INTER CA

STRATEGIC MANAGEMENT
&
INDIRECT TAX
Dear Students,

Welcome to the world of knowledge – JK Shah Classes

I have the pleasure of presenting this study material to you. It contains relevant
portions from chapters in indirect taxes. It contains exhaustive theory for
strategic Management. The practical questions are selected so carefully from
wide ranging sources. It is in alignment with the study materials issued by
the ICAI including Practice Manual, Suggested answers. The material is so
exhaustive that it leaves out nothing.

The subject will be taught by eminent professors who are highly experienced
and well versed with the job.

The coaching is very exhaustive and concept based. Also the coaching is very
systematic, well planned and absolutely time bound. I am sure you will feel
that the study is a pleasurable job and not a painful exercise.

I wish you a very happy study time.

Best of Luck

Prof. J. K. Shah
Chartered Accountant
 INTER – INDIRECT TAX

INDEX

Introduction to GST &

01 Page No.
241-258
Supply under GST

Page No.
02 Problems – Time of Supply
259-261

03 Exemptions
Page No.
262-289

Page No.
04 Payment of GST 290-294

Invoice and Other Page No.

05 Documents 295- 308
INDIRECT TAX
 INTER – INDIRECT TAX

Introduction to GST &

Supply Under GST

1. Multiplicity of taxes

• Prior to 1.7.2017, there were multiple taxes on goods or services such as Value
Added Tax (VAT), Central Sales Tax(CST), Service Tax, Excise Duty, Entry Tax,
Entertainment tax, etc.

• With effect from 1.7.2017, the above taxes were replaced by Goods and Services
Tax (GST). India follows dual GST which means GST is levied by both Central
Government and State Government.

• Even after introduction of GST, local bodies have the power to levy certain taxes
as the power of local bodies has not been subsumed under GST. Basic Custom
Duty is also not subsumed under GST.

• Goods and Service Tax (“GST”) is charged by the Central Government as well
as the respective State Government/ Union Territory on Goods and Services.
GST is a value added tax levied on manufacture, sale and consumption of goods and
services.

• GST offers comprehensive and continuous chain of tax credits from the producer's
point/service provider's point upto the retailer's level/consumer’s level thereby
taxing only the value added at each stage of supply chain.

• Power to levy and collect tax is obtained from the Constitution of India. There
are 3 list specifying the various subjects of regulations and taxation viz Union
List, State List and Concurrent List under article 246 read with seventh schedule
of constitution.

• Article 246A was added to the constitution to provide for concurrent powers to

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Central Government and State Government to levy GST on intra state supplies
of goods and services.

• Article 269A provides that Central Government has exclusive powers to make a
law for Inter State supplies and it will be apportioned as provided by Parliament.

• Article 279A provides for GST Council which is empowered to make recommendations
to the Central Government and State Government with regard to GST. It is headed
by the Union Finance Minister.

• Legislations under GST Regime

2. Relevant Definitions

• Person includes an individual, HUF, Company, Firm, LLP, AOP or BOI, whether
incorporated or not, in India or outside India; a co-operative society, local
authority, CG, SG, society, trust, artificial juridical person and any corporation
established by or under any Central Act, State Act or Provincial Act or a
Government company as defined in clause (45) of section 2 of the Companies
Act, 2013.

• India means-
(a) Territory of India as referred to in article 1 of the Constitution
(b) Its territorial waters, seabed and sub soil under lying such waters, continental
shelf, exclusive economic zone or any other maritime zone as referred to
in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and
other Maritime Zones Act,1976
(c) The air space above its territory and territorial waters [Section 2(56)]

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• Works contract means a contract for building, construction, fabrication,

completion, erection, installation, fitting out, improvement, modification,
repair, maintenance, renovation, alteration or commissioning of any immovable
property wherein transfer of property in goods (whether as goods or in some
other form) is involved in the execution of such contract.

• Exempt supply means supply of any goods or services or both which attracts nil
rate of tax or which may be wholly exempt from tax under section 11, or under
section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable
supply [Section 2(47)].

• Non-taxable supply means a supply of goods or services or both which is not

leviable to tax under CGST Act or under IGST Act. [Section 2(78)]

• Taxable supply means supply of goods &/or services which is chargeable to tax
under CGST Act.

• Recipient: of supply of goods and/or services means-

(a) Where a consideration is payable for the supply of goods or services or

both, the person who is liable to pay that consideration,
(b) Where no consideration is payable for the supply of goods, the person to
whom the goods are delivered or made available, or to whom possession or
use of the goods is given or made available, and
(c) Where no consideration is payable for the supply of a service, the person to
whom the service is rendered.
It shall also include an agent acting as such on behalf of the recipient in relation
to the goods or services or both supplied. [Section 2(93)]

• Supplier: in relation to any goods or services or both, shall mean the person
supplying the said goods or services or both and shall include an agent acting
as such on behalf of such supplier in relation to the goods or services or both
supplied. [Section 2(105)]

• Taxable person means a person who is registered or liable to be registered u/s 22

or section 24.

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3. Levy of GST – Section 9 of CGST/ Section 5 of IGST

• Section 9(1) - Main Provision: There shall be levied a tax called the central goods and
services tax on all intra-State supplies of goods1 or services2 or both, except on the
supply of alcoholic liquor for human consumption, on the value determined under
section 15 and at such rates, not exceeding twenty per cent, as may be notified by the
Government on the recommendations of the Council and collected in such manner as
may be prescribed and shall be paid by the taxable person.

1
Goods means every kind of movable property other than money and securities but includes actionable claim, growing
crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under
a contract of supply. [Section 2(52)]
2
Services means anything other than goods, money and securities but includes activities relating to the use of money or
its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged. [Section 2(102)].
Explanation: For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or
arranging transactions in securities.

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• Sec 9(2) - Petroleum products from the date to be notified: The central tax on the supply
of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
gas and aviation turbine fuel shall be levied with effect from such date as may be
notified by the Government on the recommendations of the Council.

• Sec 9(3) - Reverse Charge Mechanism for notified Goods or services: The Government
may, on the recommendations of the Council, by notification, specify categories of
supply of goods or services or both, the tax on which shall be paid on reverse charge basis
by the recipient of such goods or services or both and all the provisions of this Act
shall apply to such recipient as if he is the person liable for paying the tax in relation
to the supply of such goods or services or both.

• Sec 9(4) - Purchases from unregistered person: The Government may, on recommendations
of the Council, by notification, specify a class of registered persons who shall, in
respect of supply of specified categories of goods or services or both received from
an unregistered supplier, pay the tax on reverse charge basis as the recipient of such
supply of goods or services or both, and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying the tax in relation to such supply
of goods or services or both.

• Sec 9(5) - Tax on notified services to be paid by E Commerce Operator3 : The Government
may, on the recommendations of the Council, by notification, specify categories
of services the tax on intra-State supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it, and all the provisions of this
Act shall apply to such electronic commerce operator as if he is the supplier liable
for paying the tax in relation to the supply:
- Provided that where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax:

- Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also he does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in the taxable territory
for the purpose of paying tax and such person shall be liable to pay tax.

3
E-Commerce operator means any person who owns, operates or manages digital or electronic facility or platform for
electronic commerce. [Section 2(45)]

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• Examples for section 9

4. Type of Tax – Section 7 and 8 of IGST Act

• Where the location of the supplier and the place of supply of goods or services
are in the same State/Union territory, it is treated as intra-State supply of goods
or services respectively.

• Where the location of the supplier and the place of supply of goods or services
are in (i) two different States or (ii) two different Union Territories or (iii) a State
and a Union territory, it is treated as inter-State supply of goods or services
respectively.

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5. Scope of the term supply & taxability of various transactions – Section 7 of CGST Act

5.1. Supply for consideration and in the course or furtherance of business

• “All forms of supply of goods or services or both such as sale, transfer, barter,
exchange, licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business”

Example

• Business includes –

(a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or

any other similar activity, whether or not it is for a pecuniary benefit;

(b) Any activity or transaction in connection with or incidental or ancillary to (a)

above;

(c) Any activity or transaction in the nature of (a) above, whether or not there is
volume, frequency, continuity or regularity of such transaction;

(d) Supply or acquisition of goods including capital assets and services in connection
with commencement or closure of business;

(e) Provision by a club, association, society, or any such body (for a subscription or
any other consideration) of the facilities or benefits to its members, as the case
may be;

(f) Admission, for a consideration, of persons to any premises; and

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(g) Services supplied by a person as the holder of an office which has been accepted
by him in the course or furtherance of his trade, profession or vocation;

(h) Activities of a race club including by way of totalisator or a license to book

maker or activities of a licensed book maker in such club and

(i) Any activity or transaction undertaken by the Central Government, a State

Government or any local authority in which they are engaged as public authorities
[Section 2(17)].

• Consideration: in relation to the supply of goods or services or both includes:

(a) Any payment made or to be made, whether in money or otherwise, in respect of,
in response to, or for the inducement of, the supply of goods or services or both,
whether by the recipient or by any other person but shall not include any subsidy
given by the Central Government or a State Government.

(b) The monetary value of any act or forbearance, in respect of, in response to, or
for the inducement of, the supply of goods or services or both, whether by the
recipient or by any other person but shall not include any subsidy given by the
Central Government or a State Government.

Note: However, a deposit given in respect of the supply of goods or services

or both shall not be considered as payment made for such supply unless the
supplier applies such deposit as consideration for the said supply. [Section 2(31)].

5.2. Importation of service

• Import of services for a consideration whether or not in the course or furtherance

of business.

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5.3. Supply without Consideration – Schedule I

• This includes all supplies by a taxable person to a taxable or non-taxable

person, even if the same is without consideration. These are specifically mentioned
in Schedule I appended to the CGST Act. The same has been discussed in the
subsequent paras

i. Permanent Transfer/Disposal of Business Assets where ITC was taken

• Any kind of disposal or transfer of business assets made by an entity on

permanent basis even though without consideration.

• This clause is wide enough to cover transfer of business assets from holding to
subsidiary company for nil consideration. However, it is important to note that
this provision would apply if input tax credit has been availed on such assets.

Example: Dealer of laptops or dealers of cloth gives laptops or clothes free of

cost to their friend.

ii. Supply between related person or distinct persons

• Related person is defined under Section 15 of CGST Act which means the following:

a. Such persons are officers or directors of one another’s businesses;

b. Such persons are legally recognised partners in business;

c. Such persons are employer and employee;

d. Any person directly or indirectly owns, controls or holds twenty-five per

cent or more of the outstanding voting stock or shares of both of them;

e. One of them directly or indirectly controls the other;

f. Both of them are directly or indirectly controlled by a third person;

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g. Person who are associated as sole agent or sole distributor or sole

concessionaire.

h. Together they directly or indirectly control a third person; or they are

members of the same family; FAMILY MEANS

Explanation: Persons who are associated in the business of one another in that one is the sole
agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be
deemed to be related.

Examples:
(i) Mr. A and Mr. B are partners in the partnership firm A&B Co. Mr. A & Mr. B are
related persons. Thus, a transaction of supply between Mr. A & Mr. B in the
course or furtherance of business is treated as supply even if made without
consideration.

(ii) Ms. Priya holds 30% shares of ABC Ltd. and 35% shares of XYZ Ltd. ABC Ltd.
and XYZ Ltd. are related.

(iii) Q Ltd. has a deciding role in corporate policy, operations management and
quality control of R Ltd. It can be said that Q Ltd. controls R Ltd. Thus, Q Ltd.
and R Ltd. are related.

(iv) Alpha Ltd. controls the composition of Board of directors of Beta Ltd. and Gama
Ltd. It is said to control both Beta Ltd. and Gama Ltd. Beta Ltd. and Gama Ltd.
are related persons.

(v) Brita Ltd. and Grita Ltd. together control Margarita Ltd. Brita Ltd. and Grita Ltd.
are related.
• Supply of goods or services or both between an employer and employee: By virtue of
aforesaid definition of related person, employer and employee are related persons.
However, services provided by an employee to the employer in the course of or in
relation to his employment shall not be treated as supply of services [Schedule III
(Negative List)].

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Further, Schedule I provides that gifts not exceeding ₹` 50,000 in value in a financial
year by an employer to an employee shall not be treated as supply of goods or services
or both.

Examples

• Distinct persons: As per section 25 of CGST Act, A person who has obtained/is required
to obtain more than one registration, whether in one State/Union territory or more
than one State/Union territory shall, in respect of each such registration, be treated
as distinct persons.

Stock transfers or branch transfers: In view of the aforesaid discussion, transactions

between different locations (with separate GST registrations) of same legal entity
(eg., stock transfers or branch transfers) will qualify as ‘supply’ under GST.

iii. Importation of Service

Import of services by a person from a related person or from his establishments

located outside India, in the course or furtherance of business shall be treated as
“supply”.

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iv. Principal - Agent

• Supply of goods by a principal to his agent, without consideration, where the agent
undertakes to supply such goods on behalf of the principal is considered as supply.
Similarly, supply of goods by an agent to his principal, without consideration, where
the agent undertakes to receive such goods on behalf of the principal is considered
as supply.

Scope of Principal Agent relationship - Circular 57/31/2018 dated 4th September 2018

The key ingredient for determining relationship under GST would be whether the
invoice for the further supply of goods on behalf of the principal is being issued by
the agent or not. Where the invoice for further supply is being issued by the agent
in his name then, any provision of goods from the principal to the agent would fall
within the fold of the said entry. However, it may be noted that in cases where the
invoice is issued by the agent to the customer in the name of the principal, such agent
shall not fall within the ambit of Schedule I of the CGST Act.

Scenario 1
Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various
suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr.
C) to send the goods and issue the invoice directly to Mr. A. In this scenario, Mr. B is
only acting as the procurement agent, and has in no way involved himself in the supply or
receipt of the goods. Hence, Mr.B is not an agent of Mr. A for supply of goods in terms
of Schedule I.

Scenario 2
M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods.
The auctioneer arranges for auction and identifies potential bidders. The highest bid
is accepted and the goods are sold by M/s XYZ and invoice for supply of goods is
issued by M/s XYZ to successful bidder. In this scenario, auctioneer is merely providing
auctioneering services with no role in supply of goods. Even in this scenario, Mr.B is
not an agent of M/s XYZ for supply of goods in terms of Schedule I.

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Scenario 3
Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges
for the auction and identifies the potential bidders. The highest bid is accepted and
the painting is sold to the highest bidder. The invoice for the supply of the painting
is issued by M/s B on the behalf of Mr. A but in his own name and the painting is
delivered to the successful bidder. In this scenario, M/s B is not merely providing
auctioneering services, but is also supplying the painting on behalf of Mr. A to the
bidder, and has the authority to transfer the title of the painting on behalf of Mr. A.
This scenario is covered under Schedule I.
A similar situation can exist in case of supply of goods as well where the C&F or
commission agent takes possession of the goods from the principal and issues the
invoice in his own name. In such cases, the C&F/commission agent is an agent of
the principal for the supply of goods in terms of Schedule I. The disclosure or non-
disclosure of name of principal is immaterial in such situations.

Scenario 4
Mr. A sells agricultural produce by utilizing the services of Mr. B, a commission agent
as per Agricultural Produce Marketing Committee Act (APMC Act). Mr. B identifies the
buyers and sells the agricultural produce on behalf of Mr. A for which he charges a
commission from Mr. A. As per the APMC Act, commission agent is a person who buys
or sells the agricultural produce on behalf of his principal, or facilitates buying and
selling of agricultural produce on behalf of his principal and receives commission in
such transaction.
In cases where invoice is issued by Mr. B to the buyer, the former is an agent covered
under Schedule I. However, in cases where invoice is issued directly by Mr. A to the
buyer, the commission agent (Mr. B) doesn’t fall under the category of agent covered
under Schedule I.

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5.4. Activities to be treated as supply of goods or supply of services – Schedule II

Sl No. Transaction Type Nature of Supply

1 Transfer Title of goods
Right in goods/ undivided share in goods
without transfer of goods
Title in goods under an agreement which
stipulates that property shall pass at a
future date
2 Land & Building Lease, tenancy, easement, licence to
occupy land
Lease or letting out of building wholly or
partly
3 Treatment or Applied to other person’s goods
process
4 Renting of immovable property
5 Transfer of right to use any goods for any purpose
6 Construction of complex, building, civil structure, etc. except
where the entire consideration has been received after
issuance of completion certificate, where required, by the
competent authority or after its first occupation, whichever
is earlier
7 Temporary transfer or permitting use or enjoyment of any
intellectual property right
8 Development, design, programming, customisation,
adaptation, upgradation, enhancement, implementation of
IT software

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9 Transfer of Goods forming part of business assets

business assets are transferred or disposed off by/under
directions of person carrying on the business,
whether or not for consideration
Goods held/used for business are put to
private use or are made available to any
person for use for any purpose other than
business, by/under directions of person
carrying on the business, whether or not
for consideration
Goods forming part of assets of any
business carried on by a person who
ceases to be a taxable person, shall be
deemed to be supplied by him, in the
course or furtherance of his business,
immediately before he ceases to be a
taxable person
10 Agreeing to obligation to refrain from an act, or to tolerate an
act or situation, or to do an act
11 Works contract services
12 Supply by way of or as part of any other service or in any
other manner whatsoever, of goods, being food or any other
article for human consumption or any drink
13 Supply of goods by an unincorporated association or body of
persons to a member thereof for cash, deferred payment or
other valuable consideration

5.5. Negative list under GST – Schedule III

No. Activities or transactions neither as a supply of goods nor a supply of

services
1 Services by an employee to the employer in the course of or in relation to
his employment
2 Services by any court or Tribunal established under any law for the time
being in force

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3 (a) Functions performed by the Members of Parliament, Members of State

Legislature, Members of Panchayats, Members of Municipalities and
Members of other local authorities;

(b) Duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or

(c) Duties performed by any person as a Chairperson or a Member or a

Director in a body established by the Central Government or a State
Government or local authority and who is not deemed as an employee
before the commencement of this clause
4 Services of funeral, burial, crematorium or mortuary including transportation
of the deceased.
5 Sale of land and, subject to paragraph 5(b) of Schedule II (Construction service),
sale of building
6 Actionable claims, other than lottery, betting and gambling.
Explanation - For the purposes of paragraph 2, the term "Court" includes
District Court, High Court and Supreme Court
7 Services by way of any activity in relation to a function entrusted to a Panchayat
under article 243G of the Constitution by CG, SG or local authority
8 Alcoholic Liquor License fee charged by State Government

IMMOVABLE PROPERTY
Money
ACTIONABLE CLAIM
GOODS
EMPLOYEE

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6. Questions on Section 7
Case Taxability and classification
Sale of goods for a consideration in the course
of business.
Purchase of mobile phone paying ` 15,000
after exchange of old phone worth ` 4,000.
Mr A (photographer) clicks a photograph of Mr
B and gets his bicycle for 2 days.
Renting of immovable property.
Sale of land by Mr A.
Sale of lottery ticket.
Demand draft of ` 5,000 without a fee.
Demand draft of ` 5,000 with a fee of ` 40.
Exchange of foreign currency with a fee.
Commission earned from sale of goods.
Employer providing transportation service to
employees for ` 200 per month as part of
employment.
Employer providing canteen facility for a
charge.
Finance minister receiving teaching fee from JKSC.
Investment in Mutual Fund.
Commission earned by mutual fund agents.

Insurance claim receipts.

Insurance Premium charged by insurance
company.
Commission earned by insurance agent.
Sale of old car which was used for personal
purpose.
Inter-state movement of various modes of
conveyance such as trucks, buses between
distinct persons.

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7. Composite and Mixed Supplies [Section 8 of CGST Act]

• The tax liability on composite or a mixed supply shall be determined in the
following manner, namely:-

- A composite supply4 comprising two or more supplies, one of which is a

principal supply, shall be treated as a supply of such principal supply5.

- A mixed supply6 comprising of two or more supplies shall be treated as

supply of that particular supply that attracts highest rate of tax.

4
Composite supply means a supply made by a taxable person to a recipient and comprises two or more taxable supplies
of goods or services or both, or any combination thereof are naturally bundled and supplied in conjunction with each
other, in the ordinary course of business.
5
Principal supply means the supply of goods or services which constitutes the predominant element of a composite
supply and to which any other supply forming part of that composite supply is ancillary.

6
Mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in
conjunction with each other by a taxable person for a single price where such supply does not constitute a composite
supply.

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Problems – Time of Supply

1. Determine the time of supply of SERVICES in the following cases

Case Date of Date of Invoice Date of receipt of Time of Supply

Completion payment
1 10th Oct, 2021 25th Oct, 2021 15th Oct, 2021
2 10th Oct, 2021 25th Nov, 2021 15th Oct, 2021
3 10th Oct, 2021 25th Oct, 2021 09th Oct, 2021
4 10th Oct, 2021 25th Nov, 2021 07th Oct, 2021

2. Determine the time of supply of GOODS in the following cases where Supply involves
movement

Case Date of Removal Date of Invoice Date of receipt of Time of Supply

payment
1 16th Oct, 2021 25th Oct, 2021 15th Oct, 2021
2 10th Oct, 2021 25th Nov, 2021 15th Oct, 2021
3 25th Oct, 2021 10th Oct, 2021 24th Oct, 2021

3. Illustration: Supply does not involve movement - GOODS

Case Date of making Date of Invoice Date of receipt of Time of Supply

available payment
1 16th Oct, 2021 25th Oct, 2021 15th Oct, 2021
2 10th Oct, 2021 25th Nov, 2021 15th Oct, 2021
3 25th Oct, 2021 10th Oct, 2021 24th Oct, 2021
4 25th Oct, 2021 15th Oct, 2021 30th Oct, 2021

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4. Determine Time of supply for services - RCM

Case Date of Date of Invoice Date of payment Time of Supply

Completion
1 10th Oct, 2021 25th Oct, 2021 15th Oct, 2021
2 10th Oct, 2021 25th Nov, 2021 15th Dec, 2022
3 10th Oct, 2021 25th Oct, 2021 09th Jan, 2021
4 10th Oct, 2021 25th Nov, 2021 07th Dec, 2021

5. Determine TOS for Goods – Reverse Charge

Removal of Issue of Receipt of Date of Time of Supply

goods invoice goods payment
1st Nov, 25th Oct, 15th Nov, 25th Nov,
2021 2021 2021 2021
1st Nov, 25th Oct, 15th Nov, 12th Nov,
2021 2021 2021 2021
1st Oct, 1st Oct, 15th Nov, 12th Nov,
2021 2021 2021 2021
1st Oct, 1st Oct, 10th Feb, 02nd May,
2021 2021 2022 2022

6. Continuous supply

Gas is supplied by a pipeline. Monthly payments are made by the recipient as per
contract. Every quarter, invoice is issued by the supplier supported by a statement
of the goods dispatched and payments made, and the recipient has to pay the
differential amount, if any. The details of the various events are:

• August 5, September 5, October 6 - Payments of Rs 2 lakh made in each month.

• October 3 Statement of accounts issued by supplier, with invoice for the quarter July
– September
• October 17 Differential payment of Rs 56,000 received by supplier for the quarter
July –September as per statement of accounts

Determine the time of supply.

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7. Service industry

Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks
in an apartment complex, for which the Apartment Owners’ Association showed a
payment in cash on 4th April to them against work of this description. The dates
of the work are not clear from the records of ABC & Co. ABC & Co have not issued
invoice or entered the payment in their books of account.

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Exemptions

1. Power to Exempt – Section 11 of CGST Act, 2017

• Overview

Section 11 of CGST Act, 2017/ Section 6 of IGST Act, 2017

General Exemption: If the CG is satisfied that it is necessary in the public interest,
it may on the recommendation of GST Council exempt, goods or services of any
specified description from the whole or any part of the GST leviable thereon, subject
to such conditions (to be fulfilled before or after removal) as may be specified in the
notification.
Special Exemption: On the recommendation of GST Council, Central Government may
by special order in each case, exempt goods or services of any specified description
from the whole or any part of the GST leviable thereon, under circumstances of an
exceptional nature to be stated in such order, subject to such conditions (to be
fulfilled before or after removal) as may be specified in the order.

This exemption is also called as ad-hoc exemption and can also be granted
retrospectively.
Explanation: Central Government may insert Explanations for clarifying the scope or
applicability of the notification or special order.

Such explanation can have retrospective effect from date of exemption notification.
However, the Explanation should be inserted within 1 year from issue of such
Notification or Order.
Mandatory: If an exemption is absolute – whether for whole or part of GST, then the
registered person supplying such goods or services or both shall not collect the
tax, in excess of the effective rate after giving effect to the exemption.

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2. List of Service Exemptions – Notification no.12/2017 of CGST and 9/2017 of IGST

2.1. Renting of Immovable Property

a) Exemptions

• Renting or leasing of vacant land relating to agriculture7 .

• Renting of a residential dwelling for use as residence. Hotel, Lodge used as residence
for temporary or long period will not be covered under this entry as they are not
residential dwelling.

• Renting of Hotel, Inn, guest house, club or campsite, by whatever name called, for
residential and lodging purpose having value of supply of a unit of accommodation
below or equal to 1,000 rupees per day or equivalent.

2.2. Hiring, Leasing, Licensing of Goods

• Services by way of giving on hire

(a) Motor vehicle meant to carry more than 12 passengers to State transport undertaking;
or

(b) Electrically operated vehicle meant to carry more than 12 passengers to Local authority;
or

(c) Means of transportation of goods to a Goods transport agency; or

7
Agriculture means the cultivation of plants and rearing of all life forms of animals except rearing of horses, for food,
fibre, fuel, raw materials or other similar products.

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 INTER – INDIRECT TAX

(d) Motor vehicle for transport of students, faculty and staff, to a person providing
services of transportation of students, faculty and staff to an educational institution
providing services by way of pre-school education and education upto higher
secondary school or equivalent.

2.3. Construction Services

• Services provided by way of pure labour contracts of construction, erection,

commissioning, installation, completion, fitting out, repair, maintenance, renovation,
or alteration of a civil structure or any other original works pertaining to the
beneficiary-led individual house construction or enhancement under the Housing for All
(Urban) Mission or Pradhan Mantri Awas Yojana.

• Services by way of pure labour contracts of construction, erection, commissioning, or

installation of original works pertaining to a single residential unit otherwise than as a
part of a residential complex8.

• Services supplied by electricity distribution utilities by way of construction, erection,

commissioning, or installation of infrastructure for extending electricity distribution
network upto the tube well of the farmer or agriculturalist for agricultural use.

2.4. Services provided by Government and Local Authorities

• Exemption

8
Residential complex: means any complex comprising of a building or buildings, having more than one single residential
unit

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 INTER – INDIRECT TAX

• Additional Points

 Basic postal services, money orders, book post, registered posts provided by
department of post is not taxable. However, agency services are liable to GST.

 Any service provided by CG, SG or LA upto ` 5,000 is also exempted. This exemption
is not applicable to first three limbs of exemption

 Exemption: Any service provided by Government to a business entity whose

turnover does not exceed registration limit(`40/`20/`10 lakh) in preceding
financial year is exempt except first three limbs and renting of immovable
property.

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 INTER – INDIRECT TAX

• Other Points & Exemptions related to Government

Type of service Taxability

Service provided by Government or local Such services have been exempted.
authority to another Government or local However, it does not apply to first three limbs
authority of 1st exemption provided by government.
Service provided to an individual who may Services by way of grant of passport, visa,
be carrying out a profession or business. driving license, birth or death certificates
have been exempted.
Services in the nature of allocation of Exempted. However, Such allocations/
natural resources by Government or a auctions to categories of persons other
local authority to individual farmers than individual farmers would be
leviable to GST.
Services provided in lieu of fee charged by Registration required under the law;
Government or a local authority testing, calibration, safety check or
certification relating to protection or
safety of workers, consumers or public at
large, required under the law, have been
exempted.
Fines and It is clarified that fines and penalty chargeable by Government or a
penalties local authority imposed for violation of a statute, bye-laws, rules or
regulations are not leviable to GST.
Fines and liquidated damages payable to Government for non-
performance of contract entered into with Government or local
authority have been exempted.
Guarantee Services supplied by Central Government, State Government, Union
Commission territory to their undertakings or PSUs by way of guaranteeing the
loans taken by such undertakings or PSUs from the banking companies
& financial institutions.
Long term One time upfront amount (called as premium, salami, cost, price,
lease by State development charges or by any other name) leviable in respect
Government of the service, by way of granting long term (thirty years, or more)
lease of industrial plots or plots for development of infrastructure for
financial business, provided by the State Government Industrial
Development Corporations or Undertakings or by any other entity
having 20% or more ownership of CG, SG, UT to industrial units is
exempted

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 INTER – INDIRECT TAX

Charges for Services provided by the Central Government, State Government,

officers Union territory by way of deputing officers after office hours or on
holidays for inspection or container stuffing or such other duties in
relation to import export cargo on payment of Merchant Overtime
charges is exempted.
Petroleum Supply of services by way of grant of license or lease to explore or
Profit mine petroleum crude or natural gas or both, from so much of tax
as is leviable on the consideration paid to the Central Government
in the form of Central Government’s share of profit petroleum as
defined in the contract entered into by the Central Government in
this behalf.
Assigning Services supplied by a State Government to Excess Royalty Collection
right to collect Contractor (ERCC) by way of assigning the right to collect royalty on
royalty behalf of the State Government on the mineral dispatched by the
mining lease holders.
FSSAI Services by way of licensing, registration and analysis or testing of
food samples supplied by the Food Safety and Standards Authority
of India (FSSAI) to Food Business Operators.
Panchayat and Pure Service/ Composite supply of goods or services where value of
Municipality goods is not more than 25% of the total value provided to Government
or local authority or government authority or government entity
by way of any activity in relation to any function entrusted to
Panchayat under Article 243G or to Municipalities under Article 243W
of the Constitution.
Commission paid Service provided by Fair Price Shops to Central Government, State
to ration shops Government or Union territory by way of sale of food grains,
kerosene, sugar, edible oil, etc. under Public Distribution System
against consideration in the form of commission or margin

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 INTER – INDIRECT TAX

2.5. Education related services - Exemption

• Services provided

(a) BY an educational institution* to its students, faculty and staff.

(aa) By an education institution* by way of conduct of entrance examination against

consideration in the form of entrance fee.

(b) TO an educational institution*, by way of,-

(i) Transportation of students, faculty and staff;

(ii) Catering, including any mid-day meals scheme sponsored by the
Government;
(iii) Security or cleaning or house-keeping services performed in such educational
institution;
(iv) Services relating to admission to, or conduct of examination by, such
institution;
(v) Supply of online educational journals or periodicals;

Note 1: However nothing contained in entry (i) (ii) (iii) of item (b) shall apply to an education
institution* other than an institution providing services by way of pre-school education and
education up to higher secondary school or equivalent.

Note 2: Provided further that nothing contained in sub-item (v) of item (b) shall apply to an
institution providing services by way of,-

(i) Pre-school education and education up to higher secondary school or equivalent; or

(ii) Education as a part of an approved vocational education course

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 INTER – INDIRECT TAX

*Education institution9 means an institution providing services by way of -

(i) Pre-school education and education up to higher secondary school or equivalent;

(ii) Education as a part of a curriculum for obtaining a qualification recognised by
any law for the time being in force;
(iii) Education as a part of an approved vocational education course**;

**Approved vocational education course means,-

(i) A course run by an industrial training institute or an industrial training centre

affiliated to the National Council for Vocational Training or State Council for
Vocational Training offering courses in designated trades notified under the
Apprentices Act, 1961 (52 of 1961.); or

(ii) A Modular Employable Skill Course, approved by the National Council of

Vocational Training10, run by a person registered with the Directorate General of
Employment and Training, Union Ministry of Labour and Employment.

9
It is clarified that the Central and State Educational Boards shall be treated as Educational Institution for the limited
purpose of providing services by way of conduct of examination to the students.
10
Circular number 55/2018 clarified that private Industrial Training Institutes providing courses approved by NCVT/
SCVT would be exempt.

269
 INTER – INDIRECT TAX

270
 INTER – INDIRECT TAX

2.6. Transportation of goods - Exemptions

• Services by way of transportation of goods by road except the services of goods

transportation agency11 or courier agency12 ;

• GTA providing service to an unregistered person other than specified persons.

• GTA providing service to Government Department, Local authority, Government

Agency who have registered under GST for deducting tax u/s 51 – To be discussed in
TDS.

• Transportation of goods by an aircraft from outside India upto the custom airport;

• By inland waterways (means national waterway);

• Services by way of transportation by rail or a vessel from one place in India to another
and transportation by Goods Transportation Agency of the following goods:

- Relief materials meant for victims of natural or man-made disasters, calamities,

accidents or mishap;
- Defence or military equipment’s;
- Newspaper or magazines registered with the Registrar of Newspapers;
- Railway equipment’s or materials; (Except through GTA)
- Agricultural produce;
- Milk, Salt and Food grains including flour, pulses and rice; or
- Organic manure;

• Services by way of transportation of goods by an aircraft/vessel from customs station of

clearance in India to a place outside India. (upto 30th September 2021);

11
GTA means any person who provides services in relation to transportation of goods by road and issues consignment
note, by whatever name called.
12
Courier agency means any person engaged in the door-to-door transportation of time-sensitive documents, goods
or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents,
goods or articles.

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 INTER – INDIRECT TAX

• Additional Exemption for GTA Service

- Goods, where gross amount charged for the transportation of goods on a

consignment transported in a single carriage does not exceed ` 1500;
- Goods, where gross amount charged for transportation of all such goods for a
single consignee does not exceed ` 750;

Examples

2.7. Transportation of passengers - Exemptions

• Railways in a class other than First class; or An air-conditioned coach;

• Metro, monorail or tramway;

• Inland waterways;

• Public transport, other than predominantly for tourism purpose, in a vessel, between
places located in India; and

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 INTER – INDIRECT TAX

• Metered cabs13, Auto rickshaws;

• Transport of passengers by Air, embarking from or terminating in an airport located

in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, or Tripura or at Bagdogra located in West Bengal; In short- North eastern
states, to encourage development.

• Services provided to the Central Government, by way of transport of passengers with or

without accompanied belongings, by air, embarking from or terminating at a regional
connectivity scheme airport, against consideration in the form of viability gap funding.
(Upto a period of 3 years from date of commencement of connectivity scheme)

• Non-air conditioned contract carriage other than radio taxi, for transportation of
passengers, excluding tourism, conducted tour, charter or hire; or

• Stage carriage other than AC stage carriage.

Radio taxi means a taxi including a radio cab, by whatever name called, which is in two-way radio communication
13

with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio
Service (GPRS).

Metered cab means any contract carriage on which an automatic device, of the type and make approved under
the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any
moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988
(59 of 1988.) and the rules made thereunder but does not include radio taxi.

Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver
for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of
the journey.- Motor Vehicle Act, 1988. A person can get in or get down at any stage of journey.

In a contract carriage, the person will always buy a ticket for the whole journey. Generally, passengers do not get
in or step down at every point.

273
 INTER – INDIRECT TAX

274
 INTER – INDIRECT TAX

2.8. Agriculture Related Exemptions

a) Services relating to cultivation of plants and rearing of animals except rearing of horses,
for food, fibre, fuel, raw material or similar produce or agricultural produce by way of —

- (i) Agricultural operations directly related to production of any agricultural

produce including cultivation, harvesting, threshing, plant protection or
testing;
- (ii) Supply of farm labour;
- (iii) Processes carried out at an agricultural farm including tending, pruning,
cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating,
curing, sorting, grading, cooling or bulk packaging and such like operations
which do not alter the essential characteristics of agricultural produce but
make it only marketable for the primary market;
- (iv) Renting or leasing of agro machinery or vacant land with or without a
structure incidental to its use;
- (v) Loading, unloading, packing, storage or warehousing of agricultural
produce;
- (vi) Agricultural extension services;
- (vii) Services by any Agricultural Produce Marketing Committee or Board or
services provided by a commission agent for sale or purchase of agricultural
produce14;

b) Services by way of storage or warehousing of cereals, pulses, fruits, nuts and

vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton,
flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee
and tea

c) Pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and

vegetables.

d) Services by way of fumigation in a warehouse of agricultural produce.

14
Agricultural produce means any produce of agriculture on which either no further processing is done or such processing
is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it
marketable for primary market.

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 INTER – INDIRECT TAX

e) Services by way of loading, unloading, packing, storage or warehousing of rice.

f) Services by way of warehousing of minor forest produce.

g) Carrying out an intermediate production process as job work in relation to cultivation

of plants and rearing of all life forms of animals, except the rearing of horses, for
food, fibre, fuel, raw material or other similar products or agricultural produce.

Examples:

2.9. Health Care Services and Charity Related Exemptions

a) Health care services15 by a clinical establishment16 , an authorised medical practitioner

or para-medics and Ambulance services provided by any person17 .

b) Services provided by operators of the Common Bio-medical Waste Treatment Facility

to a clinical establishment by way of treatment or disposal of biomedical waste or
processes incidental thereto

c) Service provided by a cord blood bank in relation to preservation of stem cells.

d) Services by a veterinary clinic in relation to health care of animals or birds;

e) Services by an entity registered under section 12AA of the Income tax Act,1961 (43
of 1961) by way of charitable activities*;

*Charitable activities means activities relating to -

- (i) Public health by way of -

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 INTER – INDIRECT TAX

(a) Care or counseling of (i) terminally ill persons or persons with severe physical or
mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted
to a dependence-forming substance such as narcotics drugs or alcohol; or
(b) Public awareness of preventive health, family planning or prevention of HIV
infection;

- (ii) Advancement of religion or spirituality or yoga;

- (iii) Advancement of educational programmes or skill development relating

to,-

(a) Abandoned, orphaned or homeless children;

(b) Physically or mentally abused and traumatized persons or prisoners;
(c) Persons over the age of 65 years residing in a rural area;

- (iv) Preservation of environment including watershed, forests and wildlife

f) Services by an old age home run by Central Government, State Government or by an entity
registered under Section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years
or more) against consideration upto 25,000 per month per member.

Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality
15

or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the
patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except
when undertaken to restore or to reconstruct functions of body affected due to such injury or trauma.

Clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever
16

name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity,
abnormality or pregnancy in any recognised system of medicines in India.

Circular number 51/25/2018 has clarified that ambulance service provided by private operators to Government under
17

National Health Mission is not liable to GST.

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 INTER – INDIRECT TAX

g) Services provided by an unincorporated body or a non-profit entity registered under any

law for the time being in force, engaged in

i) Activities relating to the welfare of i) To its own members against

industrial or agricultural labour or consideration in the form of
farmers; or membership fee upto an amount of
ii) Promotion of trade, commerce, one thousand rupees (`1000/-) per
industry, agriculture, art, science, member per year
literature, culture, sports, education,
social welfare, charitable activities and
protection of environment

h) Services by way of training or coaching in recreational activities relating to -

 Arts, Culture, or
 Sports by charitable entities registered under section 12AA of Income Tax Act,
1961

i) Services by a person by way of-

 Conduct of any religious ceremony;
 Renting of precincts of a religious place meant for general public by an entity
registered u/s 12AA of Income tax Act. 1961 or;
Except
 Rooms for `1000 or more per day;
 Community hall for ` 10,000 or more per day;
 Shops for ` 10,000 or more per month

j) Services provided by rehabilitation professionals recognised under the Rehabilitation

Council of India Act, 1992 (34 of 1992) by way of rehabilitation, therapy or counselling
and such other activity as covered by the said Act at medical establishments,
educational institutions, rehabilitation centers established by Central Government,
State Government or Union territory or an entity registered under section 12AA of
the Income-tax Act, 1961

2.10. RBI, Embassy and Financial Sector Related Exemptions

a) Services by the Reserve Bank of India;

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 INTER – INDIRECT TAX

b) Services received by the Reserve Bank of India, from outside India in relation to
management of foreign exchange reserves;

c) Services by a Foreign Diplomatic Mission located in India;

d) Banking and other financial services- Services by way of—

- (i) extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount except interest on credit card;
- (ii) inter se sale or purchase of foreign currency amongst banks or authorised
dealers of foreign exchange or amongst banks and such dealers;

e) Service by an acquiring bank, to any person in relation to settlement of an amount

upto two thousand rupees in a single transaction transacted through credit card,
debit card, charge card or payment card services.

f) Service provided by a Banking Company to Basic Saving Bank Deposit (BSBD) account
holders under Pradhan Mantri Jan Dhan Yojana (PMJDY).

g) Business facilitator or business correspondent to banking company with respect to

accounts in its rural area branch or any intermediary to the business facilitator or
business correspondent.

h) Business facilitator/ Business Correspondent to insurance company in rural area.

2.11. Other services - Exemptions

a) Toll Charges- Service by way of access to a road or a bridge on payment of toll

charges/ annuity.

b) Transmission or distribution of electricity by an electricity transmission or distribution

utility;

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 INTER – INDIRECT TAX

c) Arbitral Tribunal and Advocates (Not CA,CS,ICWA) by way of legal service -

d) Services provided by a tour operator to a foreign tourist in relation to a tour conducted

wholly outside India.

e) Services by an organiser to any person in respect of a business exhibition held outside

India;

f) Service by an unincorporated body or a non-profit entity registered under any law, to its
own members by way of reimbursement of charges or share of contribution -

• As a trade union;

• For the provision of carrying out any activity which is exempt from the levy of GST; or

*Legal service means any service provided in relation to advice, consultancy or assistance in any branch of law, in any
manner & includes representational services before any court, tribunal or authority

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 INTER – INDIRECT TAX

• Upto an amount of ` 7,500 per month per member for sourcing of goods or services
from a third person for the common use of its members in a housing society or a
residential complex;

g) Services of admission to a museum, zoo, national park, wildlife sanctuary and a tiger
reserve. Ancient monuments have been exempted recently.

h) Service by way of Right to admission to:

 Circus, dance, or theatrical performances including drama where the
or ballet. consideration for
 Award functions, concerts, pageants, musical performances such admission
or any sporting events other than recognized sporting event. is upto `500
 Recognized sporting events and Planetarium. per person.

i) Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance,
or (iii) theatre upto `1,50,000 per performance, excluding services provided by such
artist as a brand ambassador.

j) Services provided to a recognised sports body by-

• (a) an individual as a player, referee, umpire, coach or team manager for participation
in a sporting event organized by a recognized sports body;

• (b) another recognised sports body;

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 INTER – INDIRECT TAX

k) Services by way of sponsorship of sporting events organised,-

 By a national sports federation, or its affiliated federations, where the participating

teams or individuals represent any district, State, Zone or Country;
 By Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for Deaf, Paralympic Committee of
India or Special Olympics Bharat;
 By Central Civil Services Cultural and Sports Board;
 As part of national games, by Indian Olympic Association; or
 Under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

l) Services received from a provider of service located in a non- taxable territory by -

o (i) Government, a local authority, a governmental authority or an individual

in relation to any purpose other than commerce, industry or any other
business or profession;

o (ii) An entity registered under section 12AA of the Income tax Act, 1961 (43 of
1961) for the purposes of providing charitable activities; or

o (iii) A person located in a non-taxable territory;

m) Services imported by unit/developer in SEZ for authorised operations are exempt

from IGST.

n) Services by an intermediary of financial services located in a multi services SEZ with

International Financial Services Centre (IFSC) status to a customer located outside
India for international financial services in currencies other than Indian rupees (INR).
[Eg: Gift City Gandhinagar]

o) Services provided to the Central Government, State Government, Union territory

administration under any training program for which total expenditure is borne by
CG/SG/UT.

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 INTER – INDIRECT TAX

2.12. Read these exemptions yourself 

a) Services by way of collecting or providing news by an independent journalist, Press

Trust of India or United News of India;

b) Services by way of public conveniences such as provision of facilities of bathroom,

washrooms, lavatories, urinal or toilets;
c) Services of public libraries by way of lending of books, publications or any other
knowledge enhancing content or material;

d) Services by way of slaughtering of animals;

e) Services by way of transfer of a going concern, as a whole or an independent part

thereof;

f) Service provided to the Central Government, State Government or Union Territory

under any insurance scheme for which total premium is paid by CG/SG/UT.

g) Specified schemes18 of general insurance business. Services of life insurance business

provided under following schemes -

(i) Janashree Bima Yojana (JBY); or Aam Aadmi Bima Yojana (AABY);

(ii) Varista Pension Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri
Jeevan Jyoti Bima Yojana and Jan Dhan Yojana, Atal Pension Yojana, Pradhan Mantri
Vaya Vandana Yojana;

(iii) Life micro-insurance product as approved by the Insurance Regulatory and

Development Authority, having maximum amount of cover of two lakh rupees;

18
Hut insurance scheme, Cattle insurance, scheme for insurance of tribals, Janata Personal Accident Policy and Gramin
Accident Policy, Group Personal Accident Policy for Self Employed women, Agricultural Pumpset and Failed Well
Insurance, Jan Arogya Bima Policy, Universal Health Insurance scheme, National Agricultural Insurance Scheme, Nirmaya
health insurance scheme, Bangla Shasya Bima

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 INTER – INDIRECT TAX

h) Any service provided by

 The National Skill Development In relation to
Corporation (NSDC) set up by  The National Skill Development
Government of India programme implemented by NSDC
 A Sector Skill Council approved by  A Vocational Skill development
NSDC course under National Skill
 An assessment agency approved by Certification and Monetary Reward
above two Scheme
 A training partner approved by  Any other scheme implemented by
above two NSDC
i) Service rendered by training providers under Deen Dayal Upadhyaya Grameen
Kaushalya Yojana.
j) Services of assessing bodies empanelled centrally by the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship by way of assessments
under the Skill Development Initiative Scheme.

k) Service provided by Employee Provident Fund Organisation, IRDA to insurers, SEBI and
National Centre for Cold chain development.

l) Services by Employees‘ State Insurance Corporation to persons governed under the

Employees‘ Insurance Act, 1948 (34 of 1948);

m) Services of life insurance business provided or agreed to be provided by the Army,

Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force
respectively, under the Group Insurance Scheme of Central Government. Services of
life insurance provided or agreed to be provided by the Naval Group Insurance Fund
to the personnel of Coast Guard & Central Armed Police Force under the Group Insurance
Schemes of the Central Government.

n) Services by Coal Mines Provident Fund Organization to persons governed by the Coal
Mines Provident Fund and Miscellaneous Provisions Act, 1948.

o) Service provided under National Pension system.

p) Services by National Pension System (NPS) Trust to its members against consideration in
the form of administrative fee.

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 INTER – INDIRECT TAX

q) Services provided by the Goods and Services Tax Network to the Central Government
or State Governments or Union territories for implementation of Goods and Services
Tax.

r) Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by
the Indian Railways Finance Corporation to Indian Railways.

s) Services by way of providing information under the Right to Information Act, 2005.

t) Services by way of artificial insemination of livestock (other than horses).

u) Supply of services associated with transit cargo to Nepal and Bhutan.

v) Satellite launch services supplied by Indian Space Research Organisation, Antrix

Corporation Limited or New Space India Limited.

w) Service provided by an intermediary when location of the supplier of goods & recipient
of goods is outside India.

x) Service provided by the Haj Committee and Kumaon Mandal Vikas Nigam Limited in
relation to pilgrimage to Mecca and Kailash Mansarovar.

3. Questions for practice

Case Taxability
Catering service provided to visitors by educational institution
Catering service provided to students by an education institute
Renting of immovable property to an education institute
Renting of vacant land for agriculture
Renting of vacant land to a stud farm
Renting of vacant land for poultry farming
Security service provided by Cobra Limited to a degree college
Security service provided by Cobra Limited to a school
A vocational training programme by Rajasthan Parishad, Bangalore

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 INTER – INDIRECT TAX

Vocational training programme approved by National council for

Vocational training
Swimming pool usage service provided by degree college to Faculties
Repair and Maintenance of a college building
Speed post provided by Dept of Post to Karnataka State Government
Speed post provided to an individual with no business/profession
Speed post service provided to a business entity
Repair of an aircraft provided by a Government department
Basic Mail service
Collection of telephone bills by dept of post on behalf of telecom
operators
Mining license given to a business entity
Passport of employees of a business owned by Mr. A
Mining license given to a business entity whose turnover in PFY was
18 lakhs
Mumbai Police providing security service to person other than
business entity
Money order by department of post
Marriage certificate for ` 2,000 from the registrar
Pension payments by department of post
Service provided by Central government to State government
Warehousing of biscuits
Transportation of Flour by Rail (Non AC)
Transportation of mineral oil by GTA to Registered Person
Warehousing for vegetable Oil
Supply of farm labour
Commission agent of wheat
Commission agent of Rice
Commission agent of watches
Packing and loading of wheat
Packing and loading of rice
Packing and loading of paddy
Training to farmers
Testing of farm Soil
Scientific research on Tropicana Fruit juice
Waxing of apples
Service provided to RBI
Service provided by a CA to RBI

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 INTER – INDIRECT TAX

Service provided by an Embassy

Administration charges for loan processing
Interest on Government Securities
Discount earned on bills discounted
Interest earned by a pawn broker for loan on jewellery
Exchange of foreign currency with general public
Entry fee to Bangalore International Circus – ` 600
Entry Fee to IIFA Award function – ` 200
Entry fee to India v Australia match – ` 5,000
Entry fee to IPL Match – ` 500
Entry fee to hip hop dance performance by Hema Malini – ` 200.
Hema Malini Charged ` 1,00,000 for the performance
Entry fee to Kathak dance performance by Honey Singh – ` 700.
Honey Singh Charged ` 1,50,000 for the performance
Zakir Hussain charged ` 1,00,000 for Taj Mahal Tea advertisement
Entry fee to Amoeba bowling centre – ` 11
Entry fee to a pageant – ` 499
Entry fee to snow city – ` 99
Entry Fee to Wonderla (Amusement Park)– ` 199
Health care service provided by Fortis Hospital
Mr A (CA) providing health advisory for cough and cold
Cosmetic and plastic surgery for an accident
Advocate providing legal service to a person other than business
entity
A CA providing representation service before income tax authorities
Recreational activity in relation to arts
CA providing service to a charitable trust registered u/s 12AA
Entry fee to a museum
Entry fee to a wild life sanctuary
IRDA providing service to insurers
Life micro insurance of ` 2,75,000
Public library
Virat Kohli receiving fees for Boost advertisement
Virat Kohli receiving fees from BCCI
Virat Kohli receiving fees from IPL franchise
A religious ceremony conducted by a priest for ` 10,000
Renting of shop in precincts of religious premise for ` 10,000 per
month
Renting of shop in precincts of religious premise for ` 9,000 per month
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Renting of shop in precincts of religious premise for ` 11,000 per

month
Ravi Shastri receiving fees from BCCI for Commentary
A commercial complex charging ` 3,000 per month as maintenance
A commercial complex charging ` 8,000 per month as maintenance
A residential complex charging ` 3,000 per month as maintenance
A residential complex charging ` 8,000 per month as maintenance
Pradhan mantri jeevan jyothi yojana
Public telephone booth
Public Conveniences
A service provided by GSTN to Karnataka State Government
Passengers – Tramway
Passengers – Aerial Tramway
Preservation of stem cells
Ambulance service provided by a CA
Transportation of passengers by Sleeper class (Rail)
Transportation of passengers by Two tier AC (Rail)
Transportation of passengers by Metro
Transportation of passengers by AC Monorail
Transportation of passengers by Non AC contract carriage
Transportation of passengers by Non AC stage carriage
Transportation of goods by Muniraju Auto driver
Transportation of goods by GTA to Registered Person
Transportation of goods by Courier Agency
Transportation of goods by GTA – Agriculture Produce
Transportation of goods by GTA – Organic Manure
Transportation of goods by aircraft from a place outside India upto
Custom Airport
Transportation of goods by Vessel from a place outside India upto
Custom Port
Transportation of goods by Inland waterways
Construction of a villa as part of a residential complex
Hiring of a truck to GTA
Hiring of a truck to Mr B (Individual Truck Driver)
Root canal by a Dentist
Slaughtering of animals
Transfer of business as going concern
Credit card Interest
Training given to trainers of farmers
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 INTER – INDIRECT TAX

Development of a new research drug

Dehusking of paddy to rice on job work basis
Leasing of vacant land to a poultry farm
Plantation of tea and coffee
Amount of commission received for debt collection service
Discount earned on bills discounted
Charges received on credit card and debit card facilities extended
Commission received for service rendered to Government for tax
collection
Interest earned on reverse repo transaction
Future contracts without delivery of underlying asset
Service supplied by a private transport operator to a School in
relation to transportation of students to and from a School
Services supplied by way of vehicle parking to general public in a
shopping mall.
Service supplied by way of repair or maintenance of aircraft owned by
a State Government
Exhibiting movies on television channels
Transportation of petroleum and petroleum products and household
effects by railways
Transportation of postal mails or mail bags by a vessel
Printing services for printing the question papers provided to a school
Honorarium to paper setters and examiners provided to a degree
college
Rural postal life insurance service in a Post office
Distribution of mutual funds, bonds and passport applications by Post
Office
Premises let to a temple trust for ` 40,000 by PQR Properties engaged
in the business of renting immovable properties
Building let to a theatre for ` 80,000 by PQR Properties engaged in
the business of renting immovable properties

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 INTER – INDIRECT TAX

Payment of GST

1. Introduction

• Working of the three Ledgers is as follows:

Note: Any sum due in Electronic Liability Ledger can be paid through Cash Ledger or Credit
Ledger. This chapter helps to understand the three ledgers.

2. Definitions

• Valid return means a return furnished under sub-section (1) of section 39 on which
self-assessed tax has been paid in full.

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• Output tax in relation to a taxable person, means the tax chargeable under this Act
on taxable supply of goods or services or both made by him or by his agent but
excludes tax payable by him on reverse charge basis.

• CPIN stands for Common portal Identification Number. It is created for every Challan
successfully generated by the taxpayer. It is a 14-digit unique number to identify the
challan. CPIN remains valid for a period of 15 days.

• CIN or Challan Identification Number is generated by banks, once payment in lieu of

a generated Challan is successful. It is a 17-digit number that is 14-digit CPIN plus
3-digit Bank Code.

• BRN or Bank Reference Number is the transaction number given by the bank for a
payment against a Challan.

3. Utilization methodology – ONLY FOR ITC not for CASH – Section 49(5), 49A, 49B

Type of Tax Order of Utilization

IGST It is first utilized against Output IGST. Then against Output
CGST and against Output SGST/ UTGST in ANY ORDER AND
ANY PROPORTION.
CGST It is utilized against Output CGST and thereafter against
Output IGST.
SGST/ UTGST It is utilized against Output SGST/ UTGST and thereafter
against Output IGST.
Compensation CESS Only against Output Compensation Cess.
Note: ITC Cross utilization of CGST and SGST is strictly prohibited. Use ITC of C & S only
after utilising ITC of IGST completely.

4. Major and Minor Heads for payment

Major Heads Minor Heads
IGST Tax
CGST Interest
SGST/ UTGST Penalty
Compensation Cess Fee
----------- Others

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Note 1: Cross Utilization of Major Head and Minor Head is strictly prohibited.
Note 2: Cross Utilization within Minor head is also not allowed.

Example for Adjustment: An amount of ` 1,000 is available under minor head ‘tax’ of major
head ‘SGST/UTGST’ and the taxpayer has a liability of ` 200 for minor head ‘interest’
under the same major head ‘SGST/UTGST’. Since, there is no amount available under
minor head ‘interest’ under major head “SGST/UTGST”, therefore, interest payment cannot
be made from the amount available under ‘tax’ of the same major head.

5. Payment of tax, interest, penalty and other amounts – Section 49 with the Rules

• Credit to E Cash Ledger: Every deposit made towards tax, interest, penalty, fee or any
other amount by a person by internet banking or by using credit or debit cards or National
Electronic Fund Transfer or Real Time Gross Settlement or by such other mode shall be
credited to the electronic cash ledger.

• Credit to E Credit Ledger: The input tax credit as self-assessed in the return of a
registered person shall be credited to his electronic credit ledger as provisional credit
u/s 41.

• What happens if the taxable person files the return but does not make payment of tax?

Solution: In such cases, the return is not considered as a valid return. Section 2(117)
defines a valid return to mean a return furnished under sub-section (1) of section
39 on which self-assessed tax has been paid in full. It is only the valid return that
would be used for allowing input tax credit (ITC) to the recipient. In other words,
unless the supplier has paid the entire self-assessed tax and filed his return and the
recipient has filed his return, the ITC of the recipient would not be confirmed.

• Sequence to discharge tax and other dues: Every taxable person shall discharge his tax
and other dues under this Act or the rules made thereunder in the following order:
- Self-assessed tax, and other dues19 related to returns of previous tax periods;
- Self-assessed tax, and other dues related to the return of the current tax
period;

19
Other dues means interest, penalty, fee or any other amount payable under this Act or the rules under GST.

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 INTER – INDIRECT TAX

- Any other amount payable under this Act or the rules made thereunder including
the demand determined under section 73 or section 74.

• Date of Deposit: The date of credit to the account of the Government in the authorised
bank shall be deemed to be the date of deposit in the electronic cash ledger.

• ONLY CASH PAYMENT - TDS under section 51, or TCS under section 52, or the amount
payable on reverse charge basis, or the amount payable under Composition Scheme,
any amount payable towards interest, penalty, fee or any other amount under the
Act shall be paid by debiting the electronic cash ledger.

• Payment challan to be generated online and will be valid for 15 days – Form GST
PMT – 06.

• Limit for Over the Counter Payment: The limit for Over the Counter payment through
authorised banks for deposits is up to `\10,000 per challan per tax period, by
cash, cheque or demand draft. However, the limit of `\10,000 is not applicable to
Government Departments or any other deposit to be made by persons as may be
notified by the Commissioner in this behalf or deposit by proper officer in case of
recovery by department.

• The credit in E Credit ledger can be used to make payment of TAX ONLY and not for other
amounts such as interest, penalty, fees etc.

6. Interest on delayed payment of tax – Section 50

Case Interest
Delay in payment of tax, in full or in part 18% per annum from the date
within the prescribed period. following the due date to the date of
payment.
Undue or excess claim of input tax credit 24% per annum from the date of
under section 42(10) or Undue or excess taking ITC/ Reduction in Output tax
reduction in output tax liability under till the date of payment.
section 43(10)

Note 1: Provided that the interest on tax payable in respect of supplies made during a

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tax period and declared in the return for the said period furnished after the due date in
accordance with the provisions of section 39 shall be levied on that portion of the tax
that is paid by debiting the electronic cash ledger.

However, this benefit will not be available where such return is furnished after
commencement of any proceedings under section 73 or 74 in respect of the said period.

Note 2: Section 19 – Payment of tax wrongly collected and paid due to wrong place of supply:

In case a person has paid IGST instead of CGST+SGST, then he has to claim refund of IGST
after payment of CGST+SGST. However, interest is not applicable on such payment due to
wrong place of supply.

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Invoice and Other

Documents

1. Time limit for issue of invoice - Section 31

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2. Manner of issuing an invoice – Rule 48

Case Number of Copies
Goods 3 Copies – Original for recipient, Duplicate
for Transporter and Triplicate for supplier
Services 2 Copies – Original for recipient, Duplicate
for supplier

3. Particulars to be mentioned on the invoice – Rule 46

4. Revised Tax Invoice – Rule 53

• Every registered person who has been granted registration with effect from a date
earlier than the date of issuance of certificate of registration to him, may issue revised
tax Invoices.

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 INTER – INDIRECT TAX

• There would be a time lag between date of grant of certificate of registration and the
effective date of registration. For supplies made by such person during this intervening
period, the law enables the issuance of a revised invoice can be issued within 30 days, so
that ITC can be availed by the recipient on such supplies except for cases where revised
invoice is due to Section 74,129 & 130.

Example:

• A registered person may issue a Consolidated Revised Tax Invoice in respect of all
taxable supplies made to an unregistered recipient during such period. However, in case
of inter-State supplies, a consolidated Revised Tax Invoice cannot be issued in respect
of all unregistered recipients if the value of a supply exceeds ` 2,50,000.

5. Consolidated tax invoice – Rule 46

• A registered person may not issue a Tax Invoice if: (i) Value of the goods/services/
both supplied is less than ` 200, (ii) the recipient is unregistered; and (iii) the recipient
does not require such invoice.

• Instead such registered person shall issue a Consolidated Tax Invoice for such supplies
at the close of each day in respect of all such supplies.

• All the above provisions are also applicable to Bill of Supply.

Example:

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6. Bill of Supply – Rule 49

• A registered person supplying exempted goods or services or both or paying tax

under composition levy shall issue a bill of supply instead of a tax invoice.

7. Invoice cum Bill of Supply – Rule 49

• A registered person supplying exempted and taxable goods or services may issue an
invoice cum bill of supply instead of a tax invoice and bill of supply separately.

8. Receipt Voucher – Rule 50

• A registered person shall, on receipt of advance payment with respect to any supply
of goods or services or both, issue a Receipt Voucher evidencing receipt of such
payment.

• Where at the time of receipt of advance, rate of tax/ nature of supply is not
determinable:

- Rate of tax would be – 18%

- Nature of supply would be– inter-state supply (IGST)

9. Refund Voucher – Rule 51

• Where, on receipt of advance payment with respect to any supply of goods or services
or both the registered person issues a Receipt Voucher, but subsequently no supply
is made and no tax invoice is issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a Refund Voucher against such
payment.

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 INTER – INDIRECT TAX

10. Payment Voucher – Rule 52

• A registered person who is liable to pay tax under reverse charge [under section
9(3)/9(4) of the CGST Act] shall issue a Payment Voucher at the time of making
payment to the supplier.

• Invoice and Payment Voucher for RCM - Summary

11. Suppliers permitted to issue any other document – Rule 54

Supplier O p t i o n a l Mandatory Information

information
Insurer/ Banking Serial Number Other information’s and the document as
C o m p a n y and Address of may be issued/ made available – Optional
including NBFC recipient for these entities to issue invoice (Can also issue
consolidated invoice for a month).
Goods Transport Gross weight, Name of consignor and consignee,
Agency Registration number of carriage, Details of
goods, place of origin and destination, GSTIN
of the person liable to pay tax.
Supplier of Serial Number Tax invoice shall include ticket in any form, by
p a s s e n g e r and Address of whatever name called.
transportation recipient
A registered person supplying Issue an electronic ticket and the said electronic
services by way of admission to ticket shall be deemed to be a tax invoice for
exhibition of cinematograph films all purposes of the Act, even if such ticket
in multiplex screens. does not contain the details of the recipient of
service but contains the other information.

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Note: A banking company or other financial institution can raise a single invoice per
quarter for transactions between distinct persons.

12. Delivery Challan – Rule 55

• Rule 55 specifies the cases where at the time of removal of goods, goods may be
removed on delivery challan and invoice may be issued after delivery.

- Supply of liquid gas where the quantity at the time of removal from the place of
business of the supplier is not known;
- Transportation of goods for job work;
- Transportation of goods for reasons other than by way of supply;
- Transportation of goods in semi knocked down or completely knocked down condition
and invoice was issued before dispatch of first consignment;
- Such other supplies as may be notified by Board;

13. Section 31A – Facility for digital payment to recipient

• The Government may, on the recommendations of the Council, prescribe a class of

registered persons who shall provide prescribed modes of electronic payment to
the recipient of supply of goods or services or both made by him and give option
to such recipient to make payment accordingly, in such manner and subject to such
conditions and restrictions, as may be prescribed.

14. Credit Note and Debit Note – Section 34

• Credit Note: Where one or more tax invoices have has been issued for supply of any
goods or services or both and the taxable value or tax charged in that tax invoice
is found to exceed the taxable value or tax payable in respect of such supply, or
where the goods supplied are returned by the recipient, or where goods or services
or both supplied are found to be deficient, the registered person, who has supplied
such goods or services or both, may issue to the recipient one or more credit notes for
supplies made in a financial year containing such particulars as may be prescribed.

• Reasons for Credit Note issued by Supplier

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- Taxable value in invoice is more than Taxable value in respect of such supply;
- Tax charged in invoice is more than Tax payable in respect of such supply;
- Where the goods supplied are returned by the recipient;
- Where goods or services or both are found to be deficient.

• Debit Note is

Note: Last date to issue Credit note is

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15. Manner of issuing E-invoice- - Rule 48(4)

• The e-invoice shall be prepared by notified class of registered persons, on the

recommendation of GST Council, by including such particulars contained in Form GST
INV-01 after obtaining an IRN (Invoice Reference Number) by uploading information
contained therein on the prescribed electronic portal (Invoice Registration Portal –
Eg: einvoice1.gst.gov.in).

• Every Invoice issued in any other manner shall not be treated as on invoice.

• The requirement of preparing the invoice in duplicate and triplicate in case of supply
of services and goods does not apply to such e-invoice. Signature or digital signature
is also not required for e-invoice. An e-invoice will have a Quick Response Code (QR
Code) having embedded IRN in it.

• Notified Persons: E-invoicing is mandatory for the registered person whose aggregate
turnover in any of the preceding financial year from 2017-18 exceeds ₹ 50 Crore in
case of B2B supplies and exports.

• E-invoice can be cancelled within 24 hours but any amendment is not permitted.

• Exceptions: However, irrespective of the turnover, e-invoicing shall not be applicable

to the following categories of registered person:
- SEZ Unit;
- Insurer or a banking company or a financial institution, including a NBFC;
- A Goods Transport Agency;
- A registered person supplying passenger transportation service; and
- A registered person supplying services by way of admission to the exhibition of
cinematograph films in multiplex screens.
- Government Department and Local Authority

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16. Electronic way bill – Section 68 read with Rule 138, 138A, 138B, 138C, 138D & 138E

• The Government may require the person in charge of a conveyance carrying any
consignment of goods of value exceeding such amount as may be specified to carry
with him such documents and such devices as may be prescribed.

• Consequently, E-way Bills have been prescribed for such purpose.

16.1. Rule 138 – Information to be furnished prior to Commencement of movement of goods and
generation of E-way bill

• Every registered person who causes movement of goods of value20 exceeding ` 50,000
shall before commencement furnish Part A of GST EWB-01. It is required in the
following cases:
a. In relation to a supply;
b. For reasons other than supply;
c. Due to inward supply from an unregistered person (In this case, movement is
deemed to be caused by the registered recipient);

Note 1: The Unique number generated after submitting Part A would be valid for 15
days for updating Part B.
Note 2: A transporter or E-commerce operator or a courier agency can also furnish
the above details if they have the authorisation from the registered person.
Note 3: Mandatory E-way bill - The limit of ` 50,000 is not applicable in case of
movement of goods from the principal in one state to the job worker in another
state and handicraft goods from one state to another by a person who is
exempted from registration u/s 24 of CGST Act.

• Goods transported by road: Where the goods are transported by the registered person
as a consignor or consignee, whether in his own conveyance or a hired one or a public
conveyance, by road, the said person shall generate the e-way bill in FORM GST EWB-
01 electronically on the common portal after furnishing information in Part B of
FORM GST EWB-01.

20
Value shall be as per section 15 of CGST Act, 2017 including GST but excludes exempt supply.

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• Goods transported by road: If the registered person has not generated the E-way bill
and the goods are handed over to the transporter for transportation by road, the
registered person shall furnish the information relating to the transporter on the
common portal and the e-way bill shall be generated by the transporter on the said
portal on the basis of the information furnished by the registered person in Part A of
FORM GST EWB-01. Some key points are:

a. Consignment below `50,000 – E-way bill is optional. However, if the

consignments in a conveyance exceed `50,000 where the consignor or consignee
have not generated E-way bill and it is an interstate supply, then transporter
has to generate E-way bill.

b. Movement by URP – E-way bill is optional for such URP

c. Part B is optional if the distance between the place of business of consignor

and the place of business of transporter is upto 50 kms within the state.

• Goods transported by railway, air or vessel: E-way bill can be generated by the registered
person by furnishing Part B of form GST EWB-01 before or after the commencement
of movement. However, railways shall not deliver the goods unless E-way bill is
produced at the time of delivery.

• Consolidated E-way bill: The transporter may indicate serial number of e-way bills
generated in respect of each such consignment electronically on common portal and
a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on said
portal prior to the movement of goods.

• E-way Bill Number: Upon generation of the e-way bill on the common portal, a unique
e-way bill number (EBN) shall be made available to the supplier, the recipient and the
transporter on the common portal. Any acceptance or rejection should be made within 72
hours or delivery of goods, whichever is earlier. Otherwise, it is deemed to be accepted.

• Cancellation of EBN: Where an e-way bill has been generated under this rule, but
goods are either not transported or are not transported as per the details furnished
in the e-way bill, the e-way bill may be cancelled electronically on the common
portal within twenty four hours of generation of the e-way bill. However, an e-way

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bill cannot be cancelled if it has been verified in transit in accordance with the provisions
of rule 138B.

• One conveyance to another: If the goods are transferred from one conveyance to
another, then the consignor or recipient or transporter shall before such transfer,
update Part B of GST EWB-01. It is not required if the distance is upto 50 kms within
the state.

• One transporter to another: The consignor or recipient or the transporter shall assign
the EBN to another registered or enrolled transporter for updating Part B of GST
EWB-01.

• Validity of EWB Number

Distance Validity period

Upto 200 Kms One day in cases other than over dimensional Cargo
For every 200 km. or One additional day in cases other than over dimensional
part thereof thereafter Cargo

Note 1: In case of Over Dimensional Cargo and Multi Modal transportation (at least one
leg involves transport by ship) 200 Kms is replaced by 20 Kms.

Note 2: The count would start from midnight of the day on which the goods were
transported. However, under circumstances of an exceptional nature, including
trans-shipment, where the goods cannot be transported within the validity period of
the e-way bill, the transporter may extend the validity period within 8 hours from the
expiry of EWB after updating the details in Part B of FORM GST EWB-01, if required.

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• Exemptions from generation of E-way bill

a. Where the goods being transported are specified in Annexure21 ;
b. Where the goods are being transported by a non-motorised conveyance;
c. Where the goods are being transported from the customs port, airport, air cargo
complex and land customs station to an ICD/CFS22 for clearance by Customs;
d. In respect of movement of goods within such areas as are notified;
e. Where the goods being transported are alcoholic liquor for human consumption,
petroleum crude, high speed diesel, motor spirit (petrol), natural gas or aviation
turbine fuel;
f. Where supply of goods being transported is treated as no supply under Schedule
III of Act;
g. Where the goods are being transported—
(i) under customs bond from an inland container depot or a container freight
station to a customs port, airport, air cargo complex and land customs
station, or from one customs station or customs port to another customs
station or customs port, or
(ii) under customs supervision or under customs seal;
h. Where the goods being transported are transit cargo from or to Nepal or Bhutan;
i. Where the goods being transported are exempt from tax;
j. Any movement of goods caused by defence formation under Ministry of defence
as a consignor or consignee;
k. Where the consignor of goods is the Central Government, Government of any
State or a local authority for transport of goods by rail;
l. Where empty cargo containers are being transported; and
m. Where the goods are being transported upto a distance of twenty kilometers
from the place of the business of the consignor to a weighbridge for weighment
or from the weighbridge back to the place of the business of the said consignor
accompanied by a delivery challan.
n. Empty cylinders for packing of LPG are being moved for reasons other than supply;

21
LPG, Kerosene (PDS), Postal baggage, precious stones, jewellery, currency, used personal or household effect, Coral.
22
Inland Container Depot/ Container Freight Station

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16.2. Rule 138A – Documents and devices to be carried by person in charge of a conveyance

• The person in charge of a conveyance shall carry—

(a) The invoice or bill of supply or delivery challan, as the case may be; and

(b) A copy of the e-way bill in physical form or the e-way bill number in electronic
form or mapped to a Radio Frequency Identification Device embedded on to the
conveyance in such manner as may be notified by the Commissioner. [(b) Not
applicable for rail, air or vessel]

16.3. Rule 138B – Verification of documents and conveyances

• The Commissioner or an officer empowered by him in this behalf may authorize the
proper officer to intercept any conveyance to verify the e-way bill in physical or
electronic form for all inter-State and intra-State movement of goods.

• The Commissioner shall get Radio Frequency Identification Device readers installed
at places where the verification of movement of goods is required to be carried out
and verification of movement of vehicles shall be done through such device readers
where the eway bill has been mapped with the said device.

• The physical verification of conveyances shall be carried out by the proper officer
as authorised by the Commissioner or an officer empowered by him in this behalf:
Provided that on receipt of specific information on evasion of tax, physical verification of a
specific conveyance can also be carried out by any other officer after obtaining necessary
approval of the Commissioner or an officer authorised by him in this behalf.

16.4. Rule 138C – Inspection and verification of goods

• A summary report of every inspection of goods in transit shall be recorded online

by the proper officer in Part A of FORM GST EWB-03 within twenty four hours of
inspection and the final report in Part B of FORM GST EWB-03 shall be recorded
within three days of such inspection.

• Provided that where the circumstances so warrant, the Commissioner, or any other
officer authorised by him, may, on sufficient cause being shown, extend the time

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for recording of the final report in Part B of FORM EWB-03, for a further period not
exceeding three days.

• Where the physical verification of goods being transported on any conveyance has
been done during transit at one place within the State or Union territory or in any
other State or Union territory, no further physical verification of the said conveyance
shall be carried out again in the State or Union territory, unless a specific information
relating to evasion of tax is made available subsequently.

16.5. Rule 138D – Facility for uploading information regarding detention of vehicle
• Where a vehicle has been intercepted and detained for a period exceeding thirty
minutes, the transporter may upload the said information in FORM GST EWB-04 on
the common portal.

16.6. Rule 138E – Restriction on furnishing information in Part A of GST EWB-01

• The following persons shall not be allowed to furnish information in Part A of Form
GST EWB-01 in respect of the following registered persons for their outward supply:
a. A person paying tax under composition scheme who has not furnished the
statement of payment of self-assessed tax for 2 consecutive quarters or
b. A person paying tax under regular scheme has not furnished the return for 2
consecutive tax period or
c. A person paying tax under regular scheme has not furnished GSTR 1 for any 2
months or quarters, as the case may be or
d. A person whose registration is suspended

• However, Commissioner may, on receipt of application from such person may allow
him to furnish information upon sufficient cause being shown and make an order in
writing. He shall not reject the application without giving an opportunity of being
heard.

17. Press release on E-way bill – Bill to ship to transaction

• Bill-to-Ship-to model of supply which involves two transactions, only one e-way
bill is to be generated –either by the person ordering goods to be sent to another or
by the person actually sending the goods. (Press Release dated 23-4-2018)

308