GUIDANCE NOTE ON GST FOR EVENT MANAGEMENT COMPANIES

Transcription

1 GUIDANCE NOTE ON GST FOR EVENT MANAGEMENT COMPANIES Being a CA in practice for last 26 years and consultant to several Event Management, Advertising and Marketing Companies, I thought it would be good to come out with a Guidance Note on GST keeping in mind some specific issues related to Event Management Industry which is small in size but has its own peculiar issues. I have tried to make it as simple and practical as possible covering all material aspects specific to Event Management Industry in particular and Service sector is general. GST is planked as a "One Nation One Tax" which is a misnomer in many ways. First of all we have come out with a dual system of GST where every transaction will suffer two Taxes, being CGST and SGST, when a transaction is done Intra-State, and IGST in case of an Inter-State transaction. Secondly, different rates have been proposed for different types of Goods and Services which vary from 0% to 28%. For Event Management and most of the Services, the rate will be 18%. This will be split between CGST and SGST in case of Intra-State supply of Goods or Services or both. Many of the provisions of GST Law are equally applicable to Goods and Services, however it would pertinent to mention that most the existing provisions of State VAT Laws, Central Excise Laws and Services Tax Laws have been extended to GST. Before I go forward, it would be better to understand a few important ingredients of GST: The entire GST concept is based on Matching and Reconciliation of Outward and Inward Invoices. Therefore, the essence of GST is that all the Outward Invoices and Inward Invoices are duly recorded, irrespective of whether such transactions are done with Registered or non-registered persons. Under GST there is no need for taking separate registration for supply of Services and supply of Goods. Once, you are registered under GST you can supply Services and deal in Goods as well. The addition and deletion of traded Goods and Services has been made very simple. Many a times, service providers have to sell goods as part of an overall agreement and there are technical issues involves as most of the Services providers are not registered under VAT. This problem has been fully addressed under GST sushil@gmail.com P a g e 1

2 The issues related to Double Taxation on items like Works contract, Sale of Software, Banquet-hall services and Restaurant Services, where Service tax and VAT both are applicable, are fully settled. Under GST, there is no scope for covering any service under two heads. GST is based on accrual system of accounting. Therefore, taxes will be due immediately upon issuance of invoice and tax has to be deposited by 20th of the following month irrespective of actual collection against such invoice. At the same time, an assessee is liable to deposit taxes on advances against supply of goods and/or services. If a supplier issues an Invoice but the same is not reported, the consequences will follow. There is no concept of Centralized registration under GST and each assessee has to register with respective State separately where it has a place of business. In the case of Multiple offices in different States, assessee has to obtain registration in each State and claim input credits accordingly. In case of different verticals of the same assessee in the same State, registration has to be obtained for each vertical under the same PAN. Therefore, if an Event management company has a separate vertical for Production related services operating from a different place within the same State, it will have to obtain separate registration under GST, even though the PAN is same for the assessee. Under GST regime, if you buy goods or take services from unregistered dealers, the registered dealer will be compulsorily liable to pay applicable GST first and thereafter input credit will be allowed to be taken on such purchase of Goods or Services. This is likely to create problems and compel businesses to deal only with registered persons. Wherever goods or services are imported into the country, IGST will be applicable and payable in the State where such goods or services are imported. However, basic customs duty will still be attracted on import of Goods. HSN (Harmonised System of Nomenclature) code shall be used for classifying the goods under the GST regime. Taxpayers whose turnover is above Rs. 1.5 crores but below Rs. 5 crores shall use 2 digit code and the taxpayers whose turnover is Rs. 5 crores and above shall use 4 digit code. Taxpayers whose turnover is below Rs. 1.5 crores are not required to mention HSN Code in their invoices. Services will be classified as per the Services Accounting Code (SAC) sushil@gmail.com P a g e 2

3 The key issues covered in this Guidance Note are as under: Sn. Description Page No. 1. REGISTRATION a. Single Office Registration b. Multiple office Registration c. SEPERATE REGISTRATION FOR MULTIPLE BUISNESS VERTICLES WITHIN A STATE OR UT d. GRANT OF REGISTRATION TO NON-RESIDENTS OR CASUAL TAXABLE PERSONS e. Extension in period of operation by casual taxable person and nonresident taxable person f. Grant of registration to a person supplying online information and data base access or retrieval services from a place outside India to a non-taxable online recipient 2. SUPPLY OF GOODS, SERVICES OR BOTH a. Inter-State, Intra-State and Place of Supply of Goods and Services b. The place of supply of goods c. The place of supply of services 3. VALUATION: a. VALUATION OF GOODS AND SERVICES UNDER GST b. Cases where Transaction Price is not accepted and Valuation Rules are applied c. Valuation Rules will be applicable when d. Methods of Valuation e. Determination of value in respect of certain supplies f. Valuation and Taxation of Mixed or Composite Supply of Goods and Services: a. Mixed supply b. Composite supply c. Principal supply 4. INVOICING sushil@gmail.com P a g e 3

4 a. Supplying taxable goods b. Supplying taxable services c. Tax under reverse charge mechanism d. In case of continuous supply of services e. Time limit for issuing an invoice f. Manner of issuing invoices g. Bill of supply h. Issue of receipt voucher against advance payment i. Tax not to be collected by unregistered taxable person j. Amount of tax to be indicated in tax invoice and other documents k. Supplementary tax invoice and credit or debit notes l. Tax invoice in special cases m. Transportation of goods without issue of invoice n. Supply of goods, services or both to un bodies o. Value of supply of services in case of pure agent 5. JOB WORK Taxability of goods sent by a taxable person to a job-worker Supply of goods by principal directly from the premises of the jobworker without bringing it back to his own premises 6. INPUT TAX CREDIT a. Conditions for availing input-credit b. Where goods and/or services are received in installments c. Cases were no input credit can be claimed GSTR-1 (Return for Outward supply of Goods and Services or both) GSTR-2 (Return of Inward supply of Goods and Services) 7. ANNUAL RETURN 8. FINAL RETURN a. No Provision for Revised or Rectification of Return b. Modes of filing GST Returns c. Consequences of Non-filing of GST Returns sushil@gmail.com P a g e 4

5 d. Consequences of Return of Goods purchased or Cancellation of Input Services 9. REFUNDS UNDER GST a. GST on purchases made by Embassies or UN and Refund b. Refund under exports REGISTRATION SINGLE OFFICE REGISTRATION A Single Office registration would be sufficient if the operations of an establishment are confined to a State and all billings are done from that Single Office. However, this does not at all mean that the such a person cannot provide services outside that State. The only condition is that such person does not have office in any other State and billing should be done only from one State only. MULTIPLE OFFICE REGISTRATION In the event of Multiple offices in different States, separate registration in each State would be required even though there is single PAN of the assessee. The assessee would be eligible to do billing from each of such office and CENVAT credit can be taken separately in each State. However, a minimum of three monthly returns (GSTR-1, 2 and 3) would be required to be filed by each State-Office independently. SEPERATE REGISTRATION FOR MULTIPLE BUISNESS VERTICLES WITHIN A STATE OR UT (1). Any person having multiple business verticals within a State or a Union territory, requiring a separate registration for any of its business verticals under sub-section (2) of section 25 shall be granted separate registration in respect of each of the verticals subject to the following conditions: (a) Such person has more than one business vertical as defined in clause (18) of section 2 of the Act; (b) No business vertical of a taxable person shall be granted registration to pay tax under section 10 if any one of the other business verticals of the same person is paying tax under section 9 (Composition Levy). Explanation :- Where any business vertical of a registered person that has been granted a separate registration becomes ineligible to pay tax under sushil@gmail.com P a g e 5

6 section 10, all other business verticals of the said person shall become ineligible to pay tax under the said section. (c) All separately registered business verticals of such person shall pay tax under this Act on supply of goods or services or both made to another registered business vertical of such person and issue a tax invoice for such supply. GRANT OF REGISTRATION TO NON-RESIDENTS OR CASUAL TAXABLE PERSONS (1) A non-resident taxable person shall electronically submit an application, along with a valid passport, for registration, duly signed, in FORM GST REG- 09, at least five days prior to the commencement of business at the Common Portal either directly or through a Facilitation Centre notified by the Commissioner. Therefore, every non-resident Artist/performer/technician etc who is planning to visit India for business or commerce shall be liable for registration at least 5 days prior to actual date of performance to service. (2) A person applying for registration as a non-resident taxable person shall be given a temporary reference number by the Common Portal for making an advance deposit of tax under section 27 and the acknowledgement under sub-rule (5) of rule 1 shall be issued thereafter. (3) The person applying for registration under sub-rule (1) shall make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person for the period for which registration is sought, as specified in section 27. (4) The provisions of rule 2 and rule 3 relating to verification and grant of registration shall mutatis mutandis, apply to an application submitted under this rule. Explanation : The application for registration made by a non-resident taxable person shall be signed by his authorized signatory who shall be a person resident in India having a valid PAN. The certificate of registration issued to a casual taxable person or a nonresident taxable person shall be valid for a period of ninety days from the effective date of registration. However, the proper officer, at the request of the said taxable person, may extend the validity of the aforesaid period of ninety days by a further period not exceeding ninety days sushil@gmail.com P a g e 6

7 Extension in period of operation by casual taxable person and nonresident taxable person (1) Where a registered casual taxable person or a non-resident taxable person intends to extend the period of registration indicated in his application of registration, an application in FORM GST REG-10 shall be furnished electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, by such person before the end of the validity of registration granted to him. (2) The application under sub-rule (1) shall be acknowledged only on payment of the amount specified in sub-section (2) of section 27. Grant of registration to a person supplying online information and data base access or retrieval services from a place outside India to a non-taxable online recipient (1) Any person supplying online information and data base access or retrieval services from a place outside India to a non-taxable online recipient shall electronically submit an application for registration, duly signed, in FORM GST REG-09A, at the Common Portal. (2) The applicant referred to in sub-rule (1) shall be granted registration, in FORM GST REG-06, subject to such conditions and restrictions and by such officer as may be notified by the Central Government on the recommendations of the Council. SUPPLY OF GOODS, SERVICES OR BOTH The taxable event under GST shall be the supply of goods and/or services made for consideration in the course or furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as supply. The term supply is wide in its import and includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It also includes import of service. The model GST law also provides for including certain transactions made without consideration within the scope of supply sushil@gmail.com P a g e 7

8 Under certain circumstances such as importation of service (Section 3(1) (b)) or supplies made without consideration, specified under Schedule-I of MGL, it shall still be treated as supply under GST Law. Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take state-wise registration in terms of Schedule 1(5). Such transactions have been made taxable even if there is no consideration. However, intra-state self-supplies are not taxable. Title as well as possession both have to be transferred for a transaction to be considered as a supply of goods. In case title is not transferred, the transaction would be treated as supply of service in terms of Schedule II (1). In some cases, possession may be transferred immediately but titled may be transferred at a future date like in case of sale on approval basis or hire purchase arrangement. Such transactions will also be termed as supply of goods. Provision of facilities by a club, association, society or any such body to its members shall be treated as supply. This is included in the definition of business in section 2(17) of MGL. Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title, albeit at a future date. Inter-State, Intra-State and Place of Supply of Goods and Services 1. Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-state supply: Provided that the following supply of goods shall not be treated as intra-state supply, namely: (i) (ii) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; goods imported into the territory of India till they cross the customs frontiers of India; or (iii) supplies made to a tourist referred to in section sushil@gmail.com P a g e 8

9 2. Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-state supply: Provided that the intra-state supply of services shall not include supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. Explanation-1 : For the purposes of this Act, where a person has : (i) (ii) (iii) an establishment in India and any other establishment outside India; an establishment in a State or Union territory and any other establishment outside that State or Union territory; or an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons. Explanation-2: A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. 3. Notwithstanding anything contained in this Act : (a) (b) where the location of the supplier is in the territorial waters, the location of such supplier; or where the place of supply is in the territorial waters, the place of supply, shall, for the purposes of this Act, be deemed to be in the coastal state or Union territory where the nearest point of the appropriate baseline is located. 4. The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under: (a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at sushil@gmail.com P a g e 9

10 which the movement of goods terminates for delivery to the recipient; (b) (c) (d) (e) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person; where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient; where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly; where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board. 5. Where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed. The place of supply of goods :- (a) (b) imported into India shall be the location of the importer; exported from India shall be the location outside India. Determination of place of supply of services where the location of supplier of services and the location of the recipient of services is in India. The place of supply of services, except the services specified in sub-sections (3) to (14): (a) made to a registered person shall be the location of such person; (b) made to any person other than a registered person shall be: (i) (ii) the location of the recipient where the address on record exists; and the location of the supplier of services in other cases. 6. The place of supply of services: sushil@gmail.com P a g e 10

11 (a) (b) (c) (d) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or any services ancillary to the services referred to in clauses (a), (b) and (c), shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located: Provided that if the location of the immovable property or boat or vessel is or intended to be located outside India, the place of supply shall be the location of the recipient. Explanation : Where the immovable property or boat or vessel is located in more than one State or Union territory, the supply of services shall be treated as made in each of the respective States or Union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. 7. The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed. 8. The place of supply of services in relation to training and performance appraisal to: (a) a registered person, shall be the location of such person; sushil@gmail.com P a g e 11

12 (b) a person other than a registered person, shall be the location where the services are actually performed. 9. The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located. 10. The place of supply of services provided by way of : (a) (b) (i) (ii) organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events: to a registered person, shall be the location of such person; to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient. Explanation: Where the event is held in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. 11. The place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services: Provided that if the location of recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services sushil@gmail.com P a g e 12

13 12. The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded in such manner and subject to such conditions and safeguards as may be prescribed. Explanation: For the purposes of this section, the term tourist means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes. 13. A registered person who has paid integrated tax on a supply considered by him to be an inter-state supply, but which is subsequently held to be an intra-state supply, shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed. No inter-head adjustment is allowed between IGST, CGST and SGST. Therefore, determination of place of supply is crucial. 14 A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall not be required to pay any interest on the amount of integrated tax payable. VALUATION VALUATION OF GOODS AND SERVICES UNDER GST The value of taxable supply of goods and services shall ordinarily be the transaction value which is actually the price paid or payable, when the parties are not related and price is the sole consideration. There are various inclusions and exclusions from the ambit of transaction value. For example, the transaction value shall not include refundable deposit, discount allowed before or at the time of supply. Transaction value refers to the price actually paid or payable for the supply of goods and or services where the supplier and the recipient are not related and price is the sole consideration for the supply. It includes any amount which the supplier is liable to pay but which has been incurred by the recipient of the supply The inclusions specified in Section 15(2) which could be added to Transaction Value are as follows: a) Any amounts paid by recipient that are obligation of supplier to pay; sushil@gmail.com P a g e 13

14 b) Money value of goods or services provided free or at concession by recipient; c) Royalties and license fees payable by recipient as a condition of supply; d) Taxes levied under any other law(s) (other than SGST / CGST or IGST); e) Expenses incurred by supplier before supply and charged separately; f) Subsidy realized by supplier on the supply; g) Reimbursements claimed separately by supplier; h) Discounts allowed after supply except when known before supply; (Discounts allowed as a normal trade practice and reflected on the face of the invoice shall not be included). Generally contract price is the basis for computing tax. However, when the price is influenced by some factors like relationship of parties or certain transactions are deemed to be supply, which do not have a price, it is required to overcome these factors to determine the transaction value correctly. Cases where Transaction Price is not accepted and Valuation Rules are applied Reference to Valuation Rules is required only in cases listed under section 15(4) i.e., where consideration payable is not money or parties to the transaction are related. However, it may be noted that transaction value can be accepted even where the supplier and recipient are related, provided the relationship has not influenced the price (Rule 3(4) of draft GST valuation rules). Section 15(2) provides the list of adjustments that may be made to make the price of a transaction reliable for purposes of determining tax payable. Post-supply discounts or incentives are to be included in the transaction value unless the post-supply discount is established as per the agreement and is known at or before the time of supply and specifically linked to relevant invoice. Pre-supply discounts allowed before or at the time of supply are includible in the provided it is allowed in the course of normal trade practice and has been duly recorded in the invoice. Valuation Rules will be applicable when : (i) Consideration is not in money terms; sushil@gmail.com P a g e 14

15 (ii) (iii) parties are related or supply by any specified category of supplier; and transaction value declared is not reliable. According to GST Valuation Rules, the reasons for doubting transaction value declared can be: (i) (ii) (iii) comparable supplies are at significantly higher value; transaction is at significantly lower or higher than market value of supplies; and miss-declaration in parameters like description, quantity, quality, year of make etc. The above list is indicative and not exhaustive. Methods of Valuation Three methods are prescribed under GST Valuation Rules for determining the transaction value i.e., comparative method, computation method and residual method, which are required to be followed sequentially. Besides, some specific valuation methods have been specified like in case of pure agents and money changers. Further specific rules may later be notified in case of Insurer, Air travel Agent and distributor or selling agents of lottery. Determination of value in respect of certain supplies 1. The value of supply of services in relation to purchase or sale of foreign currency, including money changing, shall be determined by the supplier of service in the following manner:- (a) For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency at that time, multiplied by the total units of currency: Provided that in case where the RBI reference rate for a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or received by the person changing the money. Provided further that in case where neither of the currencies exchanged is Indian Rupee, the value shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupee on that day at the reference rate provided by RBI sushil@gmail.com P a g e 15

16 Provided also that a person supplying the services may exercise option to ascertain value in terms of clause (b) for a financial year and such option shall not be withdrawn during the remaining part of that financial year. (b) At the option of supplier of services, the value in relation to supply of foreign currency, including money changing, shall be deemed to be: (i) one percent of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees; (ii) one thousand rupees and half of a percent of the gross amount of currency exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees; and (iii) five thousand rupees and one tenth of a percent of the gross amount of currency exchanged for an amount exceeding ten lakh rupees, subject to maximum amount of sixty thousand rupees. 2. The value of supply of services in relation to booking of tickets for travel by air provided by an air travel agent, shall be deemed to be an amount calculated at the rate of 5% of the basic fare in the case of domestic bookings, and at the rate of 10% of the basic fare in the case of international bookings of passage for travel by air. Explanation:- For the purposes of this sub-rule, the expression basic fare means that part of the air fare on which commission is normally paid to the air travel agent by the airline. 3. The value of supply of services in relation to life insurance business shall be: (a) the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such amount is intimated to the policy holder at the time of supply of service; (b) in case of single premium annuity policies other than (a), 10% of single premium charged from the policy holder; or sushil@gmail.com P a g e 16

17 (c) in all other cases, 25% of the premium charged from the policy holder in the first year and 12.50% of the premium charged from policy holder in subsequent years: Provided that nothing contained in this sub-rule shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance. 4. Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on purchase of such goods, the value of supply shall be the difference between the selling price and purchase price and where the value of such supply is negative it shall be ignored. 5. The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp. Rate of exchange of currency, other than Indian rupees, for determination of value The rate of exchange for determination of value of taxable goods or services or both shall be the applicable reference rate for that currency as determined by the Reserve Bank of India on the date when point of taxation arises in respect of such supply in terms of section 12 or, as the case may be, section 13 of the Act. Valuation and Taxation of Mixed or Composite Supply of Goods and Services 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. Illustration: A supply of a package consisting of chocolates, cakes, cookies, dry fruits, and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately sushil@gmail.com P a g e 17

18 Composite supply means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration : Where goods are packed and sold in combination like Laptop alongwith a bag, the supply of Laptop alongwith bag is a composite supply and supply of goods is the principal supply being Laptop. 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 and does not constitute, for the recipient an aim in itself, but a means for better enjoyment of the principal supply. The tax liability on a composite or a mixed supply shall be determined in the following manner : (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; (b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax. INVOICING 1) A registered taxable person supplying taxable goods shall, before or at the time of : (a) (b) removal of goods for supply to the recipient, where the supply involves movement of goods, or delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed. 2) A registered taxable person supplying taxable services shall, before or after the provision of service but within a period prescribed in this behalf, issue a tax invoice, showing the description, value, the tax payable thereon and such other particulars as may be prescribed: sushil@gmail.com P a g e 18

19 PROVIDED that the Central/State Government may, on the recommendation of the Council, by notification, specify the categories of services in respect of which any other document issued in relation to the supply shall be deemed to be a tax invoice, subject to such conditions and limitations as may be prescribed. 3) Notwithstanding anything contained in sub-sections (1) and (2) (a) (b) a registered taxable person may, within one month from the date of issuance of certificate of registration and in such manner as may be prescribed, issue a revised invoice against the invoice already issued during the period starting from the effective date of registration till the date of issuance of certificate of registration to him; a registered taxable person supplying exempted goods and/or services or paying tax under the provisions of section 9 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed: PROVIDED that the registered taxable person may not issue a bill of supply if the value of the goods or services supplied is less than one hundred rupees except where the recipient of the goods or services requires such bill. (c) (d) a registered taxable person shall, on receipt of advance payment with respect to any supply of goods or services by him, issue a receipt voucher or any other document, including therein such particulars as may be prescribed, evidencing receipt of such payment; a registered taxable person who is liable to pay tax under Reverse Charge Mechanism shall issue an invoice in respect of goods or services received by him on the date of receipt of goods or services from a person who is not registered under the Act. 4) In case of continuous supply of goods, where successive statements of accounts or successive payments are involved, the invoice shall be issued before or at the time each such statement is issued or, as the case may be, each such payment is received. 5) In case of continuous supply of services: (a) where the due date of payment is ascertainable from the contract, the invoice shall be issued before or after the payment is liable to be made by the recipient but within a period prescribed in this behalf whether or not any payment has been received by the supplier of the service; sushil@gmail.com P a g e 19

20 (b) (c) where the due date of payment is not ascertainable from the contract, the invoice shall be issued before or after each such time when the supplier of service receives the payment but within a period prescribed in this behalf; where the payment is linked to the completion of an event, the invoice shall be issued before or after the time of completion of that event but within a period prescribed in this behalf. 6) In a case where the supply of services ceases under a contract before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply effected before such cessation. 7) For the purposes of (4) and (5) above, the Central or a State Government may on the recommendation of the Council, specify, by notification, the supply of goods or services that shall be treated as continuous supply of goods or services. (8) Notwithstanding anything contained (1) above, where the goods (being sent or taken on approval or sale or return or similar terms) are removed before it is known whether a supply will take place, the invoice shall be issued before or at the time when it becomes known that the supply has taken place or six months from the date of removal, whichever is earlier. Explanation.- The expression tax invoice shall be deemed to include a document issued by an Input Service Distributor under section 21, and shall also include any revised invoice issued by the supplier in respect of a supply made earlier. Further, it may be clarified that there is no concept of Inter-state movement of goods on Approval basis or Stock Transfer. In case of Intra-State Transfer where Goods are sent on approval but are returned to the seller after 6 months from the appointed day(which may be extended by 2 months), GST will be payable after 6 months. In case of retainership contract/arrangement, the due date of payment shall be ascertained from the date mentioned in the contract. If no date is mentioned, the date shall be such periodic date as starting from the date of entering into the contract sushil@gmail.com P a g e 20

21 Time limit for issuing an Invoice The invoice, in case of taxable supply of services, shall be issued within a period of thirty days from the date of supply of service: Provided that where the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, the period within which the invoice or any document in lieu thereof is to be issued shall be forty five days from the date of supply of service. Provided further that where the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, or a telecom operator, or any other class of supplier of services as may be notified by the Government on the recommendations of the Council, making taxable supplies of services between distinct persons as specified in section 25 as referred to in Entry 2 of Schedule I, may issue the invoice before or at the time such supplier records the same in his books of account or before the expiry of the quarter during which the supply was made. Manner of Issuing Invoices (1) The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner: (a) the original copy being marked as ORIGINAL FOR RECIPIENT; (b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and (c) the triplicate copy being marked as TRIPLICATE FOR SUPPLIER. (2) The invoice shall be prepared in duplicate, in case of supply of services, in the following manner:- (a) the original copy being marked as ORIGINAL FOR RECIPIENT; and (b) the duplicate copy being marked as DUPLICATE FOR SUPPLIER. (3) The serial number of invoices issued during a tax period shall be furnished electronically through the Common Portal in FORM GSTR-1. Bill of Supply A registered person supplying exempted goods or services or both or paying tax under the provisions of section 10 (Composition Scheme) shall issue, instead of a tax invoice, a bill of supply containing the following details: sushil@gmail.com P a g e 21

22 (a) name, address and GSTIN of the supplier; (b) a consecutive serial number, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as - and / respectively, and any combination thereof, unique for a financial year; (c) date of its issue; (d) name, address and GSTIN or UIN, if registered, of the recipient; (e) HSN Code of goods or Accounting Code for services; (f) description of goods or services or both; (g) value of supply of goods or services or both taking into account discount or abatement, if any; and (h) signature or digital signature of the supplier or his authorized representative. Provided that the registered person may not issue a bill of supply if the value of the goods or services or both supplied is less than two hundred rupees subject to such conditions and in such manner as may be prescribed. ISSUE OF RECEIPT VOUCHER AGAINST ADVANCE PAYMENT A registered person shall, on receipt of advance payment with respect to any supply of goods or services or both, issue a receipt voucher or any other document, containing following particulars evidencing receipt of such payment: (a) (b) (c) (d) (e) (f) (g) name, address and GSTIN of the supplier; a consecutive serial number containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as - and / respectively, and any combination thereof, unique for a financial year; date of its issue; name, address and GSTIN or UIN, if registered, of the recipient; description of goods or services; amount of advance taken; rate of tax (central tax, State tax, integrated tax, Union territory tax or cess); sushil@gmail.com P a g e 22

23 (h) (i) (j) (k) amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess); place of supply along with the name of State and its code, in case of a supply in the course of inter-state trade or commerce; whether the tax is payable on reverse charge basis; and signature or digital signature of the supplier or his authorized representative. TAX NOT TO BE COLLECTED BY UNREGISTERED TAXABLE PERSON A person who is not a registered taxable person shall not collect in respect of any supply of goods and/or services any amount by way of tax under the CGST/SGST Act and no registered taxable person shall make any such collection except in accordance with the provisions of this Act and the rules made there under. AMOUNT OF TAX TO BE INDICATED IN TAX INVOICE AND OTHER DOCUMENTS Notwithstanding anything contained in CGST, SGST, UGST or IGST Acts or any other law for the time being in force, where any supply is made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all documents relating to assessment, tax invoice and other like documents, the amount of tax which will form part of the price at which such supply is made. SUPPLEMENTARY TAX INVOICE AND CREDIT OR DEBIT NOTES (1) A revised tax invoice referred to in section 31 and credit or debit note referred to in section 34 shall contain the following particulars - (a) the word Revised Invoice, wherever applicable, indicated prominently; (b) name, address and GSTIN of the supplier; (c) (d) (e) (f) nature of the document; a consecutive serial number containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as - and / respectively,, and any combination thereof, unique for a financial year; date of issue of the document; name, address and GSTIN or UIN, if registered, of the recipient; sushil@gmail.com P a g e 23

24 (g) (h) (i) (j) name and address of the recipient and the address of delivery, along with the name of State and its code, if such recipient is un-registered; serial number and date of the corresponding tax invoice or, as the case may be, bill of supply; value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient; and signature or digital signature of the supplier or his authorized representative: (2) 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 in respect of taxable supplies effected during the period starting from the effective date of registration till the date of issuance of certificate of registration: Provided that the registered person may issue a consolidated revised tax invoice in respect of all taxable supplies made to a recipient who is not registered under the Act during such period: Provided further that in case of inter-state supplies, where the value of a supply does not exceed two lakh and fifty thousand rupees, a consolidated revised invoice may be issued separately in respect of all recipients located in a State, who are not registered under the Act. (3) Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of section 74 or section 129 or section 130 shall prominently contain the words INPUT TAX CREDIT NOT ADMISSIBLE. TAX INVOICE IN SPECIAL CASES (1) An ISD invoice or, as the case may be, an ISD credit note issued by an Input Service Distributor shall contain the following details:- (a) (b) (c) name, address and GSTIN of the Input Service Distributor; a consecutive serial number containing alphabets or numerals or special characters hyphen or dash and slash symbolised as, -, /, respectively, and any combination thereof, unique for a financial year; date of its issue; sushil@gmail.com P a g e 24

25 (d) (e) (f) name, address and GSTIN of the recipient to whom the credit is distributed; amount of the credit distributed; and signature or digital signature of the Input Service Distributor or his authorized representative: Provided that where the Input Service Distributor is an office of a banking company or a financial institution, including a non-banking financial company, a tax invoice shall include any document in lieu thereof, by whatever name called, whether or not serially numbered but containing the information as prescribed above. (2) Where the supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company, the said supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called, whether or not serially numbered, and whether or not containing the address of the recipient of taxable service but containing other information as prescribed under (1) above. (3) Where the supplier of taxable service is a goods transport agency supplying services in relation to transportation of goods by road in a goods carriage, the said supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called, containing the gross weight of the consignment, name of the consignor and the consignee, registration number of goods carriage in which the goods are transported, details of goods transported, details of place of origin and destination, GSTIN of the person liable for paying tax whether as consignor, consignee or goods transport agency, and also containing other information as prescribed under (1) above. (4) Where the supplier of taxable service is supplying passenger transportation service, a tax invoice shall include ticket in any form, by whatever name called, whether or not serially numbered, and whether or not containing the address of the recipient of service but containing other information as prescribed under (1) above sushil@gmail.com P a g e 25