except
Remarks on amendment made by CGST (Amendment) Act, 2018:
(1) vehicles for transportation of persons capacity 13 persons not allowed
(2) vehicles for transportation of persons capacity > 13 persons allowed
(3)
Examples: Where ITC is not allowed [ITC is blocked]
Examples: Where ITC is allowed [Exception to Section 17(5)(a)]
TAXMANN ®
3.
1. 2. -
1. 2.3. 4. 5. 6. Para 10.10 10.18
(aa) Vessels and Aircraft except
Remarks on amendment made by CGST (Amendment) Act, 2018:
Examples: 1. allowed 2. not allowed
(ab) Specific Services relating to Motor vehicles, Vessels and Aircraft
Provided
Author’s Remarks on above provision:
not allowed
allowed
Examples:
TAXMANN ®
i ii
i ii not
3. 4.
a aa
i a aa ii
1.
2.
1. 2.10.19 Para 10.10
(b) Specific Supply of Goods or services or both
Author’s Remarks on above provision:
1. Food and beverages……: is allowed
2. Membership of club…..Travel benefits……: is allowed
Examples:
1.
2.
(ITC allowed)
3. (ITC Not allowed) 4. ` (ITC Not allowed) 5.
Explanation:
TAXMANN ®
(i) a aa Provided (ii) (iii) Provided
-
-
(c) Works Contract Services
Para 10.10 10.20
GST & CUSTOMS LAW TEXTBOOK
AUTHOR : K.M. BANSALPUBLISHER : TAXMANN
DATE OF PUBLICATION : JANUARY 2023
EDITION : 9th Edition
ISBN NO : 9789356226401
NO.OF PAGES : 640
BINDING TYPE : PAPERBACK
DESCRIPTION
Rs. 895 USD 45
Taxmann's flagship publication on GST & Customs Law aims to fulfil the requirement of students of undergraduate courses in commerce and management, particularly the following:
• Choice-Based Credit System
• B.Com. (Hons.) Semester VI: Paper BCH 6.2: Goods and Services Tax (GST) and Customs Law
• B.Com. Semester V: Paper BC 5.2(b): Goods & Services Tax (GST) and Customs Law
• Non-Collegiate Women's Education Board
• School of Open Learning of the University of Delhi
• Various Central Universities throughout India. This book aims to minimize the need to consult multiple books while preparing for the exam and give the students a step-by-step guide for learning the subject.
This book is written in simple language, explaining the provision of the law in a step-by-step manner with the help of suitable illustrations, without resorting to paraphrasing of sections and legal jargons. This book helps bridge the gap between theory and application of the subject matter.