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6/2/2017 GSTSummaryoftheModelGSTlaw

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GSTSummaryoftheModelGSTlaw
SummaryofModelGSTlaw

The model GST law has been released on 14th June, 2016. It outlays the
basicstructureoftheCGSTactSGSTactstobebasedonthestructurelaid
out.ThedraftoftheIGSTacthasbeenalsoreleasedasapartoftheModel
GSTlaw.

ThekeyfeaturesoftheModelaresummarisedasunder:

ScopeofGST:

TheactisextendedtowholeofIndiaincludingJammu&Kashmir.Therecanbedifferentappointeddatesindifferentstates.

BasicDefinitions:

Section2oftheactcontains109definitions.Fewimportantdefinitionsarecoveredasunder:

Business:ThedefinitionofBusinessisaninclusivedefinitionandcoversvariousspheresoftransactionsincludingthe
services.Itincludesanytrade,commerce,manufacture,profession,vocationoranyothersimilaractivity,whetheror

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not it is for a pecuniary benefit. Further, it includes any transactions without considering the volume, frequency,
continuityorregularityofsuchtransaction.
Consideration:Itincludesthepaymentmadeortobemadeinmoneyorotherwiseforsupplyofgoodsorservices.It
includesthemonetaryvalueofanyactorforbearanceinrespectoforinresponsetoinducementofthesupplyof
goodsandservices.
Goods: It includes every kind of moveable property other than actionable claims and money. It also includes
securities,growingcrops,grassandthingsattachedorformingpartoftheland.
Services:Itmeansanythingotherthangoods.Itincludesactionableclaimsandintangiblepropertybutnotmoney.

Supply:(Sec3)Itincludes

Allformsofsupplies,sale,transfer,barter,exchange,license,rental,leaseordisposaletc.
Importofservicewithorwithoutconsideration.
Certainsuppliestobetreatedassupplywithoutconsiderationare(ScheduleI):

2BHKFlat,758Sqft 3BHKFlat,1360Sq
inBaruipur,Kolkata ftinGaria,Kolkata
15.2Lac 59.2Lac

EnquireNow! EnquireNow!

Permanenttransfer/disposalofbusinessassets.
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Temporaryapplicationofbusinessassetstoaprivateornonbusinessuse(definedassupplyofserviceinSchedule
II).
Servicesputtoaprivateornonbusinessuse.
Assetsretainedafterderegistration.
Supply of goods and / or services by a taxable person to another taxable or non taxable person in the course or
furtheranceofbusiness.

Transactionbetweenagentandprincipalforanagreedcommissionorbrokerage.
Supplyofanybrandedservicebyanaggregatorunderabrandnameortradenameownedbyhim.

Schedule II lays down the transactions to be treated as supply of goods and supply of services. Apart from the said
schedule,CentralGovt.(CG)orStateGovt.(SG)maynotifyastowhichtransactionstobetreatedassupplyofgoodsor
supply of services. (It may lead to increase in taxes if the rate of GST on supply of goods and supply of services are
separate.)

LevyandCollectionoftax:

CGorSGmaynotifythegoodsandservicesonwhichthetaxshallbeleviedunderreversechargebasis.

AregisteredtaxablepersonwhoseaggregateturnoverislessthanRs.50lakhcanoptforCompositionscheme.Therateof
taxpayablewillbe1%oftheturnoverduringtheyear.

Theschemecannotbeavailedbyanysupplierwhodealsininterstatesupplies.

Timeofsupply:

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Forwardcharge:

SupplyofGoods:TheliabilitytopayCGST/SGSTonthegoodsunderforwardchargeshallariseatthetimeofsupply
whichistheearliestofthefollowingdates:

Scenarios Pointoftaxation

Wheregoodsareremoved Dateofremovalofgoods

Date on which goods are made available to


Wheregoodsarenotremoved
recipient

Dateofinvoice,paymentofthesupplyorthe
Inothercases date of receipt of goods in books of the
recipient

SupplyofServices:TheliabilitytopayCGST/SGSTonservicesunderforwardchargeshallariseatthetimeofsupplyas
follows:

Scenarios Pointoftaxation

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dateofissueofinvoice

Invoiceissuedwithin
orwhicheverisearlier
prescribedtimeperiod

thedateofreceiptofpayment

dateofcompletionofprovisionofservice

Invoicenotissuedwithin
orwhicheverisearlier
prescribedperiod

dateofreceiptofpayment

Whereprovisions(a)or date on which the recipient shows the receipt of


(b)donotapply servicesinhisbooksofaccount

Reversecharge:

Goodsandservices:TheliabilitytopayCGST/SGSTonthegoodsunderreversechargeshallariseatthetimeofsupply
whichistheearliestofthefollowingdates:

Dateofreceiptofgoods

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Dateofreceiptofinvoice

Dateofmakingpayment

Dateofdebitinthebooksofaccounts

ContinuousSupply:

Goods:TheliabilitytopayCGST/SGSTonservicesundercontinuoussupplyshallariseatthetimeofsupplyasfollows:

Scenarios Pointoftaxation

Successive statements of
Dateofexpiryofsuchperiod
accounts/paymentsexist

Dateofissueofinvoice

No Successive statements of
orwhicheverisearlier
accounts/paymentsexist

dateofreceiptofpayment,

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Services:TheliabilitytopayCGST/SGSTonservicesundercontinuoussupplyshallariseatthetimeofsupplyasfollows:

Scenarios Pointoftaxation

Where due date is ascertainable


Dateofpaymentliabletobemade
fromthecontract

Dateofpaymentorwhicheverisearlier
Where due date is not
ascertainablefromthecontract
Dateofinvoice

Payment linked to completion of


Timeofcompletionoftheevent
theevent

Specificscenarios:ThepointoftaxationofCGST/SGSTonsupplyofgoodsandservicesunderthespecificscenarios
shallbedeterminedinthefollowingmanner:

Scenarios Pointoftaxation

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Where it is not possible to


whenitbecomesknownthatthesupplyhas
determine when the supply will
taken place or, 6 months from date of
take place (e.g. sale on approval
removal,whicheverisearlier
basis)

Where supply of services ceases


under a contract before the whenthesupplyceases
completionofthesupply

Residuary:Whenthepointoftaxationcannotbedeterminedfromtheaboverules,thefollowingruleshallbefollowed:

Whereaperiodicalreturnistobefiled,thedateonwhichsuchreturnistobefiled,or,
Inanyothercase,thedateonwhichCGST/SGSTispaid

Valueofsupply:

Valueoftaxablesupplyofgoodsandservicesshallbethetransactionvalue(actualpricepaidorpayableonlywhere
thepriceisthesoleconsiderationforthesupplyandthesupplierandtherecipientofthesupplyarenotrelatedtoeach
other).
Wheretheabovemethodcannotbeapplied,theGSTValuation(DeterminationoftheValueofSupplyofGoodsand
Services)Rules,2016providesothermethodstobeappliedhierarchywise:

Rule4:Transactionvalueofgoodsandservicesoflikekind:

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Transactionvalueofthelikequantityandqualityatandaboutthesametimeadjustedwiththedifferenceintime,quantity,
freightandinsurancechargesetc.

Rule5:Computedvaluemethod:

Valuecanbecomputedbyaddingthecostofproduction,costofservices,designcharges,profitandgeneralexpensesof
samekindorclassofgoodsorservices.

Rule6:Residualmethod:

Valuedeterminedbyusingreasonablemeansconsistentwiththeprinciples&generalprovisionsoftheserules.

Rule7:Rejectionofdeclaredvalue:

Therelevantofficermaydeterminethevalueaspertheabovestatedrulesifthereisreasonabledoubtforthereasonstobe
recordedinwriting,thatthedeclaredvaluedoesnotrepresentthetransactionvalue.

Rule8:Valuationincertaincases:

Theruleprescribesthevaluationmethodincaseofpureagentandmoneychanger.

ValuationRulesaresimilartothoseofCustomValuationRules,2007.Rule8oftheValuationRulesregardingthesupplyof
servicesissimilartotheexistingprovisionsincurrentlaw.

Inputtaxcredit

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ITCoftheinputs/semifinished/finishedgoodsheldinstockheldimmediatelyprecedingthedateofregistrationcanbe
taken.
TimelimitoftakingITChasbeenprescribedasoneyearfromthedateofinvoiceforcredit.
ITCforthesuppliesrelatingtothebusinessandtaxablesuppliesincludingzeroratedsuppliesshallbeeligibletobe
availed.
Transferofinputtaxcreditisallowedincaseofsale,transfer,amalgamationetc.
ITCisnotavailableinthefollowingcases:

Motor vehicles except the services provided are transportation of goods, passengers or imparting training on motor
vehicles.
Goods /services in relation to food, beverages, outdoor catering etc. primarily for personal consumption of the
employees
Goods /services acquired in execution of works contract for construction of immovable property except plant &
machinery
Goods acquired by a principal, the property in which is not transferred to any other person, which are used in the
constructionofimmovableproperty,otherthanplantandmachinery
Goodsusedforprivateorpersonalconsumption.
Taxpaidundercompositionlevy.

ITCshallbeavailableonlywhentherecipienthastaxinvoiceorothersimilardocumentreceivedgoods/servicestax
chargeshasbeenpaidtotheGovt.bythesupplierandreturnhasbeenfurnished.
No ITC for an invoice of goods /services pertaining to a FY is available after the return for the month of September
followingtheendofFYortherelevantannualreturnisfiled,whicheverisearlier.
Jobwork:thecreditiseligibleforinputgoodsandcapitalgoods,ifthesamearereceivedbackwithin180daysor2
yearsrespectively,otherwiseanamountequaltotheITCavailedalongwithinteresttobepaid.
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MannerofutilisationofITC:

CGST:CGST,IGST
SGST:SGST,IGST
IGST:IGST,CGST,SGST

Registration

Registrationrequiredinallthestatesofthesuppliesofgoodsandservicesmadebytheassessee.
Registrationtobeobtainedwithin30daysfromthedateofbecomingliabletoberegistered.
Thresholdofaggregateturnover*forregistrationisRs.9lacs(Rs.4lacsinNorthEasternStatesincludingSikkim).
Voluntaryregistrationcanalsobedone.
Mandatoryregistrationsinthefollowingcases:

Casualtaxableperson,
Nonresidentperson,
Personinvolvedininterstatesupplies
Personsliabletopaytaxesunderreversechargemechanism
Inputservicedistributor
Personswhodeducttax
Personwhosupplygoods/servicesonbehalfofotherregisteredtaxablepersonwhetherasagentorotherwise.
Electroniccommerceoperator,aggregatorwhosuppliesservicesunderhisbrandnameorhistradename
OtherpersonsasnotifiedbyCGorSG.

Registration of casual taxable person and nonresident person shall be effective for 90 days and have to make an
advancedepositoftheestimatedtaxliability.

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CancellationoftheregistrationunderCGST/SGSTactshallalsobeconsideredascancellationunderSGST/CGSTact
respectively.
Aggregate turnover* is aggregate value of taxable and nontaxable supplies, exempt supplies and exports of
goods/servicesofapersonhavingsamePAN(includesonallIndiabasisandexcludesGSTleviedonit).

Taxinvoice,Credit&DebitNotes

Taxinvoicetobeissuedatthetimeofsupplyofgoods/servicesshowingthedescription,quantity,valueofgoodsand
taxchargedthereonetc.
Abillofsupplyhasbeenprescribedfornontaxablesupplies.
Credit/Debitnotestobeissuedbeforethe30thdayofSeptembertheendofFYortherelevantannualreturnisfiled,
(whicheverisearlier),wherethetaxablevalueintheinvoiceisfoundmore/lessthanthevaluetobetaxed.

Returns:

ReturnType

All assesses except ISD, Outward Supplies Onorbefore10thofnext


composition scheme Monthly month
payersandpersonpaying
TDS
Onorbefore15thofnext
InwardSuppliesMonthly
month

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Within 20 days from end


Monthlyreturn
ofthemonth

On or before 31st
AnnualReturn December following the
endofrelevantFY

Within 18 days from end


Compositionpayers Quarterlyreturn
ofquarter

Within 10 days from end


TDSpayers Monthlyreturns
ofthemonth

Within 13 days from end


ISD Monthlyreturns
ofthemonth

Returntobetreatedasvalidonlyafterpaymentoftax.
Noreturnscanbefurnishedifreturnforlasttaxperiodnotfurnished.
Taxtobepaidbeforethedateofthereturnfiling.
Nilreturnstobesubmittedincaseofnosupplyofgoods/services.

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Rectificationoferrororomissioninthereturnsshallnotbeallowedaftertheduedateoffilingthereturnforthemonth
ofSeptemberfollowingtheendoftherelevantFYorfilingoftherelevantannualreturn,whicheverisearlier.
Subject to the prescribed conditions/restrictions (not yet prescribed) can avail the ITC on provisional basis. On final
assessment,thedifferenceshallbepaidorrefunded,asthecasemaybe.
Finalreturnoncancellationofregistrationtobesubmittedwithinthreemonthsfromdateoforderofcancellationordate
ofcancellation,whicheverisearlier.
Penaltyoflatefiling:

Annualreturn:Rs.100/dayforeachdayofdefault(maxto0.25%aggregateturnover)
Otherthanannualreturn:Rs.100/dayforeachdayofdefault(maxtoRs.5000)

Paymentoftax

Deposit made towards tax, interest, penalties shall be paid online using debit /credit cards, NEFT etc. which will be
creditedtoelectroniccashledgeraccount.
SelfassessedITCclaimedinthereturnshallbecreditedtoelectroniccreditledgeraccount.
Payment towards tax, interest, penalties can be made from electronic cash or credit ledger accounts subject to the
rules,conditionsprescribed.
Interestperiodshallbecalculatedfromthefirstdaysuchtaxwasduetobepaid.

TDS:

SpecifiedpersonsshalldeductTDS@1%ofthecontractvaluewhereitexceedsRs.10lakhs.
TDSdeductedshallbepaidwithin10daysoftheendofthemonthofdeductionandthecertificatetobefurnishedin5
daysofpaymentoftax.
ThelatefeeforfurnishingofthecertificateisRs.100/daysubjecttoRs.5000.
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Refunds:

Refundforanamountcanbeclaimedwithinaperiodof2yearsfromtherelevantdate.
Refundtobegrantedontheprincipalofunjustenrichment.IfamountclaimedislessthanRs.5,000,thenonlyself
declarationtobemade,otherwisedocumentaryevidencestobefurnishedtoestablishnounjustenrichment.
Thesaidlimitationdoesnotapplyincaseofpaymentsmadeunderprotest.
UnutilisedITCcanbeclaimedasrefundincaseofinverteddutystructuresandexports(accumulationofITC)
Properofficermaygrantprovisionalrefundof80%oftheclaimandtherest20%canberefundedafterdueverification
ofthedocuments.
Orderofrefundshallbeissuedwithin90daysofthereceiptofapplication.
Interestattheprescribedrateswillbepaidfordelayincaseofrefundbeyond3months.
Incasesofunjustenrichment,refundordershallbegrantedandtheamountshallbecreditedtotheConsumerWelfare
Fund.
Refund of unutilised credit is also allowed in case of export of goods/services except in cases where export duty is
payableandinverteddutystructure.

Accountsandrecords:

Recordstobemaintainedattheregisteredplaceofbusiness:certificateofregistration,atrueandcorrectaccountof
production,ormanufactureofgoods,ofinwardoroutwardsupplyofgoodsand/orservices,ofstock,ofgoods,ofinput
taxcreditavailed,ofoutputtaxpayableandpaid,andsuchother,particularsasmaybeprescribed.
Assesses to get his accounts audited if the turnover exceeds a prescribed limit by CA or ICWA and submit to the
properofficer.

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Accountstoberetainedtilltheexpiryof60monthsfromthelastdateoffilingofAnnualReturnfortheyearpertaining
tosuchaccountsandrecords.
Partytoanappealorrevision/proceedingshallretainthebooksofaccountsandotherrecordsforaperiodofoneyear
afterfinaldisposalofsuchappeal/revision/proceedingormonthsfromthelastdateoffilingofAnnualReturnforthe
yearpertainingtosuchaccountsandrecords,whicheverislater.

JobWork:

Goodscanbesentbytheprincipaltothejobworkerwithoutthepaymentoftax,subjectto:

Thegoodsarebroughtbacktotheplaceoftheprincipalafterthejobworkandremovedfromtherewithpaymentoftax
orwithoutpaymentoftaxincaseofexports.
Supplygoodsfromplaceofjobworkeronpaymentoftaxorwithouttaxincaseofexports.Theplaceofbusinessofthe
jobworkershallbedeclaredasadditionalplaceofbusinessofprincipalexceptwhenthejobworkerisregisteredor
principalisengagedinsupplyofsuchgoodsasmaybenotifiedinthisbehalf.

Theresponsibilityforaccountabilityofthegoodsincludingpaymentoftaxthereonshallliewiththeprincipal.

ElectronicCommerce:

Everyelectroniccommerceoperatorshalldeductanamountatthetimeofcreditofanyamounttotheaccountofthe
supplier of goods / services, or, at the time of payment of any amount in cash or by any other mode, whichever is
earlierattherateprescribedlater.
Theecommerceoperatorshalldeposittheamountsodeductedaswellassubmitastatementofallamountsdeducted
within10daysaftertheendofthemonthinwhichsuchcollectionismade.

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Theamountcollectedanddepositedtogovt.shallbedeemedpaymentonbehalfofthesupplier,whichcanbeclaimed
bythesupplierintheelectroniccashledgeraccount.
Thedetailsoftheoutwardsuppliesfurnishedbyecommerceoperatorshallmatchwiththedetailsofthesupplier.In
caseofdiscrepancies,bothpersonsshouldtrytoresolvethesame.
In case, the same is not resolved, the excess tax shall be added to output tax liability of the supplier for the month
succeedingthemonthinwhichdiscrepancyisnoticed.
AnyofficerbelowrankofJCmayaskforadditionaldetailsfromtheecommerceoperatorwhichshallbefurnishedin
next5workingdaysofserviceofnotice,failuretowhichmayleadtopenaltyofRs.25,000.

Assessment

Everytaxablepersonshallhimselfassesthetaxpayableandfurnishesareturnunderrelevantsection.
Provisionalassessment:

Iftheassesseeisnotabletodeterminethetaxestobepaidonsupplyofgoods/services,thentaxescanbepaidon
provisionalbasis.
Abondalongwithrequiredsurety/securityhastobefurnishedbindingthetaxablepersontomakethepaymentofthe
differentialpaymentofthetaxes.
Thefinalassessmentordershallbepassedbytheproperofficerinnext6monthsofpassingtheprovisionalorder.The
timeperiodcanbefurtherextendedby6monthsbyJC/AConsufficientcausetobeshown.
Interestshallbepaidonthedifferentialamountfromthefirstdayafterduedateofpaymentoftaxtillthedateofactual
payment.

Returnscanbescrutinisedtoverifythecorrectnessbytheproperofficer.Explanationifsoughtbytheproperofficer,
hastobeprovidedwithin30days.

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Nonfilersofreturn:Bestjudgementcanbedoneiftheassesseedoesnotfilethereturnwithin15daysofserviceof
noticetononfilersofreturns.
Unregistered persons: Assessment order determining the tax liability of a person liable to be registered can be
determinedbasedonbestjudgement.Theordercanbeissuedwithinaperiodof5yearsfromtheduedateoffilingthe
annualreturnofthetaxperiodunderconsideration.
Summary assessment: If the proper officer has reasonable evidence showing liability of person coming to his notice
canproceedtoissueassessmentorder(withpermissionofAC/DC).Thepersoninchargeofgoodsmaybedeemedto
bethetaxablepersonincasetaxablepersonisnotascertainable.Thenoticecanbewithdrawnbyapplicationmadeby
deemedtaxablepersonwithin30daysorownmotionbydept.,iftheorderiserroneous.

Audit:

Audittobeinformedinadvancetotheassessee(atleastfifteenworkingdays)priortoconductofaudit.
Auditshallbecompletedwithin3monthsoftheproductionofthedocumentsintheauditoractualinstitutionofauditat
thebusinesspremises,whicheverislater.
Thetimecanbeextendedfurtherby6monthsincasetheCommissionerissatisfiedforthereasonsrecorded.Hemay
extendtheperiodby6monthsforthereasonstoberecordedinwriting.
Specialaudit:

It is invoked in case the officer (not below AC/DC) has an opinion that the value is not correctly ascertained or the
credithasbeentakeninexcessofthelimits.
Insuchcases,withpriorapprovalofCommissioner,assesseemaybedirectedtogethisaccountsauditedfromCAor
CWAnominatedbytheCommissioner.
Thedulysignedandcertifiedreporthastobesubmittedin90daysbytheCA/CWAtotheofficer.Thetimeperiodcan
beextendedbyanother90daysforanymaterialorsufficientreason.

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Theassesseetobegivenreasonableopportunityofbeingheardinregardtothefindingsofspecialaudit,tobeused
againsthimduringtheproceedings.

DemandsandRecovery

Taxnotpaid/shortpaid/ Taxnotpaid/shortpaid
erroneously refunded on / erroneously refunded
account of Other than on account of fraud/
fraud/wilfulmisstatement wilful misstatement /
/suppressionoffacts suppressionoffacts

3 years from the due date 5yearsfromtheduedate


or the actual date, or the actual date,
Timeperiodforissueof whichever is earlier, for whichever is earlier, for
order filing of annual return/ 3 filing of annual return/ 5
years from the date of years from the date of
erroneousrefund erroneousrefund

Penalty before service No penalty payable, if tax Penalty@15%,iftaxand


ofNotice andinterestispaid interestispaid

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Penalty @ 25% payable,


No penalty payable, if tax
if tax and interest is paid
and interest is paid within
within 30 days of
30daysofissueofnotice
communicationofnotice

Penalty @ 50% of tax, if


tax and interest is paid
Notprescribed. within 30 days of
communication of order
else100%oftax

10% of the tax or


Maximum levy of
Rs.10,000/ whichever is Notprescribed.
Penaltyintheorder
higher

Proceedingsshallbedeemedtobeconcludedincasethepenaltiesarepaidinthemannertabledabove.

Taxcollectedbutnotdepositedwiththecentralorstategovt.:

ProperofficershallissueashowcausenoticeastowhysaidamountbenotdepositedtotheStateorCentralGovt.
andthepenaltyequivalenttotheamountbenotlevied.
InterestshallbeleviedfromthedateofcollectionoftheamounttillthedateofpaymentofsuchamounttotheGovt.

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Theordershallbeissuedwithinoneyearfromthedateofissueoftheinvoiceaftergivingareasonableopportunityof
beingheard.

Properofficermaydeductthetaxamount:

duetosuchpersonfromanyamountpayabletosuchperson
detainingandsellinganygoodsbelongingtosuchperson
commencementofgarnisheeproceedings
Distrainanymovableorimmovablepropertybelongingorundercontrolofsuchtaxableperson.

During the pendency of any proceedings, if the Commissioner opines that provisional attachment of the property of the
assesseeisintheinterestoftherevenue,thenhecanorderthesame.

Inspection,Search,SeizureandArrest:

Inspection,searchandseizure:

The proper officer not below the rank of JC, may direct any CGST/SGST officer to inspect or search the business
placesoftheassesseeorconfiscatethegoods,wherethereisareasontobelievethat:
thetransactionhasbeensuppressed,or,
anypersonengagedinbusinessoftransportationorwarehousinghasstoredthegoodsorkepttheaccountsso
astoevadetaxes.
The officers have the power to seal or break open the door of any premises or to break open any almirah, box,
receptacleinwhichanygoods,accounts,etc.aresuspectedtobeconcealed.
Aninventoryofgoodsintheprescribedmannershallbeprepared.

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ThepersoninchargeofaconveyancecarryinganyconsignmentofgoodsofvaluemorethanRs.50,000shallcarry
withhimsuchprescribeddocumentsasmaybeprescribed.
AllofficersofPolice,CustomsandthoseofState/CentralGovernmentengagedincollectionofgoodsandservicestax
and all officers of State/Central Government engaged in the collection of land revenue, and all village officers are
empoweredandrequiredtoassisttheCGST/SGSTofficersforthepurposeofthisact.

CommissionerisempoweredtoauthoriseanyCGST/SGSTofficertoarrestaperson,committingcertainspecifiedoffences
suchassupplyofgoodswithoutinvoice,collectingbutnotpayingtaxetc.,whereintheamountoftaxevadedexceedsan
amountofRs.25lakhs.

Offencesandpenalties

Offences Penaltieslevied

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Rs.10,000or
Collecttaxes,butnotpaidtothe
govt., collects TCS in anamountequivalenttothetaxevaded
contraventionoftheactandnon / tax not deducted /short
payment to govt. of the same, deducted/deducted but not paid /ITC
fraudulent availment of refund, availed/passed on/ distributed
nonmaintenance of proper irregularly, or refund claimed
books of accounts, tampers fraudulently,asthecasemaybe,
destroysmaterialevidencesetc.
Whicheverishigher

Rs.10,000or
Short payment of tax repeatedly
(shortpaymentinthreereturnfor 10%oftaxshortpaid
lastsixconsecutivetaxperiods)
Whicheverishigher

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Aidsorabetsincontraventionof
the law, fails to issue an invoice
or fails to account an invoice in
books, fails to appear before
ExtenduptoRs.25,000
CGST/SGSTofficerwhenissued
a summon for appearance to
produce a document in a an
enquiry.

Generalpenalty ExtenduptoRs.25,000

Detentionandconfiscation:

Anygoodsaretransportedorstoredwhiletheyareintransitornotaccountedinthebooksrespectivelyinviolationof
theAct,then,suchgoodsorconveyanceoftransportshallbeliabletobeconfiscated.Thesamecanbereleasedon
paymentofinterest,taxandpenaltyorfurnishinganequivalentamountofsecurity.
In specified circumstances, like evasion of duty, nonaccounting in books, supplying goods with no registration etc.
shallbeliabletobeconfiscated.Suchgoodscanbereleasedonpaymentoffinewhichinnocaseexceedthemarket
valueofgoods.
Theconveyanceoftransportationoftheconfiscatedgoodsisalsoliabletobeconfiscated.
No confiscation can be made without proper show cause notice or without giving a reasonable opportunity of being
heard.

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Prosecutionandcompoundingofoffences

Following punishments has been prescribed for the offences, such as supply of goods without invoice/ incorrect invoice/
falseinvoice,fraudulentrefund,falsifyingfinancialrecords,etc.:

Amountoftaxevaded Natureofoffence

Imprisonment for a term Cognizable and non


AboveRs.2.5crores
upto5yearswithfine bailable

Above Rs. 50 lakhs but Imprisonment for a term Non cognizable and
lessthanRs.2.5crores upto3yearswithfine bailable

Above Rs. 25 lakhs but Imprisonment for a term Non cognizable and
lessthanRs.50lakhs upto1yearswithfine bailable

Imprisonment for a term Non cognizable and


Repeatedlyconvicted
upto5yearswithfine bailable

TheoffencesmaybecompoundedbytheCompetentAuthority,subjecttocertainexceptions.

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Also,thecompoundingpaymentwouldbebetweentheminimumofRs.10,000or50%ofthetaxinvolved,whicheveris
higherandwouldbesubjecttoamaximumofRs.30,000or150%ofthetaxinvolved,whicheverishigher.

Appeals

AppealcanbefiledbyaseesseeorthecommissionerofGST
onhisownmotion.
Appeal to be filed within 3 months of the date of the order
againstwhichtheappealisfiled.Thetimecanbeextendedby
1month,sufficientcausetobeshown.
10% of the disputed amount to be paid for filing appeal in
First appellate CGST.
authority 10%ofthedisputedamountand100%oftheadmittedamount
tobepaidforfilingappealinSGST.Also,thelimitof10%can
be extended to 50% if the dispute is considered as serious
case(matterinvolvingdutymorethanRs.25crores)
Hemayconfirm,modifyorannulthedecision/order.
Appealfiledshallbetriedtobedecidedwithinanyearoffiling
ofappeal.

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Revisionary In case of SGST law, the Commissioner has been given

power of revisionarypowers.

Commissioner He can stay the operation of the order for such period as he
deemsfitandmakefurtherinquiryforpassingarevisedorder.

National Goods and Service tax Appellate Tribunal shall be


constitutedonrecommendationoftheCouncil.

Constitutionof ItshallbeheadedbytheNationalPresident.

NATGST EachstatewillhaveabranchheadedbyStatePresident.
Qualifications,constitutionetc.willbeasprescribed.
Afterheadingthepresidentposition,theyshallnotbeentitled
toappear,actorpleadbeforetheAppellateTribunal.

Appealstothe Appeal to the Tribunal shall be filed within 3 months of the

Appellate dateoftheorder.

Tribunal MemorandumofCrossobjectionscanbefiledwithin45days
ofthedateoffilingtheappealtotheAppellateTribunal.

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An order confirming, modifying or annulling the decision or


orderappealedagainstormayreferthecasebacktotheFirst
Appellate Authority or to the original adjudicating authority,
withsuchdirectionsasitmaythinkfit,forafreshadjudication
or decision, as the case may be, after taking additional
Order of evidence,ifnecessary.
Appellate Theordercanberectifiedbyforamistakeapparentonrecord
Tribunal by commissioner within three months of the date of original
order.
Appealfiledshallbetriedtobedecidedwithinanyearoffiling
ofappeal.
Proceedings of Appellate Tribunal shall be deemed to be the
judicialproceedingsofCivilCourt.

Casesinvolvingsubstantialquestionoflawtobeadmitted.
Appeal to the
HighCourt
Appealstobefiledwithin180daysoftheorder.

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AppealslietoSupremeCourtinfollowingmatters:

againstorderofHighCourt
Appeal to
matterwheretwoormoreStates,oraStateandCentre,have
Supreme
a difference of views regarding the treatment of a
Court
transaction(s)beingintraStateorinterStateor
matterwheretwoormoreStates,oraStateandCentre,have
adifferenceofviewsregardingplaceofsupply.

Refundofpredeposit,whereapplicable,wouldbemadewithinterestfromthedateofdeposittillthedateofrefund.
AnorderbyGSTofficersanctioningprosecutionwouldbenonappealableundertheGSTAct.

Advancerulings

AuthorityforAdvanceRulingshallbelocatedineachstateandcompriseofonememberfromCentralGovernmentand
onememberfromStateGovernment.
Mattersforwhichrulingmaybesoughtareasunder:

classificationofanygoods/services
applicabilityofanotificationhavingabearingontherateoftax
principlestobeadoptedforthepurposesofdeterminationofvalueofthegoods/services
admissibilityofITCoftaxpaidordeemedtohavebeenpaid
determinationoftheliabilitytopaytaxonanygoods/servicesundertheAct
requirementofregistrationundertheact
whetheranactivityamountstoorresultsinasupplyofgoodsand/orservices.

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No appeal shall be submitted when the question raised is already pending or already been decide by the First
AppellateAuthority,theAppellateTribunaloranyCourt.
Advancerulingstobepronouncedwithin90daysofthereceiptofapplication.
Advancerulingscanbeappealedwithin30daysoftherulings.
Orderoftheappellateauthorityinanappealagainsttheadvancerulingsshallbegivenwithin90daysofdateoffiling
theappeal.
Theadvancerulingscanberectifiedforthemistakesapparentfromrecordwithinsixmonthsfromthedateoftheorder.
Theadvancerulingstobevoidabinitioincasewhereithasbeenattainedbywayoffraud,misrepresentationoffacts,
suppressionofmaterialfacts.

Liabilitytopayincertaincases:

Liabilityon

transferofbusiness Joint and several liability of the transferee and the


transferorofthebusiness

amalgamation If effective date of order is before the date of the

/merger of court order, the transactions till the date of court

companies order shall be treated in individual books as if no


merger/amalgamationhastakenplace.

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Intimation of appointment of liquidator to be given


within30days

company in Duesoftax,interestorpenaltytobecommunicated

liquidation to the liquidator within 3 months by the


Commissioner
Directors held liable for recovery of the dues of the
companyunlesscontraryisproved.

Jointandseveralliabilityofthefirmandthepartners

partners of firm to ofthefirm

paytax Partnerretiringshallintimatedept.Withinonemonth
otherwise his liability shall continue in the firm
towardsthedept.

Liable for the tax, interest and penalty dues as

guardians,trustees determined and recoverable from minor or other


incapacitated person is he was a major or
capacitatedperson.

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Court of Wards, the Administrator General, the

CourtofWards Official Trustee or any receiver/ manager as


determinedandrecoverablefromthetaxableperson
asifhewereconductingthebusiness.

Incaseofdeathofperson,hisbusinessiscontinued,
thenthelegalrepresentative
In case of death of person, his business is
discontinued,thentheestateofthedeceased

Othercases HUF/AOP:Jointandseveralliabilityofthemembers
ofthePartitionedHUFandAOP
Dissolutionofafirm:Jointandseveralliabilityofthe
firmandthepartnersofthefirm
Termination of the guardianship or trust: Beneficiary
shallbeliableforthepaymentoftaxdues.

Miscellaneousprovisions

EverytaxablepersonwillbegivenaGSTcomplianceratingscorewhichwillbeupdatedatregularintervalsandalso
beplacedinpublicdomain.
Certain specified persons to furnish Annual Information Return relating to payment of tax and transactions in goods
andservices.FailuretothesameleadstopenaltyofRs.100perdaythedefaultcontinues.
GSTofficersempoweredtomaymaketestpurchasesanddrawlofsamplestocheckcompliances.

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CentralandStateGovernmentaregivenextensivepowerstomakerules,issuenotificationswithretrospectiveeffect
underthoserules,tocarryintoeffectthepurposesoftheact.
Mode of service of notice to also include by way of hand delivery, by courier, email, facsimile, on dashboard of
taxpayerswebsite,SMSandbypublicationinnewspapercirculatinginlocalityoftaxpayer.

TransitionalProvisions

Cenvat credit/ ITC shall be allowed to be carried forward under CGST/SGST act respectively furnished under the
earlierlawbyhim,inrespectoftheperiodendingwiththedayimmediatelyprecedingtheappointedday.
Unavailedcenvatcredit/ITConcapitalgoods,notcarriedforwardinareturn,tobeallowedunderCGST/SGSTacts
respectively.
Credit of certain eligible duties and taxes under CGST/SGST in respect of inputs held in held in stock and inputs
containedinsemifinishedorfinishedgoodsheldinstockontheappointeddayshallbeallowedsubjecttoconditions
mentionedinNote1.
Credit of eligible duties and taxes on inputs held in stock shall be allowed to a taxable person switching over from
compositionschemetonormaltaxpaymentunderCGST/SGSTlawssubjecttoconditionsmentionedinNote1.
Ifthetaxablepersonswitchingovertocompositionscheme,theCenvatcreditandITCinputsheldinheldinstockand
inputs contained in semifinished or finished goods held in stock shall be debited to the electronic credit ledger or
electroniccashledger.AnybalancelyingintheITCorcenvatcreditinelectroniccreditledgershalllapse.
No tax is payable under GST if the goods exempted under earlier law is returned to the place of business within 6
monthsoftheappointedday.
Ifthedutypaidgoodsarereturnedtothesupplierwithin6monthsoftheappointeddate,heshallbeentitledtotakethe
taxcreditonsuchgoodsandthepurchaserofthegoodsshallnotbeliabletomakethepaymentoftaxonthegoods.

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NotaxshallbepayableontheInputsremovedforjobworkandreturnedwithin6monthsoftheappointeddate.The
periodcanbefurtherextendedtotwomonths.Thedetailsoftheinputssenttojobworkershallbedisclosedseparately
bythemanufacturerandjobworkeronappointeddayintheprescribedmanner.
No tax shall be payable on the semi finished goods removed for job work and returned within 6 months of the
appointeddate.Theperiodcanbefurtherextendedtotwomonths.Thedetailsofthesemifinishedgoodssenttojob
workershallbedisclosedseparatelybythemanufacturerandjobworkeronappointeddayintheprescribedmanner.
No tax shall be payable on the finished goods removed for job work and returned within 6 months of the appointed
date.Theperiodcanbefurtherextendedtotwomonths.Thedetailsofthefinishedgoodssenttojobworkershallbe
disclosedseparatelybythemanufacturerandjobworkeronappointeddayintheprescribedmanner.
Theinvoice/documentissuedpursuanttotheupwardanddownwardrevisioninthecontractsalreadyexistingonthe
appointeddateshallbeissuedwithin30daysoftheappointeddate.Itshallbeconsideredtobeissuedunderthisact.
Pendingrefundclaims,claimofcenvatcredit,reviews,reference,appeal,revisionsetc.inregardtooutputliabilityor
treatment of any amount refundable or recoverable pursuant to assessment or adjudication etc. shall be dealt in
accordance with the provisions of earlier law and the refund granted shall be paid in cash. The amount recoverable
formtheassesseeshallbetreatedasarrearsofrevenueandwillnotbeadmissibleasinputtaxcredit.
Taxpaidunderearlierlawonretentionpayments,periodic/progressivesupplyofgoods/serviceswillnotbepaidagain
GSTtobeleviedonSuppliesmadeunderworkscontractonoraftertheappointeddate.
ITConaccountofservicesreceivedpriortoappointeddateshallbeeligiblefordistributionascreditevenifinvoices
receivedafterappointeddate
Taxpaidongoodslyingwithagents,goodssentonapprovalbasisreturnedonorafterappointeddate(receivedwithin
6months)shallbeallowed.
NoIGSTshallbepaidonimportofservicesorinterstatesuppliesofgoods/servicesmadeonoraftertheappointed
datetotheextentthetaxpaidundertheprovisionsofcurrentlaw.

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Note1

Conditionsforseekingthecreditunderthenewlaws:

(i)suchinputsand/orgoodsareusedorintendedtobeusedformakingtaxablesuppliesunderthisAct

(ii)thesaidpersonisnotpayingtaxundersection8

(iii)thesaidtaxablepersonwaseligibleforcenvatcreditonreceiptofsuchinputsand/orgoodsundertheearlierlawbutfor
hisbeingacompositiontaxpayerunderthesaidlaw

(iv)thesaidtaxablepersoniseligibleforinputtaxcreditunderthisAct

(v)thesaidtaxablepersonisinpossessionofinvoiceand/orotherprescribeddocumentsevidencingpaymentofduty/tax
undertheearlierlawinrespectofinputsheldinstockandinputscontainedinsemifinishedorfinishedgoodsheldinstock
ontheappointeddayand

(vi)suchinvoicesand/orotherprescribeddocumentswereissuednotearlierthantwelvemonthsimmediatelyprecedingthe
appointedday.

IGSTspecificprovisions:

PlaceofSupplyofGoods(section5inIGST):

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Scenarios PlaceofSupplyofGoods

Supply involves movement of Locationatthetimeatwhichthemovementof


goods goodsterminatesfordeliverytorecipient.

Supply does not involve


Locationofsuchgoodsatthetimeofdelivery.
movementofgoods.

Delivery of goods by way of


Principalplaceofbusinessofthirdperson(the
transfer of documents of title to
place which is mentioned in the registration
thegoodsorotherwise,beforeor
certificate).
during their movement, to
recipient or any other person on
(considered as goods received by third
thedirectionofathirdperson(as
person)
anagentorotherwise)

Goods installed or assembled at


Placeofsuchinstallationorassembly.
site.

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Goods supplied on board a


Location at which such goods are taken on
conveyance,suchasavessel,an
board.
aircraft,atrainoramotorvehicle.

DeterminedbylawmadebytheParliamentin
In any other case (not covered
accordance with the recommendations of the
above).
Council.

Placeofsupplyofservices(section6inIGST):

NatureofService PlaceofSupplyofService

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Services in relation to immovable


property including ancillary
services:

a.Servicesofarchitects,interior
decorators, other related
experts or estate agents etc.,
grant of rights to use
immovablepropertyetc.
b.Lodgingaccommodationbya Location at which the immovable

hotel,inn,guesthouseetc.by property,boatorvesselislocated.

whatever name called


(including house boat or any
othervessel)
c.Accommodation and other
facilities provided at the
property for organizing any
marriage/reception etc. and
other official, social, cultural,
religiousorbusinessfunction.

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Restaurant & catering, personal


grooming, fitness, beauty Location of the performance of the
treatment, health services, service.
cosmetic&plasticsurgery.

Registered person location of

Training and performance suchperson.

appraisalservicesgivento Other than registered person


location where the services are
actuallyperformed.

Admission to a cultural, artistic,


sporting, scientific, educational, or
Location of the event/ park/ other
entertainmenteventoramusement
placeetc.,asthecasemaybe.
park or any other place and
servicesancillarythereto.

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Services of organising and


ancillary thereto of cultural,
artistic, sporting, scientific, Registered person location of
educational or entertainment suchperson.
event (including conference, Other than registered person
fair, exhibition, celebration or location where the services are
similarevents). actuallyperformed.
Assigning of sponsorship of
anyoftheaboveevents.

Registered person location of

Servicesoftransportationofgoods suchperson.

includingmailorcourierto Other than registered person


location where the services are
actuallyperformed.

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Registered person location of


suchperson.
Other than registered person
place where the passenger
embarksontheconveyancefor
thecontinuousjourney.
Right to passage is given for
Services of Passenger
future use and point of
transportationto
embarkationisnotknown:

Registered person: location of


suchperson.
Unregisteredperson:locationof
recipient , where address on
record exist or the location of
supplierofservices.

Service on board a conveyance Location of the first scheduled point


such as vessel, aircraft, train or of departure of that conveyance for
motorvehicle. thejourney.

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Telecommunication services
including data transfer,
Location where the
broadcasting, cable and direct to
telecommunication line, leased
hometelevisionservices:
circuit or cable connection or

Fixedtelecommunicationline, dishantennaisinstalled.

leased circuits, internet Location of billing address of

leased circuit, cable or dish the service receiver on record

antenna oftheserviceprovider.
Location where such pre
Mobile connection for
payment is received or such
telecommunication and
vouchersaresold.
internet services provided on
postpaidbasis If prepaid service is availed through

Mobile connection for electronic network the location of

telecommunication and the service recipient as per the

internetservicesareprovided recordoftheserviceprovider.

on prepayment through a
voucheroranyothermeans.

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Location of service receiver as


on records of the service
Services of banking or other provider.
financial services including stock If service is not linked to
broking account of the recipient of
services location of the
supplierofservices.

Registered person location of


suchperson.

Insuranceservices Other than registered person


location of service receiver as
on records of the service
provider.

Advertisement services to the


central government, state
government, a statutory body or a EachsuchState.
local authority meant for
identifiablestates.

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Registered person location of


suchperson.
Other than registered person
Servicesnotcoveredabove. location of the service receiver
available on the records of the
service provider or location of
theserviceprovider.

Apportionmentoftaxes:

IGST, interest and penalties collected in the interstate supplies shall be apportioned to the Centre at the rate
equivalenttoCGSTonsimilarintrastatesupply.
BalanceamountoftheIGSTshallbeapportionedtotheStatewheresuchsupplytakesplace.

Settlementofcases:

Constitution:

NationalGoodsandServicesTaxsettlementCommissionshallbeconstitutedheadedbyNationalchairman.
Itwillhaveonebenchforoneormorethanonestates,knownasStateSettlementCommission.Itshallbeheadedby
StateChairman.

Applicationforacase/identicalcasesinvolvingperiodicalnotices&pendingbeforeadjudicatingauthority/FirstAppellate
Authoritycanbemadeforsettlement.

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Alltherequiredreturnsarefurnished
SCNororderbyIGSTofficerhasbeenissuedandispendingbeforetheFirstAppellateAuthority.
Additionaltaxacceptedbytheassesseeexceeds5lakhrupees.
Theadditionalamountoftaxaswellastheinterestthereonhasbeenpaidbytheassessee.

Theapplicationshallcontainfullandtruedisclosureiftaxliability,whichhasnotbeendisclosedtojurisdictionalIGSTofficer,
themannerinwhichtheliabilityisarrived,theadditionalamountoftaxpayableandotherprescribedparticulars.

Anapplicationforsettlementcannotbemadeif:

caseispendingbeforeAppellateTribunaloranyCourt
Itpertainstodeterminationofquestioninrespectofrateoftax/determinationofliabilityonanygoodsand/or
services.

Procedure:

SettlementCommission(theCommission)shallissueanoticewithin7daysoftheapplication,totheassesseetostate
astowhytheapplicationshouldbeallowedtobeproceededwith.
Thecommissionshallalloworrejecttheapplicationwithin45daysfromdateofnoticebywayofanorder.

Ifnonoticehasbeenissuedornoorderhasbeenpassed,theapplicationshallbedeemedtobeallowed.

ThecommissionmaycallforareportfromthejurisdictionalIGSTofficerwithin7daysoforderoftheacceptanceofthe
application.
Thereportshallbefurnishedwithin60daysofthedateofreceiptofthecommunication,ifthereportisnotfurnished,
thecommissionmayproceedfurtherwithoutthereport.

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Ifthecommissionopinesthatfurtherenquiryisrequired,hemayorderdirectanydesignatedofficerforthesamewithin
15daysofthereceiptofthereportfromjurisdictionalIGSTofficer.
Thereportshallbefurnishedbytheofficerwithin90days.
If the report is not furnished within the stipulated time, the commission may proceed to pass the order without such
report.
Theordershallbepassedwithin12monthsofmakingtheapplicationfailingwhichtheproceedingsshallabateandthe
relevantauthoritywherethematterwaspendingbeforetheapplicationshalldisposethecase.
If it is found that the settlement has been sought on the basis of fraud and misrepresentation, then the proceedings
shallberevivedattheappellateauthority,itwasoriginallydealtbyandtheordershallbepassedbybeforetheexpiry
oftwoyearsfromthedateofreceiptofcommunicationofthesettlementbeingvoid.

The commission may order the provisional attachment of the property if he opines that it is necessary in order to
protecttherevenue.
The commission may reopen the completed cases within 5 years of the application for proper disposal of the cases
pending before it. The commission should have valid reasons recorded in writing to reopen the completed
assessments.
Thecommissionmaygrantimmunityfromprosecutionandpenaltyiftheassesseehasfullycooperatedandmadefull
andtruedisclosuresofhistaxliability.
The commission has the powers to send back the case back to the IGST officer in case the assessee has not
cooperated with the commission and shall be fully entitled to use the material produced/results of the enquiry etc.
discoveredduringthecourseofproceedings.
Orderofthecommissionshallbeconclusiveandcannotbereopenedexceptotherwiseprovided/
Noapplicationscanbemadebyanassesseetothecommissioninanymatterifthepersonisfoundconvictedofany
offenceinthisactorthecasewassentbacktotheIGSTofficeroftheFirstAppellateAuthority.

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Noassesseecanavailthefacilityofthecommissionmorethantwice.
Thecommissioncanrectifyanorderpassedbyitforthemistakeapparentfromtherecord.

Source:ModelGSTlaw

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PraveenKumarPareek07July2016
Thankyou

TarunSrivastava05July2016
thanksforsharingsuchanimportantinformation.

ALOKRANJAN05July2016
ManymanythankstouforsharethesummryofGSTmodule.

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