GST Concept

Common Provisions Of CGST, SGST, IGST, and UTGST

  1. Provisions of CGST and SGST Article 265 of the Constitution of India mandates that no tax shall be levied or collected except with the authority of law. Charging Section is a must in any taxing statute for the purpose of levy and collection of tax.

In the pre-GST regime, there was a clear demarcation of fiscal powers between the Centre and the State. While Centre was empowered to levy a tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics, etc.), the States have the powers to levy a tax on the sale of goods. In the case of inter-State sales, the Centre has the power to levy a tax (the Central Sales Tax) but, the tax is collected and retained entirely by the originating States.

As for services, it is the Centre alone that is empowered to levy service tax. Keeping in mind the federal structure of the Indian Constitution, Dual GST which is a political necessity, is introduced in India. Under GST, tax is levied concurrently by both the Centre and the States. The Centre will levy and collect the Central GST and State will levy and collect the State GST on supply of goods and services within the State. (Section 9 of the CGST/SGST Act).

The Central GST will be governed by CGST (Central Goods and Service) Act which is applicable to the whole of India except the State of Jammu & Kashmir. However, vide an ordinance dated 8th July, 2017, the provisions governing Goods and Service tax have been extended to the State of Jammu & Kashmir. Consequently, Goods and Service tax is now applicable to the whole of India.

The State GST will be governed by the SGST (State Goods and Service Tax) Act which is applicable to the whole of a specified State (Section 1(2) of CGST/SGST Act). Therefore, there is one CGST Act and 31 SGST Act for each of the 29 states, Delhi and Puducherry.

Some of the highlights of the Dual GST, i.e., CGST+SGST are as follows: –

• Both CGST and SGST will be levied on same price or value in case of Intra state sale. In case of Interstate sale, only Integrated Goods and Services Tax (IGST) will be levied which shall be administered and collected by the Central Government. IGST is not a tax but a mechanism by which part of the tax shall travel to the state where goods/services shall be consumed ultimately.

In case a supplier utilizes the credit of IGST for the payment of SGST, the amount will be reimbursed to the importing state by the Centre. In case the supplier in the exporting State utilizes credit of SGST for payment of IGST, the centre will debit that amount to the exporting State.

• Every supplier has to take registration in a State from where he undertakes to supply goods or services. Registration in a State will automatically register the supplier under CGST Act and IGST Act. No separate registration is required.

 • Full input tax credits will be available with regard to CGST and SGST. However no cross utilization between CGST and SGST will be allowed. The dealer of importing state will be entitled to avail ITC of entire IGST. Further IGST of one State cannot be set off against the IGST of another state.

 • HSN will form the basis for product classification for both the Central GST and State GST.

• The obligation to pay both the taxes will be discharged based on a single tax document.

 • The pre-requisite to determine the taxable event which gives rise to CSGT and SGST is common.

• The SGST will operate within the specified boundaries of the respective state. Accordingly, in relation to inter-state supplies of goods and services, it will be important to determine which particular state will charge and collect the applicable IGST.

 • There will be uniform procedures for collection of the CGST and SGST.

 • There will be one common tax return for both the taxes. It is worth highlighting here that the provisions of the CGST Act 2017 have been replicated in the various SGST Acts.

Resultantly almost all the provisions of the CGST Act, 2017 shall apply to SGST Acts, also with necessary changes. Accordingly, the officers appointed under CGST Act are authorized to be the proper officers for the purposes of this Act. Whereas officers appointed under SGST Act are authorized to be the proper officers for the purposes of SGST Act (Section 3 of CGST/SGST).

Section 4 of the IGST Act provides that without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such exceptions and conditions as the Government shall, on the recommendations of the Council, by notification, specify.

Section 174 of the CGST Act repeals all the Central levies under the previous law viz, the Central Excise Act, 1944 (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 Section 174 of the SGST Act repeals all the State levies under the previous laws viz, the State VAT Act, the State Entry tax Act, the State Amusement and Betting Tax Act, State Luxury Tax, State Health Infrastructure & Services Development fund Act and any other State levies as may be provided under the section. Section 173 of the CGST Act omits Chapter V of the Finance Act 1994, while Section 173 of the SGST Act omits / amends various state levies w.r.t octroi, entry tax, amusement and entertainment tax and other State levies that are subsumed under GST.

The Transitional Provisions under Chapter XX shows certain additional requirement under SGST Act compared to CGST Act. Section 140(1) of CGST Act entitles to take in the electronic credit ledger, credit of the amount of CENVAT credit as carried forward in the return furnished under earlier law, relating to the period ending with the day immediately preceding the appointed day. The CENVAT credit shall be admissible as CGST tax. Section 140(1) of the SGST Act entitles to take in the electronic credit ledger, credit of the amount of VAT, as carried forward in the return furnished under earlier law, relating to the period ending with the day immediately preceding the appointed day. The VAT credit shall be admissible as SGST tax. The second provision to Section 140(1) of the SGST Act so much of the said credit as is attributable to any claim related to section 3, 5(3), 6, 6A and 8(8) of the CST Act, 1956 which is not substantiated in the manner, and within the period prescribed in rule 12 of the CST(Registration and Turnover) Rules, 1957 shall not be eligible to be credited to the electronic credit ledger. Thus in case of inter-state sale, if CST Forms like, Form C,F,H,E1,E2 are not received by the seller within the prescribed time of 3 months as stipulated in Rule 12 of the CST rules, credit equal to difference between state VAT on that item and CST paid will not be available for carry forward. T

he third provision to Section 140(1) of the SGST Act provides that an amount equivalent to the credit specified in the second provision shall be refunded under the existing law when the said claims are substantiated in the manner prescribed in rule 12 of the CST (Registration and Turnover) Rules, 1957. Thus, when the claim is substantiated, the amount will be refunded to the taxable person.

Sub-section 14 is specifically inserted to Section 142 of the SGST Act, which provides that where any goods or capital goods belonging to the principal are lying at the premises of the agent on the appointed day, the agent shall be entitled to take credit, subject to the following conditions:

  • The agent is a registered taxable person
  • Both the principal and the agent declare the details of stock
  • The invoices are not older than twelve months
  • The principal has either reversed or not been availed on the input tax credit Besides the above, all the provisions of CGST Act and SGST Act are similar.

B.  Common provisions of CGST AND IGST the following provisions of the Central Goods and Services Tax Act, shall, mutatis mutandis, apply to Integrated tax as they apply in relation to Central tax as if they are enacted under IGST Act.

(I) scope of supply;

(ii) composite supply and mixed supply;

(iii) time and value of supply;

(iv) input tax credit;

(v) registration;

(vi) tax invoice, credit and debit notes;

(vii) accounts and records;

 (viii) returns, other than late fee;

(ix) payment of tax;

(x) tax deduction at source;

(xi) collection of tax at source;

(xii) assessment;

(xiii) refunds;

(xiv) audit;

(xv) inspection, search, seizure and arrest;

(xvi) demands and recovery;

(xvii) liability to pay in certain cases;

(xviii) advance ruling;

(xix) appeals and revision;

(xx) presumption as to documents;

(xxi) offences and penalties;

(xxii) job work;

(xxiii) electronic commerce;

(xxiv) transitional provisions; and

(xxv) miscellaneous provisions including the provisions relating to the imposition of interest and penalty,

C. Common Provisions of CGST AND UTGST the following provisions of the Central Goods and Services Tax Act, shall, mutatis mutandis, apply to Union Territory as they apply in relation to Central tax as if they are enacted under UTGST Act.

(I) scope of supply;

(ii) composition levy;

(iii) composite supply and mixed supply;

(iv) time and value of supply;

(v) input tax credit;

(vi) registration;

(vii) tax invoice, credit and debit notes;

(viii) accounts and records;

(ix) returns;

(x) payment of tax;

(xi) tax deduction at source;

(xii) collection of tax at source;

(xiii) assessment;

(xiv) refunds;

(xv) audit;

(xvi) inspection, search, seizure and arrest;

(xvii) demands and recovery;

(xviii) liability to pay in certain cases;

(xix) advance ruling;

(xx) appeals and revision;

(xxi) presumption as to documents;

(xxii) offences and penalties;

(xxiii) job work;

(xxiv) electronic commerce;

(xxv) settlement of funds;

(xxvi) transitional provisions; and

(xxvii) miscellaneous provisions including the provisions relating to the imposition of interest and penalty,