Simplified Laws Guide to Taxation and Legal Concern On June 14, 2016 the Finance Ministry has released the ‘Model GST Law’. It outlines the structure of the GST regime. Further, the draft of ‘Integrated GST Bill, 2016’ is also released along with such Model GST laws. It also provides the framework for levy and collection of CGST and SGST. “CGST” is the tax levied under the Central Goods and Services Tax Bill, 2016. “IGST” is the tax levied under the Integrated Goods and Services Tax Bill, 2016.
Key takeaways from Model GST law are given hereunder:
1. Threshold limit for registration:
The dealer is required to take registration under this law if his aggregate turnover in a financial year exceeds Rs. 9 lakhs. However, dealers conducting business in any North Eastern State are required to take registration if their turnover exceeds Rs. 4 lakhs.
2. Place of registration:
The dealer has to take registration in the State from where taxable goods or services are supplied
3. Migration of existing taxpayers to GST:
Every person already registered under extant law will be issued a certificate of registration on a provisional basis. This certificate shall be valid for period of 6 months. Such person will have to furnish the requisite information within 6 months and on furnishing of such information, final registration certificate shall be granted by the Central/State Government.
4. GST compliance rating score:
Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed.
5. Taxation of e-commerce transactions at the point of supply
The draft model law seeks to tax e-commerce operators “at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier”, bringing clarity regarding levy of GST in cases where goods are sold in one state and brought in another.
6. Consumer Welfare Fund
The draft law also seeks to establish a Consumer Welfare Fund, which shall be utilised by the Centre/state government for the welfare of the consumers in accordance with such rules as that government may make in this behalf.
7. Powers of search, seize, summons and arrest
The model law also proposes to empower senior tax officials with the powers of search, seize, summons and arrest. A person can be imprisoned for up to five years for evasion of tax, the model law said.
8. National GST Settlement Commission
A National GST Settlement Commission to be set up by the Centre has also been proposed in the draft law for settlement of cases under the proposed GST Act. The National Commission chairman will be a High Court judge and the commission will have one bench for one or more states.
Click the below link to access draft Model GST Law:
Model GOODS AND SERVICES TAX ACT, 2016 (GST Law 2016) contains following topics
CHAPTER – I
PRELIMINARY
- Short title, extent and commencement
- Definitions
- Meaning and scope of supply
CHAPTER- II
ADMINISTRATION
- Classes of officers under the Central Goods and Services Tax Act
- Classes of officers under the State Goods and Services Tax Act
- Appointment of officers under the Central Goods and Services Tax Act
- Powers of officers under the Central Goods and Services Tax Act
CHAPTER- III
LEVY OF, AND EXEMPTION FROM, TAX
- Levy and Collection of Central/State Goods and Services Tax
- Composition levy
- Taxable person
- Power to grant exemption from tax
- Remission of tax on supplies found deficient in quantity
CHAPTER- IV
TIME AND VALUE OF SUPPLY
- Time of supply of goods
- Time of supply of services
- Change in rate of tax in respect of supply of services
- Value of taxable supply
CHAPTER-V
INPUT TAX CREDIT
- Manner of taking input tax credit
16A. Taking input tax credit in respect of inputs sent for job work
- Manner of distribution of credit by Input Service Distributor
- Manner of recovery of credit distributed in excess
CHAPTER- VI
REGISTRATION
- Registration
19A. Special provisions relating to casual taxable person and non-resident taxable person
- Amendment of registration
- Cancellation of registration
- Revocation of cancellation of registration
CHAPTER – VII
TAX INVOICE, CREDIT AND DEBIT NOTES
- Tax invoice
23 A. Amount of tax to be indicated in tax invoice and other documents
- Credit and debit notes
CHAPTER- VIII
RETURNS
- Furnishing details of outward supplies
- Furnishing details of inward supplies
- Returns 27A. First Return
- Claim of input tax credit and provisional acceptance thereof
- Matching, reversal and re-claim of input tax credit
29A. Matching, reversal and re-claim of reduction in output tax liability
- Annual return
- Final return
- Notice to return defaulters
- Levy of late fee
- Tax Return Preparers
CHAPTER- IX
PAYMENT OF TAX
- Payment of tax, interest, penalty, and other amounts
- Interest on delayed payment of tax
- Tax deduction at source
CHAPTER-IXA
TRANSFER OF INPUT TAX CREDIT
37A. Transfer of input tax credit
CHAPTER-X
REFUNDS
- Refund of tax
- Interest on delayed refunds
- Consumer Welfare Fund
- Utilization of the Fund
CHAPTER- XI
ACCOUNTS AND RECORDS
- Accounts and other records
Period of retention of accounts
CHAPTER- XIA
JOB WORK
43A. Special procedure for removal of goods for certain purposes
CHAPTER- XIB
ELECTRONIC COMMERCE
43B. Definitions
43C. Collection of tax at source
CHAPTER- XII
ASSESSMENT
- Self-assessment
44A. Provisional assessment
- Scrutiny of returns
- Assessment of non-filers of returns
- Assessment of unregistered persons
- Summary assessment in certain special cases
CHAPTER- XIII
AUDIT
- Audit by tax authorities
- Special audit
CHAPTER- XIV
DEMANDS AND RECOVERY
- Determination of tax not paid or short paid or erroneously refunded
- Tax collected but not deposited with the Central or a State Government
- Tax wrongfully collected and deposited with the Central or a State Government
- Recovery of tax
- Payment of tax and other amount in installments
- Transfer of property to be void in certain cases
- Tax to be first charge on property
- Provisional attachment to protect revenue in certain cases
- Continuation of certain recovery proceedings
CHAPTER- XV
INSPECTION, SEARCH, SEIZURE AND ARREST
- Power of inspection, search and seizure
- Inspection of goods in movement
- Power to arrest
- Power to summon persons to give evidence and produce documents
- Access to business premises
- Officers required assisting CGST/SGST Officers
CHAPTER- XVI
OFFENCES AND PENALTIES
- Offences and penalties
- General penalty
- General disciplines related to penalty
- Detention of goods and conveyances, and levy of penalty
- Confiscation of goods and levy of penalty
- Confiscation of conveyances
- Confiscation or penalty not to interfere with other punishments
CHAPTER- XVII
PROSECUTION AND COMPOUNDING OF OFFENCES
- Prosecution
Cognizance of offences
- Presumption of culpable mental state
- Relevancy of statements under certain circumstances
- Offences by companies and certain other persons
- Compounding of offences
CHAPTER-XVIII
APPEALS
- Appeals to First Appellate Authority
- Left Blank
- Constitution of the National Appellate Tribunal
- Appeals to the Appellate Tribunal
- Orders of Appellate Tribunal
CHAPTER- XVIII
APPEALS AND REVISION
- Appeals to First Appellate Authority
- Revisional powers of Commissioner
- Constitution of the National Appellate Tribunal
- Appeals to the Appellate Tribunal
- Orders of Appellate Tribunal
- Procedure of Appellate Tribunal
- Interest on delayed refund of pre-deposit
- Appearance by authorised representative
- Appeal to the High Court
- Appeal to the Supreme Court
- Hearing before Supreme Court
- Sums due to be paid notwithstanding appeal etc
- Exclusion of time taken for copy
- Appeal not to be filed in certain cases
- Non appealable decisions and orders
CHAPTER- XIX
ADVANCE RULING
- Definitions
- Authority for Advance Ruling
- Appellate Authority for Advance Ruling
- Application for advance ruling
- Procedure on receipt of application
- Appeal to the Appellate Authority
- Orders of Appellate Authority
- Rectification of advance ruling
- Applicability of advance ruling
- Advance ruling to be void in certain circumstances
- Powers of the Authority and Appellate Authority
- Procedure of the Authority and Appellate Authority
CHAPTER- XX
SETTLEMENT OF CASES
CHAPTER- XXI
PRESUMPTION AS TO DOCUMENTS
- Presumption as to documents in certain cases
- Admissibility of micro films, facsimile copies of documents and computer printouts as documents and as evidence
CHAPTER- XXII
LIABILITY TO PAY IN CERTAIN CASES
- Liability in case of transfer of business
- Liability in case of amalgamation/merger of companies
Liability in case of company in liquidation Liability of partners of firm to pay tax Liability of guardians, trustees etc Liability of Court of Wards etc.
Special provision regarding liability to pay tax in certain cases Liability in other cases
CHAPTER- XXIII
MISCELLANEOUS PROVISIONS
GST compliance rating Obligation to furnish information return Penalty for failure to furnish information return Power to collect statistics
Disclosure of information required under section 119 Test purchase of goods and/or services Drawal of samples Burden of Proof
Persons discharging functions under the Act shall be deemed to be public servants
Indemnity
Disclosure of information by a public servant
Publication of information respecting persons in certain cases
Assessment proceedings, etc. not to be invalid on certain grounds
Rectification of mistakes or errors apparent from record
Bar of jurisdiction of civil courts
Levy of fees
Power of Central (or State) Government to make rules General power to make Regulations Delegation of powers
- Instructions to GST Officers
- Removal of difficulties
- Service of Notice in certain circumstances
- Rounding off of tax etc
- Effect of amendments, etc., of rules, notifications or orders
- Publication of rules and notifications and laying of rules before Parliament / State Legislature
CHAPTER- XXIV
REPEALAND SAVING
- Repeal and saving
CHAPTER- XXV
TRANSITIONAL PROVISIONS
- General provisions
- Migration of existing taxpayers to GST
- Amount of CENVAT credit carried forward in a return to be allowed as input tax credit
- Unavailed cenvat credit on capital goods, not carried forward in a return, to be allowed in certain situations
- Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations
- Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme
- Amount payable in the event of a taxable person switching over to composition scheme
- Exempted goods returned to the place of business on or after the appointed day
- Duty paid goods returned to the place of business on or after the appointed day
- Inputs removed for job work and returned on or after the appointed day
- Semi-finished goods removed for job work and returned on or after the appointed day
- Finished goods removed for carrying out certain processes and returned on or after the appointed day
- Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of a contract
- Pending refund claims to be disposed of under earlier law
- Claim of cenvat credit to be disposed of under the earlier law
- Finalization of proceedings relating to output duty liability
- Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings
- Treatment of the amount recovered or refunded pursuant to revision of returns
- Treatment of long term construction / works contracts
- Progressive or periodic supply of goods or services
- Treatment of retention payments
- Credit distribution of service tax by ISD
162A.Tax paid on goods lying with agents to be allowed as credit 162B. Tax paid on capital goods lying with agents to be allowed as credit 162C. Treatment of branch transfers
162D. Goods sent on approval basis returned on or after the appointed day 162 E. Deduction of tax source
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FAQs on Goods and Services Tax (GST)
