This article attempts to explain the key constituents of 'GST levy and collection' along with a discussion on certain critical aspects of taxation and their corresponding impact on business operations. In terms of Article 366(12A) as inserted in the Constitution vide The Constitution (101st Amendment) Act, 2016, the term 'Goods and Services Tax”, is defined to mean 'any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption”. Provisions for levy and collection of CGST are contained under Section 9 (Chapter III) of the CGST Act, 2017 for intra-state supply.
Similar provisions are prescribed under Section 7 of the UTGST Act, 2017 for levy & collection of UTGST and in the respective States GST Act, 2017 vide Section 9 thereunder for levy & collection of SGST. Further, Section 5 of the IGST Act, 2017, governs levy and collection of IGST in case of inter-State supply.
Constituents of GST levy
Taxable Event in GST
- GST is a tax leviable on 'supply' of goods or services or both except the supply of alcoholic liquor for human consumption.
- On five petroleum products viz., petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, GST shall be levied with effect from such date as may be notified.
Liability to pay GST
- Forward charge - Generally, the liability to pay tax in a GST regime is upon the supplier of goods or services (taxable person) in terms of Section 9(1) of the CGST Act.
- Reverse charge - There are certain transactions mentioned in Section 9(3) [for specified goods/ services like GTA, Import of Services, Legal Services, etc.] and 9(4) (Exempted till September 2019) - [Procurements from unregistered suppliers of taxable goods or services or both] of the CGST Act, where the liability to pay GST is upon the receiver of such goods and / or services under reverse charge mechanism.
- Specified E-com operator of services - As per Section 9(5) of the CGST Act, there are specified categories of services on which e-com operators are liable to pay tax when supplied through them like Ola, Oyo rooms etc.
Rate of tax under GST
- Rate of tax, not exceeding 20%, as notified by the Government on rthe ecommendation of the GST Council, shall be applicable.
- Different notifications are issued for rthe ate of tax as applicable on specified goods and services
Value of supply
Tax shall be levied on value determined under Section 15 of the CGST Act.
I. Taxability of Employees' recovery :
'Supply' is the most critical and pivotal term under the GST regime. It is the fulcrum around which one determines the levy & collection of GST. Despite it being the taxable event, definition of supply under Section 7 of the CGST Act is a subjective and an
inclusive definition, entailing wide ramifications as regards its scope.
Extending the arms of taxability, scope of supply further covers employer-employees transactions in its ambit even when there is no consideration. Para 2 of Schedule I to the CGST Act treats the following as supply:
'Supply of goods or services or both between related persons or between distinct persons as specified in Section 25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.”
Note: In terms of clause (iii) to explanation (a) of Section 15 of the CGST Act, employer and employee are deemed as related persons in a GST regime.
Over the past few years, organizations have developed various ways and means, of rewarding their employees which may not necessarily be in the form of salary or bonus but may take the form of perquisites or some other benefits. While,Schedule III to the CGST Act only excludes supply of services by an employee to the employer in the course of or in relation to his employment, but, in the light of Para 2 of Schedule I, the supply of goods or services flowing from employer to employee requires due consideration of their taxability in GST either made without or with consideration.
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