Suggestions and queries from the readers are welcomed at the below mentioned E-Mail Id.
We are thankful to CMA V.S. Datey sir (Guru of Indirect Tax Laws), as the source of inspiration for us to write this book, and without whose guidance, this book would not have been completed. We are also thankful to the TAXMANN and their editorial team.
The Part I of the book has been divided into 24 chapters which are based on the provisions of CGST Act, 2017 and IGST Act, 2017. The Customs and FTP have been included in Part II under 8 chapters.
TAXMANN®
Preface I-5
Dated: CA. (Dr.) Mahesh Gaur 30th June, 2022 drmaheshgour@gmail.comCA.(Dr.)K.M.Bansalkmbansaldu@gmail.com
It gives us immense pleasure to place before esteemed readers, the second edition of our book “Indirect Tax Laws”. The book is designed as per the requirements of CA Final syllabus of ICAI. After the roll out of GST in India with effect from 1st July, 2017, there have been many changes in the GST laws. The present book provides practical application of GST and Customs Tax in a holistic approach while testing the analytical skills of the reader. The book is written with an explanatory & analytical approach so as to enable the students to obtain knowledge in the subject.
The subject of Indirect Tax Laws at the Final level is divided into two parts: (a) Goods and Services Tax (75 marks) (b) Customs & FTP (25 marks)
TAXMANN® Preface I-5 Amendments for Nov. 2022 Examination I-11 PART I GOODS AND SERVICES TAX Chapter 1 GST IN INDIA: AN INTRODUCTION 1.3 Chapter 2 SUPPLY UNDER GST 2.1 Chapter 3 CHARGE OF GST 3.1 Chapter 4 EXEMPTIONS FROM GST 4.1 Chapter 5 PLACE OF SUPPLY 5.1 Chapter 6 TIME OF SUPPLY 6.1 Chapter 7 VALUE OF SUPPLY 7.1 Chapter 8 INPUT TAX CREDIT 8.1 Chapter 9 REGISTRATION 9.1 Chapter 10 TAX INVOICE, CREDIT AND DEBIT NOTES 10.1 Chapter 11 ACCOUNTS, RECORDS & E-WAY BILL 11.1 Chapter 12 PAYMENT OF TAX 12.1 Contents I-7
®TAXMANN Chapter 13 RETURNS 13.1 Chapter 14 IMPORT AND EXPORT UNDER GST 14.1 Chapter 15 REFUNDS UNDER GST 15.1 Chapter 16 JOB WORK 16.1 Chapter 17 ASSESSMENT & AUDIT 17.1 Chapter 18 INSPECTION, SEARCH, SEIZURE & ARREST 18.1 Chapter 19 DEMAND & RECOVERY 19.1 Chapter 20 LIABILITY TO PAY IN CERTAIN CASES 20.1 Chapter 21 OFFENCES & PENALTIES 21.1 Chapter 22 APPEAL & REVISION 22.1 Chapter 23 ADVANCE RULING 23.1 Chapter 24 MISCELLANEOUS PROVISIONS 24.1 PART II CUSTOMS & FTP Chapter 25 LEVY OF AND EXEMPTIONS FROM CUSTOMS DUTY 25.3 Chapter 26 TYPES OF DUTY 26.1 Chapter 27 CLASSIFICATION OF IMPORTED AND EXPORT GOODS 27.1 Chapter 28 VALUATION UNDER CUSTOMS 28.1 Chapter 29 IMPORTATION, EXPORTATION AND TRANSPORTATION OF GOODS 29.1 I-8
TAXMANN® Chapter 29A WAREHOUSING 29A.1 Chapter 30 DUTY DRAWBACK 30.1 Chapter 31 REFUND UNDER CUSTOMS 31.1 Chapter 32 FOREIGN TRADE POLICY 32.1 SOLVED PAPER : DECEMBER 2021 (PART II - DESCRIPTIVE QUESTIONS) (SUGGESTED ANSWERS) P.1 SOLVED PAPER : MAY 2022 (PART II - DESCRIPTIVE QUESTIONS) (SUGGESTED ANSWERS) P.14 I-9
TAXMANN® 7.1 INTRODUCTION ad valorem ad valorem 7.2 METHODS OF CALCULATION OF VALUE OF TAXABLE SUPPLY (AN OVERVIEW) Section 15(1) Section 15(2) Section 15(3) Section 15(4) Section 15(5) 7 VALUE OF SUPPLY CHAPTER 7.1
®TAXMANN 7.2 VALUE OF SUPPLY General Valuation Mechanism Notified Supplies Valuation Supply Satisfying Basic Conditions Supply NOT Satisfying Basic Conditions Supplies Notified by Central Government Valuation Sec. 15(1), 15(2) & 15(3) of CGST Act, 2017 Valuation As per Rules 27-31 of CGST Rules, 2017 Section 15(4) of CGST Act, 2017 Valuation As per Rule 32 of CGST Rules, 2017 Section 15(5) of CGST Act, 2017 It may be noted that 1. vide CGST2. Rules at a Glance Rule 27 Rule 28 Rule 29 Rule 30 Rule 31 7.3 VALUE OF TAXABLE SUPPLY [SECTION 15(1)] “The value of a supply of goods or services or both shall be the transaction value, which is the price 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 ” (a) 2.1. (b) Value of Supply = +
TAXMANN® 7.3 Meaning of Relevant Terms Transaction Value: Related Persons [Explanation to Section 15]: “ ” i ’ viiiviiiiiiiivvvi b c Definition of Family [Section 2(49)]: iii 7.3.1 Inclusions in Transaction Value [Section 15(2)] (i) (ii) [Refer Example 7.2] (iii) (iv) (v) [Refer Example 7.4] Valuation Methodology for ascertainment of GST on TCS under Income-tax Act, 1961 [Circular No. 76/50/2018 GST, dated 31-12-2018 amended vide corrigendum dated 7-3-2019]
®TAXMANN 7.4 Example 7.1 (Treatment of Municipal and other taxes) ` ` ` ` ` Example 7.2 (Payment on behalf of supplier) ` ` ` ` ` ` i.e. ` Example 7.3 (Treatment of incidental expenses) ` ` ` ` ` As per Section 15(2)(iii), Amount (`) (a) ` (b)(c)(d)(e)Value of Supply of 50 tons of chemical 2,33,500 Example 7.4 (Subsidy linked to price) ` ` ` ` If this subsidy had been received from a non-government agency ` E.Q. 1. Surya Agencies has agreed to supply goods to customer’s premises. Goods valued, ` 80,000 are taxable at 5% IGST as it is an inter-State supply. It also pays freight arid transit insurance of ` 12,000. GTA is a registered entity and has charged GST (6% CGST and 6% SGST) under forward charge. (i) Compute the Invoice value of supply including IGST. (ii) What will be the Invoice value of supply including IGST, if the supply was under ex-factory basis instead of door delivery basis? [Nov 2019, 4 Marks]
TAXMANN® 7.5 Ans. (i) Computation of Invoice value of supply including IGST in case of door delivery. Particulars Amount WorkingAdd Notes: ` (ii) Supply at the Ex-factory price instead of door delivery basis Particulars Amount Note: ii 7.3.2 Exclusion of Discount from Transaction Value
As of the not include any discount which is given: or at the time of the if such discount has been duly recorded in the invoice issued in respect of such the has been effected, discount is established in terms of an agreement entered into at or before the time of such and linked to relevant as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply.
supply; and ( ) after
invoices; and ( ) Input tax credit
if ( ) Such
ANALYSIS OF SECTION analysis of
supply
per section 15(3) “The value
above provision deciphers the following: (1) [Refer Examples 7.5 and 7.6] (2) b.a. [Refer Example 7.7]
15(3) The
( ) before
specifically
”
supply shall
supply
supply
®TAXMANN The7.6 provisions relating to discount can be depicted by way of following diagram: DISCOUNT GIVEN Before or at the time of supply After the Supply NOT Included INCLUDED NOT Included INCLUDED CONDITION CONDITION 2 MentionedCONDITIONSabove 2 MentionedCONDITIONSabove Example 7.5 (Discount allowed at the time of supply) ` ` ` Example 7.6 (Discount allowed at the time of supply) ` ` Less: ` Net Price (Taxes to be added) ` 5,50,800 ` Example 7.7 (Discount not known at the time of supply) (b)(a) Example 7.8 (Comprehensive problem on Section 15(1), (2)&(3)) Particulars Amount (`)
TAXMANN® 7.7 Solution Computation of value of taxable supply Particulars ` Add: 2 c Add: 2 e Total 1,01,000 Less: i.e. ` 3 a Value of taxable supply 99,000 2.E.Q. Vayu Ltd. provides you the following particulars relating to goods supplied by it to Agni Ltd.: Particulars Amount ` Vayu Ltd. offers 3% discount of the list price of the goods which is recorded in the invoice for the goods. Determine the value of taxable supplies made by Vayu Ltd. [May 2018, Old, 5 Marks] Ans. Computation of value of taxable supplies by Vayu Ltd. Particulars Amount Add: Less: ` Notes: c a e a
®TAXMANN 7.8 7.4 DETERMINATION OF VALUE OF TAXABLE SUPPLY WHERE SECTION 15(1) IS NOT APPLICABLE [SECTION 15(4)] 7.4.1 Valuation Principles in CGST Rules, 2017 Rule 27 : Rule 28 Rule 29 : Rule 30 : Rule 31 : 7.4.2 Valuation Rule Where the Consideration is Not Wholly in Money [Rule 27] When Rule 27 is applicable: Methodology of Valuation: bacd Sequential application:
TAXMANN® 7.9 Order Applicationof Situation Manner in which Value of supply will be determined A available Example 7.9 (Given in CGST Rules, 2017) ` ` ` B not available ‘ ’ PLUS Example 7.10 (Given in CGST Rules, 2017) ` ` ` C ‘ ’ ‘ ’ “ ” D ‘ ’ ‘ ’ ‘ ’ PLUS Meaning of “Open Market Value” as per Explanation (a) to Rule 35 Meaning of “Supply of goods or services or both of like Kind and Quality” as per Explanation (b) to Rule 35 Example 7.11 (Rule 27)
®TAXMANN 7.10 7.4.3 Value of supply of goods or services or both between distinct or related persons, other than through an agent [Rule 28] iii Note: “ ” Order Applicationof Situation Manner in which Value of supply will be determined A available. Deemed Open Market Value B not available. ‘ ’ “ ” C ‘ ’ ‘ ’ Example 7.12 (Supply between related persons) ` ` ` ` Example 7.13 (Rule 28) i.e. Case-2Case-1Case-3
TAXMANN® 7.11 FundamentalSolution: Rule: Case-1 i.e. Case-2Case-3 Explanation Example 7.14 (Rule 28) givenConsultancyto Invoice Value Market value of supply Detail of supply fecbad Analysis:Recipient Value Supplyof(Rs.) Basis Explanation cbadef
®TAXMANN FURTHER7.12 SUPPLY BY THE RECIPIENT iii Example 7.15 (Based on second proviso to Rule 28) ` ` a When Weak Limited is NOT entitled to ITC: ` ` b When Weak Limited is ENTITLED to ITC: ` 7.4.4 Value of supply of goods made or received through an agent [Rule 29] cannot be applied in case of services a 1. OR 2. 90 per cent (The choice between the two is left at the option of the supplier b Definition of Principal [Section 2(87)]: Definition of Agent [Section 2(5)]: del credere Example 7.16 (Given in CGST Rules, 2017) ` ` ` ` `
TAXMANN® 7.13 7.4.5 Value of supply of goods or services or both based on cost [Rule 30] 110% of the cost of production or manufacture Example 7.17 (Based on Rule 30) ‘ ’ ` ` ` 7.4.6 Residual method for determination of value of supply of goods or services or both [Rule 31] 7.5 VALUE OF SUPPLY IN CASE OF LOTTERY, BETTING, GAMBLING AND HORSE RACING [RULE 31A] videabcd Note: The Rule has been discussed in detail in Paras 7.5.1 and 7.5.2. 7.5.1 Value of Supply in case of lottery [Rule 31A(2)]: vide higher of the following amounts a
®TAXMANN 7.14 b Example 7.18 (Based on Rule 31A(2)) ` a If the price notified by the State Government in the Official Gazette is ` 448: ` ` Deemed value of supply of lottery as per Rule 31A(2) ` b If the price notified by the State Government in the Official Gazette is ` 530: ` ` Deemed value of supply of lottery as per Rule 31A(2) ` Lottery run by State Government: Example 7.19 (Lottery run by State Government) ` ` NatureSolution: : GST . Nature of Lottery : Value of Supply : Value of Supply × × × ` × CGST Payable SGST Payable Example 7.20 (Lottery authorised by State Government) ` `
TAXMANN® 7.15 Solution:-Nature : GST : Value of Supply : Value of Supply = No. of Tickets × Face Value × ×` × ` IGST Payable : ` ` Subsequent Supply of Lottery: Tax Implications in Case of Lotterythe Supply of lottery is exempt from GST ba Example 7.21 ( Subsequent Supply of Lottery) Solution: 7.5.2 Value of supply in case of betting, gambling & horse racing:
®TAXMANN 7.16 7.6 VALUE OF NOTIFIED SUPPLIES [SECTION 15(5)] “notwithstanding anything contained in sub-section sub-section 4 the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed.” 7.7 DETERMINATION OF VALUE IN RESPECT OF CERTAIN SUPPLIES Sub-Rule Category Supply 32(6)32(5)32(4)32(3)32(2)32(7) 7.7.1 Services in relation to purchase or sale of foreign currency, including money changing [Rule 32(2)] a There are two options given under rule 32(2): OPTION I a OPTION II b Option once exercised to apply for that financial year cannot be withdrawn:
TAXMANN® 7.17 OPTION I On the basis of RBI reference Rate [Clause (a) of Rule 32(2)] (a) For a currency, when exchanged from, or to, Indian Rupees (INR) Value of Supply Example 7.22 (RBI reference Rate is available) ` ` ` ` = ` 40,000 (b) Where the RBI reference rate for a currency is not available [Refer example 7.21] Value of Supply Example 7.23 (RBI reference Rate is Not available) ` Value of Supply = ` ` (c) Where neither of the currencies exchanged is Indian Rupee Step-I Find out value converted into Indian Rupees Step-II Take lesser of the two amounts as calculated in Step I
®TAXMANN 7.18 Step-III Find Value of Supply: Value of Supply Example 7.24 (Neither of the currencies exchanged is Indian Rupee) £ ` £ ` Step-I Find out value converted into Indian Rupees ` ` £ ` ` Step-II Take lesser of the two amounts as calculated in Step I ` ` ` Step-III Value of Supply ` ` OPTION II On the basis of Gross amount of currency exchanged [Clause (b) of Rule 32(2)] at the option of the supplier If gross amount of currency exchanged is Value of Supply i ` (GAC) ` Whichever is Higher ii ` ` ` Plus ` iii ` ` ` ` Whichever is Lower Example 7.25 (Compounding Scheme for Money Changer) ` ` b Amount (a) US (b) (`) (c) (`)
TAXMANN® 7.19 Gross amount of currency exchanged (GAC) ` ` Value of Supply Amount (`) 1. ` 2. ` Value of taxable supply 5,800 E.Q. 3. Rolex Forex Private Limited, registered in Delhi, is a money changer. It has undertaken the following purchase and sale of foreign currency: (i) 1,000 US $ are purchased from Rajesh Enterprises at the rate of ` 68 per US $. RBI reference rate for US $ on that day is ` 68.60. (ii) 2,000 US $ are sold to Sriniti at the rate of ` 67.50 per US$. RBI reference rate for US $ for that day is not available. Determine the value of supply in each of the above cases in terms of: (A) Rule 32(2)(a) of the CGST Rules, 2017 (B) Rule 32(2)(b) of the CGST Rules, 2017. [RTP Nov. 18/19] Ans. As per Rule 32(2)(a) of CGST Rules, 2017:vice versa IF RBI RATE AVAILABLE :` ` ` IF RBI RATE NOT AVAILABLE :` ` (B) Determination of value under rule 32(2)(b) of the CGST Rules, 2017 b S. No. Currency exchanged Value of supply ` 1% OR ` 250 ` ` ` 1,000 + 0.50% ` ` ` 5,500 + 0.1% ` OR ` 60,000
®TAXMANN 7.20 (i) ` ` ` ` ` ` (ii) ` ` ` ` ` ` ` ` 7.7.2 The value of the supply of services in relation to booking of tickets for travel by air provided by an air travel agent shall be deemed [Rule 32(3)] “ ” 1.2. Example 7.26 (Air Travel Agent) ` ` ` ` ` 7.7.3 The value of supply of services in relation to life insurance business shall [Rule 32(4)] When the entire premium paid by the policy holder is towards the risk cover in life insurance, then this rule is NOT APPLICABLE Example 7.27 (When Rule 32(4) is not applicable) ` ` When premium paid is not for the risk cover exclusively (a) reduced by (b)
Rs. : 1650 | USD : 63 AUTHOR : Mahesh Gour , K.M. Bansal , V.S. Datey PUBLISHER : TAXMANN DATE OF PUBLICATION : July 2022 EDITION : 2nd Edition ISBN NO : 9789393656315 NO. OF PAGES : 1262 BINDING TYPE : PAPERBACK Indirect Tax Laws (IDT) | TEXTBOOKDescription ORDER NOW This book provides practical application of GST and Customs Tax in a holistic approach while testing the analytical skills of the reader. It is prepared exclusively for the Final Level of Chartered Accountancy Examination requirement. It covers the entire revised, new syllabus as per ICAI. The Present Publication is the 2nd Edition & updated till 30th April 2022 for CA-Final | New Syllabus | Nov. 2022/May 2023 Exams. This book is authored by CA (Dr.) Mahesh Gour & CA (Dr.) K.M. Bansal, under the guidance of CMA V.S. Datey. This book incorporates the following noteworthy features: · Strictly as per the New Syllabus of ICAI · This book is divided into two parts: o Goods & Services Tax | 75 Marks o Customs & Foreign Trade Policy (FTP) | 25 Marks · [Simple & Concise Language] for easy understanding · [Tabular Presentation] for easy learning · [Explanatory & Analytical Approach] to enable students to obtain knowledge in the subject with ease · Coverage of this book includes: All Past Exam Questions, including CA Final December 2021 (New Syllabus) CA Final May 2022 (New Syllabus) Questions from RTPs and MTPs of ICAI [Most Updated & Amended] This book is updated & amended up to 30th April 2022, and the amendments are incorporated at the relevant places · [Student-Oriented Book] The authors have developed this book, keeping in mind the following factors: Interaction of the authors with their students, with specific emphasis on difficulties faced by students in the examinations Shaped by the authors' experience of teaching the subject matter at different levels Reactions and responses of students have also been incorporated at different places in the book
