Author: Tilak Chand Shaw

Auditing Standard

Auditing Standard

buy modafinil south africa SA 300* PLANNING AN AUDIT OF FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after April 1, 2008) Contents Paragraph(s) Introduction Scope of this SA …………………………………………………………………………… 1 Effective Date ……………………………………………………………………………. 2 Objective …………………………………………………………………………… 3 Requirements Involvement of Key Engagement Team […]

Indirect Taxes

Indirect Taxes

MODEL GST LAW
Empowered Committee of State Finance Ministers
June, 2016
Page 1 of 190
GOODS AND SERVICES TAX ACT, 2016
CHAPTER – I
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
3. Meaning and scope of supply
CHAPTER– II
ADMINISTRATION
4. Classes of officers under the Central Goods and Services Tax Act
4. Classes of officers under the State Goods and Services Tax Act
5. Appointment of officers under the Central Goods and Services Tax Act
6. Powers of officers under the Central Goods and Services Tax Act
CHAPTER– III
LEVY OF, AND EXEMPTION FROM, TAX
7. Levy and Collection of Central/State Goods and Services Tax
8. Composition levy
9. Taxable person
10. Power to grant exemption from tax
11. Remission of tax on supplies found deficient in quantity
CHAPTER- IV
TIME AND VALUE OF SUPPLY
12. Time of supply of goods
13. Time of supply of services
14. Change in rate of tax in respect of supply of services
15. Value of taxable supply
Page 2 of 190
CHAPTER– V
INPUT TAX CREDIT
16. Manner of taking input tax credit
16A. Taking input tax credit in respect of inputs sent for job work
17. Manner of distribution of credit by Input Service Distributor
18. Manner of recovery of credit distributed in excess
CHAPTER– VI
REGISTRATION
19. Registration
19A. Special provisions relating to casual taxable person and non-resident taxable
person
20. Amendment of registration
21. Cancellation of registration
22. Revocation of cancellation of registration
CHAPTER – VII
TAX INVOICE, CREDIT AND DEBIT NOTES
23. Tax invoice
23 A. Amount of tax to be indicated in tax invoice and other documents
24. Credit and debit notes
CHAPTER– VIII
RETURNS
25. Furnishing details of outward supplies
26. Furnishing details of inward supplies
27. Returns
27A. First Return
28. Claim of input tax credit and provisional acceptance thereof
Page 3 of 190
29. Matching, reversal and re-claim of input tax credit
29A. Matching, reversal and re-claim of reduction in output tax liability
30. Annual return
31. Final return
32. Notice to return defaulters
33. Levy of late fee
34. Tax Return Preparers
CHAPTER– IX
PAYMENT OF TAX
35. Payment of tax, interest, penalty, and other amounts
36. Interest on delayed payment of tax
37. Tax deduction at source
CHAPTER– IXA
TRANSFER OF INPUT TAX CREDIT
37A. Transfer of input tax credit
CHAPTER-X
REFUNDS
38. Refund of tax
39. Interest on delayed refunds
40. Consumer Welfare Fund
41. Utilization of the Fund
CHAPTER– XI
ACCOUNTS AND RECORDS
42. Accounts and other records
43. Period of retention of accounts
Page 4 of 190
CHAPTER– XIA
JOB WORK
43A. Special procedure for removal of goods for certain purposes
CHAPTER– XIB
ELECTRONIC COMMERCE
43B. Definitions
43C. Collection of tax at source
CHAPTER– XII
ASSESSMENT
44. Self-assessment
44A. Provisional assessment
45. Scrutiny of returns
46. Assessment of non-filers of returns
47. Assessment of unregistered persons
48. Summary assessment in certain special cases
CHAPTER– XIII
AUDIT
49. Audit by tax authorities
50. Special audit
CHAPTER– XIV
DEMANDS AND RECOVERY
51. Determination of tax not paid or short paid or erroneously refunded
52. Tax collected but not deposited with the Central or a State Government
53. Tax wrongfully collected and deposited with the Central or a State Government
Page 5 of 190
54. Recovery of tax
55. Payment of tax and other amount in installments
56. Transfer of property to be void in certain cases
57. Tax to be first charge on property
58. Provisional attachment to protect revenue in certain cases
59. Continuation of certain recovery proceedings
CHAPTER– XV
INSPECTION, SEARCH, SEIZURE AND ARREST
60. Power of inspection, search and seizure
61. Inspection of goods in movement
62. Power to arrest
63. Power to summon persons to give evidence and produce documents
64. Access to business premises
65. Officers required assisting CGST/SGST Officers
CHAPTER– XVI
OFFENCES AND PENALTIES
66. Offences and penalties
67. General penalty
68. General disciplines related to penalty
69. Detention of goods and conveyances, and levy of penalty
70. Confiscation of goods and levy of penalty
71. Confiscation of conveyances
72. Confiscation or penalty not to interfere with other punishments
CHAPTER– XVII
PROSECUTION AND COMPOUNDING OF OFFENCES
73. Prosecution
74. Cognizance of offences
Page 6 of 190
75. Presumption of culpable mental state
76. Relevancy of statements under certain circumstances
77. Offences by companies and certain other persons
78. Compounding of offences
CHAPTER–XVIII
APPEALS
79. Appeals to First Appellate Authority
80. Left Blank
81. Constitution of the National Appellate Tribunal
82. Appeals to the Appellate Tribunal
83. Orders of Appellate Tribunal
CHAPTER– XVIII
APPEALS AND REVISION
79. Appeals to First Appellate Authority
80. Revisional powers of Commissioner
81. Constitution of the National Appellate Tribunal
82. Appeals to the Appellate Tribunal
83. Orders of Appellate Tribunal
84. Procedure of Appellate Tribunal
85. Interest on delayed refund of pre-deposit
86. Appearance by authorised representative
87. Appeal to the High Court
88. Appeal to the Supreme Court
89. Hearing before Supreme Court
90. Sums due to be paid notwithstanding appeal etc
91. Exclusion of time taken for copy
92. Appeal not to be filed in certain cases
93. Non appealable decisions and orders
Page 7 of 190
CHAPTER– XIX
ADVANCE RULING
94. Definitions
95. Authority for Advance Ruling
96. Appellate Authority for Advance Ruling
97. Application for advance ruling
98. Procedure on receipt of application
99. Appeal to the Appellate Authority
100. Orders of Appellate Authority
101. Rectification of advance ruling
102. Applicability of advance ruling
103. Advance ruling to be void in certain circumstances
104. Powers of the Authority and Appellate Authority
105. Procedure of the Authority and Appellate Authority
CHAPTER– XX
SETTLEMENT OF CASES

CHAPTER– XXI
PRESUMPTION AS TO DOCUMENTS
106. Presumption as to documents in certain cases
107. Admissibility of micro films, facsimile copies of documents and computer printouts
as documents and as evidence
CHAPTER- XXII
LIABILITY TO PAY IN CERTAIN CASES
108. Liability in case of transfer of business
109. Liability in case of amalgamation/merger of companies
Page 8 of 190
110. Liability in case of company in liquidation
111. Liability of partners of firm to pay tax
112. Liability of guardians, trustees etc
113. Liability of Court of Wards etc.
114. Special provision regarding liability to pay tax in certain cases
115. Liability in other cases
CHAPTER– XXIII
MISCELLANEOUS PROVISIONS
116. GST compliance rating
117. Obligation to furnish information return
118. Penalty for failure to furnish information return
119. Power to collect statistics
120. Disclosure of information required under section 119
121. Test purchase of goods and/or services
122. Drawal of samples
123. Burden of Proof
124. Persons discharging functions under the Act shall be deemed to be public
servants
125. Indemnity
126. Disclosure of information by a public servant
127. Publication of information respecting persons in certain cases
128. Assessment proceedings, etc. not to be invalid on certain grounds
129. Rectification of mistakes or errors apparent from record
130. Bar of jurisdiction of civil courts
131. Levy of fees
132. Power of Central (or State) Government to make rules
132A. General power to make Regulations
133. Delegation of powers
134. Instructions to GST Officers
Page 9 of 190
135. Removal of difficulties
136. Service of Notice in certain circumstances
137. Rounding off of tax etc
138. Effect of amendments, etc., of rules, notifications or orders
139. Publication of rules and notifications and laying of rules before Parliament / State
Legislature
CHAPTER– XXIV
REPEAL AND SAVING
140. Repeal and saving
CHAPTER– XXV
TRANSITIONAL PROVISIONS
141. General provisions
142. Migration of existing taxpayers to GST
143. Amount of CENVAT credit carried forward in a return to be allowed as input
tax credit
144. Unavailed cenvat credit on capital goods, not carried forward in a return, to be
allowed in certain situations
145. Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in
certain situations
146. Credit of eligible duties and taxes on inputs held in stock to be allowed to a
taxable person switching over from composition scheme
147. Amount payable in the event of a taxable person switching over to
composition scheme
148. Exempted goods returned to the place of business on or after the appointed
day
149. Duty paid goods returned to the place of business on or after the appointed
day
150. Inputs removed for job work and returned on or after the appointed day
151. Semi-finished goods removed for job work and returned on or after the
appointed day
152. Finished goods removed for carrying out certain processes and returned on
or after the appointed day
153. Issue of supplementary invoices, debit or credit notes where price is revised
in pursuance of a contract
Page 10 of 190
154. Pending refund claims to be disposed of under earlier law
155. Claim of cenvat credit to be disposed of under the earlier law
156. Finalization of proceedings relating to output duty liability
157. Treatment of the amount recovered or refunded in pursuance of assessment
or adjudication proceedings
158. Treatment of the amount recovered or refunded pursuant to revision of
returns
159. Treatment of long term construction / works contracts
160. Progressive or periodic supply of goods or services
161. Treatment of retention payments
162. Credit distribution of service tax by ISD
162A.Tax paid on goods lying with agents to be allowed as credit
162B. Tax paid on capital goods lying with agents to be allowed as credit
162C. Treatment of branch transfers
162D. Goods sent on approval basis returned on or after the appointed day
162 E. Deduction of tax source
Page 11 of 190
SCHEDULES
I Matters to be treated as supply without consideration
II Matters to be treated as supply of goods or services
III Liability to be registered
IV Activities or transactions in respect of which the Central Government, a State
Government or any Local Authority shall not be regarded as a taxable person
RULES
1. GST Valuation (Determination of the Value of supply of Goods and Services)
Rules, 2016
Page 12 of 190
CHAPTER I
PRELIMINARY
1. Short title, extent and commencement
(1) This Act may be called the Central / State Goods and Services Tax Act, 2016.
(2) It extends to the whole of India / State’s name.
(3) It shall come into force on such date as the Central or a State Government may, by
notification in the Official Gazette, appoint in this behalf:
Provided that different dates may be appointed for different provisions of this Act and
any reference in any such provision to the commencement of this Act shall be construed
as a reference to the coming into force of that provision.
2. Definitions
In this Act, unless the context otherwise requires,-
(1) “actionable claim” shall have the meaning assigned to it in section 3 of the
Transfer of Property Act, 1882;
(2) “address of delivery” means the address of the recipient of goods and/or
services indicated on the tax invoice issued by a taxable person for delivery of such
goods and/or services;
(3) “address on record” means the address of the recipient as available in the
records of the supplier;
(4) “adjudicating authority” means any authority competent to pass any order or
decision under this Act, but does not include the Board, the First Appellate Authority and
the Appellate Tribunal;
(5) “agent” means a person who carries on the business of supply or receipt of
goods and/or services on behalf of another, whether disclosed or not and includes a
factor, broker, commission agent, arhatia, del credere agent, intermediary or an
auctioneer or any other mercantile agent, by whatever name called, and whether of the
same description as hereinbefore mentioned or not;
(6) “aggregate turnover” means the aggregate value of all taxable and non-taxable
supplies, exempt supplies and exports of goods and/or services of a person having the
same PAN, to be computed on all India basis and excludes taxes, if any, charged under
the CGST Act, SGST Act and the IGST Act, as the case may be;
Explanation.- Aggregate turnover does not include the value of supplies on which tax is
levied on reverse charge basis and the value of inward supplies.
(7) “agriculture” with all its grammatical variations and cognate expressions,
includes floriculture, horticulture, sericulture, the raising of crops, grass or garden
produce and also grazing, but does not include dairy farming, poultry farming, stock
breeding, the mere cutting of wood or grass, gathering of fruit, raising of man-made
forest or rearing of seedlings or plants;
Explanation.– For the purpose of this clause, the expression ‘forest’ means the forest to
which the Indian Forest Act, 1927 applies.
Page 13 of 190
(8) “agriculturist” means a person who cultivates land personally, for the purpose of
agriculture;
(9) “Appellate Tribunal” means the National Goods and Services Tax Appellate
Tribunal constituted under section 81;
(10) “appointed day’’ means the date on which section 1 of this Act comes into
effect;
(11) “appropriate Government” means the Central Government in case of the IGST
and the CGST, and the State Government in case of the SGST;
(12) “assessment” means determination of tax liability under this Act and includes
self-assessment, re-assessment, provisional assessment, summary assessment and
best judgement assessment;
(13) “associated enterprise” shall have the meaning assigned to it in section 92A of
the Income Tax Act, 1961;
(14) “audit” means detailed examination of records, returns and other documents
maintained or furnished by the taxable person under this Act or rules made thereunder
or under any other law for the time being in force to verify, inter alia, the correctness of
turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess
his compliance with the provisions of this Act or rules made thereunder;
(15) “authorized bank” shall mean a bank or a branch of a bank authorised by the
Government to collect the tax or any other amount payable to the appropriate
government under this Act;
(16) “Board” means the Central Board of Excise and Customs constituted under the
Central Boards of Revenue Act, 1963;
(17) “business” includes –
(a) any trade, commerce, manufacture, profession, vocation or any other similar activity,
whether or not it is for a pecuniary benefit;
(b) any transaction in connection with or incidental or ancillary to (a) above;
(c) any 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
(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;
(18) “business vertical” shall have the meaning assigned to a ‘business segment’ in
Accounting Standard 17 issued by the Institute of Chartered Accountants of India;
Page 14 of 190
(19) “capital assets” shall have the meaning as assigned to it in the Income Tax Act,
1961 (43 of 1961) but the said expression shall not include jewellery held for personal
use or property not connected with the business;
(20) “capital goods” means: –
(A) the following goods, namely:-
(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading
6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the
Schedule to this Act;
(ii) pollution control equipment;
(iii) components, spares and accessories of the goods specified at (i) and (ii);
(iv) moulds and dies, jigs and fixtures;
(v) refractories and refractory materials;
(vi) tubes and pipes and fittings thereof;
(vii) storage tank; and
(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704,
8711 and their chassis but including dumpers and tippers
used-
(1) at the place of business for supply of goods; or
(2) outside the place of business for generation of electricity for captive use at theplace
of business; or
(3) for supply of services,
(B) motor vehicle designed for transportation of goods including their chassis registered
in the name of the supplier of service, when used for
(i) supplying the service of renting of such motor vehicle; or
(ii) transportation of inputs and capital goods used for supply of service; or
(iii) supply of courier agency service;
(C) motor vehicle designed to carry passengers including their chassis, registered in the
name of the supplier of service, when used for supplying the service of-
(i) transportation of passengers; or
(ii) renting of such motor vehicle; or
(iii) imparting motor driving skills;
(D) Components, spares and accessories of motor vehicles which are capital goods for
the taxable person.
(21) “casual taxable person” means a person who occasionally undertakes
transactions involving supply of goods and/or services in the course or furtherance of
Page 15 of 190
business whether as principal, agent or in any other capacity, in a taxable territory
where he has no fixed place of business;
(22) “CGST” means the tax levied under the Central Goods and Services Tax Act,
2016;
(23) “chartered accountant” means a chartered accountant within the meaning of
the Chartered Accountants Act, 1949 (38 of 1949);
(24) “commissioner” means the Commissioner of Central Goods and Services Tax
/Commissioner of State Goods and Services Tax appointed under section 4 of the
Central/State Goods and Services Tax Act, 2016;
(25) “common portal” means the common GST electronic portal approved by the
Central Government and State Governments, on the recommendation of the Council, for
the specified purposes, as may be notified under this Act;
(26) “company secretary” means a company secretary within the meaning of the
Company Secretaries Act, 1980 (56 of 1980);
(27) “composite supply” means a supply consisting of –
(a) two or more goods;
(b) two or more services; or
(c) a combination of goods and services
provided in the course or furtherance of business, whether or not the same can be
segregated;
(28) “consideration” in relation to the supply of goods and/or services to any person,
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 and/or services, whether by
the said person or by any other person;
(b) the monetary value of any act or forbearance, whether or not voluntary, in respect
of, in response to, or for the inducement of, the supply of goods and/or services,
whether by the said person or by any other person:
Provided that a deposit, whether refundable or not, given in respect of the supply of
goods and/or services shall not be considered as payment made for the supply unless
the supplier applies the deposit as consideration for the supply;
(29) “continuous journey” means a journey for which a single or more than one
ticket or invoice is issued at the same time, either by a single supplier of service or
through an agent acting on behalf of more than one supplier of service, and which
involves no stop over between any of the legs of the journey for which one or more
separate tickets or invoices are issued;
Explanation.- For the purposes of this clause, ‘stopover’ means a place where a
passenger can disembark either to transfer to another conveyance or break his journey
for a certain period in order to resume it at a later point of time.
(30) “continuous supply of goods” means a supply of goods which is provided, or
agreed to be provided, continuously or on recurrent basis, under a contract, whether or
Page 16 of 190
not by means of a wire, cable, pipeline or other conduit, and for which the supplier
invoices the recipient on a regular or periodic basis;
(31) “continuous supply of services” means a supply of services which is provided,
or agreed to be provided, continuously or on recurrent basis, under a contract, for a
period exceeding three months with periodic payment obligations and includes supply of
such service as the Central or a State Government may, whether or not subject to any
condition, by notification, specify;
(32) “conveyance” includes a vessel, aircraft and a vehicle;
(33) “cost accountant” means a cost accountant within the meaning of the Cost and
Works Accountants Act, 1959 (23 of 1959);
(34) “Council” means the Goods and Services Tax Council established under Article
279A of the Constitution;
(35) “credit note” means a document issued by a taxable person as referred to in
sub-section (1) of section 24;
(36) “debit note” means a document issued by a taxable person as referred to in
sub-section (2) of section 24;
(37) “deemed exports”, as notified by the Central Government/State Government on
the recommendation of the Council, refer to those transactions in which the goods
supplied do not leave India, and payment for such supplies is received either in Indian
Rupees or in convertible foreign exchange;
(38) “document” includes written or printed record of any sort and electronic record
as defined in the Information Technology Act, 2000 [21 of 2000];
(39) “earlier law” means any of the following laws, that is to say,
(a) . . .
(b) . . .
(c) . . .
as amended from time to time and includes enactments which have validated anything
done or omitted to be done under any of the above mentioned laws and also any law
repealed by the earlier laws but continued in force under any provisions of the above
enumerated laws;
(40) “electronic cash ledger” means the cash ledger in electronic form maintained at
the common portal for each registered taxable person in the manner as may be
prescribed in this behalf;
(41) “electronic credit ledger” means the input tax credit ledger in electronic form
maintained at the common portal for each registered taxable person in the manner as
may be prescribed in this behalf;
(42) “exempt supply” means supply of any goods and/or services which are not
taxable under this Act and includes such supply of goods and/or services which are
specified in Schedule . . . of the Act or which may be exempt from tax under section 10;
Page 17 of 190
(43) “export of goods” with its grammatical variations and cognate expressions,
means taking out of India to a place outside India;
(44) the supply of any service shall be treated as “export of service” when
(a) the supplier of service is located in India,
(b) the recipient of service is located outside India,
(c) the place of supply of service is outside India,
(d) the payment for such service has been received by the supplier of service in
convertible foreign exchange, and
(e) the supplier of service and recipient of service are not merely establishments of a
distinct person;
Explanation.- For the purposes of clause (e), an establishment of a person in India and
any of his other establishment outside India shall be treated as establishments of distinct
persons.
(45) “First Appellate Authority” means an authority referred to in section 79;
(46) “fixed establishment” means a place (other than the place of business) which is
characterised by a sufficient degree of permanence and suitable structure in terms of
human and technical resources to supply services, or to receive and use services for its
own needs;
(47) “fund” means the Consumer Welfare Fund established under section 40;
(48) “goods’’ means every kind of movable property other than actionable claim and
money but includes securities, growing crops, grass and things attached to or forming
part of the land which are agreed to be severed before supply or under the contract of
supply;
Explanation.– For the purpose of this clause, the term ‘moveable property’ shall not
include any intangible property.
(49) “government” means Central Government and its departments, a State
Government and its departments and a Union territory and its departments, but shall not
include any entity, whether created by a statute or otherwise, the accounts of which are
not required to be kept in accordance with Article 150 of the Constitution or the rules
made thereunder;
(50) “IGST” means the tax levied under the Integrated Goods and Services Tax Act,
2016;
(51) “import of goods” with its grammatical variations and cognate expressions,
means bringing into India from a place outside India;
(52) the supply of any service shall be treated as an “import of service” if,
(a) the supplier of service is located outside India,
(b) the recipient of service is located in India,
(c) the place of supply of service is in India, and
(d) the supplier of service and the recipient of service are not merely establishments of a
distinct person;
Page 18 of 190
Explanation 1.- An establishment of a person in India and any of his other establishment
outside India shall be treated as establishments of distinct persons.
Explanation 2.- A person carrying on a business through a branch or agency or
representational office in any territory shall be treated as having an establishment in
that territory.
(53) “India” means,-
(a) the territory of the Union as referred to in clauses (2) and (3) of Article 1 of the
Constitution;
(b) its territorial waters, continental shelf, exclusive economic zone or any other
maritime zone as defined in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976 (80 of 1976);
(c) the seabed and the subsoil underlying the territorial waters;
(d) the air space above its territory and territorial waters; and
(e) the installations, structures and vessels located in the continental shelf of India and
the exclusive economic zone of India, for the purposes of prospecting or extraction or
production of mineral oil and natural gas and supply thereof;
(54) “input” means any goods other than capital goods, subject to exceptions as may
be provided under this Act or the rules made thereunder, used or intended to be used by
a supplier for making an outward supply in the course or furtherance of business;
(55) “input service” means any service, subject to exceptions as may be provided
under this Act or the rules made thereunder, used or intended to be used by a supplier
for making an outward supply in the course or furtherance of business;
(56) “Input Service Distributor” means an office of the supplier of goods and / or
services which receives tax invoices issued under section 23 towards receipt of input
services and issues tax invoice or such other document as prescribed for the purposes of
distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said
services to a supplier of taxable goods and / or services having same PAN as that of the
office referred to above;
Explanation.- For the purposes of distributing the credit of CGST (SGST in State Acts)
and / or IGST, Input Service Distributor shall be deemed to be a supplier of services.
(57) “input tax” in relation to a taxable person, means the {IGST and CGST}/{IGST
and SGST} charged on any supply of goods and/or services to him which are used, or
are intended to be used, in the course or furtherance of his business and includes the tax
payable under sub-section (3) of section 7;
(58) “input tax credit” means credit of ‘input tax’ as defined in section 2(56);
(59) “intangible property” means any property other than tangible property;
(60) “invoice” shall have the meaning as assigned to it under section 23;
(61) “inward supply” in relation to a person, shall mean receipt of goods and/or
services whether by purchase, acquisition or any other means and whether or not for
any consideration;
Page 19 of 190
(62) “job work” means undertaking any treatment or process by a person on goods
belonging to another registered taxable person and the expression “job worker” shall be
construed accordingly;
(63) “local authority” means
(a) a “Panchayat” as defined in clause (d) of Article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of Article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other
authority legally entitled to, or entrusted by the Central or any State Government with
the control or management of a municipal or local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule to
the Constitution;
(f) a Development Board constituted under Article 371 of the Constitution; or
(g) a Regional Council constituted under Article 371A of the Constitution;
(64) “location of recipient of service” means:
(i) where a supply is received at a place of business for which registration has been
obtained, the location of such place of business;
(ii) where a supply is received at a place other than the place of business for which
registration has been obtained, that is to say, a fixed establishment elsewhere, the
location of such fixed establishment;
(iii) where a supply is received at more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the receipt of the supply; and
(iv) in absence of such places, the location of the usual place of residence of the
recipient;
(65) “location of supplier of service” means:
(i) where a supply is made from a place of business for which registration has been
obtained, the location of such place of business ;
(ii) where a supply is made from a place other than the place of business for which
registration has been obtained, that is to say, a fixed establishment elsewhere, the
location of such fixed establishment;
(iii) where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provision of the supply; and
(iv) in absence of such places, the location of the usual place of residence of the
supplier;
(66) “manufacturer” shall have the meaning assigned to it by the Central Excise
Act, 1944 (1 of 1944);
(67) “market value” shall mean the full amount which a recipient of a supply is
required to pay in order to obtain the goods and/or services of like kind and quality at or
Page 20 of 190
about the same time and at the same commercial level where the recipient and the
supplier are not related;
(68) “money” means Indian legal tender or any foreign currency, cheque, promissory
note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order,
postal or electronic remittance or any such similar instrument when used as
consideration to settle an obligation or exchange with Indian legal tender of another
denomination but shall not include any currency that is held for its numismatic value;
(69) “non-resident taxable person” means a taxable person who occasionally
undertakes transactions involving supply of goods and/or services whether as principal
or agent or in any other capacity but who has no fixed place of business in India;
(70) “non-taxable territory” means the territory which is outside the taxable territory;
(71) “notification” means notification published in the Official Gazette and the
expressions ‘notify’ and ‘notified’ shall be construed accordingly;
(72) ”output tax” in relation to a taxable person, means the CGST/SGST chargeable
under this Act on taxable supply of goods and/or services made by him or by his agent
and excludes tax payable by him on reverse charge basis;
(73) “outward supply” in relation to a person, shall mean supply of goods and/or
services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal
made or agreed to be made by such person in the course or furtherance of business
except in case of such supplies where the tax is payable on reverse charge basis;
(74) “person” includes—
(a) an individual;
(b) a Hindu undivided family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in
India or outside India;
(g) any corporation established by or under any Central, State or Provincial Act or a
Government company as defined in section 2(45) of the Companies Act, 2013 (18 of
2013);
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to cooperative societies;
(j) a local authority;
(k) government;
(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);
(m) trust; and
(n) every artificial juridical person, not falling within any of the preceding sub-clauses;
(75) “place of business” includes
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a
godown or any other place where a taxable person stores his goods, provides or receives
goods and/or services; or
(b) a place where a taxable person maintains his books of account; or
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(c) a place where a taxable person is engaged in business through an agent, by
whatever name called;
(76) “prescribed’’ means prescribed by the rules, regulations or by any notification
issued under this Act;
(77) “principal” means a person on whose behalf an agent carries on the business of
supply or receipt of goods and/or services;
(78) “principal place of business” means the place of business specified as the
principal place of business in the certificate of registration where the taxable person
keeps and maintains the accounts and records as specified under section 42 ;
(79) “proper officer” in relation to any function to be performed under this Act, means
the officer of goods and services tax who is assigned that function by the
Board/Commissioner of SGST;
(80) “recipient” of supply of goods and/or services means-
(a) where a consideration is payable for the supply of goods and/or services, 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,
and any reference to a person to whom a supply is made shall be construed as a
reference to the recipient of the supply;
Explanation.- The expression “recipient” shall also include an agent acting as such on
behalf of the recipient in relation to the goods and/or services supplied.
(81) “regulations” means the regulations made by the Board/Commissioner under
any provision of the Act on the recommendation of the Council;
(82) persons shall be deemed to be “related persons’’ if only –
(a) they are officers or directors of one another’s businesses;
(b) they are legally recognized partners in business;
(c) they are employer and employee;
(d) any person directly or indirectly owns, controls or holds 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;
(g) together they directly or indirectly control a third person; or
(h) they are members of the same family;
Explanation I. – The term “person” also includes legal persons.
Explanation II. – 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.
(83) “removal’’, in relation to goods, means –
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(a) dispatch of the goods for delivery by the supplier thereof or by any other person
acting on behalf of such supplier, or
(b) collection of the goods by the recipient thereof or by any other person acting on
behalf of such recipient;
(84) “return” means any return prescribed or otherwise required to be furnished by or
under this Act or rules made thereunder;
(85) “reverse charge’’, means the liability to pay tax by the person receiving goods
and / or services instead of the person supplying the goods and / or services in respect
of such categories of supplies as the Central or a State Government may, on the
recommendation of the Council, by notification, specify;
(86) “rules” means the rules made by the Central/State Government under any
provision of the Act on the recommendation of the Council;
(87) “schedule” means a schedule appended to this Act;
(88) “services’’ means anything other than goods;
Explanation: Services include intangible property and actionable claim but does not
include money.
(89) “SGST” means the tax levied under the State Goods and Services Tax Act;
(90) “Special Economic Zone’’ shall have the meaning assigned to it in clause (za) of
section 2 of the Special Economic Zones Act, 2005 [28 of 2005];
(91) “supplier” in relation to any goods and/or services shall mean the person supplying
the said goods and/or services and shall include an agent acting as such on behalf of
such supplier in relation to the goods and/or services supplied;
(92) “supply’’ shall have the meaning as assigned to it in section 3;
(93) “tangible property” means any property that can be touched or felt;
(94) “tax” means goods and services tax levied on the supply of goods and/or services
under this Act and includes any amount payable under section 8;
(95) “tax period’’ means the period for which the tax return is required to be filed;
(96) “taxable person’’ shall have the meaning as assigned to it in section 9 of this Act;
(97) “taxable supply’’ means a supply of goods and/or services which is chargeable to
tax under this Act;
(98) “taxable territory’’ means the territory to which the provisions of this Act apply;
(99) “Tax Return Preparer” means any person who has been approved to act as a
Tax Return Preparer under the scheme framed under section 34;
(100) “telecommunication service” means service of any description (including
electronic mail, voice mail, data services, audio text services, video text services, radio
paging and cellular mobile telephone services) which is made available to users by
means of any transmission or reception of signs, signals, writing, images and sounds or
intelligence of any nature, by wire, radio, visual or other electro-magnetic means;
(101) “time of supply of goods’’ shall have the meaning as assigned to it in section
12;
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(102) “time of supply of services’’ shall have the meaning as assigned to it in section
13;
(103) “to cultivate personally” means to carry on any agricultural operation on one’s
own account-
(a) by one’s own labour, or
(b) by the labour of one’s family, or
(c) by servants on wages payable in cash or kind (but not in crop share) or by hired
labour under one’s personal supervision or the personal supervision of any member of
one’s family;
Explanation 1. – A widow or a minor or a person who is subject to any physical or mental
disability or is a serving member of the armed forces of the Union, shall be deemed to
cultivate land personally if it is cultivated by her or his servants or by hired labour.
Explanation 2. – In the case of a Hindu Undivided Family, land shall be deemed to be
cultivated personally, if it is cultivated by any member of such family.
(104) “turnover in a State” means the aggregate value of all taxable and non-taxable
supplies, including exempt supplies and exports of goods and / or services made within a
State by a taxable person and inter-state supplies of goods and / or services made from
the State by the said taxable person excluding taxes, if any charged under the CGST Act,
SGST Act and the IGST Act, as the case may be;
(105) “usual place of residence” means
(a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person, as defined in sub-section (74), is
incorporated or otherwise legally constituted;
(106) “valid return” shall have the meaning assigned to it under sub-section (3) of
section 27.
(107) “works contract” means an agreement for carrying out for cash, deferred
payment or other valuable consideration, building, construction, fabrication, erection,
installation, fitting out, improvement, modification, repair, renovation or commissioning
of any moveable or immovable property;
(108) “year” means the financial year; and
(109) “zero-rated supply” means a supply of any goods and/or services on which no
tax is payable but credit of the input tax related to that supply is admissible;
Explanation.- Exports shall be treated as zero-rated supply.
3. Meaning and scope of supply
(1) Supply includes
(a) 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,
(b) importation of service, whether or not for a consideration and whether or not in the
course or furtherance of business, and
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(c) a supply specified in Schedule I, made or agreed to be made without a consideration.
(2) Schedule II, in respect of matters mentioned therein, shall apply for determining
what is, or is to be treated as a supply of goods or a supply of services.
(2A) Where a person acting as an agent who, for an agreed commission or brokerage,
either supplies or receives any goods and/or services on behalf of any principal, the
transaction between such principal and agent shall be deemed to be a supply.
(3) Subject to sub-section (2), the Central or a State Government may, upon
recommendation of the Council, specify, by notification, the transactions that are to be
treated as—
(i) a supply of goods and not as a supply of services; or
(ii) a supply of services and not as a supply of goods; or
(iii) neither a supply of goods nor a supply of services.
(4) Notwithstanding anything contained in sub-section (1), the supply of any branded
service by an aggregator, as defined in section 43B, under a brand name or trade name
owned by him shall be deemed to be a supply of the said service by the said aggregator.
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CHAPTER II
ADMINISTRATION
4. Classes of officers under the Central Goods and Services Tax Act
(1) There shall be the following classes of officers under the Central Goods and
Services Tax Act, namely;
(a) Principal Chief Commissioners of CGST or
Principal Directors General of CGST,
(b) Chief Commissioners of CGST or
Directors General of CGST,
(c) Principal Commissioners of CGST or
Principal Additional Directors General of CGST,
(d) Commissioners of CGST or
Additional Directors General of CGST,
(e) First Appellate Authority,
(f) Additional Commissioners of CGST or
Additional Directors of CGST,
(g) Joint Commissioners of CGST or
Joint Directors of CGST,
(h) Deputy Commissioners of CGST or
Deputy Directors of CGST,
(i) Assistant Commissioners of CGST or
Assistant Directors of CGST, and
(j) such other class of officers as may be appointed for the purposes of this Act.
4. Classes of officers under the State Goods and Services Tax Act
(1) There shall be the following classes of officers and persons under the State Goods
and Services Tax Act namely.
a) Commissioner of SGST,
b) Special Commissioners of SGST,
c) Additional Commissioners of SGST,
d) Joint Commissioners of SGST,
e) Deputy Commissioners of SGST,
f) Assistant Commissioners of SGST, and
g) such other class of officers and persons as may be appointed for the purposes of this
Act. [List is indicative]
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(2) The Commissioner shall have jurisdiction over the whole of the State of (….). All
other officers shall have jurisdiction over the whole of the State or over such areas as
the Commissioner may, by notification, specify.
5. Appointment of officers under the Central Goods and Services Tax Act
(1) The Board may appoint such persons as it may think fit to be officers under the
Central Goods and Services Tax Act.
(2) Without prejudice to the provisions of sub-section (1), the Board may authorize a
Principal Chief Commissioner/Chief Commissioner of Central Goods and Services Tax or a
Principal Commissioner/Commissioner of Central Goods and Services Tax or an
Additional/Joint or Deputy/Assistant Commissioner of Central Goods and Service Tax to
appoint officers of Central Goods and Services Tax below the rank of Assistant
Commissioner of Central Goods and Services Tax.
(Note: State laws may have similar provision)
6. Powers of officers under the Central Goods and Services Tax Act
(1) Subject to such conditions and limitations as the Board may impose, an officer of
the Central Goods and Services Tax may exercise the powers and discharge the duties
conferred or imposed on him under this Act.
(2) An officer of Central Goods and Services Tax may exercise the powers and
discharge the duties conferred or imposed under this Act on any other officer of Central
Goods and Services Tax who is subordinate to him.
(3) The Board/Commissioner may, subject to such conditions and limitations as may
be specified in this behalf by him, delegate its powers to any other officer subordinate to
him.
(4) Notwithstanding anything contained in this section, a First Appellate Authority shall
not exercise the powers and discharge the duties conferred or imposed on an officer of
Central Goods and Services Tax other than those specified in section 79 of this Act.
(Note: State laws may have similar provision)
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CHAPTER III
LEVY OF, AND EXEMPTION FROM, TAX
7. Levy and Collection of Central/State Goods and Services Tax
(1) There shall be levied a tax called the Central/State Goods and Services Tax
(CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in
the Schedule . . . to this Act and collected in such manner as may be prescribed.
(2) The CGST/SGST shall be paid by every taxable person in accordance with the
provisions of this Act.
(3) Notwithstanding anything contained in sub-section (2), the Central or a State
Government may, on the recommendation of the Council, by notification, specify
categories of supply of goods and/or services the tax on which is payable on reverse
charge basis and the tax thereon shall be paid by the person receiving such goods
and/or services and all the provisions of this Act shall apply to such person as if he is the
person liable for paying the tax in relation to such goods and/or services.
8. Composition Levy
(1) Notwithstanding anything to the contrary contained in the Act but subject to subsection
(3) of section 7, on the recommendation of the Council, the proper officer of the
Central or a State Government may, subject to such conditions and restrictions as may
be prescribed, permit a registered taxable person, whose aggregate turnover in a
financial year does not exceed [fifty lakh of rupees], to pay, in lieu of the tax payable by
him, an amount calculated at such rate as may be prescribed, but not less than one
percent of the turnover during the year:
Provided that no such permission shall be granted to a taxable person who effects any
inter-State supplies of goods and/or services.
Provided further that no such permission shall be granted to a taxable person unless all
the registered taxable persons, having the same PAN as held by the said taxable person,
also opt to pay tax under the provisions of this sub-section.
(2) A taxable person to whom the provisions of sub-section (1) apply shall not collect
any tax from the recipient on supplies made by him nor shall he be entitled to any credit
of input tax.
(3) If the proper officer has reasons to believe that a taxable person was not eligible
to pay tax under sub-section (1), such person shall, in addition to any tax that may be
payable by him under other provisions of this Act, be liable to a penalty equivalent to the
amount of tax payable as aforesaid:
Provided that no penalty shall be imposed without giving a notice to show cause and
without affording a reasonable opportunity of being heard to the person proceeded
against.
9. Taxable person
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(1) Taxable Person means a person who carries on any business at any place in India
/State of ____ and who is registered or required to be registered under Schedule III of
this Act:
Provided that an agriculturist shall not be considered as a taxable person.
Provided further that a person who is required to be registered under paragraph 1 of
Schedule III of this Act shall not be considered as a taxable person until his aggregate
turnover in a financial year exceeds [Rs ten lakh]
Provided further that a person who is required to be registered under paragraph 1 of
Schedule III of this Act shall not be considered as a taxable person until his aggregate
turnover in a financial year exceeds [Rs five lakh]
[This threshold of 5 lacs will apply only if a taxable person conducts his business in any
of the NE States including Sikkim.]
(2) The Central Government, a State Government or any local authority shall be
regarded as a taxable person in respect of activities or transactions in which they are
engaged as public authorities other than the activities or transactions as specified in
Schedule IV to this Act.
(3) The following persons shall not be considered as taxable persons for the purposes
of this Act –
(a) any person who provides services as an employee to his employer in the course of,
or in relation to his employment, or by any other legal ties creating the relationship of
employer and employee as regards working conditions, remunerations and employer’s
liability;
(b) any person engaged in the business of exclusively supplying goods and/or services
that are not liable to tax under this Act;
(c) any person, liable to pay tax under sub-section (3) of section 7, receiving services of
value not exceeding ______ rupees in a year for personal use, other than for use in the
course or furtherance of his business.
10. Power to grant exemption from tax
(1) If the Central or a State Government is satisfied that it is necessary in the public
interest so to do, it may, on the recommendation of the Council, by notification, exempt
generally either absolutely or subject to such conditions as may be specified in the
notification, goods and/or services of any specified description from the whole or any
part of the tax leviable thereon.
Explanation.- Where an exemption under sub-section (1) in respect of any goods and/or
services from the whole of the tax leviable thereon has been granted absolutely, the
taxable person providing such goods and/or services shall not pay the tax on such goods
and/or services.
(2) If the Central or a State Government is satisfied that it is necessary in the public
interest so to do, it may, on the recommendation of the Council, by special order in each
case, exempt from payment of tax, under circumstances of an exceptional nature to be
stated in such order, any goods and/or services on which tax is leviable.
(3) The Central or a State Government may, if it considers necessary or expedient
so to do for the purpose of clarifying the scope or applicability of any notification issued
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under sub-section (1) or order issued under sub-section (2), insert an explanation in
such notification or order, as the case may be, by notification at any time within one
year of issue of the notification under sub-section (1) or order under sub-section (2),
and every such explanation shall have effect as if it had always been the part of the first
such notification or order, as the case may be.
(4) Every notification issued under sub-section (1) or sub-section (3)and every order
issued under sub-section (2) shall
(a) unless otherwise provided, come into force on the date of its issue by the Central or
a State Government for publication in the Official Gazette; and
(b) be made available on the official website of the department of the Central or a State
Government.
11. Remission of tax on supplies found deficient in quantity
(1) The Central or a State Government may, by rules made under this sub-section,
provide for remission of tax on such supplies which are found to be deficient in quantity
due to any natural causes.
(2) Any rules made under sub-section (1) may, having regard to the nature of the
supply, fix the limit or limits of percentage beyond which no such remission shall be
allowed.
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CHAPTER IV
TIME AND VALUE OF SUPPLY
12. Time of supply of goods
(1) The liability to pay CGST / SGST on the goods shall arise at the time of supply as
determined in terms of the provisions of this section.
(2) The time of supply of goods shall be the earliest of the following dates, namely,-
(a) (i) the date on which the goods are removed by the supplier for supply to the
recipient, in a case where the goods are required to be removed or
(ii) the date on which the goods are made available to the recipient, in a case where the
goods are not required to be removed; or
(b) the date on which the supplier issues the invoice with respect to the supply; or
(c) the date on which the supplier receives the payment with respect to the supply; or
(d) the date on which the recipient shows the receipt of the goods in his books of
account.
Explanation 1.- The provisions of sub-clause (ii) of clause (a) shall apply in cases where
the goods
(a) are physically not capable of being moved; or
(b) are supplied in assembled or installed form; or
(c) are supplied by the supplier to his agent or his principal.
Explanation 2.- For the purposes of sub-clause (ii) of clause (a), the expression ’made
available to the recipient’ shall mean when the goods are placed at the disposal of the
recipient.
Explanation 3.- For the purposes of clauses (b) and (c) of sub-section (2), the supply
shall be deemed to have been made to the extent it is covered by the invoice or, as the
case may be, the payment.
Explanation 4.- For the purpose of clause (c) of sub-section (2), “the date on which the
supplier receives the payment” shall be the date on which the payment is entered in his
books of accounts or the date on which the payment is credited to his bank account,
whichever is earlier.
(3) In case of continuous supply of goods, where successive statements of accounts or
successive payments are involved, the time of supply shall be the date of expiry of the
period to which such successive statements of accounts or successive payments relate.
If there are no successive statements of account, the date of issue of the invoice (or any
other document) or the date of receipt of payment, whichever is earlier, shall be the
time of supply.
(4) For the purposes of sub section (3) above, the Central or a State Government may,
on the recommendation of the Council, specify, by notification, the supply of goods that
shall be treated as continuous supply of goods;
(5) In case of supplies in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be the earliest of the following dates, namely—
(a) the date of the receipt of goods, or
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(b) the date on which the payment is made, or
(c) the date of receipt of invoice, or
(d) the date of debit in the books of accounts.
Explanation.- For the purpose of clause (b) of sub-section (5), “the date on which the
payment is made” shall be the date on which the payment is entered in the books of
accounts of the recipient or the date on which the payment is debited in his bank
account, whichever is earlier.
(6) If 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 time of supply shall be
at the time when it becomes known that the supply has taken place or six months from
the date of removal, whichever is earlier.
(7) In case it is not possible to determine the time of supply under the provisions of subsection
(2), (3), (5) or (6), the time of supply shall
(a) in a case where a periodical return has to be filed, be the date on which such return
is to be filed, or
(b) in any other case, be the date on which the CGST/SGST is paid.
13. Time of supply of services
(1) The liability to pay CGST/SGST on services shall arise at the time of supply, as
determined in terms of the provisions of this section.
(2) The time of supply of services shall be:-
(a) the date of issue of invoice or the date of receipt of payment, whichever is earlier, if
the invoice is issued within the prescribed period; or
(b) the date of completion of the provision of service or the date of receipt of payment,
whichever is earlier, if the invoice is not issued within the prescribed period; or
(c) the date on which the recipient shows the receipt of services in his books of account,
in a case where the provisions of clause (a) or (b) do not apply.
Explanation 1.- For the purposes of clauses (a) and (b), the supply shall be deemed to
have been made to the extent it is covered by the invoice or, as the case may be, the
payment.
Explanation 2.- For the purpose of clause (a) and (b) of sub-section (2), “the date of
receipt of payment” shall be the date on which the payment is entered in the books of
accounts of the supplier or the date on which the payment is credited to his bank
account, whichever is earlier.
(3) In case of continuous supply of services, the time of supply shall be –
(a) where the due date of payment is ascertainable from the contract, the date on which
the payment is liable to be made by the recipient of service, whether or not any invoice
has been issued or any payment has been received by the supplier of service;
(b) where the due date of payment is not ascertainable from the contract, each such
time when the supplier of service receives the payment, or issues an invoice, whichever
is earlier;
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(c) where the payment is linked to the completion of an event, the time of completion of
that event;
(4) For the purposes of sub section (3) above, the Central or a State Government may
on the recommendation of the Council, specify, by notification, the supply of services
that shall be treated as continuous supply of services;
(5) In case of supplies in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be the earliest of the following dates, namely-
(a) the date of receipt of services, or
(b) the date on which the payment is made, or
(c) the date of receipt of invoice, or
(d) the date of debit in the books of accounts.
Explanation.- For the purpose of clause (b) of sub-section (5), “the date on which the
payment is made” shall be the date on which the payment is entered in the books of
accounts of the recipient or the date on which the payment is debited in his bank
account, whichever is earlier.
(6) In a case where the supply of services ceases under a contract before the completion
of the supply, such services shall be deemed to have been provided at the time when the
supply ceases.
(7) Where it is not possible to determine the time of supply of services in the manner
specified in sub-sections (2), (3), (5) and (6), the time of supply shall
(a) in a case where a periodical return has to be filed, be the date on which such return
is to be filed; or
(b) in any other case, be the date on which the CGST/SGST is paid.
14. Change in rate of tax in respect of supply of services
(1) Notwithstanding anything contained in section 13, the time of supply, in cases where
there is a change in the effective rate of tax in respect of services, shall be determined
in the following manner, namely:-
(a) in case the taxable service has been provided before the change in effective rate of
tax –
(i) where the invoice for the same has been issued and the payment is also received
after the change in effective rate of tax, the time of supply shall be the date of receipt of
payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to change in effective rate of tax but the
payment is received after the change in effective rate of tax, the time of supply shall be
the date of issue of invoice; or
(iii) where the payment is received before the change in effective rate of tax, but the
invoice for the same has been issued after the change in effective rate of tax, the time of
supply shall be the date of receipt of payment;
(b) in case the taxable service has been provided after the change in effective rate of tax

(i) where the payment is received after the change in effective rate of tax but the
invoice has been issued prior to the change in effective rate of tax, the time of supply
shall be the date of receipt of payment; or
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(ii) where the invoice has been issued and the payment is received before the change in
effective rate of tax, the time of supply shall be the date of receipt of payment or date of
issue of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in effective rate of tax but the
payment is received before the change in effective rate of tax, the time of supply shall
be the date of issue of invoice.
Explanation.- For the purpose of this section, “the date of receipt of payment” shall be
the date on which the payment is entered in the books of accounts of the supplier or the
date on which the payment is credited to his bank account, whichever is earlier:
Provided that the date of receipt of payment shall be the date of credit in the bank
account when such credit in the bank account is after four working days from the date of
change in the effective rate of tax.
15. Value of taxable supply
(1) The value of a supply of goods and/or services shall be the transaction value, that
is the price actually paid or payable for the said supply of goods and/or services where
the supplier and the recipient of the supply are not related and the price is the sole
consideration for the supply.
(2) The transaction value under sub-section(1) shall include:
(a) any amount that the supplier is liable to pay in relation to such supply but which has
been incurred by the recipient of the supply and not included in the price actually paid or
payable for the goods and/or services;
(b) the value, apportioned as appropriate, of such goods and/or services as are
supplied directly or indirectly by the recipient of the supply free of charge or at reduced
cost for use in connection with the supply of goods and/or services being valued, to the
extent that such value has not been included in the price actually paid or payable;
(c) royalties and licence fees related to the supply of goods and/or services being
valued that the recipient of supply must pay, either directly or indirectly, as a condition
of the said supply, to the extent that such royalties and fees are not included in the price
actually paid or payable;
(d) any taxes, duties, fees and charges levied under any statute other than the SGST
Act or the CGST Act or the IGST Act;
(e) incidental expenses, such as, commission and packing, charged by the supplier to
the recipient of a supply, including any amount charged for anything done by the
supplier in respect of the supply of goods and/or services at the time of, or before
delivery of the goods or, as the case may be, supply of the services;
(f) subsidies provided in any form or manner, linked to the supply;
(g) any reimbursable expenditure or cost incurred by or on behalf of the supplier and
charged in relation to the supply of goods and/or services;
(h) any discount or incentive that may be allowed after the supply has been effected:
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Provided that such post-supply discount which is established as per the
agreement and is known at or before the time of supply and specifically linked to
relevant invoices shall not be included in the transaction value.
(3) The transaction value under sub-section (1) shall not include any discount
allowed before or at the time of supply provided such discount is allowed in the course of
normal trade practice and has been duly recorded in the invoice issued in respect of the
supply.
(4) The value of the supply of goods and/or services in the following situations which
cannot be valued under sub-section (1), shall be determined in such manner as may be
prescribed in the rules.
(i) the consideration, whether paid or payable, is not money, wholly or partly;
(ii) the supplier and the recipient of the supply are related;
(iii) there is reason to doubt the truth or accuracy of the transaction value declared
by the supplier;
(iv) business transactions undertaken by a pure agent, money changer, insurer, air
travel agent and distributor or selling agent of lottery;
(v) such other supplies as may be notified by the Central or a State Government in
this behalf on the recommendation of the Council.
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CHAPTER V
INPUT TAX CREDIT
16. Manner of taking input tax credit
(1) Every registered taxable person shall, subject to such conditions and restrictions
as may be prescribed and within the time and manner specified in section 35, be entitled
to take credit of input tax admissible to him and the said amount shall be credited to the
electronic credit ledger of such person.
(2) A person who has applied for registration under the Act within thirty days from the
date on which he becomes liable to registration and has been granted such registration
shall, subject to such conditions and restrictions as may be prescribed, be entitled to
take credit of input tax in respect of inputs held in stock and inputs contained in semifinished
or finished goods held in stock on the day immediately preceding the date from
which he becomes liable to pay tax under the provisions of this Act.
(2A) A person, who takes registration under sub-section (3) of section 19, shall, subject
to such conditions and restrictions as may be prescribed, be entitled to take credit of
input tax in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock on the day immediately preceding the date of registration.
(3) Where any registered taxable person ceases to pay tax under section 8, he shall,
subject to such conditions and restrictions as may be prescribed, be entitled to take
credit of input tax in respect of inputs held in stock and inputs contained in semi-finished
or finished goods held in stock on the day immediately preceding the date from which he
becomes liable to pay tax under section 7.
(3A) A taxable person shall not be entitled to take input tax credit under sub-section (2),
(2A) or sub-section (3)in respect of any supply of goods and / or services to him after
the expiry of one year from the date of issue of tax invoice relating to such supply.
(4) The amount of credit under sub-section (2), (2A) or sub-section (3) shall be
calculated in accordance with generally accepted accounting principles in such manner as
may be prescribed.
(5) Where the goods and/or services are used by the registered taxable person partly for
the purpose of any business and partly for other purposes, the amount of credit shall be
restricted to so much of the input tax as is attributable to the purposes of his business.
(6) Where the goods and / or services are used by the registered taxable person partly
for effecting taxable supplies and partly for effecting non-taxable supplies, including
exempt supplies but excluding zero-rated supplies, the amount of credit shall be
restricted to so much of the input tax as is attributable to the taxable supplies including
zero-rated supplies.
(7) The Central or a State Government may, by notification issued in this behalf,
prescribe the manner in which the credit referred to in sub-sections (5) and (6) above
may be attributed.
(8) Where there is a change in the constitution of a registered taxable person on
account of sale, merger, demerger, amalgamation, lease or transfer of the business with
the specific provision for transfer of liabilities, the said registered taxable person shall be
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allowed to transfer the input tax credit that remains unutilized in its books of accounts to
such sold, merged, demerged, amalgamated, leased or transferred business in the
manner prescribed.
(9) Notwithstanding anything contained in sub-section (1), (2), (2A) or (3) input tax
credit shall not be available in respect of the following:
(a) motor vehicles, except when they are supplied in the usual course of business or are
used for providing the following taxable services—
(i) transportation of passengers, or
(ii) transportation of goods, or
(iii) imparting training on motor driving skills;
(b) goods and / or services provided in relation to food and beverages, outdoor catering,
beauty treatment, health services, cosmetic and plastic surgery, membership of a club,
health and fitness centre, life insurance, health insurance and travel benefits extended to
employees on vacation such as leave or home travel concession, when such goods
and/or services are used primarily for personal use or consumption of any employee;
(c) goods and/or services acquired by the principal in the execution of works contract
when such contract results in construction of immovable property, other than plant and
machinery;
(d) goods acquired by a principal, the property in which is not transferred (whether as
goods or in some other form) to any other person, which are used in the construction of
immovable property, other than plant and machinery;
(e) goods and/or services on which tax has been paid under section 8; and
(f) goods and/or services used for private or personal consumption, to the extent they
are so consumed.
(10) Where the registered taxable person has claimed depreciation on the tax
component of the cost of capital goods under the provisions of the Income Tax Act,
1961, the input tax credit shall not be allowed on the said tax component.
(11) Notwithstanding anything contained in this section, but subject to the provisions of
section 28, no registered taxable person shall be entitled to the credit of any input tax in
respect of any supply of goods and/or services to him unless
(a) he is in possession of a tax invoice, debit note, supplementary invoice or such other
taxpaying document as may be prescribed, issued by a supplier registered under this Act
or the IGST Act;
(b) he has received the goods and/or services;
(c) the tax charged in respect of such supply has been actually paid to the credit of the
appropriate Government, either in cash or through utilization of input tax credit
admissible in respect of the said supply; and
(d) he has furnished the return under section 27:
Provided that where the goods against an invoice are received in lots or instalments, the
registered taxable person shall be entitled to the credit upon receipt of the last lot or
instalment.
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Explanation.—For the purpose of clause (b), it shall be deemed that the taxable person
has received the goods where the goods are delivered by the supplier to a recipient or
any other person on the direction of such taxable person, whether acting as an agent or
otherwise, before or during movement of goods, either by way of transfer of documents
of title to goods or otherwise.
(12) Where any registered taxable person who has availed of input tax credit switches
over as a taxable person for paying tax under section 8 or, where the goods and / or
services supplied by him become exempt absolutely under section 10, he shall pay an
amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit
of input tax in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock on the day immediately preceding the date of such switch
over or, as the case may be, the date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying
in his electronic credit ledger shall lapse.
(13) The amount payable under sub-section (12) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
(14) In case of supply of capital goods on which input tax credit has been taken, the
registered taxable person shall pay an amount equal to the input tax credit taken on the
said capital goods reduced by the percentage points as may be specified in this behalf or
the tax on the transaction value of such capital goods under sub-section (1) of section
15, whichever is higher.
(15) A taxable person shall not be entitled to take input tax credit in respect of any
invoice for supply of goods and/or services, after the filing of the return under section 27
for the month of September following the end of financial year to which such invoice
pertains or filing of the relevant annual return, whichever is earlier.
(16) Where credit has been taken wrongly, the same shall be recovered from the
registered taxable person in the manner as may be prescribed in this behalf.
16A. Taking input tax credit in respect of inputs sent for job work
(1) The “principal” referred to in section 43 A shall, subject to such conditions and
restrictions as may be prescribed, be entitled to take credit of input tax on inputs sent to
a job-worker for job-work if the said inputs, after completion of job-work, are received
back by him within one hundred and eighty days of their being sent out:
Provided that the “principal” shall be entitled to take credit of input tax on inputs even if
the inputs are directly sent to a job worker for job-work without their being first brought
to his place of business, and in such a case, the period of one hundred and eighty days
shall be counted from the date of receipt of the inputs by the job worker.
(2) The “principal” shall, subject to such conditions and restrictions as may be
prescribed, be entitled to take credit of input tax on capital goods sent to a job-worker
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for job-work if the said capital goods, after completion of job-work, are received back by
him within two years of their being sent out:
Provided that the “principal” shall be entitled to take credit of input tax on capital goods
even if the capital goods are directly sent to a job worker for job-work without their
being first brought to his place of business, and in such a case, the period of two years
shall be counted from the date of receipt of the capital goods by the job worker.
(3) Where the inputs or capital goods, as the case may be, are not received back by the
“principal” within the time specified under sub-section (1) or under sub-section (2), as
the case may be, he shall pay an amount equivalent to the input tax credit availed of on
the said inputs or capital goods, as the case may be, along with interest specified under
sub-section (1) of section 36:
Provided that the said “principal” may reclaim the input tax credit and interest paid
earlier when the inputs or capital goods, as the case may be, are received back by him
at his place of business.
17. Manner of distribution of credit by Input Service Distributor
(1) The Input Service Distributor may distribute, in such manner as may be prescribed,
the credit of CGST as IGST and IGST as IGST, by way of issue of a prescribed document
containing, inter alia, the amount of input tax credit being distributed or being reduced
thereafter, where the Distributor and the recipient of credit are located in different
States.
(CGST ACT)
(1) The Input Service Distributor may distribute, in such manner as may be prescribed,
the credit of SGST as IGST, by way of issue of a prescribed document containing, inter
alia, the amount of input tax credit being distributed or being reduced thereafter, where
the Distributor and the recipient of credit are located in different States.
(SGST Act)
(2) The Input Service Distributor may distribute, in such manner as may be prescribed,
the credit of CGST and IGST as CGST, by way of issue of a prescribed document
containing, inter alia, the amount of input tax credit being distributed or being reduced
thereafter, where the Distributor and the recipient of credit, being a business vertical,
are located in the same State.
(CGST Act)
(2) The Input Service Distributor may distribute, in such manner as may be prescribed,
the credit of SGST and IGST as SGST, by way of issue of a prescribed document
containing, inter alia, the amount of input tax credit being distributed or being reduced
thereafter, where the Distributor and the recipient of credit, being a business vertical,
are located in the same State.
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(SGST Act)
(3) The Input Service Distributor may distribute the credit subject to the following
conditions, namely:
(a) the credit can be distributed against a prescribed document issued to each of the
recipients of the credit so distributed, and such invoice or other document shall contain
such details as may be prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit available
for distribution;
(c) the credit of tax paid on input services attributable to a supplier shall be distributed
only to that supplier;
(d) the credit of tax paid on input services attributable to more than one supplier shall
be distributed only amongst such supplier(s) to whom the input service is attributable
and such distribution shall be pro rata on the basis of the turnover in a State of such
supplier, during the relevant period, to the aggregate of the turnover of all such
suppliers to whom such input service is attributable and which are operational in the
current year, during the said relevant period.
18. Manner of recovery of credit distributed in excess
(1) Where the credit distributed by the Input Service Distributor is in excess of the credit
available for distribution by him, the excess credit so distributed shall be recovered from
such distributor along with interest, and the provisions of section 51 shall apply mutatis
mutandis for effecting such recovery.
(2) Where the Input Service Distributor distributes the credit in contravention of the
provisions contained in section 17 resulting in excess distribution of credit to one or
more suppliers, the excess credit so distributed shall be recovered from such supplier(s)
along with interest, and the provisions of section 51 shall apply mutatis mutandis for
effecting such recovery.
Explanation. –For the purposes of section 17 and this section, the relevant period shall
be-
(a) if the recipients of the credit have turnover in their States in the financial year
preceding the year during which credit is to be distributed, the said financial year; or
(b) if some or all recipients of the credit do not have any turnover in their States in the
financial year preceding the year during which the credit is to be distributed, the last
quarter for which details of such turnover of all the recipients are available, previous to
the month during which credit is to be distributed.
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CHAPTER – VI
REGISTRATION
19. Registration
(1) Every person who is liable to be registered under Schedule III of this Act shall
apply for registration in every such State in which he is so liable within thirty days from
the date on which he becomes liable to registration, in such manner and subject to such
conditions as may be prescribed:
Provided that if the person, other than an Input Service Distributor, is registered under
an earlier law, it shall not be necessary for him to apply for fresh registration under this
section and he shall follow the procedure as may be prescribed in this behalf.
(2) Notwithstanding anything contained in sub-section (1), a person having multiple
business verticals in a State may obtain a separate registration for each business
vertical, subject to such conditions as may be prescribed.
(3) A person, though not liable to be registered under Schedule III, may get himself
registered voluntarily, and all provisions of this Act, as are applicable to a registered
taxable person, shall apply to such person.
(4) Every person shall have a Permanent Account Number issued under the Income
Tax Act, 1961 (43 of 1961) in order to be eligible for grant of registration under subsection
(1), (2) or (3).
(4A) Notwithstanding anything contained in sub-section (4), a non-resident taxable
person may be granted registration under sub-section (1) on the basis of any other
document as may be prescribed.
(5) Where a person who is liable to be registered under this Act fails to obtain
registration, the proper officer may, without prejudice to any action that is, or may be
taken under this Act, or under any other law for the time being in force, proceed to
register such person in the manner as may be prescribed.
(6) Notwithstanding anything contained in sub-section (1), any specialized agency of
the United Nations Organization or any Multilateral Financial Institution and Organization
notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947),
Consulate or Embassy of foreign countries and any other person or class of persons as
may be notified by the Board / Commissioner, shall obtain a Unique Identity Number, in
the manner prescribed, for the purpose(s) notified, including refund of taxes on the
notified supplies of goods and/or services received by them.
(7) The registration or the Unique Identity Number, shall be granted or, as the case
may be, rejected after due verification in the manner and within such period as may be
prescribed.
(8) The proper officer shall not reject the application for registration or the Unique
Identity Number without giving a notice to show cause and without giving the person a
reasonable opportunity of being heard.
(8A) A certificate of registration shall be issued in the prescribed form, with effective
date as may be prescribed.
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(9) A registration or an Unique Identity Number shall be deemed to have been granted
after the period prescribed under sub-section (7), if no deficiency has been
communicated to the applicant by the proper officer within that period.
(10) Notwithstanding anything contained in sub-section (7), any rejection of application
for registration or the Unique Identity Number under the CGST Act / SGST Act shall be
deemed to be a rejection of application for registration under the SGST Act / CGST Act.
(11) The grant of registration or the Unique Identity Number under the CGST Act / SGST
Act shall be deemed to be a grant of registration or the Unique Identity Number under
the SGST/CGST Act provided that the application for registration or the Unique Identity
Number has not been rejected under SGST/CGST Act within the time specified in subsection
(7).
(12) The Central or a State Government may, on the recommendation of the Council, by
notification, specify the category of persons who may be exempted from obtaining
registration under this Act.
19A. Special provisions relating to casual taxable person and non-resident
taxable person
(1) The certificate of registration issued to a casual taxable person or a non-resident
taxable person shall be valid for a period of ninety days from the effective date of
registration.
Provided that the proper officer may, at the request of the said taxable person, extend
the aforesaid period of ninety days by a further period not exceeding ninety days.
(2) Notwithstanding anything to the contrary contained in this Act, a casual taxable
person or a non-resident taxable person shall, at the time of submission of application
for registration under sub-section (1) of section 19, make an advance deposit of tax in
an amount equivalent to the estimated tax liability of such person for the period for
which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such taxable
person shall deposit an additional amount of tax equivalent to the estimated tax liability
of such person for the period for which the extension is sought.
(3) The amount deposited under sub-section (2) shall be credited to the electronic cash
ledger of such person and shall be utilized in the manner provided under section 35.
20. Amendment of registration
(1) Every registered taxable person shall inform the proper officer of any changes in
the information furnished at the time of registration, or that furnished subsequently, in
the manner and within such period as may be prescribed.
(2) The proper officer may, on the basis of information furnished under sub-section
(1) or as ascertained by him, approve or reject amendments in the registration
particulars in the manner and within such period as may be prescribed:
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Provided that approval of the proper officer shall not be required in respect of
amendment of such particulars as may be prescribed.
(3) The proper officer shall not reject the request for amendment in the registration
particulars without giving a notice to show cause and without giving the person a
reasonable opportunity of being heard.
(4) Any rejection or, as the case may be, approval of amendments under the CGST
Act/SGST Act shall be deemed to be a rejection or approval of amendments under the
SGST Act/CGST Act.
21. Cancellation of registration
(1) The proper officer may, either on his own motion or on an application filed, in the
prescribed manner, by the registered taxable person or by his legal heirs, in case of
death of such person, cancel the registration, in such manner and within such period as
may be prescribed, having regard to the circumstances where, –
(a) the business has been discontinued, transferred fully for any reason including
death of the proprietor, amalgamated with other legal entity, demerged or otherwise
disposed of; or
(b) there is any change in the constitution of the business; or
(c) the taxable person, other than the person registered under sub-section (3) of
section 19, is no longer liable to be registered under Schedule III.
(2) The proper officer may, in the manner as may be prescribed, cancel the
registration of taxable person from such date, including any anterior date, as he may
deem fit, where, –
(a) the registered taxable person has contravened such provisions of the Act or the
rules made thereunder as may be prescribed; or
(b) a person paying tax under section 8 has not furnished returns for three
consecutive tax periods; or
(c) any taxable person, other than a person specified in clause (b), has not furnished
returns for a continuous period of six months; or
(d) any person who has taken voluntary registration under sub-section (3) of section
19 has not commenced business within six months from the date of registration.
(3) Where any registration has been obtained by means of fraud, wilful misstatement or
suppression of facts, the proper officer may cancel the registration with retrospective
effect, subject to the provisions of section 29.
(4) The proper officer shall not cancel the registration without giving a notice to show
cause and without giving the person a reasonable opportunity of being heard.
(5) The cancellation of registration under this section shall not affect the liability of
the taxable person to pay tax and other dues under the Act for any period prior to the
date of cancellation whether or not such tax and other dues are determined before or
after the date of cancellation.
(6) The cancellation of registration under the CGST Act/SGST Act shall be deemed to
be a cancellation of registration under the SGST Act/CGST Act.
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(7) Every registered taxable person whose registration is cancelled shall pay an amount,
by way of debit in the electronic credit or cash ledger, equivalent to the credit of input
tax in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock on the day immediately preceding the date of such cancellation or
the output tax payable on such goods, whichever is higher, calculated in such manner as
may be prescribed:
Provided that in case of capital goods, the taxable person shall pay an amount equal to
the input tax credit taken on the said capital goods reduced by the percentage points as
may be prescribed in this behalf or the tax on the transaction value of such capital goods
under sub-section (1) of section 15, whichever is higher.
(8) The amount payable under sub-section (7) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
22. Revocation of cancellation of registration
(1) Subject to such conditions and in such circumstances as may be prescribed, any
registered taxable person, whose registration is cancelled by the proper officer on his
own motion, may apply to such officer for revocation of cancellation of the registration in
the prescribed manner within thirty days from the date of service of the cancellation
order.
(2) The proper officer may, in the manner and within such period as may be
prescribed in this behalf, by way of an order, either revoke cancellation of the
registration or reject the application for revocation for good and sufficient reasons.
(3) The proper officer shall not reject the application for revocation of cancellation of
registration without giving a notice to show cause and without giving the person a
reasonable opportunity of being heard.
(4) Revocation of cancellation of registration under the CGST Act / SGST Act shall be
deemed to be a revocation of cancellation of registration under the SGST Act / CGST Act.
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CHAPTER- VII
TAX INVOICE, CREDIT AND DEBIT NOTES
23. Tax invoice
A registered taxable person supplying,-
(i) taxable goods shall issue, at the time of supply, a tax invoice showing the
description, quantity and value of goods, the tax charged thereon and such other
particulars as may be prescribed;
(ii) taxable services shall issue a tax invoice, within the prescribed time, showing the
description, the tax charged thereon and such other particulars as may be prescribed:
Provided that a registered taxable person may 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:
Provided further that a registered taxable person supplying non-taxable goods and/or
services or paying tax under the provisions of section 8 shall issue, instead of a tax
invoice, a bill of supply containing such particulars as may be prescribed.
Explanation.- The expression “tax invoice” shall be deemed to include a document issued
by an Input Service Distributor under section 17, and shall also include any
supplementary or revised invoice issued by the supplier in respect of a supply made
earlier.
23 A. Amount of tax to be indicated in tax invoice and other documents
Notwithstanding anything contained in this Act 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.
24. Credit and debit notes
(1) Where a tax invoice has been issued for supply of any goods and/or services and the
taxable value and/or tax charged in that tax invoice is found to exceed the taxable value
and/or tax payable in respect of such supply, the taxable person, who has supplied such
goods and/or services, may issue to the recipient a credit note containing such
particulars as may be prescribed on or before the thirtieth day of September following
the end of the financial year in which such supply was made, or the date of filing of the
relevant annual return, whichever is earlier:
Provided that no credit note shall be issued by the said person if the incidence of tax and
interest on such supply has been passed by him to any other person.
(2) Where a tax invoice has been issued for supply of any goods and/or services and the
taxable value and/or tax charged in that tax invoice is found to be less than the taxable
value and/or tax payable in respect of such supply, the taxable person, who has supplied
such goods and/or services, shall issue to the recipient a debit note containing such
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particulars as may be prescribed on or before the thirtieth day of September following
the end of the financial year in which such supply was made, or the date of filing of the
relevant annual return, whichever is earlier.
(3) Any registered taxable person who issues or receives a credit or debit note in
relation to a supply of goods and/or services shall declare the details of such credit or
debit note, as the case may be, in the return for the month during which such credit or
debit note has been issued or received or in the return for any subsequent month but
not later than September following the end of financial year in which such supply was
made, or the date of filing of the relevant annual return, whichever is earlier, and the
tax liability shall be adjusted in the manner specified in this Act.
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CHAPTER- VIII
RETURNS
25. Furnishing details of outward supplies
(1) Every registered taxable person, other than an input service distributor and a person
paying tax under the provisions of section 8 or section 37, shall furnish, electronically, in
such form and manner as may be prescribed, the details of outward supplies of goods
and/or services effected, during a tax period on or before the tenth day of the month
succeeding the said tax period and such details shall be communicated to the recipient of
the said supplies within the time and in the manner as may be prescribed:
Provided that the Board / Commissioner may, for valid and sufficient reasons, by
notification, extend the time limit for furnishing such details:
Provided further that any extension of time limit by the Board/Commissioner of State
Goods and Services Tax shall be deemed to be approved by the Commissioner of State
Goods and Services Tax/Board:
Explanation.- For the purposes of this section, the expression “details of outward
supplies” shall include details relating to zero-rated supplies, inter-state supplies, return
of goods received in relation to/ in pursuance of an inward supply, exports, debit
notes, credit notes and supplementary invoices issued during the said tax period.
(2) Any registered taxable person, who has furnished the details under sub-section (1)
for any tax period and which have remained unmatched under section 29, shall, upon
discovery of any error or omission therein, rectify such error or omission in the tax
period during which such error or omission is noticed in such manner as may be
prescribed, and shall pay the tax and interest, if any, in case there is a short payment of
tax on account of such error or omission, in the return to be furnished for such tax
period:
Provided that no rectification of error or omission in respect of the details furnished
under sub-section (1) shall be allowed after filing of the return under section 27 for the
month of September following the end of the financial year to which such details pertain,
or filing of the relevant annual return, whichever is earlier.
26. Furnishing details of inward supplies
(1) Every registered taxable person, other than an input service distributor and a
person paying tax under the provisions of section 8 or section 37, shall verify, validate,
modify or, if required, delete the details relating to outward supplies and credit or debit
notes communicated under sub-section (1) of section 25 to prepare the details of his
inward supplies and credit or debit notes and may include therein, the details of inward
supplies and credit or debit notes received by him in respect of such supplies that have
not been declared by the supplier under sub-section (1) of section 25.
(2) Every registered taxable person shall furnish, electronically, the details of inward
supplies of taxable goods and/or services, including inward supplies of services on which
the tax is payable on reverse charge basis under this Act and inward supplies of goods
and/or services taxable under the IGST Act, and credit or debit notes received in respect
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of such supplies during a tax period on or before the fifteenth day of the month
succeeding the tax period in such form and manner as may be prescribed:
Provided that the Board/Commissioner may, for valid and sufficient reasons, by
notification, extend the time limit for furnishing such details:
Provided further that any extension of time limit by the Board/Commissioner of State
Goods and Services Tax shall be deemed to be approved by the Commissioner of State
Goods and Services Tax/Board.
(3) Any registered taxable person, who has furnished the details under sub-section
(2) for any tax period and which have remained unmatched under section 29, shall,
upon discovery of any error or omission therein, rectify such error or omission in the tax
period during which such error or omission is noticed in such manner as may be
prescribed, and shall pay the tax and interest, if any, in case there is a short payment of
tax on account of such error or omission, in the return to be furnished for such tax
period:
Provided that no rectification of error or omission in respect of the details furnished
under sub-section (2) shall be allowed after filing of the return under section 27 for the
month of September following the end of the financial year to which such details pertain,
or filing of the relevant annual return, whichever is earlier.
27. Returns
(1) Every registered taxable person shall, for every calendar month or part thereof,
furnish, in such form and in such manner as may be prescribed, a return, electronically,
of inward and outward supplies of goods and/or services, input tax credit availed, tax
payable, tax paid and other particulars as may be prescribed within twenty days after
the end of such month:
Provided that a registered taxable person paying tax under the provisions of section 8 of
this Act shall furnish a return for each quarter or part thereof, electronically, in such
form and in such manner as may be prescribed, within eighteen days after the end of
such quarter:
Provided further that a registered taxable person shall not be allowed to furnish return
for a tax period if valid return for any previous tax period has not been furnished by him.
(2) Every registered taxable person, who is required to furnish a return under subsection
(1), shall pay to the credit of the appropriate Government the tax due as per
such return not later than the last date on which he is required to furnish such return.
(3) A return furnished under sub-section (1) by a registered taxable person without
payment of full tax due as per such return shall not be treated as a valid return for
allowing input tax credit in respect of supplies made by such person.
(4) Every registered taxable person shall furnish a return for every tax period under
sub-section (1), whether or not any supplies of goods and/or services have been
effected during such tax period.
(5) Every registered taxable person required to deduct tax at source shall furnish a
return, electronically, in such form and in such manner as may be prescribed, for the
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month in which such deductions have been made along with the payment of tax so
deducted, within ten days after the end of such month.
(6) Every Input Service Distributor shall, for every calendar month or part thereof,
furnish a return, electronically, in such form and in such manner as may be prescribed,
within thirteen days after the end of such month.
(7) Subject to the provisions of sections 25 and 26, if any taxable person after
furnishing a return under sub-section (1) discovers any omission or incorrect particulars
therein, other than as a result of scrutiny, audit, inspection or enforcement activity by
the tax authorities, he shall rectify such omission or incorrect particulars in the return to
be filed for the month or quarter, as the case may be, during which such omission or
incorrect particulars are noticed, subject to payment of interest, where applicable and as
specified in the Act:
Provided that no such rectification of any omission or incorrect particulars shall be
allowed after the due date for filing of return for the month of September or second
quarter, as the case may be, following the end of the financial year, or the actual date of
filing of relevant annual return, whichever is earlier.
27A. First Return
(1) Every registered taxable person paying tax under the provisions of section 7 shall
furnish the first return containing the details of:
(a) outward supplies under section 25 from the date on which he became liable to
registration till the end of the month in which the registration has been granted;
(b) inward supplies under section 26 from the effective date of registration till the
end of the month in which the registration has been granted:
Provided that a registered taxable person paying tax under the provisions of section 8
shall furnish the first return for the period starting from the date on which he becomes a
registered taxable person till the end of the quarter in which the registration has been
granted.
(2) Provisions of section 25, 26 and 27, other than the provision pertaining to tax
period, shall apply mutatis mutandis to the said person furnishing return under subsection
(1).
28. Claim of input tax credit and provisional acceptance thereof
Every taxable person shall, subject to such conditions and restrictions as may be
prescribed in this behalf, be entitled to take credit of input tax, as self-assessed, in his
return and such amount shall be credited, on a provisional basis, to his electronic credit
ledger to be maintained in the manner as may be prescribed:
Provided that a taxable person who has not furnished a valid return under section 27 of
the Act shall not be allowed to utilize such credit till he discharges his self-assessed tax
liability.
29. Matching, reversal and reclaim of input tax credit
(1) The details of every inward supply furnished by a taxable person (hereinafter
referred to in this section as the ‘recipient’) for a tax period shall, in the manner and
within the time prescribed, be matchedPage
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(a) with the corresponding details of outward supply furnished by the corresponding
taxable person (hereinafter referred to in this section as the ‘supplier’) in his valid return
for the same tax period or any preceding tax period,
(b) with the additional duty of customs paid under section 3 of the Customs Tariff
Act, 1975 (51 of 1975) in respect of goods imported by him, and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices and/or debit notes relating to
inward supply that match with the details of corresponding outward supply or with the
additional duty of customs paid shall, subject to the provisions of section 16, be finally
accepted and such acceptance shall be communicated, in the manner as may be
prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in
excess of the tax declared by the supplier for the same supply or the outward supply is
not declared by the supplier in his valid returns, the discrepancy shall be communicated
to both such persons in the manner as may be prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the recipient in
the manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section
(3) and which is not rectified by the supplier in his valid return for the month in which
discrepancy is communicated shall be added to the output tax liability of the recipient, in
the manner as may be prescribed, in his return for the month succeeding the month in
which the discrepancy is communicated.
(6) The amount claimed as input tax credit that is found to be in excess on account of
duplication of claims shall be added to the output tax liability of the recipient in his
return for the month in which the duplication is communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability, the amount
added under sub-section (5) if the supplier declares the details of the invoice and/or
debit note in his valid return within the time specified in sub-section (7) of section 27.
(8) A recipient in whose output tax liability any amount has been added under subsection
(5) or, as the case may be, under sub-section (6), shall be liable to pay interest
at the rate specified under sub-section (1) of section 36 on the amount so added from
the date of availing of credit till the corresponding additions are made under the said
sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the
interest paid under sub-section (8) shall be refunded to the recipient by crediting the
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amount in the corresponding head of his electronic cash ledger in the manner as may be
prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the
amount of interest paid by the supplier.
(10) The amount reduced from the output tax liability in contravention of the provisions
of sub-section (7) shall be added to the output tax liability of the recipient in his return
for the month in which such contravention takes place and such recipient shall be liable
to pay interest on the amount so added at the rate specified in sub-section (3) of section
36.
29A. Matching, reversal and reclaim of reduction in output tax liability
(1) The details of every credit note relating to outward supply furnished by a taxable
person (hereinafter referred to in this section as the ‘supplier’) for a tax period shall, in
the manner and within the time prescribed, be matched –
(a) with the corresponding reduction in the claim for input tax credit by the
corresponding taxable person (hereinafter referred to in this section as the ‘recipient’) in
his valid return for the same tax period or any subsequent tax period, and
(b) for duplication of claims for reduction in output tax liability.
(2) The claim for reduction in output tax liability by the supplier that matches with the
corresponding reduction in the claim for input tax credit by the recipient shall be finally
accepted and communicated, in the manner as may be prescribed, to the supplier.
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the
corresponding reduction in the claim for input tax credit or the corresponding credit note
is not declared by the recipient in his valid returns, the discrepancy shall be
communicated to both such persons in the manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated
to the supplier in the manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section
(3) and which is not rectified by the recipient in his valid return for the month in which
discrepancy is communicated shall be added to the output tax liability of the supplier, in
the manner as may be prescribed, in his return for the month succeeding the month in
which the discrepancy is communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on
account of duplication of claims shall be added to the output tax liability of the supplier
in his return for the month in which such duplication is communicated.
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(7) The supplier shall be eligible to reduce, from his output tax liability, the amount
added under sub-section (5) if the recipient declares the details of the credit note in his
valid return within the time specified in sub-section (7) of section 27.
(8) A supplier in whose output tax liability any amount has been added under subsection
(5) or, as the case may be, under sub-section (6), shall be liable to pay interest
at the rate specified under sub-section (1) of section 36 in respect of the amount so
added from the date of such claim for reduction in the output tax liability till the
corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the
interest paid under sub-section (8) shall be refunded to the supplier by crediting the
amount in the corresponding head of his electronic cash ledger in the manner as may be
prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the
amount of interest paid by the recipient.
(10) The amount reduced from output tax liability in contravention of the provision of
sub-section (7) shall be added to the output tax liability of the supplier in his return for
the month in which such contravention takes place and such supplier shall be liable to
pay interest on the amount so added at the rate specified in sub-section (3) of section
36.
30. Annual return
(1) Every registered taxable person, other than an input service distributor, a deductor
under section 37, a casual taxable person and a non-resident taxable person, shall
furnish an annual return for every financial year electronically in such form and in such
manner as may be prescribed on or before the thirty first day of December following the
end of such financial year.
(2) Every taxable person who is required to get his accounts audited under subsection
(4) of section 42 shall furnish, electronically, the annual return along with the
audited copy of the annual accounts and a reconciliation statement, reconciling the value
of supplies declared in the return furnished for the year with the audited annual financial
statement, and such other particulars as may be prescribed.
31. Final return
Every registered taxable person who applies for cancellation of registration shall
furnish a final return within three months of the date of cancellation or date of
cancellation order, whichever is later, in such form and in such manner as may be
prescribed.
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32. Notice to return defaulters
Where a registered taxable person fails to furnish a return under section 27 or section
31, a notice shall be issued requiring him to furnish such return within such time and in
such form and manner as may be prescribed.
33. Levy of late fee
(1) Any registered taxable person who fails to furnish the details of outward or inward
supplies required under section 25 or section 26, as the case may be, or returns required
under section 27 or section 31 by the due date shall be liable to a late fee of rupees one
hundred for every day during which such failure continues subject to a maximum of
rupees five thousand.
(2) Any registered taxable person who fails to furnish the return required under
section 30 by the due date shall be liable to a late fee of rupees one hundred for every
day during which such failure continues subject to a maximum of an amount calculated
at a quarter percent of his aggregate turnover.
34. Tax Return Preparers
(1) The appropriate Government may, by rules, prescribe the manner of approval of
Tax Return Preparers, their eligibility conditions, duties and obligations, manner of
removal and such other conditions as may be relevant for their functioning as a Tax
Return Preparer.
(2) A registered taxable person may, in the manner prescribed, authorise an
approved Tax Return Preparer to furnish the details of outward supplies under section
25, the details of inward supplies under section 26 and the return under section 27, 30
or section 31, as the case may be, and such other tasks as may be prescribed.
(3) Notwithstanding anything contained in sub-section (2), the responsibility for
correctness of any particulars furnished in the return and/or other details filed by the
Tax Return Preparer shall continue to rest with the registered taxable person on whose
behalf such return and details are filed.
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CHAPTER-IX
PAYMENT OF TAX
35. Payment of tax, interest, penalty and other amounts
(1) Every deposit made towards tax, interest, penalty, fee or any other amount by a
taxable person by internet banking or by using credit/debit cards or National Electronic
Fund Transfer or Real Time Gross Settlement or by any other mode, subject to such
conditions and restrictions as may be prescribed in this behalf, shall be credited to the
electronic cash ledger of such person to be maintained in the manner as may be
prescribed.
Explanation.- The date of credit to the account of the appropriate Government in the
authorized bank shall be deemed to be the date of deposit.
(2) The input tax credit as self-assessed in the return of a taxable person shall be
credited to his electronic credit ledger to be maintained in the manner as may be
prescribed.
(3) The amount available in the electronic cash ledger may be used for making any
payment towards tax, interest, penalty, fees or any other amount payable under the
provisions of the Act or the rules made thereunder in such manner and subject to such
conditions and within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be used for making any
payment towards tax payable under the provisions of the Act or the rules made
thereunder in such manner and subject to such conditions and within such time as may
be prescribed.
(5)(a) The amount of input tax credit on account of IGST available in the electronic
credit ledger shall first be utilized towards payment of IGST and the amount remaining,
if any, may be utilized towards the payment of CGST and SGST, in that order.
(b) The amount of input tax credit on account of CGST available in the electronic credit
ledger shall first be utilized towards payment of CGST and the amount remaining, if any,
may be utilized towards the payment of IGST.
(c) The input tax credit on account of CGST shall not be utilized towards payment of
SGST.
Note: This provision is to be incorporated in CGST Act.
(b) The amount of input tax credit on account of SGST available in the electronic credit
ledger shall first be utilized towards payment of SGST and the amount remaining, if any,
may be utilized towards the payment of IGST.
(c) The input tax credit on account of SGST shall not be utilized towards payment of
CGST.
Note: This provision is to be incorporated in SGST Act.
(6) The balance in the cash or credit ledger after payment of tax, interest, penalty,
fee or any other amount payable under the Act or the rules made thereunder may be
refunded in accordance with the provisions of section 38 and the amount collected as
CGST/SGST shall stand reduced to that extent.
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(7) All liabilities of a taxable person under this Act shall be recorded and maintained
in an electronic register as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues under this Act or the
rules made thereunder in the following order:
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to return of current tax period;
(c) any other amount payable under the Act or the rules made thereunder including
the demand determined under section 51.
(9) Every person who has paid the tax on goods and/or services under this Act shall,
unless the contrary is proved by him, be deemed to have passed on the full incidence of
such tax to the recipient of such goods and/or services.
Explanation.— For the purposes of this section, the expression “tax dues” means the tax
payable under this Act and does not include interest, fee and penalty.
36. Interest on delayed payment of tax
(1) Every person liable to pay tax in accordance with the provisions of the Act or rules
made thereunder, who fails to pay the tax or any part thereof to the account of the
Central or a State Government within the period prescribed, shall, on his own, for the
period for which the tax or any part thereof remains unpaid, pay interest at such rate as
may be notified, on the recommendation of the Council, by the Central or a State
Government.
(2) The interest under sub-section (1) shall be calculated from the first day such tax was
due to be paid.
(3) In case a taxable person makes an undue or excess claim of input tax credit under
sub-section (10) of section 29, he shall be liable to pay interest on such undue or excess
claim at the prescribed rate for the period computed in the manner prescribed.
37. Tax deduction at source
(1) Notwithstanding anything contained to the contrary in this Act, the Central or a
State Government may mandate, –
(a) a department or establishment of the Central or State Government, or
(b) Local authority, or
(c) Governmental agencies, or
(d) such persons or category of persons as may be notified, by the Central or a State
Government on the recommendations of the Council,
[hereinafter referred to in this section as “the deductor”], to deduct tax at the rate of
one percent from the payment made or credited to the supplier [hereinafter referred to
in this section as “the deductee”] of taxable goods and/or services, notified by the
Central or a State Government on the recommendations of the Council, where the total
value of such supply, under a contract, exceeds rupees ten lakh.
Explanation. – For the purpose of deduction of tax specified above, the value of supply
shall be taken as the amount excluding the tax indicated in the invoice.
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(2) The amount deducted as tax under this section shall be paid to the credit of the
appropriate Government by the deductor within ten days after the end of the month in
which such deduction is made, in the manner prescribed.
(3) The deductor shall, in the manner prescribed, furnish to the deductee a certificate
mentioning therein the contract value, rate of deduction, amount deducted, amount paid
to the appropriate Government and such particulars as may be prescribed in this behalf.
(4) If any deductor fails to furnish to the deductee the certificate, after deducting the
tax at source, within five days of crediting the amount so deducted to the appropriate
Government, the deductor shall be liable to pay, by way of a late fee, a sum of rupees
one hundred per day from the day after the expiry of the five day period until the failure
is rectified:
Provided that the amount of fee payable under this sub-section shall not exceed rupees
five thousand.
(5) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted
and reflected in the return of the deductor filed under sub-section (5) of section 27, in
the manner prescribed.
(6) If any deductor fails to pay to the credit of the appropriate Government the
amount deducted as tax under sub-section (1), he shall be liable to pay interest in
accordance with the provisions of section 36, in addition to the amount of tax deducted.
(7) Determination of the amount in default under this section shall be made in the
manner specified in section 51.
(8) Refund to the deductor or the deductee, as the case may be, arising on account
of excess or erroneous deduction shall be dealt with in accordance with the provisions of
section 38:
Provided that no refund to deductor shall be granted if the amount deducted has been
credited to the electronic cash ledger of the deductee.
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CHAPTER-IXA
TRANSFER OF INPUT TAX CREDIT
37A. Transfer of input tax credit
On utilization of input tax credit availed under the CGST Act for payment of tax
dues under the IGST Act as per sub-section (5) of section 35, the amount collected as
CGST shall stand reduced by an amount equal to the credit so utilized and the Central
Government shall transfer an amount equal to the amount so reduced from the CGST
account to the IGST account in the manner and time as may be prescribed.
Note: This provision is to be incorporated in the CGST Act.
On utilization of input tax credit availed under the SGST Act for payment of tax
dues under the IGST Act as per sub-section (5) of section 35, the amount collected as
SGST shall stand reduced by an amount equal to the credit so utilized and the State
Government shall transfer an amount equal to the amount so reduced from the SGST
account to the IGST account in the manner and time as may be prescribed.
Note. This provision is to be incorporated in SGST Act.
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CHAPTER-X
REFUNDS
38. Refund of tax
(1) Any person claiming refund of any tax and interest, if any, paid on such tax or
any other amount paid by him, may make an application in that regard to the proper
officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such
form and in such manner as may be prescribed:
Provided that the limitation of two years shall not apply where such tax or interest or the
amount referred to above has been paid under protest.
(2) Subject to the provisions of sub-section (8), a taxable person may claim refund of
any unutilized input tax credit at the end of any tax period:
Provided that no refund of unutilized input tax credit shall be allowed in cases other than
exports or in cases where the credit has accumulated on account of rate of tax on inputs
being higher than the rate of tax on outputs:
Provided further that no refund of unutilized input tax credit shall be allowed in cases
where the goods exported out of India are subjected to export duty.
(3) The application shall be accompanied by—
(a) such documentary evidence as may be prescribed to establish that a refund is due to
the applicant, and
(b) such documentary or other evidence (including the documents referred to in section
23A) as the applicant may furnish to establish that the amount of tax and interest, if
any, paid on such tax or any other amount paid in relation to which such refund is
claimed was collected from, or paid by, him and the incidence of such tax and interest
had not been passed on by him to any other person:
Provided that where the amount claimed as refund is less than five lac rupees, it shall
not be necessary for the applicant to furnish any documentary and other evidences and
instead, he may file a declaration, based on the documentary or other evidences with
him, certifying that the incidence of such tax and interest had not been passed on by
him to any other person.
(4) If, on receipt of any such application, the proper officer is satisfied that the whole or
part of the amount claimed as refund is refundable, he may make an order accordingly
and the amount so determined shall be credited to the Fund.
(4A) Notwithstanding anything contained in sub-section (4), the proper officer may, in
the case of any claim for refund on account of export of goods and/or services made by
such category of registered taxable persons as may be notified in this behalf, refund
eighty percent of the total amount so claimed, excluding the amount of input tax credit
provisionally accepted, on a provisional basis, in the manner and subject to such
conditions, limitations and safeguards as may be prescribed and the remaining twenty
percent may be refunded after due verification of documents furnished by the applicant.
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(5) The proper officer shall issue the order under sub-section (4) within ninety days
from the date of receipt of application.
Explanation.- The “application” for the purpose of this sub-section shall mean complete
application containing all information as may be prescribed.
(6) Notwithstanding anything contained in sub-section (4) or sub-section (4A), the
refundable amount shall, instead of being credited to the Fund, be paid to the applicant,
if such amount is relatable to –
(a) refund of tax on goods and/or services exported out of India or on inputs used in
the goods and/or services which are exported out of India;
(b) refund of unutilized input tax credit under sub-section (2);
(c) the tax and interest, if any, or any other amount paid by the applicant, if he had
not passed on the incidence of such tax and interest to any other person; or
(d) the tax or interest borne by such other class of applicants as the Central or a
State Government may, on the recommendation of the Council, by notification, specify.
(7) Notwithstanding anything to the contrary contained in any judgment, decree, order
or direction of the Appellate Tribunal or any Court or in any other provision of this Act
or the rules made thereunder or in any other law for the time being in force, no refund
shall be made except as provided in sub-section (6).
(8) Notwithstanding anything contained in sub-section (2), where any refund is due
under the said sub-section to a registered taxable person who has defaulted in furnishing
any return or who is required to pay any tax, interest or penalty, which has not been
stayed by any Court, Tribunal or Appellate Authority by the specified date, the proper
officer may—
(a) withhold payment of refund due until the said person has submitted the return or
paid the tax, interest or penalty, as the case may be;
(b) deduct from the refund due, any tax, interest or penalty which the taxable person is
liable to pay but which remains unpaid.
Explanation.- For the purposes of this sub-section the expression “specified date” shall
mean—
(a) the last date for filing an appeal under this Act, in a case where no appeal has been
filed
(b) thirty days after the last date for filing an appeal under this Act, in a case where an
appeal has been filed.
(9) Notwithstanding anything contained in sub-section (4) or sub-section (4A), where an
order giving rise to a refund is the subject matter of an appeal or further proceeding or
where any other proceeding under this Act is pending and the Commissioner / Board is
of the opinion that grant of such refund is likely to adversely affect the revenue, he may,
after giving the taxpayer an opportunity of being heard, withhold the refund till such
time as he may determine.
(10) Where a refund is withheld under sub-section (9), the taxable person shall be
entitled to interest as provided under section 39, if as a result of the appeal or further
proceeding he becomes entitled to refund.
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(11) Notwithstanding anything contained in this section, no refund under sub-section (4)
or sub-section (4A) shall be paid to an applicant if the amount is less than rupees one
thousand.
Explanation. — For the purposes of this section –
(A) “refund” includes refund of tax on goods and/or services exported out of India
or on inputs or input services used in the goods and/or services which are exported out
of India, or refund of tax on the supply of goods regarded as deemed exports, or refund
of unutilized input tax credit as provided under sub-section (2).
(B) “relevant date” means –
(a) in the case of goods exported out of India where a refund of tax paid is available in
respect of the goods themselves or, as the case may be, the inputs or input services
used in such goods, –
(i)if the goods are exported by sea or air, the date on which the ship or the aircraft in
which such goods are loaded, leaves India, or
(ii) if the goods are exported by land, the date on which such goods pass the frontier, or
(iii) if the goods are exported by post, the date of despatch of goods by Post Office
concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund of tax
paid is available in respect of the goods, the date on which the return relating to such
deemed exports is filed;
(c) in the case of goods returned for being remade, refined, reconditioned, or subjected
to any other similar process in any place of business, the date of entry into the place of
business for the purposes aforesaid;
(d) in the case of services exported out of India where a refund of tax paid is available in
respect of services themselves or, as the case may be, the inputs or input services used
in such services, the date of –
(i) receipt of payment in convertible foreign exchange, where the supply of service had
been completed prior to the receipt of such payment; or
(ii) issue of invoice, where payment for the service had been received in advance prior to
the date of issue of the invoice;
(e) in case where the tax becomes refundable as a consequence of judgment, decree,
order or direction of Appellate Authority, Appellate Tribunal or any Court, the date of
communication of such judgment, decree, order or direction;
(f) in the case of refund of unutilized input tax credit under sub-section (2), the end of
the financial year in which such claim for refund arises; and
(g) in the case where tax is paid provisionally under this Act or the rules made
thereunder, the date of adjustment of tax after the final assessment thereof.
39. Interest on delayed refunds
If any tax refundable under section 38 to any applicant is not refunded within
three months from the date of receipt of application under sub-section (1) of that
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section, interest at such rate as may be specified in the notification issued by the Central
or a State Government on the recommendation of the Council shall be payable in respect
of such refund from the date immediately after the expiry of the due date for sanction of
refund under section 38 till the date of refund of such tax.
Explanation.- Where any order of refund is made by an Appellate Authority, Tribunal or
any Court against an order of the proper officer under sub-section (4) or sub-section
(4A) of section 38, the order passed by the Appellate Authority, Tribunal or, as the case
may be, by the Court shall be deemed to be an order passed under the said sub-section
(4) or sub-section (4A) for the purposes of this section.
40. Consumer Welfare Fund
(1) There shall be established by the Central or a State Government a fund, to be called
the Consumer Welfare Fund.
(2) There shall be credited to the Fund, in such manner as may be prescribed, –
(a) the amount of tax referred to in sub-section (4) or sub-section (4A) of section
38; and
(b) any income from investment of the amount credited to the Fund and any other
monies received by the Central or a State Government for the purposes of this Fund.
41. Utilization of the Fund
(1) Any money credited to the Fund shall be utilised by the Central/State Government
for the welfare of the consumers in accordance with such rules as that Government may
make in this behalf.
(2) The Central/State Government shall maintain or, if it thinks fit, specify the authority
which shall maintain, proper and separate account and other relevant records in relation
to the Fund in such form as may be prescribed in consultation with the Comptroller and
Auditor-General of India.
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CHAPTER-XI
ACCOUNTS AND RECORDS
42. Accounts and other records
(1) Every registered person shall keep and maintain, at his principal place of business,
as mentioned in the certificate of registration, a true and correct account of production
or manufacture of goods, of inward or outward supply of goods and/or services, of stock
of goods, of input tax credit availed, of output tax payable and paid, and such other
particulars as may be prescribed in this behalf:
Provided that where more than one place of business is specified in the certificate of
registration, the accounts relating to each place of business shall be kept at such places
of business concerned:
Provided further that the registered person may keep and maintain such accounts and
other particulars in the electronic form in the manner as may be prescribed.
(2) The [Commissioner/Chief Commissioner] may notify a class of taxable persons to
maintain additional accounts or documents for such purpose as may be specified.
(3) Where the [Commissioner/ Chief Commissioner] considers that any class of taxable
persons is not in a position to keep and maintain accounts in accordance with the
provisions of this section, he may, for reasons to be recorded in writing, permit such
class of taxable persons to maintain accounts in such manner as may be prescribed.
(4) Every registered taxable person whose turnover during a financial year exceeds the
prescribed limit shall get his accounts audited by a chartered accountant or a cost
accountant and shall submit to the proper officer a copy of the audited statement of
accounts, the reconciliation statement under sub-section (2) of section 30 and such
other documents in the form and manner as may be prescribed in this behalf.
43. Period of retention of accounts
(1) Every registered taxable person required to keep and maintain books of account
or other records under sub-section (1) of section 42 shall retain them until the expiry of
sixty months from the last date of filing of Annual Return for the year pertaining to such
accounts and records:
Provided that a taxable person, who is a party to an appeal or revision or any other
proceeding before any Appellate Authority or Tribunal or Court, whether filed by him or
by the department, shall retain the books of account and other records pertaining to the
subject matter of such appeal or revision or proceeding for a period of one year after
final disposal of such appeal or revision or proceeding, or for the period specified under
sub-section (1), whichever is later.
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CHAPTER – XIA
JOB WORK
43A. Special procedure for removal of goods for certain purposes
(1) The Commissioner may, by special order and subject to conditions as may be
specified by him, permit a registered taxable person (hereinafter referred to in this
section as the “principal”) to send taxable goods, without payment of tax, to a job
worker for job-work and from there subsequently send to another job worker and
likewise, and may, after completion of job-work, allow to-
(a) bring back such goods to any of his place of business, without payment of tax, for
supply therefrom on payment of tax within India, or with or without payment of tax for
export, as the case may be, or
(b) supply such goods from the place of business of a job-worker on payment of tax
within India, or with or without payment of tax for export, as the case may be:
Provided that the goods shall not be permitted to be supplied from the place of business
of a job worker in terms of clause (b) unless the “principal” declares the place of
business of the job-worker as his additional place of business except in a case-
(i) where the job worker is registered under section 19; or
(ii) where the “principal” is engaged in the supply of such goods as may be notified in
this behalf.
(2) The responsibility for accountability of the goods including payment of tax
thereon shall lie with the “principal”.
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CHAPTER – XIB
ELECTRONIC COMMERCE
43B. Definitions
In this Chapter, unless the context otherwise requires, –
(a) ‘aggregator’ means a person, who owns and manages an electronic platform, and
by means of the application and a communication device, enables a potential customer
to connect with the persons providing service of a particular kind under the brand name
or trade name of the said aggregator;
(b) ‘brand name or trade name’ means, a brand name or a trade name, whether
registered or not, that is to say, a name or a mark, such as an invented word or writing,
or a symbol, monogram, logo, label, signature, which is used for the purpose of
indicating, or so as to indicate a connection, in the course of trade, between a service
and some other person using the name or mark with or without any indication of the
identity of that person;
(c) ‘branded Services’ means services which are supplied by an electronic commerce
operator under its own brand name or trade name, whether registered or not;
(d) ‘electronic commerce’ shall mean the supply or receipt of goods and / or services,
or transmitting of funds or data, over an electronic network, primarily the internet, by
using any of the applications that rely on the internet, like but not limited to e-mail,
instant messaging, shopping carts, Web services, Universal Description, Discovery and
Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI),
whether or not the payment is conducted online and whether or not the ultimate delivery
of the goods and/or services is done by the operator;
(e) ‘electronic commerce operator’ shall include every person who, directly or
indirectly, owns, operates or manages an electronic platform that is engaged in
facilitating the supply of any goods and/or services or in providing any information or
any other services incidental to or in connection there with but shall not include persons
engaged in supply of such goods and/or services on their own behalf.
43C. Collection of tax at source
(1) Notwithstanding anything to the contrary contained in the Act or in any contract,
arrangement or memorandum of understanding, every electronic commerce operator
(hereinafter referred to in this section as the “operator”) shall, at the time of credit of
any amount to the account of the supplier of goods and/or services or at the time of
payment of any amount in cash or by any other mode, whichever is earlier, collect an
amount, out of the amount payable or paid to the supplier, representing consideration
towards the supply of goods and /or services made through it, calculated at such rate as
may be notified in this behalf by the Central/State Government on the recommendation
of the Council.
(2) The power to collect the amount specified in sub-section (1) shall be without
prejudice to any other mode of recovery from the operator.
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(3) The amount collected under sub-section (1) shall be paid to the credit of the
appropriate Government by the operator within ten days after the end of the month in
which such collection is made, in the manner prescribed.
(4)(a) Every operator shall, furnish a statement, electronically, of all amounts collected
under sub-section (1), towards outward supplies of goods and/or services effected
through it, during a calendar month, in such form and manner as may be prescribed,
within ten days after the end of such calendar month.
(b) The statement under clause (a) shall contain, inter alia, the details of the amount
collected on behalf of each supplier in respect of all supplies of goods and/or services
effected through the operator and the details of such supplies during the said calendar
month.
(5) Any amount collected in accordance with the provisions of this section and paid
to the credit of the appropriate Government shall be deemed to be a payment of tax on
behalf of the concerned supplier and the supplier shall claim credit, in his electronic cash
ledger, of the tax collected and reflected in the statement of the operator filed under
sub-section (4), in the manner prescribed.
(6) The details of supplies and the amount collected under sub-section (1) during a
calendar month, and furnished by every operator under sub-section (4), shall, in the
manner and within the period prescribed, be matched with the corresponding details of
outward supplies furnished by the concerned supplier in his valid return for the same
calendar month or any preceding calendar month.
(7) Where the details of outward supply, on which the tax has been collected, as
declared by the operator under sub-section (4) do not match with the corresponding
details declared by the supplier under section 25, the discrepancy shall be communicated
to both persons in the manner and within the time as may be prescribed.
(8) The value of a supply relating to any payment in respect of which any discrepancy
is communicated under sub-section (7) and which is not rectified by the supplier in his
valid return for the month in which discrepancy is communicated shall be added to the
output liability of the said supplier, in the manner as may be prescribed, for the calendar
month succeeding the calendar month in which the discrepancy is communicated.
(9) The concerned supplier shall, in whose output tax liability any amount has been
added under sub-section (8), be liable to pay the tax payable in respect of such supply
along with interest, at the rate specified under sub-section (1) of section 36 on the
amount so added from the date such tax was due till the date of its payment.
(10) Any authority not below the rank of Joint Commissioner may, by notice, either
before or during the course of any proceeding under this Act, require the operator to
furnish such details relating to—
(a) supplies of goods and/or services effected through such operator during any
period, or
(b) stock of goods held by the suppliers making supplies through such operator in
the godowns or warehouses, by whatever name called, managed by such
operators and declared as additional places of business by such suppliers –
as may be specified in the notice.
(11) Every operator on whom a notice has been served under sub-section (10) shall
furnish the required information within five working days of the date of service of such
notice.
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(12) Any person who fails to furnish the information required by the notice served
under sub-section (10) shall, without prejudice to any action that is or may be taken
under section 66, be liable to a penalty which may extend to rupees twenty-five
thousand.
Explanation— For the purposes of this section, the expression ‘concerned supplier’ shall
mean the supplier of goods and/or services making supplies through the operator.”
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CHAPTER– XII
ASSESSMENT
44. Self-Assessment
Every registered taxable person shall himself assess the taxes payable under this
Act and furnish a return for each tax period as specified under section 27.
Explanation.— For the purposes of this section, where goods received in pursuance of
an inward supply are returned by the recipient to the supplier within a period of six
months from the date of the relevant invoice, the tax payable on such return supply shall
be equal to the input tax credit availed of earlier in respect of such inward supply.
44A. Provisional Assessment
(1) Where the taxable person is unable to determine the value of goods and/or services
or determine the rate of tax applicable thereto, he may request the proper officer in
writing giving reasons for payment of tax on a provisional basis and the proper officer
may pass an order allowing payment of tax on provisional basis at such rate or on such
value as may be specified by him.
(2) The payment of tax on provisional basis may be allowed, if the taxable person
executes a bond in such form as may be prescribed in this behalf, and with such surety
or security as the proper officer may deem fit, binding the taxable person for payment of
the difference between the amount of tax as may be finally assessed and the amount of
tax provisionally assessed.
(3) The proper officer shall, within a period not exceeding six months from the date of
the communication of the order issued under sub-section (1), pass the final assessment
order after taking into account such information as may be required for finalizing the
assessment:
Provided that the period specified in this sub-section may, on sufficient cause being
shown and for reasons to be recorded in writing, be extended by the Joint/Additional
Commissioner for a further period not exceeding six months and by the Commissioner
for such further period as he may deem fit.
(4) The taxable person shall be liable to pay interest on any amount payable to the
Central/State Government, consequent to the order for final assessment under subsection
(3), at the rate specified under sub-section (1) of section 36, from the first day
after the due date of payment of tax in respect of the said goods and/or services till the
date of actual payment, whether such amount is paid before or after the issue of order
for final assessment.
(5) Where the taxable person is entitled to a refund consequent to the order for final
assessment under sub-section (3), subject to sub-section (6) of section 38, interest shall
be paid on such refund as provided in section 39.
45. Scrutiny of returns
(1) The proper officer may scrutinize the return and related particulars furnished by
the taxable person to verify the correctness of the return in such manner as may be
prescribed.
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(2) The proper officer shall inform the taxable person of the discrepancies noticed, if
any, after such scrutiny in such manner as may be prescribed and seek his explanation
thereto.
(3) In case the explanation is found acceptable, the taxable person shall be informed
accordingly and no further action shall be taken in this regard.
(4) In case no satisfactory explanation is furnished within a period of thirty days of
being informed by the proper officer or such further period as may be permitted by him
or where the taxable person, after accepting the discrepancies, fails to take the
corrective measure within a reasonable period, the proper officer may initiate
appropriate action including those under section 49, 50 or section 60, or proceed to
determine the tax and other dues under sub-section (6) of section 51 A or under subsection
(6) of section 51 B.
46. Assessment of non-filers of returns
(1) Where a registered taxable person fails to furnish the return required under section
27 or section 31, even after the service of a notice under section 32, the proper officer
may, after allowing a period of fifteen days from the date of service of the notice,
proceed to assess the tax liability of the said person to the best of his judgement taking
into account all the relevant material which is available or which he has gathered and
issue an assessment order within the time limit specified in sub-section (7) of section
51A or sub-section (7) of section 51B, as the case may be.
(2) Where the taxable person furnishes a valid return within thirty days of the service of
the assessment order under sub-section (1), the said assessment order shall be deemed
to have been withdrawn.
Explanation.— For removal of doubts it is clarified that nothing in this section shall
preclude the payment of interest under section 36 or payment of late fee under section
33.
47. Assessment of unregistered persons
Where a taxable person fails to obtain registration even though liable to do so,
the proper officer may proceed to assess the tax liability of such taxable person to the
best of his judgement for the relevant tax periods and issue an assessment order within
a period of five years from the due date for filing of the annual return for the year to
which the tax not paid relates:
Provided that no such assessment order shall be passed without giving a notice to show
cause and without giving the person a reasonable opportunity of being heard.
48. Summary assessment in certain special cases
(1) The proper officer may, on any evidence showing a tax liability of a person coming
to his notice, with the previous permission of [Additional/Joint Commissioner], proceed
to assess the tax liability of such person to protect the interest of revenue and issue an
assessment order, if he has sufficient grounds to believe that any delay in doing so will
adversely affect the interest of revenue:
Provided that where the taxable person to whom the liability pertains is not ascertainable
and such liability pertains to supply of goods, the person in charge of such goods shall be
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deemed to be the taxable person liable to be assessed and pay tax and amount due
under this section.
(2) On any application made within thirty days from the date of receipt of order
passed under sub-section (1) by the taxable person or on his own motion, if the
Additional/Joint Commissioner considers that such order is erroneous, he may withdraw
such order and follow the procedure laid down in section 51.
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CHAPTER-XIII
AUDIT
49. Audit by tax authorities
(1) The [Commissioner of CGST/Commissioner of SGST] or any officer authorised by
him, by way of a general or a specific order, may undertake audit of the business
transactions of any taxable person for such period, at such frequency and in such
manner as may be prescribed.
(2) The tax authorities referred to in sub-section (1) may conduct audit at the place
of business of the taxable person and/or in their office.
(3) The taxable person shall be informed, by way of a notice, sufficiently in advance,
not less than fifteen working days, prior to the conduct of audit in the manner
prescribed.
(4) The audit under sub-section (1) shall be carried out in a transparent manner and
completed within a period of three months from the date of commencement of audit:
Provided that where the [Commissioner] is satisfied that audit in respect of such taxable
person cannot be completed within three months from the date of commencement of
audit, he may, for the reasons to be recorded in writing, extend the period by a further
period not exceeding six months.
Explanation.- For the purposes of this sub-section, ‘commencement of audit’ shall mean
the date on which the records and other documents, called for by the tax authorities, are
made available by the taxable person or the actual institution of audit at the place of
business, whichever is later.
(5) During the course of audit, the authorised officer may require the taxable person,
(i) to afford him the necessary facility to verify the books of account or other
documents as he may require and which may be available at such place,
(ii) to furnish such information as he may require and render assistance for timely
completion of the audit.
(6) On conclusion of audit, the proper officer shall without delay inform the taxable
person, whose records are audited, of the findings, the taxable person’s rights and
obligations and the reasons for the findings.
(7) Where the audit conducted under sub-section (1) results in detection of tax not
paid or short paid or erroneously refunded, or input tax credit erroneously availed, the
proper officer may initiate action under section 51.
50. Special audit
(1) If at any stage of scrutiny, enquiry, investigation or any other proceedings before
him, any officer not below the rank of [Deputy/Assistant Commissioner] having regard to
the nature and complexity of the case and the interest of revenue, is of the opinion that
the value has not been correctly declared or the credit availed is not within the normal
limits, he may, with the prior approval of the [Commissioner], direct such taxable person
by notice in writing to get his records including books of account examined and audited
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by a chartered accountant or a cost accountant as may be nominated by the
[Commissioner] in this behalf.
(2) The chartered accountant or cost accountant so nominated shall, within the
period of ninety days, submit a report of such audit duly signed and certified by him to
the said [Deputy/Assistant Commissioner] mentioning therein such other particulars as
may be specified:
Provided that the proper officer may, on an application made to him in this behalf by the
taxable person or the chartered accountant or cost accountant or for any material and
sufficient reason, extend the said period by another ninety days.
(3) The provision of sub-section (1) shall have effect notwithstanding that the
accounts of the taxable person have been audited under any other provision of this Act
or any other law for the time being in force or otherwise.
(4) The taxable person shall be given an opportunity of being heard in respect of any
material gathered on the basis of special audit under sub-section (1) which is proposed
to be used in any proceedings under this Act or rules made thereunder.
(5) The expenses of, and incidental to, the examination and audit of records under
sub-section (1), including the remuneration of such chartered accountant or cost
accountant, shall be determined and paid by the [Commissioner] and that such
determination shall be final.
(6) Where the special audit conducted under sub-section (1) results in detection of
tax not paid or short paid or erroneously refunded, or input tax credit erroneously
availed, the proper officer may initiate action under section 51.
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CHAPTER – XIV
DEMANDS AND RECOVERY
51. Determination of tax not paid or short paid or erroneously refunded
A. Determination of tax not paid or short paid or erroneously refunded or input tax
credit wrongly availed or utilized for any reason other than fraud or any willfulmisstatement
or suppression of facts
(1) Where any tax has not been paid or short paid or erroneously refunded, or where
input tax credit has been wrongly availed or utilized for any reason, other than the
reason of fraud or any willful-misstatement or suppression of facts to evade tax, the
proper officer shall serve notice on the person chargeable with tax which has not been so
paid or which has been so short paid or to whom the refund has erroneously been made,
or who has wrongly availed or utilized input tax credit, requiring him to show cause why
he should not pay the amount specified in the notice along with interest payable thereon
under section 36 and penalty leviable under the provisions of this Act or the rules made
thereunder.
(2) Where a notice has been issued for any period under sub-section (1), the proper
officer may serve a statement, containing the details of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilized for such periods
other than those covered under subsection(1), on the person chargeable with tax. The
service of such statement shall be deemed to be service of notice on such person under
the aforesaid sub-section (1), subject to the condition that the grounds relied upon for
such tax periods other than those covered under sub-section (1) are the same as are
mentioned in the earlier notice.
(3) The person chargeable with tax may, before service of notice under sub-section
(1) or, as the case may be, the statement under sub-section (2), pay the amount of tax
along with interest payable thereon under section 36 on the basis of his own
ascertainment of such tax or the tax as ascertained by the proper officer and inform the
proper officer in writing of such payment. The proper officer, on receipt of such
information, shall not serve any notice under sub-section (1) or, as the case may be, the
statement under sub-section (2), in respect of the tax so paid or any penalty leviable
under the provisions of this Act or the rules made there under.
(4) Where the proper officer is of the opinion that the amount paid under sub-section
(3) falls short of the amount actually payable, he shall proceed to issue the notice as
provided for in sub-section (1) in respect of such amount which falls short of the amount
actually payable.
(5) Where any person chargeable with tax under sub-section (1) or under sub-section
(2) pays the said tax along with interest payable under section 36 within thirty days of
issue of show cause notice, no penalty shall be payable and all proceedings in respect of
the said tax shall be deemed to be concluded.
(6) The proper officer shall, after considering the representation, if any, made by person
chargeable with tax, determine the amount of tax, interest and a penalty not exceeding
ten percent of tax or ten thousand rupees, whichever is higher, due from such person
and issue an order.
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(7) The proper officer shall issue the order under sub-section (6) within three years from
the due date or the actual date, whichever is earlier, for filing of annual return for the
year to which the tax not paid or short paid or input tax credit wrongly availed or utilized
relates or, as the case may be, within three years from the date of erroneous refund.
B. Determination of tax not paid or short paid or erroneously refunded or input tax
credit wrongly availed or utilized by reason of fraud or any willful-misstatement or
suppression of facts
(1) Where any tax has not been paid or short paid or erroneously refunded or where
input tax credit has been wrongly availed or utilized by reason of fraud, or any willfulmisstatement
or suppression of facts to evade tax, the proper officer shall serve notice
on the person chargeable with tax which has not been so paid or which has been so
short paid or to whom the refund has erroneously been made, or who has wrongly
availed or utilized input tax credit requiring him to show cause why he should not pay
the amount specified in the notice along with interest payable thereon under section 36
and a penalty equivalent to the tax specified in the notice.
(2) Where a notice has been issued for any period under sub-section (1), the proper
officer may serve a statement, containing the details of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilized for such periods
other than those covered under sub-section (1), on the person chargeable with tax. The
service of such statement shall be deemed to be service of notice on such person under
the aforesaid sub-section (1), subject to the condition that the grounds relied upon for
such periods other than those covered under sub-section(1) are the same as are
mentioned in the earlier notice.
(3) The person chargeable with tax may, before service of notice under sub-section
(1) or, as the case may be, the statement under sub-section (2), pay the amount of tax
along with interest payable under section 36 and a penalty equivalent to fifteen per cent
of such tax on the basis of his own ascertainment of such tax or the tax as ascertained
by the proper officer and inform the proper officer in writing of such payment. The
proper officer, on receipt of such information, shall not serve any notice under subsection
(1) or, as the case may be, the statement under sub-section (2), in respect of
the tax so paid or any penalty leviable under the provisions of this Act or the rules made
there under.
(4) Where the proper officer is of the opinion that the amount paid under sub-section
(3) falls short of the amount actually payable, he shall proceed to issue the notice as
provided for in sub-section (1) in respect of such amount which falls short of the amount
actually payable.
(5) Where any person chargeable with tax under sub-section (1) or under sub-section
(2) pays the said tax along with interest payable under section 36 and a penalty
equivalent to twenty five per cent of such tax within thirty days of communication of the
notice, all proceedings in respect of the said tax shall be deemed to be concluded.
(6) The proper officer shall, after considering the representation, if any, made by the
person chargeable with tax, determine the amount of tax, interest and penalty due from
such person and issue an order.
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(7) The proper officer shall issue the order under sub-section (6) within a period of
five years from the due date or the actual date, whichever is earlier, for filing of annual
return for the year to which the tax not paid or short paid or input tax credit wrongly
availed or utilized relates or, as the case may be, within five years from the date of
erroneous refund.
(8) Where any person served with an order issued under sub-section (6) pays the tax
along with interest payable thereon under section 36 and a penalty equivalent to fifty
percent of such tax within thirty days of the communication of order, all proceedings in
respect of the said tax shall be deemed to be concluded.
C. General provisions relating to demand of tax
(1) Where the service of notice or issuance of order is stayed by an order of a Court
or Tribunal, the period of such stay shall be excluded in computing the period of three
years or five years, as the case may be.
(2) Where any Appellate Authority or Tribunal or Court concludes that the notice
issued under sub-section B (1) or B (2) is not sustainable for the reason that the charges
of fraud or any wilful mis-statement or suppression of facts to evade tax has not been
established against the person to whom the notice was issued, the proper officer shall
determine the tax payable by such person for the period of three years, deeming as if
the notice were issued under sub-section A (1) or A (2).
(3) An opportunity of personal hearing shall be granted where a request is received in
writing from the person chargeable with tax or penalty, or where any adverse decision is
contemplated against such person.
(4) The proper officer shall, if sufficient cause is shown by the person chargeable with
tax, grant time, from time to time, to the said person and adjourn the hearing for
reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a person
during the proceeding.
(5) The proper officer, in his order, shall set out the relevant facts and the basis of his
decision.
(6) The amount of tax, interest and penalty demanded in the order shall not be in excess
of the amount specified in the notice and no demand shall be confirmed on grounds
other than the grounds specified in the notice.
(7) Where the Appellate Authority or Tribunal or Court modifies the amount of tax
determined by the proper officer, the amount of interest and penalty shall stand
modified accordingly, taking into account the amount of tax so modified.
(8) Interest on the tax short paid or not paid shall be payable whether or not specified in
the order determining the tax liability.
(9) The adjudication proceedings shall be deemed to be concluded if the order is not
issued within three years as provided for in sub-section A (7) or within five years as
provided for in sub-section B (7).
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(10) An issue on which the First Appellate Authority or the Appellate Tribunal or the High
Court has given its decision which is prejudicial to the interest of revenue in some other
proceedings and an appeal to the Appellate Tribunal or the High Court or the Supreme
Court against such decision of the First Appellate Authority or the Appellate Tribunal or
as the case may be, the High Court is pending, the period spent between the date of the
decision of the First Appellate Authority and the date of decision of the Appellate Tribunal
or the date of decision of the Appellate Tribunal and the date of the decision of the High
Court or as the case may be, the date of the decision of the High Court and the date of
the decision of the Supreme Court shall be excluded in computing the period referred to
in sub-section A (7) or sub-section B (7), as the case may be, where proceedings are
initiated by way of issue of a show cause notice under this section.
D (1) The provisions of sub-section A, B, C above shall apply, mutatis mutandis, to the
recovery of interest where interest payable has not been paid or part paid or erroneously
refunded.
52. Tax collected but not deposited with the Central or a State Government
(1) Notwithstanding anything to the contrary contained in any order or direction of
any Appellate Authority or Tribunal or Court or in any other provision of this Act or the
rules made thereunder or any other law, every person who has collected from any other
person any amount as representing the tax under this Act, and has not paid the said
amount to the Central or a State Government, shall forthwith deposit the said amount
to the credit of the Central or a State Government, regardless of whether the supplies in
respect of which such amount was collected are taxable or not.
(2) Where any amount is required to be paid to the credit of the Central or a State
Government under sub-section (1), and which has not been so paid, the proper officer
may serve on the person liable to pay such amount a notice requiring him to show cause
why the said amount as specified in the notice, should not be paid by him to the credit of
the Central or a State Government and why a penalty equivalent to the amount specified
in the notice should not be imposed on him under the provisions of this Act.
(3) The proper officer shall, after considering the representation, if any, made by the
person on whom the notice is served under sub-section (2), determine the amount due
from such person and thereupon such person shall pay the amount so determined.
(4) The person referred to in sub-section (1) shall in addition to paying the amount
referred to in sub-section (1) or (3), as the case may be, also be liable to pay interest
thereon at the rate specified under section 36 from the date such amount was collected
by him to the date such amount is paid by him to the credit of the Central or a State
Government.
(5) An opportunity for personal hearing shall be granted where a request is received
in writing from the person to whom the notice was issued to show cause.
(6) The proper officer shall issue an order within one year from the date of issue of
the notice.
(7) Where the issuance of order is stayed by an order of the Court or Tribunal, the
period of such stay shall be excluded in computing the period of one year.
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(8) The proper officer, in his order, shall set out the relevant facts and the basis of his
decision.
(9) The amount paid to the credit of the Central Government or a State Government
under sub-section (1) or sub-section (3) shall be adjusted against the tax payable, if any
by the person in relation to the supplies referred to in sub-section (1).
(10) Where any surplus is left after the adjustment under sub-section (9), the amount of
such surplus shall either be credited to the Fund or, as the case may be, refunded to the
person who has borne the incidence of such amount.
(11) The person who has borne the incidence of the amount referred to in sub-section
(10), may apply for the refund of the same and for such refund, the provisions of section
38 shall apply mutatis mutandis.
53. Tax wrongfully collected and deposited with the Central or a State
Government
(1) A taxable person who has paid CGST/SGST (in SGST Act) on a transaction considered
by him to be an intra-state supply, but which is subsequently held to be an inter-state
supply, shall, upon payment of IGST, be allowed to take the amount of CGST /SGST (in
SGST Act) so paid as refund subject to the provisions of section 38 and subject to such
other conditions as may be prescribed.
(CGST Act)
54. Recovery of tax
(1) Where any amount payable by a person to the credit of the Central or a State
Government under any of the provisions of this Act or of the rules made thereunder is
not paid, the proper officer shall proceed to recover the amount by one or more of the
modes mentioned below: –
(a) the proper officer may deduct or may require any other specified officer to deduct
the amount so payable from any money owing to such person which may be under the
control of the proper officer or such other specified officer.
(b) the proper officer may recover or may require any other specified officer to recover
the amount so payable by detaining and selling any goods belonging to such person
which are under the control of the proper officer or such other specified officer.
(c) (i) the proper officer may, by a notice in writing, require any other person from
whom money is due or may become due to such person or who holds or may
subsequently hold money for or on account of such person, to pay to the credit of the
Central or a State Government either forthwith upon the money becoming due or being
held, or at or within the time specified in the notice not being before the money becomes
due or is held, so much of the money as is sufficient to pay the amount due from such
person or the whole of the money when it is equal to or less than that amount;
(ii) every person to whom the notice is issued under this section shall be bound to
comply with such notice, and in particular, where any such notice is issued to a post
office, banking company or an insurer, it shall not be necessary to produce any pass
book, deposit receipt, policy or any other document for the purpose of any entry,
endorsement or the like being made before payment is made, notwithstanding any rule,
practice or requirement to the contrary;
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(iii) in case the person to whom a notice under this section has been issued, fails to
make the payment in pursuance thereof to the Central or a State Government, he shall
be deemed to be a defaulter in respect of the amount specified in the notice and all the
consequences of this Act or the rules made thereunder shall follow;
(iv) the officer issuing a notice under sub-clause (i) may, at any time or from time to
time, amend or revoke such notice or extend the time for making any payment in
pursuance of the notice;
(v) any person making any payment in compliance with a notice issued under sub-clause
(i) shall be deemed to have made the payment under the authority of the person in
default and such payment being credited to the appropriate Government shall be
deemed to constitute a good and sufficient discharge of the liability of such person to the
person in default to the extent of the amount specified in the receipt;
(vi) any person discharging any liability to the person in default after service on him of
the notice issued under sub-clause (i) shall be personally liable to the Central or a State
Government to the extent of the liability discharged or to the extent of the liability of the
person in default for tax, interest and penalty, whichever is less.
(vii) where a person on whom a notice is served under sub-clause (i) proves to the
satisfaction of the officer issuing the notice that the money demanded or any part
thereof was not due to the person in default or that he did not hold any money for or on
account of the person in default, at the time the notice was served on him, nor is the
money demanded or any part thereof, likely to become due to the said person or be held
for or on account of such person, nothing contained in this section shall be deemed to
require the person on whom the notice has been served to pay to the credit of the
appropriate Government any such money or part thereof, as the case may be.
(d) the proper officer may, on an authorisation by the competent authority and in
accordance with the rules made in this behalf, distrain any movable or immovable
property belonging to or under the control of such person, and detain the same until the
amount payable is paid; and in case, any part of the said amount payable or of the cost
of the distress or keeping of the property, remains unpaid for a period of thirty days next
after any such distress, may cause the said property to be sold and with the proceeds of
such sale, may satisfy the amount payable and the costs including cost of sale remaining
unpaid and shall render the surplus amount, if any, to such person;
(e) the proper officer may prepare a certificate signed by him specifying the amount due
from such person and send it to the Collector of the district in which such person owns
any property or resides or carries on his business and the said Collector, on receipt of
such certificate, shall proceed to recover from such person the amount specified there
under as if it were an arrear of land revenue;
(f) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (Act 2
of 1974), the proper officer may file an application to the appropriate Magistrate and
such Magistrate shall proceed to recover from such person the amount specified
thereunder as if it were a fine imposed by him.
(2) Where the terms of any bond or other instrument executed under this Act or any
rules or regulations made thereunder provide that any amount due under such
instrument may be recovered in the manner laid down in sub-section (1), the amount
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may, without prejudice to any other mode of recovery, be recovered in accordance with
the provisions of that sub-section.
(3) Where any amount of tax, interest or penalty is payable by a person to the credit
of the Central Government under any of the provisions of this Act or the rules made
thereunder and which remains unpaid, the proper officer of SGST, during the course of
recovery of SGST arrears, may recover the amount from the said person as if it were an
arrear of SGST and credit the amount so recovered to the account of the Central
Government.
(CGST ACT)
(3) Where any amount of tax, interest or penalty is payable by a person to the credit
of the State Government under any of the provisions of this Act or the rules made
thereunder and which remains unpaid, the proper officer of CGST, during the course of
recovery of CGST arrears, may recover the amount from the said person as if it were an
arrear of CGST and credit the amount so recovered to the account of the State
Government.
(SGST ACT)
55. Payment of tax and other amount in installments.
On an application filed by a taxable person, the [Commissioner/Chief Commissioner]
may, for reasons to be recorded in writing, extend the time for payment or allow
payment of any amount due under the Act, other than the amount due as per the
liability self-assessed in any return, by such person in monthly installments not
exceeding twenty four, subject to payment of interest under section 36 with such
restrictions and conditions as may be prescribed:
Provided that where there is default in payment of any one installment on its due date,
the whole outstanding balance payable on such date shall become due and payable
forthwith and shall, without any further notice being served on the person, be liable for
recovery.
56. Transfer of property to be void in certain cases
Where a person, after any tax has become due from him, creates a charge on or parts
with the property belonging to him or in his possession by way of sale, mortgage,
exchange, or any other mode of transfer whatsoever of any of his properties in favour of
any other person with the intention of defrauding the Government revenue, such charge
or transfer shall be void as against any claim in respect of any tax or any other sum
payable by the said person:
Provided that, such charge or transfer shall not be void if it is made for adequate
consideration and without notice of the pendency of such proceeding under this Act or,
as the case may be, without notice of such tax or other sum payable by the said person,
or with the previous permission of the proper officer.
57. Tax to be first charge on property
Notwithstanding anything to the contrary contained in any law for the time being in
force, any amount payable by a taxable person or any other person on account of tax,
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interest or penalty which he is liable to pay to the Central or a State Government shall
be a first charge on the property of such taxable person, or as the case may be, such
person.
58. Provisional attachment to protect revenue in certain cases
(1) Where during the pendency of any proceedings under section 46, section 47,
section 48 or section 51, the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government revenue, it is necessary so to do, he may by
order in writing attach provisionally any property belonging to the taxable person in
such a manner as may be prescribed.
(2) Every such provisional attachment shall cease to have effect after the expiry of
a period of one year from the date of the order made under sub-section (1).
59. Continuation of certain recovery proceedings
(1) Where any notice of demand in respect of any tax, penalty, interest or any other
amount payable under this Act, (hereinafter in this section referred to as “Government
dues”), is served upon any taxable person and any appeal, revision application is filed or
other proceedings is initiated in respect of such Government dues, then –
(a) Where such Government dues are enhanced in such appeal, revision or other
proceeding, the Commissioner shall serve upon the taxable person another notice
of demand only in respect of the amount by which such Government dues are
enhanced and any recovery proceeding in relation to such Government dues as are
covered by the notice of demand served upon him before the disposal of such
appeal, revision application or proceeding may, without the service of any fresh
notice of demand, be continued from the stage at which such proceedings stood
immediately before such disposal.
(b) Where such Government dues are reduced in such appeal, revision or in other
proceeding –
(i) It shall not be necessary for the Commissioner to serve upon the taxable
person a fresh notice of demand;
(ii) The Commissioner shall give intimation of such reduction to him and to the
appropriate authority with whom recovery proceeding is pending;
(iii) Any recovery proceedings initiated on the basis of the demand served upon
him prior to the disposal of such appeal, revision application or other
proceeding may be continued in relation to the amount so reduced from the
stage at which such proceedings stood immediately before such disposal.
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CHAPTER- XV
INSPECTION, SEARCH, SEIZURE AND ARREST
60. Power of inspection, search and seizure
(1) Where the CGST/SGST officer, not below the rank of Joint Commissioner, has
reasons to believe that –
(a) a taxable person has suppressed any transaction relating to supply of goods
and/or services or the stock of goods in hand, or has claimed input tax credit in excess
of his entitlement under the Act or has indulged in contravention of any of the provisions
of this Act or rules made thereunder to evade tax under this Act; or
(b) any person engaged in the business of transporting goods or an owner or
operator of a warehouse or a godown or any other place is keeping goods which have
escaped payment of tax or has kept his accounts or goods in such a manner as is likely
to cause evasion of tax payable under this Act,
he may authorize in writing any other officer of CGST/SGST to inspect any places of
business of the taxable person or the persons engaged in the business of transporting
goods or the owner or the operator of warehouse or godown or any other place.
(2) Where the CGST/SGST officer, not below the rank of Joint Commissioner, either
pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to
believe that any goods liable to confiscation or any documents or books or things, which
in his opinion shall be useful for or relevant to any proceedings under this Act, are
secreted in any place, he may authorize in writing any other CGST/SGST officer to
search and seize or may himself search and seize such goods, documents or books or
things:
Provided that the goods, documents or books or things so seized shall be retained by
such officer only for so long as may be necessary for their examination and for any
inquiry or proceeding under this Act.
(3) The officer authorised under sub-section (2) shall have the power to seal or break
open the door of any premises or to break open any almirah, box, receptacle in which
any goods, accounts, registers or documents of the person are suspected to be
concealed, where access to such premises, almirah, box or receptacle is denied.
(4) The person from whose custody any documents are seized under sub-section (2)
shall be entitled to make copies thereof or take extracts therefrom in the presence of an
officer of CGST/SGST.
(5) Where any goods are seized under sub-section (2) and no notice in respect
thereof is given within sixty days of the seizure of the goods, the goods shall be returned
to the person from whose possession they were seized:
Provided that the aforesaid period of sixty days may, on sufficient cause being shown, be
extended by the [competent authority] for a further period not exceeding sixty days at a
time subject to a maximum of six months.
(6) The Central or a State Government may, having regard to the perishable or
hazardous nature of any goods, depreciation in the value of the goods with the passage
of time, constraints of storage space for the goods or any other relevant considerations,
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by notification, specify the goods or class of goods which shall, as soon as may be after
its seizure under sub-section (2), be disposed of by the proper officer in such manner as
the Central or a State Government may prescribe.
(7) Where any goods, being goods specified under sub-section (6), have been seized by
a proper officer under sub-section (2), he shall prepare an inventory of such goods in the
manner as may be prescribed in this behalf.
(8) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to
search and seizure, shall, so far as may be, apply to search and seizure under this
section subject to the modification that sub-section (5) of section 165 of the said Code
shall have effect as if for the word “Magistrate”, wherever it occurs, the words [Principal
Commissioner/Commissioner of CGST/Commissioner of SGST] were substituted.
61. Inspection of goods in movement
(1) The Central or a State Government may require the person in charge of a
conveyance carrying any consignment of goods of value exceeding fifty thousand rupees
to carry with him such documents as may be prescribed in this behalf.
(2) Where any vehicle referred to in sub-section (1) is intercepted by the proper
officer at any place, he may require the person in charge of the said vehicle to produce
such documents for verification and the said person shall be liable to produce the
documents.
62. Power to arrest
(1) If the [Commissioner of CGST or the Commissioner of SGST] has reason to
believe that any person has committed an offence punishable under clause (i) or (ii)
of sub-section (1) or under sub-section (2) of section 73, he may, by order, authorise
any CGST/SGST officer to arrest such person.
(2) Where a person is arrested for any cognizable offence, every officer authorised to
arrest a person shall inform such person of the grounds of arrest and produce him before
a magistrate within twenty four hours.
(3) In the case of a non-cognizable and bailable offence, the Deputy Commissioner or
the Assistant Commissioner of CGST/SGST, as the case may be, shall, for the purpose of
releasing an arrested person on bail or otherwise, have the same powers and be subject
to the same provisions as an officer-in-charge of a police station has, and is subject to,
under section 436 of the Code of Criminal Procedure, 1973 (2 of 1974).
(4) All arrests made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to arrest.
63. Power to summon persons to give evidence and produce documents
(1) Any [CGST/SGST officer], duly authorised by the competent authority in this
behalf, shall have power to summon any person whose attendance he considers
necessary either to give evidence or to produce a document or any other thing in any
inquiry which such officer is making for any of the purposes of this Act.
(2) A summons to produce documents or other things may be for the production of
certain specified documents or things or for the production of all documents or things of
a certain description in the possession or under the control of the person summoned.
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(3) All persons so summoned shall be bound to attend, either in person or by an
authorised representative, as such officer may direct; and all persons so summoned shall
be bound to state the truth upon any subject respecting which they are examined or
make statements and produce such documents and other things as may be required:
Provided that the exemptions under sections 132 and 133 of the Code of Civil Procedure,
1908 (5 of 1908) shall be applicable to requisitions for attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a “judicial proceeding”
within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of
1860).
64. Access to business premises
(1) Any CGST/SGST officer authorized by the [Additional/Joint Commissioner of CGST
or SGST] shall have access to any business premises to inspect books of account,
documents, computers, computer programs, computer software (whether installed in a
computer or otherwise) and such other things as he may require and which may be
available at such premises, for the purposes of carrying out any audit, scrutiny,
verification and checks as may be necessary to safeguard the interest of revenue.
(2) Every person in charge of premises referred to in sub-section (1) shall, on
demand, make available to the officer authorized under sub-section (1) or the audit
party deputed by the Additional/Joint Commissioner of CGST or SGST or the Comptroller
and Auditor General of India or a cost accountant or chartered accountant nominated
under section 50, as the case may be,-
(i) the records as prepared or maintained by the registered taxable person and
declared to the CGST/SGST officer as may be prescribed;
(ii) trial balance or its equivalent;
(iii) Statements of annual financial accounts, duly audited, wherever required;
(iv) cost audit report, if any, under section 148 of the Companies Act, 2013 (18 of
2013);
(v) the income-tax audit report, if any, under section 44AB of the Income-tax Act,
1961 (43 of 1961); and
(vi) any other relevant record,
for the scrutiny of the officer or audit party or the cost accountant or chartered
accountant, as the case may be, within a reasonable time, not exceeding fifteen working
days from the day when such demand is made, or such further period as may be allowed
by the said officer or the audit party or the cost accountant or chartered accountant, as
the case may be.
65. Officers required to assist CGST/SGST officers
(1) All officers of Police, Customs and those of State/Central Government engaged in
collection of goods and services tax and all officers of State/Central Government
engaged in the collection of land revenue, and all village officers are hereby empowered
and required to assist the CGST/SGST officers in the execution of this Act.
(2) The Central/State Government may, by notification, empower and require any
other class of officers to assist the CGST/SGST officers in the execution of this Act when
called upon to do so by the Commissioner of CGST/SGST.
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CHAPTER – XVI
OFFENCES AND PENALTIES
66. Offences and penalties
(1) Where a taxable person who –
(i) supplies any goods and/or services without issue of any invoice or issues an
incorrect or false invoice with regard to any such supply;
(ii) issues any invoice or bill without supply of goods and/or services in violation of
the provisions of this Act, or the rules made thereunder;
(iii) collects any amount as tax but fails to pay the same to the credit of the
appropriate Government beyond a period of three months from the date on which such
payment becomes due;
(iv) collects any tax in contravention of the provisions of this Act but fails to pay the
same to the credit of the appropriate Government beyond a period of three months from
the date on which such payment becomes due;
(v) fails to deduct the tax in terms of sub-section (1) of section 37, or deducts an
amount which is less than the amount required to be deducted under the said subsection,
or where he fails to pay to the credit of the appropriate Government under subsection
(2) thereof, the amount deducted as tax;
(va) fails to collect tax in terms of sub-section (1) of section 43C, or collects an amount
which is less than the amount required to be collected under the said sub-section, or
where he fails to pay to the credit of the appropriate Government under sub-section (4)
thereof, the amount collected as tax;
(vi) takes and/or utilizes input tax credit without actual receipt of goods and/or services
either fully or partially, in violation of the provisions of this Act, or the rules made
thereunder;
(vii) fraudulently obtains refund of any CGST/SGST under this Act;
(viii) takes or distributes input tax credit in violation of section 17, or the rules made
thereunder;
(ix) falsifies or substitutes financial records or produces fake accounts and/or documents
or furnishes any false information or return with an intention to evade payment of tax
due under this Act;
(x) is liable to be registered under this Act but fails to obtain registration;
(xi) furnishes any false information with regard to particulars specified as mandatory,
either at the time of applying for registration, or subsequently;
(xii) obstructs or prevents any officer in discharge of his duties under the Act;
(xiii) transports any taxable goods without the cover of documents as may be specified
in this behalf;
(xiv) suppresses his turnover leading to evasion of tax under this Act;
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(xv) fails to keep, maintain or retain books of account and other documents in
accordance with the provisions of this Act or the rules made thereunder;
(xvi) fails to furnish information and/or documents called for by a CGST/SGST officer in
accordance with the provisions of this Act or rules made thereunder or furnishes false
information and/or documents during any proceedings under this Act;
(xvii) supplies, transports or stores any goods which he has reason to believe are liable
to confiscation under this Act;
(xviii) issues any invoice or document by using the identification number of another
taxable person;
(xix) tampers with, or destroys any material evidence;
(xx) disposes off or tampers with any goods that have been detained, seized, or
attached under this Act;
shall be liable to a penalty of rupees ten thousand or an amount equivalent to the tax
evaded or the tax not deducted or short deducted or deducted but not paid to the
Government or input tax credit availed of or passed on or distributed irregularly, or the
refund claimed fraudulently, as the case may be, whichever is higher.
(2) Any registered taxable person who repeatedly makes short payment of tax shall
be liable to a penalty of rupees ten thousand or ten percent of the tax short paid,
whichever is higher.
Explanation.- For the purposes of this sub-section, a taxable person shall be deemed to
have made short payments ‘repeatedly’, if there were short payments in three returns
during any six consecutive tax periods.
(3) Any person who
(a) aids or abets any of the offences specified in clauses (i) to (xx) of sub-section (1)
above;
(b) acquires possession of, or in any way concerns himself in transporting, removing,
depositing, keeping, concealing, supplying, or purchasing or in any other manner deals
with any goods which he knows or has reason to believe are liable to confiscation under
this Act or the rules made thereunder;
(c) receives or is in any way concerned with the supply of, or in any other manner
deals with any supply of services which he knows or has reason to believe are in
contravention of any provisions of this Act or the rules made thereunder;
(d) fails to appear before the CGST/SGST officer, when issued with a summon for
appearance to give evidence or produce a document in an enquiry;
(e) fails to issue invoice in accordance with the provisions of this Act or rules made
thereunder, or fails to account for an invoice in his books of account;
shall be liable to a penalty which may extend to rupees twenty five thousand.
67. General penalty
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Any person, who contravenes any of the provisions of this Act or any rules made
thereunder for which no penalty is separately provided for in this Act, shall be liable to a
penalty which may extend to rupees twenty five thousand.
68. General disciplines related to penalty
(1) No tax authority shall impose substantial penalties for minor breaches of tax
regulations or procedural requirements. In particular, no penalty in respect of any
omission or mistake in documentation which is easily rectifiable and obviously made
without fraudulent intent or gross negligence shall be greater than necessary to serve
merely as a warning.
Explanation.- For the purpose of this sub-section –
(a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less
than rupees five thousand.
(b) an omission or mistake in documentation shall be considered to be easily
rectifiable if the same is an error apparent on record.
(2) The penalty imposed shall depend on the facts and circumstances of the case and
shall be commensurate with the degree and severity of the breach.
(3) No penalty shall be imposed on any taxable person without giving a notice to
show cause and without giving the person a reasonable opportunity of being heard.
(4) The tax authority shall ensure that when a penalty is imposed in an order for a
breach of the laws, regulations or procedural requirements, an explanation is provided
therein to the persons upon whom the penalty is imposed, specifying the nature of the
breach and the applicable law, regulation or procedure under which the amount or range
of penalty for the breach has been prescribed.
(5) When a person voluntarily discloses to a tax authority the circumstances of a
breach of the tax law, regulation or procedural requirement prior to the discovery of the
breach by the tax authority, the tax authority may consider this fact as a potential
mitigating factor when establishing a penalty for that person.
(6) The provisions of this section will not apply in such cases where the penalty
prescribed under the Act is either a fixed sum or expressed as a fixed percentage.
69. Detention of goods and conveyances, and levy of penalty
(1) Where any person –
(i) transports any goods or stores such goods while they are in transit in violation of
the provisions of this Act; or
(ii) stores or keeps in stock goods or supplies goods which have not been accounted
for in the books or records maintained by him in the manner required by this Act;
all such goods and the conveyance used as a means of transport for carrying the said
goods shall be liable to detention, in the manner prescribed, by the proper officer and
shall be released only after payment of applicable tax, interest and penalty leviable
thereon or upon furnishing a security, in such form as may be prescribed, equivalent to
the amount of the applicable tax, interest and penalty.
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(2) No tax, interest or penalty shall be determined under sub-section (1) without
giving a notice to show cause and without giving the person a reasonable opportunity of
being heard.
70. Confiscation of goods and levy of penalty
(1) If any person –
(i) supplies any goods in contravention of any of the provisions of this Act or rules
made thereunder leading to evasion of tax; or
(ii) does not account for any goods on which he is liable to pay tax under this Act; or
(iii) supplies any goods liable to tax under this Act without having applied for the
registration; or
(iv) contravenes any of the provisions of this Act or rules made thereunder with intent
to evade payment of tax,
then, all such goods shall be liable to confiscation and the person shall be liable to
penalty under section 66.
(2) Whenever confiscation of any goods is authorized by this Act, the CGST/SGST
officer adjudging it shall give to the owner of the goods or, where such owner is not
known, the person from whose possession or custody such goods have been seized, an
option to pay in lieu of confiscation such fine as the said officer thinks fit:
Provided that such fine shall not exceed the market price of the goods confiscated, less
the tax chargeable thereon.
(3) Where any fine in lieu of confiscation of goods is imposed under sub-section (2),
the owner of such goods or the person referred to in sub-section (1), shall, in addition,
be liable to any tax and charges payable in respect of such goods.
(4) No order of confiscation of goods and/or imposition of penalty shall be issued
without giving a notice to show cause and without giving the person a reasonable
opportunity of being heard.
(5) Where any goods are confiscated under this Act, the title of such goods shall
thereupon vest in the appropriate Government.
(6) The proper officer adjudging confiscation shall take and hold possession of the
things confiscated and every Officer of Police, on the requisition of such proper officer,
shall assist him in taking and holding such possession.
71. Confiscation of conveyances
Any conveyance used as a means of transport for carriage of taxable goods
without the cover of documents as may be prescribed in this behalf shall be liable to
confiscation, unless the owner of the conveyance proves that it was so used without the
knowledge or connivance of the owner himself, his agent, if any, and the person in
charge of the conveyance:
Provided that where any such conveyance is used for the carriage of the goods or
passengers for hire, the owner of the conveyance shall be given an option to pay in lieu
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of the confiscation of the conveyance a fine equal to the tax payable on the goods being
transported thereon.
72. Confiscation or penalty not to interfere with other punishments
No confiscation made or penalty imposed under the provisions of this Act or the
rules made thereunder shall prevent the infliction of any other punishment to which the
person affected thereby is liable under the provisions of this Act or under any other law.
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CHAPTER – XVII
PROSECUTION AND COMPOUNDING OF OFFENCES
73. Prosecution
(1) Whoever commits any of the following offences, namely—
(a) supplies any goods and/or services without issue of any invoice or issues an
incorrect or false invoice with regard to any such supply;
(b) issues any invoice or bill without supply of goods and/or services in violation of
the provisions of this Act, or the rules made thereunder;
(c) collects any amount as tax but fails to pay the same to the credit of the
appropriate Government beyond a period of three months from the date on which such
payment becomes due;
(d) collects any tax in contravention of the provisions of this Act but fails to pay the
same to the credit of the appropriate Government beyond a period of three months from
the date on which such payment becomes due;
(e) takes and/or utilizes input tax credit without actual receipt of goods and/or
services either fully or partially, in violation of the provisions of this Act, or the rules
made thereunder;
(f) fraudulently obtains refund of any CGST/SGST;
(g) falsifies or substitutes financial records or produces fake accounts and/or
documents or furnishes any false information with an intention to evade payment of tax
due under this Act;
(h) obstructs or prevents any officer in the discharge of his duties under this Act;
(i) acquires possession of, or in any way concerns himself in transporting, removing,
depositing, keeping, concealing, supplying, or purchasing or in any other manner deals
with, any goods which he knows or has reason to believe are liable to confiscation under
this Act or the rules made thereunder;
(j) receives or is in any way concerned with the supply of, or in any other manner
deals with any supply of services which he knows or has reason to believe are in
contravention of any provisions of this Act or the rules made thereunder;
(k) fails to supply any information which he is required to supply under this Act or the
rules made thereunder or (unless with a reasonable belief, the burden of proving which
shall be upon him, that the information supplied by him is true) supplies false
information; or
(l) attempts to commit, or abets the commission of, any of the offences mentioned
in clauses (a) to (k) of this section;
shall be punishable –
(i) in cases where the amount of tax evaded exceeds two hundred and fifty lakh
rupees, with imprisonment for a term which may extend to five years and with fine;
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(ii) in cases where the amount of tax evaded exceeds fifty lakh rupees but does not
exceed two hundred and fifty lakh rupees, with imprisonment for a term which may
extend to three years and with fine;
(iii) in the case of any other offence where the amount of tax evaded exceeds twenty
five lakh rupees but does not exceed fifty lakh rupees, with imprisonment for a term
which may extend to one year and with fine.
(2) If any person convicted of an offence under this section is again convicted of an
offence under this section, then, he shall be punishable for the second and for every
subsequent offence with imprisonment for a term which may extend to five years and
with fine:
Provided that in the absence of special and adequate reasons to the contrary to be
recorded in the judgment of the Court, the imprisonment referred to in sub-sections (1)
and (2) shall not be for a term of less than six months.
(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of
1974), all offences under this Act, except the offences referred to in sub-section (4) shall
be non-cognizable and bailable.
(4) The offences relating to taxable goods and/or services where the amount of tax
evaded exceeds two hundred and fifty lakh rupees shall be cognizable and non-bailable.
(5) A person shall not be prosecuted for any offence under this section except with the
previous sanction of the designated authority.
74. Cognizance of offences
No Court shall take cognizance of any offence punishable except with the
previous sanction of the designated authority, and no Court inferior to that of a
Magistrate of the First Class, shall try any such offence.
75. Presumption of culpable mental state
(1) In any prosecution for an offence under this Act which requires a culpable mental
state on the part of the accused, the Court shall presume the existence of such mental
state but it shall be a defence for the accused to prove the fact that he had no such
mental state with respect to the act charged as an offence in that prosecution.
Explanation.— In this section, “culpable mental state” includes intention, motive,
knowledge of a fact, and belief in, or reason to believe, a fact.
(2) For the purposes of this section, a fact is said to be proved only when the Court
believes it to exist beyond reasonable doubt and not merely when its existence is
established by a preponderance of probability.
76. Relevancy of statements under certain circumstances
(1) A statement made and signed by a person before any gazetted officer of
CGST/IGST/SGST during the course of any inquiry or proceeding under this Act shall be
relevant, for the purpose of proving, in any prosecution for an offence under this Act, the
truth of the facts which it contains,-
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(a) when the person who made the statement is dead or cannot be found, or is
incapable of giving evidence, or is kept out of the way by the adverse party, or whose
presence cannot be obtained without an amount of delay or expense which, under the
circumstances of the case, the Court considers unreasonable; or
(b) when the person who made the statement is examined as a witness in the case
before the Court and the Court is of the opinion that, having regard to the circumstances
of the case, the statement should be admitted in evidence in the interests of justice.
(2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any
proceeding under this Act, other than a proceeding before a Court, as they apply in
relation to a proceeding before a Court.
77. Offences by Companies and certain other persons
(1) Where an offence committed by a person under this Act is a company, every
person who, at the time the offence was committed was in charge of, and was
responsible to, the company for the conduct of business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable to be proceeded
against and punished accordingly:
(2) Notwithstanding anything contained in sub-section (1), where an offence under
this Act has been committed by a company and it is proved that the offence has been
committed with the consent or connivance of, or is attributable to any negligence on the
part of, any director, manager, secretary or other officer of the company, such director,
manager, secretary or other officer shall also be deemed to be guilty of that offence and
shall be liable to be proceeded against and punished accordingly.
Explanation.- For the purposes of this section, –
(a) “company” means a body corporate and includes a firm or other association of
individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.
(3) Where an offence under this Act has been committed by a taxable person being a
partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust,
the partner or karta or managing trustee, as the case may be, shall be deemed to be
guilty of that offence and shall be liable to be proceeded against and punished
accordingly and the provisions of sub-section (2) shall apply mutatis mutandis to such
persons.
(4) Nothing contained in this section shall render any such person liable to any
punishment provided in this Act, if he proves that the offence was committed without his
knowledge or that he had exercised all due diligence to prevent the commission of such
offence.
78. Compounding of offences
(1) Any offence under the Act may, either before or after the institution of
prosecution, be compounded by the Competent Authority on payment, by the person
accused of the offence, to the Central Government or the State Government, as the case
be, of such compounding amount in such manner as may be prescribed:
Provided that nothing contained in this section shall apply to –
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(a) a person who has been allowed to compound once in respect of any of the
offences described under clause (a) to (g) of sub-section (1) of section 73 and the
offences described under clause (l) which are relatable to offences described under
clause (a) to (g) of the said sub-section;
(b) a person who has been allowed to compound once in respect of any offence
(other than those in clause (a)) under the Act or under the provisions of any other SGST
Act or IGST Act in relation to supplies of value exceeding rupees one crore;
(c) a person who has been accused of committing an offence under the Act which is
also an offence under the Narcotic Drugs and Psychotropic Substance Act,1985 (61 of
1985), the Foreign Exchange Management Act, 1999 (42 of 1999) or any other Act other
than the CGST/SGST Act;
(d) any other class of persons or offences as may be prescribed:
Provided further that any compounding allowed under the provision of this section shall
not affect the proceedings if any, instituted under any other law:
Provided also that compounding shall be allowed only after making payment of tax,
interest and penalty involved in such offences.
(2) The amount for compounding of offences under this section shall be as may be
prescribed under the rules to be made under sub-section (1), subject to the minimum
amount not being less than rupees ten thousand or fifty per cent of the tax involved,
whichever is greater, and the maximum amount not being more than rupees thirty
thousand or one hundred and fifty per cent of the tax, whichever is greater.
(3) On payment of such compounding amount as may be determined by the
competent authority, no further proceedings shall be initiated under the Act against the
accused person in respect of the same offence and any criminal proceedings, if already
initiated in respect of the said offence, shall stand abated.
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CHAPTER–XVIII
APPEALS
(Sections 79, 81, 82 and 83 shall be applicable for appeals under CGST Law.
Sections 84 to 93 are common for CGST and SGST law)
79. Appeals to First Appellate Authority
(1) Any person aggrieved by any decision or order passed against him under this
Act by an adjudicating authority, may appeal to the prescribed First Appellate
Authority.
(2) The Commissioner of GST may, of his own motion, call for and examine the
record of any proceeding in which an adjudicating authority has passed any decision or
order under this Act, for the purpose of satisfying himself as to the legality or propriety
of the said decision or order and may, by order, direct any GST Officer subordinate to
him to apply to the First Appellate Authority for the determination of such points
arising out of the said decision or order as may be specified by the Commissioner of
GST in his order.
(3) Where, in pursuance of an order under sub-section (2), the authorized officer
makes an application to the First Appellate Authority, such application shall be dealt with
by the First Appellate Authority as if it were an appeal made against the decision or
order of the adjudicating authority and the provisions of this Act relating to appeals
shall, so far as may be, apply to such application.
(4) Every appeal under this section shall be filed within three months from the date
on which the decision or order sought to be appealed against is communicated to the
Commissioner of GST, or, as the case may be, the person preferring the appeal:
Provided that the First Appellate Authority may, if he is satisfied that the appellant was
prevented by sufficient cause from presenting the appeal within the aforesaid period of
three months, allow it to be presented within a further period of one month.
(5) Every appeal under this section shall be in the prescribed form and shall be verified
in the prescribed manner.
(6) No appeal shall be filed under sub-section (1) unless the appellant has deposited a
sum equal to ten percent of the amount in dispute arising from the said order, in relation
to which the appeal has been filed.
Explanation.- For the purposes of this sub-section, the expression “amount in dispute”
shall include –
i. amount determined under section 46 or 47 or 48 or 51;
ii. amount payable under rule——-of the GST Credit Rules 201…; and
iii. amount of fee levied or penalty imposed.
(7) The First Appellate Authority shall give an opportunity to the appellant of being
heard, if he so desires.
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(8) The First Appellate Authority may, if sufficient cause is shown at any stage of
hearing of an appeal, grant time, from time to time, to the parties or any of them and
adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party
during hearing of the appeal.
(9) The First Appellate Authority may, at the hearing of an appeal, allow an appellant
to go into any ground of appeal not specified in the grounds of appeal, if he is satisfied
that the omission of that ground from the grounds of appeal was not wilful or
unreasonable.
(10) The First Appellate Authority shall, after making such further inquiry as may be
necessary, pass such order, as he thinks just and proper, confirming, modifying or
annulling the decision or order appealed against:
Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or
confiscating goods of greater value or reducing the amount of refund or input tax credit
shall not be passed unless the appellant has been given a reasonable opportunity of
showing cause against the proposed order:
Provided further that where the First Appellate Authority is of the opinion that any tax
has not been paid or short-paid or erroneously refunded, or where input tax credit has
been wrongly availed or utilized, no order requiring the appellant to pay such tax or
input tax credit shall be passed unless the appellant is given notice to show cause
against the proposed order and the order is passed within the time limit specified under
section 51.
(11) The order of the First Appellate Authority disposing of the appeal shall be in
writing and shall state the points for determination, the decision thereon and the reasons
for the decision.
(12) The First Appellate Authority shall, where it is possible to do so, hear and decide
every appeal within a period of one year from the date on which it is filed:
Provided that where the issuance of order is stayed by an order of a Court or Tribunal,
the period of such stay shall be excluded in computing the period of one year.
(13) On disposal of the appeal, the First Appellate Authority shall communicate the
order passed by him to the appellant and to the adjudicating authority.
(14) A copy of the order passed by the First Appellate Authority shall also be sent to the
jurisdictional Commissioner of CGST or the authority designated by him in this behalf
and the jurisdictional Commissioner of SGST or the authority designated by him in this
behalf.
(15) Every order passed under this section shall, subject to the provisions of section 83,
87 or 88, be final.
80. Left Blank
81. Constitution of the National Appellate Tribunal
(1) The Central Government shall on the recommendation of the GST Council
constitute a National Goods and Services Tax Appellate Tribunal (hereinafter referred to
as the Appellate Tribunal).
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(2) The Appellate Tribunal shall be headed by a National President.
(3) The Appellate Tribunal shall have one branch for each state, which shall be called
as the State GST Tribunal.
(4) Every State GST Tribunal will be headed by a State President.
(5) Every State GST Tribunal shall consist of as many Members (Judicial), Members
(Technical – CGST) and Members (Technical – SGST) as may be prescribed, to exercise
the powers and discharge the functions conferred on the Appellate Tribunal by this Act.
(6) The qualifications, eligibility conditions and the manner of selection and
appointment of the National President, the State Presidents, and the Members shall be
such as may be prescribed on the recommendations of the Council.
(7) The National President and the State Presidents shall exercise such powers and
discharge such functions as may be prescribed on the recommendations of the Council.
(8) On ceasing to hold office, the National President, the State Presidents or other
Members of the Appellate Tribunal shall not be entitled to appear, act or plead before the
Appellate Tribunal.
82. Appeals to the Appellate Tribunal
(1) Any person aggrieved by an order passed against him under section 79 may
appeal to the Appellate Tribunal against such order.
(2) The Appellate Tribunal may, in its discretion, refuse to admit any such appeal
where the tax or input tax credit involved or the difference in tax or input tax credit
involved or the amount of fine, fee or penalty determined by such order, does not
exceed one lakh rupees.
(3) The Board may by order constitute such Committees as may be necessary for the
purposes of filing appeals against the orders of the First Appellate Authority. Every such
Committee shall consist of two designated officers of GST.
(4) The Committee of designated officers of GST may, if it is of the opinion that an
order passed by the First Appellate Authority under sub-section (10) of section 79, is not
legal or proper, direct any GST Officer authorized by it in this behalf to apply to the
Appellate Tribunal for the determination of such points arising out of the order passed
by the First Appellate Authority as may be specified by the Committee in its order:
Provided that where the Committee of designated officers of GST differs in its opinion, it
shall be deemed that the Committee has formed the opinion that the order under review
is not legal or proper.
(5) Where in pursuance of an order under sub-section (4) the authorized officer
makes an application to the Appellate Tribunal, such application shall be dealt with by
the Appellate Tribunal as if it were an appeal made against the order of the First
Appellate Authority and the provisions of this Act shall, so far as may be, apply to such
application, as they apply in relation to appeals filed under sub-section (1).
(6) Every appeal under this section shall be filed within three months from the date
on which the order sought to be appealed against is communicated to the Commissioner
of GST, or, as the case may be, the person preferring the appeal.
(7) On receipt of notice that an appeal has been preferred under this section, the
party against whom the appeal has been preferred may, notwithstanding that he may
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not have appealed against such order or any part thereof, file, within forty-five days of
the receipt of the notice, a memorandum of cross-objections, verified in the prescribed
manner, against any part of the order appealed against and such memorandum shall be
disposed of by the Appellate Tribunal as if it were an appeal presented within the time
specified in sub-section (6).
(8) The Appellate Tribunal may admit an appeal or permit the filing of a
memorandum of cross-objections after the expiry of the period referred to in sub-section
(6) or sub-section (7) respectively, if it is satisfied that there was sufficient cause for not
presenting it within that period.
(9) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be
verified in the prescribed manner and shall be accompanied by a prescribed fee:
Provided that no such fee shall be payable in the case of an appeal filed by the
Commissioner referred to in sub-section (5) or a memorandum of cross-objections
referred to in sub-section (7).
(10) No appeal shall be filed under sub-section (1) unless the appellant has deposited
a sum equal to ten percent of the amount in dispute arising from the said order, in
relation to which the appeal has been filed.
Explanation.- For the purposes of this sub-section, the expression “amount in dispute”
shall include –
i. amount determined under section 46 or 47 or 48 or 51;
ii. amount payable under rule——-of the GST Credit Rules 201…; and
iii. amount of fee levied or penalty imposed.
(11) Every application made before the Appellate Tribunal, —
(a) in an appeal for rectification of mistake or for any other purpose; or
(b) for restoration of an appeal or an application,
shall be accompanied by a prescribed fee :
Provided that no such fee shall be payable in the case of an application filed by or on
behalf of the Commissioner of GST under sub-section (5).
83. Orders of Appellate Tribunal
(1) The Appellate Tribunal may, after giving the parties to the appeal an
opportunity of being heard, pass such orders thereon as it thinks fit, confirming,
modifying or annulling the decision or order appealed against or may refer the case
back to the First Appellate Authority or to the original adjudicating authority, with such
directions as it may think fit, for a fresh adjudication or decision, as the case may be,
after taking additional evidence, if necessary.
(2) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing
of an appeal, grant time, from time to time, to the parties or any of them and adjourn
the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party
during hearing of the appeal.
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(3) The Appellate Tribunal may amend any order passed by it under sub-section (1)
so as to rectify any mistake apparent from the record, if such mistake is noticed by it
on its own accord, or is brought to its notice by the Commissioner of GST or the other
party to the appeal within a period of three months from the date of the order:
Provided that no amendment which has the effect of enhancing an assessment or
reducing a refund or input tax credit or otherwise increasing the liability of the other
party, shall be made under this sub-section, unless the Appellate Tribunal has given
notice to him of its intention to do so and has allowed him a reasonable opportunity of
being heard.
(4) The Appellate Tribunal shall, where it is possible to do so, hear and decide every
appeal within a period of one year from the date on which it is filed.
(5) The Appellate Tribunal shall send a copy of every order passed under this section
to the First Appellate Authority, or to the original adjudicating authority, as the case
may be, the appellant, the jurisdictional Commissioner of CGST and the jurisdictional
Commissioner of SGST.
(6) Every order passed under this section shall, subject to the provisions of section 87 or
88, be final.
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CHAPTER–XVIII
APPEALS AND REVISION
(Sections 79, 80, 81, 82 and 83 shall be applicable for appeals under SGST Law.
Sections 84 to 93 are common for CGST and SGST law)
79. Appeals to First Appellate Authority
(1) Any person aggrieved by any decision or order passed against him under this Act
by an adjudicating authority, may appeal to the prescribed First Appellate Authority.
(2) Every appeal under this section shall be filed within three months from the date
on which the decision or order sought to be appealed against is communicated to the
person preferring the appeal:
Provided that the First Appellate Authority may, if he is satisfied that the appellant was
prevented by sufficient cause from presenting the appeal within the aforesaid period of
three months, allow it to be presented within a further period of one month.
(3) Every appeal under this section shall be in the prescribed form and shall be verified
in the prescribed manner.
(4) No appeal shall be filed under sub-section (1) unless the appellant has deposited –
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the
impugned order, as is admitted by him, and
(b) a sum equal to ten percent of the remaining amount in dispute arising from the said
order, in relation to which the appeal has been filed.
Explanation.- For the purposes of this sub-section, the expression “amount in dispute”
shall include –
i. amount determined under section 46 or 47 or 48 or 51;
ii. amount payable under rule——-of the GST Credit Rules 201…; and
iii. amount of fee levied or penalty imposed:
Provided that nothing in this sub-section shall affect the right of the departmental
authorities to apply to the First Appellate Authority for ordering a higher amount of predeposit,
not exceeding fifty percent of the amount in the dispute, in a case which is
considered by the Commissioner of GST to be a “serious case”.
Explanation .- For the purpose of this proviso, the expression “serious case” shall mean a
case involving a disputed tax liability of not less than Rupees Twenty Five Crores and
where the Commissioner of GST is of the opinion (for reasons to be recorded in writing)
that the department has a very good case against the taxpayer.
(5) The First Appellate Authority shall give an opportunity to the appellant of being
heard, if he so desires.
(6) The First Appellate Authority may, if sufficient cause is shown at any stage of
hearing of an appeal, grant time, from time to time, to the parties or any of them and
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adjourn the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party
during hearing of the appeal.
(7) The First Appellate Authority may, at the hearing of an appeal, allow an appellant to
go into any ground of appeal not specified in the grounds of appeal, if he is satisfied that
the omission of that ground from the grounds of appeal was not wilful or unreasonable.
(8) The First Appellate Authority shall, after making such further inquiry as may be
necessary, pass such order, as he thinks just and proper, confirming, modifying or
annulling the decision or order appealed against:
Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or
confiscating goods of greater value or reducing the amount of refund or input tax credit
shall not be passed unless the appellant has been given a reasonable opportunity of
showing cause against the proposed order:
Provided further that where the First Appellate Authority is of the opinion that any tax
has not been paid or short-paid or erroneously refunded, or where input tax credit has
been wrongly availed or utilized, no order requiring the appellant to pay such tax or
input tax credit shall be passed unless the appellant is given notice to show cause
against the proposed order and the order is passed within the time limit specified under
section 51.
(9) The order of the First Appellate Authority disposing of the appeal shall be in
writing and shall state the points for determination, the decision thereon and the reasons
for the decision.
(10) The First Appellate Authority shall, where it is possible to do so, hear and decide
every appeal within a period of one year from the date on which it is filed:
Provided that where the issuance of order is stayed by an order of a Court or Tribunal,
the period of such stay shall be excluded in computing the period of one year.
(11) On disposal of the appeal, the First Appellate Authority shall communicate the
order passed by him to the appellant and to the adjudicating authority.
(12) A copy of the order passed by the First Appellate Authority shall also be sent to the
jurisdictional Commissioner of CGST or the authority designated by him in this behalf
and the jurisdictional Commissioner of SGST or the authority designated by him in this
behalf.
(13) Every order passed under this section shall, subject to the provisions of sections 80,
83, 87 or 88, be final.
80. Revisional powers of Commissioner
(1) Subject to the provisions of section 93 and any rules made thereunder, the
Commissioner may on his own motion or upon information received by him, call for and
examine the record of any proceeding under this Act, and if he considers that any
decision or order passed under this Act by any officer subordinate to him is erroneous in
so far as it is prejudicial to the interest of the revenue, he may, if necessary, stay the
operation of such decision or order for such period as he deems fit and after giving the
person concerned an opportunity of being heard and after making such further inquiry as
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may be necessary, pass such order, as he thinks just and proper, including enhancing or
modifying or annulling the said decision or order.
(2) The Commissioner shall not exercise any power under sub-section (1), if.-
(a) the order has been subject to an appeal under section 79 or under section 82 or
under section 87 or under section 88; or
(b) more than three years have expired after the passing of the decision or order sought
to be revised.
(3) Notwithstanding anything contained in sub-section (2), the Commissioner may pass
an order under sub-section (1) on any point which has not been raised and decided in an
appeal referred to in clause (a) of sub-section (2), before the expiry of a period of one
year from the date of the order in such appeal or before the expiry of a period of three
years referred to in clause (b) of that sub-section, whichever is later.
(4) Every order passed in revision under sub-section (1) shall, subject to the provisions
of sections 83, 87 or 88, be final.
(5) If the decision or order passed under this Act by an officer subordinate to the
Commissioner involves an issue on which the Appellate Tribunal or the High Court has
given its decision which is prejudicial to the interest of revenue in some other
proceedings and an appeal to the High Court or the Supreme Court against such decision
of the Appellate Tribunal or as the case may be, the High Court is pending, the period
spent between the date of the decision of the Appellate Tribunal and the date of the
decision of the High Court or as the case may be, the date of the decision of the High
Court and the date of the decision of the Supreme Court shall be excluded in computing
the period referred to in clause (b) of sub-section (2).
(6) Where the issuance of an order under sub-section (1) is stayed by the order of a
Court or Tribunal, the period of such stay shall be excluded in computing the period of
three years under sub-section (2).
(7) For the purposes of this section, ‘record’ shall include all records relating to any
proceedings under this Act available at the time of examination by the Commissioner.
(8) For the purposes of this section, ‘decision’ shall include intimation given by any
officer subordinate to the Commissioner.
81. Constitution of the National Appellate Tribunal
(1) The Central Government shall on the recommendation of the GST Council
constitute a National Goods and Services Tax Appellate Tribunal (hereinafter referred to
as the Appellate Tribunal).
(2) The Appellate Tribunal shall be headed by a National President.
(3) The Appellate Tribunal shall have one branch for each state, which shall be called
as the State GST Tribunal.
(4) Every State GST Tribunal will be headed by a State President.
(5) Every State GST Tribunal shall consist of as many Members (Judicial), Members
(Technical – CGST) and Members (Technical – SGST) as may be prescribed, to exercise
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the powers and discharge the functions conferred on the Appellate Tribunal by this Act.
(6) The qualifications, eligibility conditions and the manner of selection and
appointment of the National President, the State Presidents, and the Members shall be
such as may be prescribed on the recommendations of the Council.
(7) The National President and the State Presidents shall exercise such powers and
discharge such functions as may be prescribed on the recommendations of the Council.
(8) On ceasing to hold office, the National President, the State Presidents or other
Members of the Appellate Tribunal shall not be entitled to appear, act or plead before the
Appellate Tribunal.
82. Appeals to the Appellate Tribunal
(1) Any person aggrieved by an order passed against him under section 79 or under
section 80 may appeal to the Appellate Tribunal against such order.
(2) The Appellate Tribunal may, in its discretion, refuse to admit any such appeal
where the tax or input tax credit involved or the difference in tax or input tax credit
involved or the amount of fine, fee or penalty determined by such order, does not
exceed one lakh rupees.
(3) Every appeal under this section shall be filed within three months from the date
on which the order sought to be appealed against is communicated to the person
preferring the appeal.
(4) On receipt of notice that an appeal has been preferred under this section, the
party against whom the appeal has been preferred may, notwithstanding that he may
not have appealed against such order or any part thereof, file, within forty-five days of
the receipt of the notice, a memorandum of cross-objections, verified in the prescribed
manner, against any part of the order appealed against and such memorandum shall be
disposed of by the Appellate Tribunal as if it were an appeal presented within the time
specified in sub-section (3).
(5) The Appellate Tribunal may admit an appeal or permit the filing of a
memorandum of cross-objections after the expiry of the period referred to in sub-section
(3) or sub-section (4) respectively, if it is satisfied that there was sufficient cause for not
presenting it within that period.
(6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be
verified in the prescribed manner and shall be accompanied by a prescribed fee:
Provided that no such fee shall be payable in the case of an appeal filed by the
Commissioner or a memorandum of cross-objections referred to in sub-section (4).
(7) (a) No appeal shall be filed under sub-section (1) unless the appellant has deposited

(i) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the
impugned order, as is admitted by him, and
(ii) a sum equal to ten percent of the remaining amount in dispute arising from the said
order, in relation to which the appeal has been filed.
Explanation.- For the purposes of this sub-section, the expression “amount in dispute”
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shall include –
i. amount determined under section 46 or 47 or 48 or 51;
iii. amount payable under rule——-of the GST Credit Rules 201…; and
iii. amount of fee levied or penalty imposed:
Provided that nothing in this sub-section shall affect the right of the departmental
authorities to apply to the Appellate Tribunal for ordering a higher amount of predeposit,
not exceeding fifty percent of the amount in the dispute after taking into
account the amount deposited in the first appeal, in a case which is considered by the
Commissioner of GST to be a “serious case”.
Explanation. – For the purpose of this proviso, the expression “serious case” shall mean a
case involving a disputed tax liability of not less than Rupees Twenty Five Crores and
where the Commissioner of GST is of the opinion (for reasons to be recorded in writing)
that the department has a very good case against the taxpayer.
(b) The provisions of clause (a) shall also apply mutatis mutandis to cross objections
filed under sub-section (4).
(8) Every application made before the Appellate Tribunal, —
(a) in an appeal for rectification of mistake or for any other purpose; or
(b) for restoration of an appeal or an application,
shall be accompanied by a prescribed fee :
Provided that no such fee shall be payable in the case of an application filed by or on
behalf of the Commissioner of GST.
83. Orders of Appellate Tribunal
(1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity
of being heard, pass such orders thereon as it thinks fit, confirming, modifying or
annulling the decision or order appealed against or may refer the case back to the First
Appellate Authority, or the revisional authority, as the case may be, or to the original
adjudicating authority, with such directions as it may think fit, for a fresh adjudication or
decision, as the case may be, after taking additional evidence, if necessary.
(2) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing
of an appeal, grant time, from time to time, to the parties or any of them and adjourn
the hearing of the appeal for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party
during hearing of the appeal.
(3) The Appellate Tribunal may amend any order passed by it under sub-section (1)
so as to rectify any mistake apparent from the record, if such mistake is noticed by it on
its own accord, or is brought to its notice by the Commissioner of GST or the other party
to the appeal within a period of three months from the date of the order:
Provided that no amendment which has the effect of enhancing an assessment or
reducing a refund or input tax credit or otherwise increasing the liability of the other
party, shall be made under this sub-section, unless the Appellate Tribunal has given
notice to him of its intention to do so and has allowed him a reasonable opportunity of
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being heard.
(4) The Appellate Tribunal shall, where it is possible to do so, hear and decide every
appeal within a period of one year from the date on which it is filed.
(5) The Appellate Tribunal shall send a copy of every order passed under this section
to the First Appellate Authority or the revisional authority, or the original adjudicating
authority, as the case may be, the appellant, the jurisdictional Commissioner of CGST
and the jurisdictional Commissioner of SGST.
(6) Save as provided in section 87 or section 88, orders passed by the Appellate
Tribunal on an appeal shall be final.
84. Procedure of Appellate Tribunal
(1) The powers and functions of the Appellate Tribunal may be exercised and
discharged by Benches constituted by the National President or the State Presidents from
amongst the members thereof.
(2) Subject to the provisions contained in sub-section (3), a Bench shall consist of
one Member (Judicial), one Member (Technical – CGST) and one Member (Technical –
SGST).
(3) The National President or a State President, or any other member of the Appellate
Tribunal authorized in this behalf by the National President or a State President, may,
sitting singly, dispose of any case which has been allotted to the Bench of which he is a
member, where in any disputed case, the tax or input tax credit involved or the
difference in tax or input tax credit involved or the amount of fine, fee or penalty
involved, does not exceed ten lakh rupees.
(4) If the members of a Bench differ in opinion on any point, the point shall be
decided according to the opinion of the majority, if there is a majority; but if the
members are equally divided, they shall state the point or points on which they differ
and make a reference to the National President or the State President who shall either
hear the point or points himself or refer the case for hearing on such point or points by
one or more of the other members of the Appellate Tribunal and such point or points
shall be decided according to the opinion of the majority of these members of the
Appellate Tribunal who have heard the case, including those who first heard it.
(5) Subject to the provisions of this Act, the Appellate Tribunal shall have power to
regulate its own procedure and the procedure of the Benches thereof in all matters
arising out of the exercise of its powers or of the discharge of its functions, including the
places at which the Benches shall hold their sittings.
(6) The Appellate Tribunal shall, for the purposes of discharging its functions, have
the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of
1908), when trying a suit in respect of the following matters, namely :-
a) discovery and inspection;
b) enforcing the attendance of any person and examining him on oath;
c) compelling the production of books of account and other documents; and
d) issuing commissions.
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(7) Any proceeding before the Appellate Tribunal shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228 and for the purpose of section
196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed
to be a Civil Court for all the purposes of section 195 and Chapter XXVI of the Code of
Criminal Procedure, 1973 (2 of 1974).
85. Interest on delayed refund of pre-deposit
Where an amount deposited by the appellant under sub-section (6)/(4) of section 79 or
under sub-section (10)/(7) of section 82 is required to be refunded consequent to any
order of the First Appellate Authority or of the Appellate Tribunal, as the case may be,
interest at the rate specified under section 39 shall be payable in respect of such refund
from the date of payment of the amount till the date of refund of such amount.
86. Appearance by authorised representative
(1) Any person who is entitled or required to appear before a GST Officer appointed
under this Act, or the First Appellate Authority or the Appellate Tribunal in connection
with any proceedings under the Act, may, otherwise than when required under this Act
to appear personally for examination on oath or affirmation, subject to the other
provisions of this section, appear by an authorized representative.
(2) For the purposes of this section, “authorised representative” means a person
authorised by the person referred to in sub-section (1) to appear on his behalf, being —
(a) his relative or regular employee; or
(b) an advocate who is entitled to practice in any court in India, and who has not been
debarred from practicing before any court in India; or
(c) any chartered accountant, a cost accountant or a company secretary, who holds a
valid certificate of practice and who has not been debarred from practice; or
(d) any person who has acquired such qualifications as the Central Government (or the
State Government) may, on the recommendation of the Council, prescribe for this
purpose.
(3) Notwithstanding anything contained in this section, no person who was serving
in the indirect tax departments of the Government of India or of any State Government,
and has retired or resigned from such service after having served for not less than two
years as a Gazetted officer in that department shall be entitled to appear as an
authorised representative in any proceedings before a GST Officer for a period of one
year from the date of his retirement or resignation, as the case may be.
(4) No person, —
a) who has been dismissed or removed from government service; or
b) who is convicted of an offence connected with any proceeding under this Act, the
Customs Act, 1962 (52 of 1962), the Central Excise Act, 1944 (1 of 1944) or Chapter V
of the Finance Act 1994 (25 of 2014) or under any of the Acts passed by a state
legislature dealing with the imposition of taxes on sale of goods or supply of goods
and/or services, or
c) who has become an insolvent,
shall be qualified to represent any person under sub-section (1) —
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(i) for all times in the case of a person referred to in clause (a),
(ii) for such time as the Commissioner of GST or the competent authority under the
Acts referred to in clause (b) may, by order, determine in the case of a person referred
to in clause (b), and
(iii) for the period during which the insolvency continues in the case of a person
referred to in clause (c).
(5) If any person is found guilty of misconduct by the prescribed authority in
connection with any proceedings under this Act or under any of the Acts referred to in
clause (b) of sub-section (4), the prescribed authority may direct that he shall
thenceforth be disqualified to represent any person under sub-section (1).
(6) Any order or direction under clause (b) of sub-section (4) or sub-section (5) shall
be subject to the following conditions, namely:—
a) no such order or direction shall be made in respect of any person unless he has
been given a reasonable opportunity of being heard;
b) any person against whom any such order or direction is made may, within one
month of the making of the order or direction, appeal to the competent authority
[Central/State Government] to have the order or direction cancelled; and
c) no such order or direction shall take effect until the expiration of one month from
the making thereof, or, where an appeal has been preferred, until the disposal of the
appeal.
87. Appeal to the High Court
(1) The Commissioner of GST or the other party aggrieved by any order passed by
the Appellate Tribunal under section 83 may file an appeal to the High Court and the
High Court may admit such appeal if it is satisfied that the case involves a substantial
question of law.
(2) Notwithstanding the provisions of sub section (1), no appeal shall lie to High
Court against an order passed by the Appellate Tribunal under section 83 if such order
relates, among other things, to:-
i) a matter where two or more States, or a State and Center, have a difference of
views regarding the treatment of a transaction(s) being intra-State or inter-State; or
ii) a matter where two or more States, or a State and Center, have a difference of
views regarding place of supply.
(3) An appeal under sub-section (1) shall be –
a) filed within one hundred and eighty days from the date on which the order
appealed against is received by the Commissioner of GST or the other party;
b) accompanied by a prescribed fee ;
c) in the form of a memorandum of appeal precisely stating therein the substantial
question of law involved.
(4) The High Court may admit an appeal after the expiry of the period of one hundred
and eighty days referred to in clause (a) of sub-section (3), if it is satisfied that there
was sufficient cause for not filing the same within that period.
(5) Where the High Court is satisfied that a substantial question of law is involved in
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any case, it shall formulate that question.
(6) The appeal shall be heard only on the question so formulated, and the respondents
shall, at the hearing of the appeal, be allowed to argue that the case does not involve
such question:
Provided that nothing in this sub-section shall be deemed to take away or abridge the
power of the Court to hear, for reasons to be recorded, the appeal on any other
substantial question of law not formulated by it, if it is satisfied that the case involves
such question.
(7) The High Court shall decide the question of law so formulated and deliver such
judgment thereon containing the grounds on which such decision is founded and may
award such cost as it deems fit.
(8) The High Court may determine any issue which –
a) has not been determined by the Appellate Tribunal; or
b) has been wrongly determined by the Appellate Tribunal, by reason of a decision
on such question of law as herein referred to above.
(9) When an appeal has been filed before the High Court, it shall be heard by a bench
of not less than two Judges of the High Court, and shall be decided in accordance with
the opinion of such Judges or of the majority, if any, of such Judges.
(10) Where there is no such majority, the Judges shall state the point of law upon
which they differ and the case shall, then, be heard upon that point only, by one or more
of the other Judges of the High Court and such point shall be decided according to the
opinion of the majority of the Judges who have heard the case including those who first
heard it.
(11) Where the High Court delivers a judgment in an appeal filed before it under this
section, effect shall be given to such judgment by either side on the basis of a certified
copy of the judgment.
(12) Save as otherwise provided in this Act, the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may
be, apply in the case of appeals under this section.
88. Appeal to the Supreme Court
(1) An appeal shall lie to the Supreme Court from any judgment or order passed by
the High Court in an appeal made under section 87, in any case which, on its own
motion or on an oral application made by or on behalf of the party aggrieved,
immediately after passing of the judgment or order, the High Court certifies to be a fit
one for appeal to the Supreme Court.
(2) An appeal shall lie to the Supreme Court from any order passed by the Appellate
Tribunal under section 83 where such order is of the nature referred to in sub section (2)
of section 87.
89. Hearing before Supreme Court
(1) The provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to
appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under
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section 88 as they apply in the case of appeals from decrees of a High Court :
Provided that nothing in this sub-section shall be deemed to affect the provisions of
section 90.
(2) The costs of the appeal shall be at the discretion of the Supreme Court.
(3) Where the judgment of the High Court is varied or reversed in the appeal, effect
shall be given to the order of the Supreme Court in the manner provided in section 87 in
the case of a judgment of the High Court.
90. Sums due to be paid notwithstanding appeal etc.
Notwithstanding that an appeal has been preferred to the High Court or the Supreme
Court, sums due to the Government as a result of an order passed by the Appellate
Tribunal under sub-section (1) of section 83 or an order passed by the High Court under
section 87, as the case may be, shall be payable in accordance with the order so passed.
91. Exclusion of time taken for copy
In computing the period of limitation prescribed for an appeal or application under this
Chapter, the day on which the order complained of was served, and if the party
preferring the appeal or making the application was not furnished with a copy of the
order when the notice of the order was served upon him, the time required for obtaining
a copy of such order, shall be excluded.
92. Appeal not to be filed in certain cases
(1) The Board or the State Government may, on the recommendation of the Council,
from time to time, issue orders or instructions or directions fixing such monetary limits,
as it may deem fit, for the purposes of regulating the filing of appeal or application by
the GST officer under the provisions of this Chapter.
(2) Where, in pursuance of the orders or instructions or directions, issued under subsection
(1), the GST officer has not filed an appeal or application against any decision or
order passed under the provisions of this Act, it shall not preclude such GST officer from
filing appeal or application in any other case involving the same or similar issues or
questions of law.
(3) Notwithstanding the fact that no appeal or application has been filed by the GST
Officer pursuant to the orders or instructions or directions issued under sub-section (1),
no person, being a party in appeal or application shall contend that the GST officer has
acquiesced in the decision on the disputed issue by not filing an appeal or application.
(4) The Appellate Tribunal or court hearing such appeal or application shall have
regard to the circumstances under which appeal or application was not filed by the GST
Officer in pursuance of the orders or instructions or directions issued under sub-section
(1).
93. Non Appealable decisions and orders
Notwithstanding anything to the contrary in any provisions of this Act, no appeal shall lie
against any decision taken or order passed by a GST officer if such decision taken or
order passed relates to any one or more of the following matters:-
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(a) An order of the Commissioner or other competent authority for transfer of
proceeding from one officer to another officer;
(b) An order pertaining to the seizure or retention of books of account, register and
other documents; or
(c) An order sanctioning prosecution under the Act; or
(d) An order passed under section 55.
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CHAPTER– XIX
ADVANCE RULING
94. Definitions
In this Chapter, unless the context otherwise requires, –
(a) “advance ruling” means a written decision provided by the Authority or, as the case
may be, the Appellate Authority to an applicant on matters or on questions specified in
sub-section (2) of section 97 or sub-section (1) of section 99, as the case may be, in
relation to the supply of goods and/or services proposed to be undertaken or being
undertaken by the applicant;
(b) “applicant” means any person registered or desirous of obtaining registration under
the Act.
(c) “application” means an application made to the Authority under sub-section (1) of
section 97;
(d) “Authority” means the Authority for Advance Ruling, constituted under section 95;
(e) “Appellate Authority” means the Appellate Authority for Advance Ruling constituted
under section 96.
95. Authority for Advance Ruling
(1) The Authority shall be located in each State.
(2) The Authority shall comprise one member CGST and one member SGST to be
appointed respectively by the Central Government and the State Government.
(3) The qualifications, eligibility conditions, method and the process of appointment
of the members shall be as may be prescribed.
96. Appellate Authority for Advance Ruling
(1) The Appellate Authority shall be located in each State.
(2) The Appellate Authority shall comprise the Chief Commissioner of CGST as
designated by the Board and the Commissioner of SGST having jurisdiction over the
applicant.
97. Application for advance ruling
(1) An applicant desirous of obtaining an advance ruling under this Chapter may make
an application in such form and in such manner as may be prescribed, stating the
question on which the advance ruling is sought.
(2) The question on which the advance ruling is sought shall be in respect of,
(a) classification of any goods and/or services under the Act;
(b) applicability of a notification issued under provisions of the Act having a bearing
on the rate of tax;
(c) the principles to be adopted for the purposes of determination of value of the
goods and/or services under the provisions of the Act;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determination of the liability to pay tax on any goods and/or services under the
Act;
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(f) whether applicant is required to be registered under the Act;
(g) whether any particular thing done by the applicant with respect to any goods
and/or services amounts to or results in a supply of goods and/or services, within
the meaning of that term.
(3) The application shall be accompanied by a fee as may be prescribed.
98. Procedure on receipt of application
(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded
to the officers as may be prescribed and, if necessary, call upon him to furnish the
relevant records:
Provided that where any records have been called for by the Authority in any case, such
records shall, as soon as possible, be returned to the said prescribed officers.
(2) The Authority may, after examining the application and the records called for and
after hearing the applicant or authorized representative of the applicant as well as the
authorized representative of the prescribed officers, by order, either admit or reject
the application:
Provided that the Authority shall not admit the application where the question raised in
the application is, –
(a) already pending in the applicant’s case before any First Appellate Authority, the
Appellate Tribunal or any Court;
(b) the same as in a matter already decided by the First Appellate Authority, the
Appellate Tribunal or any Court;
(c) the same as in a matter already pending in any proceedings in the applicant’s case
under any of the provisions of the Act;
(d) the same as in a matter in the applicant’s case already decided by the adjudicating
authority or assessing authority, whichever is applicable:
Provided further that no application shall be rejected under this sub-section unless an
opportunity has been given to the applicant of being heard:
Provided also that where the application is rejected, reasons for such rejection shall be
given in the order.
(3) A copy of every order made under sub-section (2) shall be sent to the applicant and
to the prescribed officers.
(4) Where an application is admitted under sub-section (2), the Authority shall, after
examining such further material as may be placed before it by the applicant or obtained
by the Authority and after providing an opportunity of being heard to the applicant or the
authorized representative of the applicant as well as to the authorized representative of
the prescribed or the jurisdictional CGST/SGST officer, pronounce its advance ruling on
the question specified in the application.
Explanation. – For the purposes of this sub-section, “authorized representative” shall
have the meaning assigned to it in section 86.
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(5) Where the members of the Authority differ on any question on which the advance
ruling is sought, they shall state the point or points on which they differ and make a
reference to the Appellate Authority for hearing and decision on such question.
(6) The Authority or, as the case may be, the Appellate Authority shall pronounce its
advance ruling in writing within ninety days of the receipt of application or, as the case
may be, reference made under sub-section (5).
(7) Where the members of the Appellate Authority differ on any point or points
referred to it under sub-section (5), it shall be deemed that no advance ruling can be
issued in respect of the question covered by the reference application.
(8) A copy of the advance ruling pronounced by the Authority or, as the case may be,
the Appellate Authority duly signed by the Members and certified in the prescribed
manner shall be sent to the applicant and the jurisdictional CGST / SGST officer and, as
the case may be, to the Authority, as soon as may be, after such pronouncement.
99. Appeal to the Appellate Authority
(1) The prescribed or jurisdictional CGST/SGST officer or, as the case may be, an
applicant aggrieved by any advance ruling pronounced under sub-section (4) of section
98, may appeal to the Appellate Authority.
(2) Every appeal under this section shall be filed within a period of thirty days from the
date on which the ruling sought to be appealed against is communicated to the
prescribed or the jurisdictional CGST/SGST officer or, as the case may be, the applicant.
(3) Every appeal under this section shall be in the prescribed form and shall be verified
in the prescribed manner.
100. Orders of the Appellate Authority
(1) The Appellate Authority may, after giving the parties to the appeal, an opportunity of
being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed
against.
(2) The order referred to in sub-section (1) shall be passed within a period of ninety
days from the date of filing appeal under section 99.
(3) Where the members of the Appellate Authority differ on any point or points referred
to in appeal, it shall be deemed that no advance ruling can be issued in respect of the
question covered under the appeal.
(4) A copy of the advance ruling pronounced by the Appellate Authority duly signed
by the Members and certified in the prescribed manner shall be sent to the applicant, the
prescribed or the jurisdictional CGST / SGST officer and to the Authority, as soon as may
be, after such pronouncement.
101. Rectification of advance ruling
The Authority or, as the case may be, the Appellate Authority may amend any order
passed by it under section 98 or section 100, as the case may be, so as to rectify any
mistake apparent from the record, if such mistake is noticed by the Authority or, as the
case may be, the Appellate Authority on its own accord, or is brought to its notice by
the prescribed or the jurisdictional CGST / SGST officer or the applicant within a period
of six months from the date of the order:
Provided that no rectification which has the effect of enhancing the tax liability or
reducing the amount of admissible input tax credit shall be made unless the Authority or,
as the case may be, the Appellate Authority has given notice to the applicant or, as the
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case may be, the appellant of its intention to do so and has allowed him a reasonable
opportunity of being heard.
Explanation.— For the removal of doubts, it is hereby clarified that the Authority or, as
the case may be, the Appellate Authority shall not, while rectifying any mistake apparent
from record, amend substantive part of its order.
102. Applicability of advance ruling
(1) The advance ruling pronounced by the Authority or, as the case may be, the
Appellate Authority under this chapter shall be binding only –
(a) on the applicant who had sought it in respect of any matter referred to in subsection
(2) of section 97 of the application for advance ruling;
(b) on the jurisdictional tax authorities in respect of the applicant.
(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless
the law, facts or circumstances supporting the original advance ruling have changed.
103. Advance ruling to be void in certain circumstances
(1) Where the Authority or, as the case may be, the Appellate Authority finds that
advance ruling pronounced by it under sub-section (4) of section 98 or under sub-section
(1) of section 100 has been obtained by the applicant or, as the case may be, the
appellant by fraud or suppression of material facts or misrepresentation of facts, it may,
by order, declare such ruling to be void ab initio and thereupon all the provisions of the
Act shall apply (after excluding the period beginning with the date of such advance ruling
and ending with the date of order under this sub-section) to the applicant as if such
advance ruling had never been made:
Provided that no order shall be passed under this sub-section unless an opportunity has
been given to the applicant of being heard.
(2) A copy of the order made under sub-section (1) shall be sent to the applicant and
the prescribed officers.
104. Powers of the Authority and Appellate Authority
(1) The Authority or, as the case may be, the Appellate Authority shall, for the purpose
of exercising its powers regarding discovery and inspection, enforcing the attendance of
any person and examining him on oath, issuing commissions and compelling production
of books of account and other records, have all the powers of a civil court under the
Code of Civil Procedure, 1908 (5 of 1908).
(2) The Authority or, as the case may be, the Appellate Authority shall be deemed to be
a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of
the Code of Criminal Procedure, 1973 (2 of 1974), and every proceeding before the
Authority shall be deemed to be a judicial proceeding within the meaning of sections 193
and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).
105. Procedure of the Authority and the Appellate Authority
The Authority or, as the case may be, the Appellate Authority shall, subject to the
provisions of this Chapter, have power to regulate its own procedure in all matters
arising out of the exercise of its powers under the Act.
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CHAPTER– XX
SETTLEMENT OF CASES
At present, the provisions for settlement of cases are incorporated under Chapter
VIIA of the IGST Act.
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CHAPTER– XXI
PRESUMPTION AS TO DOCUMENTS
106. Presumption as to documents in certain cases
Where any document-
(i) is produced by any person under the Act or any other law, or
(ii) has been seized from the custody or control of any person under the Act or any
other law, or
(iii) has been received from any place within or outside India in the course of any
proceedings under the Act or any other law
and such document is tendered by the prosecution in evidence against him or any other
person who is tried jointly with him, the court shall-
(a) unless the contrary is proved by such person, presume —
(i) the truth of the contents of such document;
(ii) that the signature and every other part of such document which purports to be in
the handwriting of any particular person or which the Court may reasonably assume to
have been signed by, or to be in the handwriting of, any particular person, is in that
person’s handwriting, and in the case of a document executed or attested, that it was
executed or attested by the person by whom it purports to have been so executed or
attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped, if such
document is otherwise admissible in evidence.
107. Admissibility of micro films, facsimile copies of documents and computer
printouts as documents and as evidence
(1) Notwithstanding anything contained in any other law for the time being in force, —
a) a micro film of a document or the reproduction of the image or images embodied in
such micro film (whether enlarged or not); or
b) a facsimile copy of a document; or
c) a statement contained in a document and included in a printed material produced
by a computer (hereinafter referred to as a “computer printout”), if the conditions
mentioned in sub-section (2) and the other provisions contained in this section are
satisfied in relation to the statement and the computer in question; or
d) any information stored electronically in any device or media, including any hard
copies made of such information
shall be deemed to be also a document for the purposes of the Act and the rules
made thereunder and shall be admissible in any proceedings there under, without
further proof or production of the original, as evidence of any contents of the original or
of any fact stated therein of which direct evidence would be admissible.
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(2) The conditions referred to in sub-section (1) in respect of a computer printout shall
be the following, namely:—
a) the computer printout containing the statement was produced by the computer
during the period over which the computer was used regularly to store or process
information for the purposes of any activities regularly carried on over that period by the
person having lawful control over the use of the computer;
b) during the said period, there was regularly supplied to the computer in the ordinary
course of the said activities, information of the kind contained in the statement or of the
kind from which the information so contained is derived;
c) throughout the material part of the said period, the computer was operating properly
or, if not, then any respect in which it was not operating properly or was out of operation
during that part of that period was not such as to affect the production of the document
or the accuracy of the contents; and
d) the information contained in the statement reproduced or is derived from
information supplied to the computer in the ordinary course of the said activities.
(3) Where over any period, the function of storing or processing information for the
purposes of any activities regularly carried on over that period as mentioned in clause
(a) of sub-section (2) was regularly performed by computers, whether —
a) by a combination of computers operating over that period; or
b) by different computers operating in succession over that period; or
c) by different combinations of computers operating in succession over that period; or
d) in any other manner involving the successive operation over that period, in whatever
order, of one or more computers and one or more combinations of computers,
all the computers used for that purpose during that period shall be treated for the
purposes of this section as constituting a single computer; and references in this section
to a computer shall be construed accordingly.
(4) In any proceedings under this Act and the rules made thereunder where it is
desired to give a statement in evidence by virtue of this section, a certificate doing any
of the following things, that is to say, —
a) identifying the document containing the statement and describing the manner in
which it was produced;
b) giving such particulars of any device involved in the production of that document as
may be appropriate for the purpose of showing that the document was produced by a
computer;
c) dealing with any of the matters to which the conditions mentioned in sub-section
(2) relate, and purporting to be signed by a person occupying a responsible official
position in relation to the operation of the relevant device or the management of the
relevant activities (whichever is appropriate) shall be evidence of any matter stated in
the certificate; and for the purposes of this sub-section it shall be sufficient for a matter
to be stated to the best of the knowledge and belief of the person stating it.
(5) For the purposes of this section, —
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a) information shall be taken to be supplied to a computer if it is supplied thereto in any
appropriate form and whether it is so supplied directly or (with or without human
intervention) by means of any appropriate equipment;
b) whether in the course of activities carried on by any official, information is supplied
with a view to its being stored or processed for the purposes of those activities by a
computer operated otherwise than in the course of those activities, that information, if
duly supplied to that computer, shall be taken to be supplied to it in the course of those
activities;
c) a document shall be taken to have been produced by a computer whether it was
produced by it directly or (with or without human intervention) by means of any
appropriate equipment.
Explanation. — For the purposes of this section, —
a) “computer” means any device that receives, stores and processes data, applying
stipulated processes to the information and supplying results of these processes; and
includes the hard disc thereof or a mirror image of hard disc thereof; and
b) any reference to information being derived from other information shall be a
reference to its being derived there from by calculation, comparison or any other
process.
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CHAPTER– XXII
LIABILITY TO PAY IN CERTAIN CASES
108. Liability in case of transfer of business
(1) Where a taxable person, liable to pay tax under this Act, transfers his business in
whole or in part, by sale, gift, lease, leave and license, hire or in any other manner
whatsoever, the taxable person and the person to whom the business is so transferred
shall jointly and severally be liable wholly or, as the case may be, to the extent of such
transfer, to pay the tax, interest or any penalty due from the taxable person up to the
time of such transfer, whether such tax, interest or penalty has been determined before
such transfer, but has remained unpaid or is determined thereafter.
(2) Where the transferee or the lessee of a business referred to in subsection (1)
carries on such business either in his own name or in some other name, he shall be
liable to pay tax on the supply of goods and/or services effected by him with effect from
the date of such transfer and shall, if he is an existing taxable person, apply within the
prescribed time for amendment of his certificate of registration.
109. Liability in case of amalgamation /merger of companies
(1) When two or more companies are amalgamated or merged by the order of court
or of Tribunal or of the Central Government and the order is to take effect from a date
earlier to the date of the order and any two or more of such companies have supplied or
received any goods and/or services to or from each other during the period commencing
on the date from which the order takes effect till the date of the order, then such
transactions of supply and receipt shall be included in the turnover of supply or receipt of
the respective companies and shall be liable to tax accordingly.
(2) Notwithstanding anything contained in the said order, for all purposes of this Act,
the said two or more companies shall be treated as distinct companies for the period up
to the date of the said order and the registration certificates of the said companies shall
be cancelled, where necessary, with effect from the date of the said order.
Explanation – Words and expressions used in this section but not defined shall have the
respective meanings assigned to them in the Companies Act, 2013 (18 of 2013).
110. Liability in case of company in liquidation
(1) When any company is being wound up whether under the orders of a court or
Tribunal or otherwise, every person appointed as receiver of any assets of a company
(hereinafter referred to as the “liquidator”), shall, within thirty days after his
appointment, give intimation of his appointment to the Commissioner
(2) The Commissioner shall, after making such inquiry or calling for such information
as he may deem fit, notify the liquidator within three months from the date on which he
receives intimation of the appointment of the liquidator, the amount which in the opinion
of the Commissioner would be sufficient to provide for any tax, interest or penalty which
is then, or is likely thereafter to become, payable by the company.
(3) When any company is wound up and any tax, interest or penalty determined
under this Act on the company for any period, whether before or in the course of or after
its liquidation, cannot be recovered, then every person who was a director of such
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company at any time during the period for which the tax was due, shall jointly and
severally be liable for the payment of such tax, interest or penalty, unless he proves to
the satisfaction of the Commissioner that such non-recovery is not attributed to any
gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the
company.
Explanation.- For the purposes of this section, the expressions “company” shall have the
meaning respectively assigned to them under clause (20) and clause (68) of section 2
respectively of the Companies Act, 2013 (18 of 2013).
111. Liability of partners of firm to pay tax
Notwithstanding any contract to the contrary, where any firm is liable to pay any tax,
interest or penalty under this Act, the firm and each of the partners of the firm shall
jointly and severally be liable for such payment:
Provided that where any partner retires from the firm, he or the firm, shall intimate the
date of retirement of the said partner to the Commissioner by a notice in that behalf in
writing and such partner shall be liable to pay tax, interest or penalty due up to the date
of his retirement whether determined or not, on that date:
Provided further that if no such intimation is given within one month from the date of
retirement, the liability of such partner under the first proviso shall continue until the
date on which such intimation is received by the Commissioner.
112. Liability of guardians, trustees etc.
Where the business in respect of which any tax, is payable under this Act is carried on by
any guardian, trustee or agent of a minor or other incapacitated person on behalf of and
for the benefit of such minor or other incapacitated person, the tax, interest or penalty
shall be levied upon and recoverable from such guardian, trustee or agent, as the case
may be, in like manner and to the same extent as it would be determined and
recoverable from any such minor or other incapacitated person, as if he were a major or
capacitated person and as if he were conducting the business himself, and all the
provisions of this Act shall, so far as may be, apply accordingly.
113. Liability of Court of Wards etc.
Where the estate or any portion of the estate of a taxable person owning a business in
respect of which any tax, interest or penalty is payable under this Act is under the
control of the Court of Wards, the Administrator General, the Official Trustee or any
receiver or manager (including any person, whatever be his designation, who in fact
manages the business) appointed by or under any order of a court, the tax, interest or
penalty shall be levied upon and be recoverable from such Court of Wards, Administrator
General, Official Trustee, receiver or manager, as the case may be, in like manner and to
the same extent as it would be determined and be recoverable from the taxable person
as if he were conducting the business himself, and all the provisions of this Act shall, so
far as may be, apply accordingly.
114. Special provision regarding liability to pay tax in certain cases
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(1) Where a person, liable to pay tax under this Act, dies, then-
(a) if a business carried on by the person is continued after his death by his legal
representative or any other person, such legal representative or other person, shall be
liable to pay tax, interest or penalty due from such person under this Act, and
(b) if the business carried on by the person is discontinued, whether before or after
his death, his legal representative shall be liable to pay out of the estate of the
deceased, to the extent to which the estate is capable of meeting the charge, the tax,
penalty or interest due from such person under this Act,-
whether such tax interest or penalty has been determined before his death but has
remained unpaid or is determined after his death.
(2) Where a taxable person, liable to pay tax under this Act, is a Hindu Undivided
Family or an association of persons and the property of the Hindu Undivided Family or
the association of persons, as the case may be, is partitioned amongst the various
members or groups of members then each member or group of members shall jointly
and severally be liable to pay the tax, interest or penalty due from the taxable person
under this Act upto the time of the partition whether such tax, penalty or interest has
been determined before partition but has remained unpaid or is determined after the
partition.
(3) Where a taxable person, liable to pay tax under this Act, is a firm, and the firm is
dissolved, then every person who was a partner shall be jointly and severally liable to
pay the tax, interest or penalty due from the firm under this Act, up to the time of
dissolution whether such tax, interest or penalty has been determined before the
dissolution, but has remained unpaid or is determined after dissolution.
(4) Where a taxable person liable to pay tax under this Act,-
(a) is the guardian of a ward on whose behalf the business is carried on by the
guardian, or
(b) is a trustee who carries on the business under a trust for a beneficiary.
then if the guardianship or trust is terminated, the ward or, as the case may be, the
beneficiary shall be liable to pay the tax, interest or penalty due from the taxable person
upto the time of the termination of the guardianship or trust, whether such tax, interest
or penalty has been determined before the termination of guardianship or trust but has
remained unpaid or is determined thereafter.
115. Liability in other cases
(1) Where a taxable person is a firm or an association of persons or a Hindu
Undivided Family and such firm, association or family has discontinued business-
(a) the tax payable under this Act by such firm, association or family up to the date
of such discontinuance may be determined as if no such discontinuance had taken
place; and
(b) every person who was at the time of such discontinuance, a partner of such firm,
or a member of such association or family, shall, notwithstanding such discontinuance,
be liable jointly and severally for the payment of tax and interest determined and
penalty imposed and payable by such firm, association or family, whether such tax and
interest has been determined or penalty imposed prior to or after such discontinuance
and subject as aforesaid, the provisions of this Act shall, so far as may be, apply as if
every such person or partner or member were himself a taxable person.
(2) Where a change has occurred in the constitution of a firm or an association of
persons, the partners of the firm or members of association, as it existed before and as
it exists after the reconstitution, shall, without prejudice to the provisions of section
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111, jointly and severally be liable to pay tax, interest and penalty due from such firm
or association for any period before its reconstitution.
(3) The provisions of sub-section (1) shall, so far as may be, apply where the taxable
person, being a firm or association of persons is dissolved or where the taxable person,
being a Hindu Undivided Family, has effected partition with respect to the business
carried on by it and accordingly references in that sub-section to discontinuance shall be
construed as reference to dissolution or, as the case may be, to partition.
11. Explanation.- For the purpose of this chapter, a limited liability partnership
formed and registered under the provisions of the Limited Liability Partnership Act, 2012
(743 of 2012) shall also be considered as a firm.
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CHAPTER– XXIII
MISCELLANEOUS PROVISIONS
116. GST compliance rating
(1) Every taxable person shall be assigned a GST compliance rating score based on
his record of compliance with the provisions of this Act.
(2) The GST compliance rating score shall be determined on the basis of parameters
to be prescribed in this behalf.
(3) The GST compliance rating score shall be updated at periodic intervals and
intimated to the taxable person and also placed in the public domain in the manner
prescribed.
117. Obligation to furnish information return
(1) Any person, being—
(a) a taxable person; or
(b) a local authority or other public body or association; or
(c) any authority of the State Government responsible for the collection of value added
tax or sales tax or state excise duty or an authority of the Central Government
responsible for the collection of Excise duty or Customs duty; or
(d) an income tax authority appointed under the provisions of the Income-tax Act, 1961
(43 of 1961); or
(e) a banking company within the meaning of clause (a) of section 45A of the Reserve
Bank of India Act, 1934 (2 of 1934); or
(f) a State Electricity Board; or an electricity distribution or transmission licensee under
the Electricity Act, 2003 (36 of 2003), or any other entity entrusted, as the case may be,
with such functions by the Central Government or the State Government; or
(g) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act,
1908 (16 of 1908); or
(h) a Registrar within the meaning of the Companies Act, 2013 (18 of 2013); or
(i) the registering authority empowered to register motor vehicles under Chapter IV of
the Motor Vehicles Act, 1988 (59 of 1988); or
(j) the Collector referred to in clause (c) of section 3 of the Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of
2013); or
(k) the recognised stock exchange referred to in clause (f) of section 2 of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956); or
(l) a depository referred to in clause (e) of sub-section (1) of section 2 of the
Depositories Act, 1996 (22 of 1996); or
(m) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve
Bank of India Act, 1934 (2 of 1934); or
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(n) Goods and Service Tax Network
who is responsible for maintaining record of registration or statement of accounts or any
periodic return or document containing details of payment of tax and other details of
transaction of goods or services or transactions related to a bank account or
consumption of electricity or transaction of purchase, sale or exchange of goods or
property or right or interest in a property, under any law for the time being in force,
shall furnish an information return of the same in respect of such periods, within such
time, in such form (including electronic form) and manner, to such authority or agency
as may be prescribed.
(2) Where the prescribed authority considers that the information submitted in the
information return is defective, he may intimate the defect to the person who has
furnished such information return and give him an opportunity of rectifying the defect
within a period of thirty days from the date of such intimation or within such further
period which, on an application made in this behalf, the prescribed authority may allow
and if the defect is not rectified within the said period of thirty days or, as the case may
be, the further period so allowed, then, notwithstanding anything contained in any other
provision of this Act, such information return shall be treated as not submitted and the
provisions of this Act shall apply.
(3) Where a person who is required to furnish information return has not furnished the
same within the time specified in sub-section (1) or sub-section (2), the prescribed
authority may serve upon him a notice requiring furnishing of such information return
within a period not exceeding ninety days from the date of service of the notice and such
person shall furnish the information return.
118. Penalty for failure to furnish information return
If a person who is required to furnish an information return under section 117
fails to do so within the period specified in the notice issued under sub-section (3)
thereof, the prescribed authority may direct that such person shall pay, by way of
penalty, a sum of one hundred rupees for each day of the period during which the failure
to furnish such return continues.
119. Power to collect statistics
(1) The Board/Commissioner, if it considers that for the purposes of the better
administration of the Act, it is necessary so to do, may by notification, direct that
statistics be collected relating to any matter dealt with, by or in connection with the Act.
(2) Upon such notification being issued, the Commissioner, or any person authorised by
the Commissioner in this behalf may call upon all concerned persons to furnish such
information or returns as may be specified therein relating to any matter in respect of
which statistics is to be collected.
(3) The form in which the persons to whom or, the authorities to which, such information
or returns should be furnished, the particulars which they should contain, and the
intervals in which such information or returns should be furnished, shall be as may be
prescribed.
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120. Disclosure of information required under section 119
(1) No information of any individual return or part thereof, with respect to any matter
given for the purposes of section 119 shall, without the previous consent in writing of the
taxpayer or person or his authorised agent, be published in such manner as to enable
any particulars to be identified as referring to a particular taxpayer and no such
information shall be used for the purpose of any proceedings under the provisions of the
Act.
(2) Except for the purposes of prosecution under the Act, or any other Act, no person
who is not engaged in the collection of statistics under the Act or of compilation or
computerization thereof for the purposes of the Act, shall be permitted to see or have
access to any information or any individual return referred to in that section.
(3) If any person required to furnish any information or return under section 119,-
(a) without reasonable cause fails to furnish such information or return as may by
that section be required, or
(b) willfully furnishes or causes to furnish any information or return which he
knows to be false,
he shall, on conviction, be punished with fine which may extend to one hundred rupees
and in case of a continuing offence to a further fine which may extend to one hundred
rupees for each day after the first day during which the offence continues subject to a
maximum limit of one thousand rupees.
(4) If any person engaged in connection with the collection of statistics under section
119 or compilation or computerization thereof willfully discloses any information or the
contents of any return given or made under that section, otherwise than in execution of
his duties under that section or for the purposes of the prosecution of an offence under
the Act or under any other Act, he shall, on conviction, be punished with imprisonment
for a term which may extend to six months or with fine which may extend to one
thousand rupees, or with both:
Provided that, no prosecution shall be instituted under the subsection, except with the
previous sanction of the Central Government or State Government.
(5) Nothing in this section shall apply to the publication of any information relating to
a class of dealers or class of transactions, if in the opinion of the competent authority, it
is desirable in the public interest, to publish such information.
121. Test purchase of goods and/or services
The [Commissioner] of CGST/SGST or an officer authorized by him may cause
purchase of any goods and/or services by any person authorized by him from the
business premises of any taxable person, to check issue of tax invoices or bills of supply
by such taxable person, and on return of goods so purchased by such officer, such
taxable person or any person in charge of the business premises shall refund the amount
paid towards the goods after cancelling any tax invoice or bill of supply issued.
122. Drawal of samples
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The [Commissioner] of CGST/SGST or an officer authorized by him may take
samples of goods from the possession of any taxable persons, where he considers it
necessary, and provide a receipt for any samples so taken.
123. Burden of Proof
If any person claims that he is not liable to pay tax under the Act in respect of any
supply of goods and/or services, or that he is eligible for input tax credit under section
16, the burden of proving such claim or claims shall lie on him.
124. Persons discharging functions under the Act shall be deemed to be public
servants
All persons discharging functions under the Act shall be deemed to be public servants
within the meaning of section 21 of the Indian Penal Code, 1860 (45 of 1860).
125. Indemnity
No legal proceedings shall lie against any goods and services tax officer, for anything
which is done or intended to be done in good faith under the Act or the rules.
126. Disclosure of information by a public servant
(1) All particulars contained in any statement made, return furnished or accounts or
documents produced in accordance with the Act, or in any record of evidence given in
the course of any proceedings under the Act (other than proceeding before a Criminal
Court), or in any record of any proceedings under the Act shall, save as provided in subsection
(4), be treated as confidential;
(2) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), no
Court shall save as aforesaid, be entitled to require any GST officer to produce before it
or to give evidence before it in respect of particulars referred to in sub-section (1).
(3) Save as provided in sub-section (4), if any GST officer discloses any of the
particulars referred to in sub-section (1), he shall, on conviction, be punished with
imprisonment which may extend to six months or with fine or with both:
Provided that, no prosecution shall be instituted under this section except with the
previous sanction of the Central Government or the State Government, as the case may
be.
(4) Nothing contained in this section shall apply to the disclosure of,-
(a) any such particulars in respect of any such statement, return, accounts,
documents, evidence, affidavit or deposition, for the purpose of any prosecution under
the Indian Penal Code (45 of 1860) or the Prevention of Corruption Act, 1988 (49 of
1988), or the Act, or any other law for the time being in force; or
(b) any such particulars to the Central Government or the State Government or to
any person acting in the execution of this Act, for verification of such particulars or for
the purpose of carrying out the object of the Act; or
(c) any such particulars when such disclosure is occasioned by the lawful
employment under the Act of any process for the service of any notice or the recovery of
any demand; or
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(d) any such particulars to a Civil Court or Tribunal constituted under any Central law
in any suit or proceeding, to which the Government or any authority under the Act is a
party, which relates to any matter arising out of any proceeding under the Act or under
any other law for the time being in force authorising any such authority to exercise any
powers thereunder; or
(e) any such particulars to any officer appointed for the purpose of audit of tax
receipts or refunds of the tax imposed by the Act; or
(f) any such particulars where such particulars are relevant the purposes of any
inquiry into the conduct of any GST officer, to any person or persons appointed as an
inquiry officer under any relevant law; or
(g) such facts to an officer of the Central Government or any State Government as
may be necessary for the purpose of enabling that Government to levy or realise any tax
or duty imposed by it; or
(h) any such particulars, when such disclosure is occasioned by the lawful exercise by
a public servant or any other statutory authority, of his or its powers under any law for
the time being in force; or
(i) any such particulars relevant to any inquiry into a charge of misconduct in
connection with any proceedings under the Act against a practising advocate, tax
practitioner, a practising cost accountant, a practising chartered accountant, a practising
company secretary to the authority empowered to take disciplinary action against the
members practising the profession of a legal practitioner, cost accountant, chartered
accountant or company secretary, as the case may be; or
(j) any such particulars to any agency appointed for the purposes of data entry on
any automated system or for the purpose of operating, upgrading or maintaining any
automated system where such agency is contractually bound not to use or disclose such
particulars except for the aforesaid purposes; or
(k) any such particulars to an officer of the Central Government or any State
Government as may be necessary for the purposes of any other law in force in India;
and
(l) any information relating to any class of taxpayers or class of transactions for
publication, if, in the opinion of the Competent authority, it is desirable in the public
interest, to publish such information.
127. Publication of information respecting persons in certain cases
(1) If the Competent Authority is of opinion that it is necessary or expedient in the
public interest to publish the names of any person and any other particulars relating to
any proceedings or prosecutions under the Act in respect of such person, it may cause to
be published such names and particulars in such manner as it thinks fit.
(2) No publication under this section shall be made in relation to any penalty imposed
under the Act until the time for presenting an appeal to the First Appellate Authority
under section 79 has expired without an appeal having been presented or the appeal, if
presented, has been disposed of.
Explanation. – In the case of firm, company or other association of persons, the names
of the partners of the firm, directors, managing agents, secretaries and treasures or
managers of the company, or the members of the association, as the case may be, may
also be published if, in the opinion of the Competent Authority, circumstances of the
case justify it.
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128. Assessment proceedings, etc. not to be invalid on certain grounds
(1) No assessment, re-assessment, adjudication, review, revision, appeal, rectification,
notice, summons or other proceedings done, accepted, made, issued, initiated, or
purported to have been done, accepted, made, issued, initiated in pursuance of any of
the provisions of the Act shall be invalid or deemed to be invalid merely by reason of any
mistake, defect or omission therein, if such assessment, re-assessment, adjudication,
review, revision, appeal, rectification, notice, summons or other proceedings is/are in
substance and effect in conformity with or according to the intents, purposes and
requirements of the Act or any earlier law.
(2) The service of any notice, order or communication shall not be called in question if
the notice, order or communication, as the case may be, has already been acted upon by
the person to whom it is issued or where such service has not been called in question at
or in the earliest proceedings commenced, continued or finalised pursuant to such
notice, order or communication.
129. Rectification of mistakes or errors apparent from record
Without prejudice to the provisions of section 128, and notwithstanding anything
contained in any other provisions of this Act, any authority, who has passed or issued
any decision or order or summons or notice or certificate or any other document, may
rectify any error or mistake which is apparent from record in such decision or order or
summons or notice or certificate or any other document, either on its own motion or
where such error or mistake is brought to its notice by any CGST / SGST officer or by
the affected person within a period of three months from the date of issue of such
decision or order or summons or notice or certificate or other document, as the case
may be:
Provided that no such rectification shall be done after a period of six months from the
date of issue of such decision or order or summons or notice or certificate or any other
document:
Provided further that the period of six months referred to in the first proviso shall not
apply in such cases where the rectification is purely in the nature of correction of a
clerical or arithmetical error or mistake, arising from any accidental slip or omission:
Provided also that the principles of natural justice shall be followed by the authority
carrying out such rectification if it adversely affects any person.
Explanation.— For the removal of doubts, it is hereby clarified that the authority shall
not, while rectifying any mistake apparent from record, amend substantive part of its
decision or order or summons or notice or certificate or any other document passed or,
as the case may be, issued under the provisions of this Act.
130. Bar of jurisdiction of civil courts
Save as provided by section 87 and 88, no civil court shall have jurisdiction to
deal with or decide any question arising from or relating to anything done or purported
to be done under the Act;
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131. Levy of fees
Wherever a copy of any order or document is to be provided to any person on an
application made by him for that purpose, there shall be paid such fee as may be
prescribed, which may include a fee for such application also.
132. Power of Central (or State) Government to make rules
(1) The Central Government (or the State Government) may, on the
recommendation of the Council, make rules, including rules conferring the power to
issue notifications with retrospective effect under those rules, to carry into effect the
purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power,
such rules may —
(i) provide for the date for determination of rate of tax and the place of supply of
goods or services or both;
(ii) having regard to the normal practice in the supply of goods or services, define or
specify the kinds of trade discount to be excluded from the value under
section 15 including the circumstances in which and the conditions subject
to which such discount is to be so excluded;
(iii) provide for determining the value of taxable supplies in the situations
mentioned under section 15;
(iv) provide, subject to such conditions as may be prescribed, for the grant of
input tax credit of tax paid on the input supplies of goods or services used
in or in relation to the providing of the output taxable supplies of goods or
services, and the manner of utilization of such credit;
(v) provide for the lapsing of input tax credit lying unutilized, in the
circumstances as may be specified in the rules;
(vi) provide for withdrawal of facilities or imposition of restrictions (including
restrictions on utilisation of input tax credit) on taxable person or
suspension or revocation of registration of taxable person, for dealing with
evasion of tax or misuse of input tax credit;
(vii) provide, subject to such conditions as may be prescribed, for the carrying
forward of the unutilized balances of cenvat credit of the duties of excise
and the service tax, under the Cenvat Credit Rules 2004, (or of VAT credit
under the state VAT credit rules) lying with the taxable persons on the date
of their switching over to GST;
(viii) provide for the remission of tax leviable on any taxable supplies, which due
to any natural causes are found to be deficient in quantity, the limit or
limits of percentage beyond which no such remission shall be allowed and
the different limit or limits of percentage for different varieties of the same
taxable supply or for different areas or for different seasons;
(ix) specify the persons who shall get themselves registered under section 19
and the time, manner and form in which application for registration shall be
made;
(x) provide for the manner of verification of application and issue of
registration under the Act and the fees, if any, to be charged therefor;
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(xi) provide for the situations and manner of grant of deemed registration
under the Act;
(xii) provide for the manner of migration, amendment, surrender, revocation,
suspension, cancellation of registration under the Act;
(xiii) provide for the assessment and collection of tax, the authorities by whom
functions under the Act are to be discharged, the issue of notices requiring
payment, the manner in which tax shall be payable, and the recovery of
tax not paid;
(xiv) impose on taxable persons or other persons as may be specified, the duty
of furnishing information, maintaining records and filing returns, and may
also prescribe the nature of such information and the form of such records
and returns, the particulars to be contained therein, and the manner in
which they shall be verified;
(xv) provide for the form, manner and frequency of the returns to be furnished
and the late fee for delayed furnishing of return under relevant section;
(xvi) provide for charging or payment of interest under the various provisions of
the Act;
(xvii) provide for the detention or attachment of goods, plant, machinery or
material and other movable or immovable properties for the purpose of
exacting the tax on taxable supplies in respect of which breaches of the Act
or rules made thereunder have been committed and the disposal of things
so detained or attached or confiscated;
(xviii) authorise and regulate the composition of offences against, or liabilities
incurred under the Act or the rules made thereunder;
(xix) provide for the amount to be paid for compounding and the manner of
compounding of offences under section 78;
(xx) provide for publication, subject to such conditions as may be specified, the
names and other particulars of persons found guilty of contravention of any
provision of the Act or of any rule made thereunder;
(xxi) provide for the manner of recovery of any amount due to the Central
Government (or state government) under section 54;
(xxii) authorise and regulate the inspection and audit of business premises and
provide for the taking of samples, and for the making of tests, of any
substance produced therein, and for the inspection or search of any place
or conveyance used for the production, storage, sale, supply or transport of
goods, and so far as such inspection or search is essential for the proper
levy and collection of the tax imposed by the Act, of any other taxable
supply of goods or services;
(xxiii) specify the form and manner in which application for refund shall be made
under section 38;
(xxiv) provide for the manner in which amounts shall be credited to the Consumer
Welfare Fund, their utilization, and the form in which the accounts and
records relating to the Fund shall be maintained;
(xxv) specify the forms in which appeals, applications and memoranda of cross
objections shall be filed and verified under Chapter XVIII of the Act;
(xxvi) provide for the qualifications and the manner of appointment of the
National President, the State President, and the Members of the Appellate
Tribunal under section 81 of the Act, and other matters related or
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incidental thereto;
(xxvii) provide for the settlement of cases, in accordance with Chapter ……. of this
Act;
(xxviii) regulate in such manner as the Central Government / State Government
thinks fit, the movement of supplies from any part of India to any other
part thereof;
(xxix) regulate the removal of taxable supplies of goods from the place where
produced, stored or manufactured or subjected to any process of
production or manufacture and their transport to or from the premises of a
registered person, or a bonded warehouse, or to a market;
(xxx) provide for the appointment, licensing, management and supervision of
bonded warehouses and the procedure to be followed for entry of goods
into such warehouses and clearance of goods therefrom;
(xxxi) provide for the distinguishing of supply of goods which have been
manufactured after registration, of materials which have been imported,
and of supply of goods on which tax has been paid, or which are exempt
from tax under this Act, or any other class of goods as may be specified in
such rules;
(xxxii) require that taxable supplies of specified goods shall not be made except in
prescribed containers, bearing a banderol, stamp or label of such nature
and affixed in such manner as may be prescribed;
(xxxiii) provide for the grant of a rebate of the tax paid on supply of goods or
services which are exported out of India or shipped for consumption on a
voyage to any port outside India including interest thereon;
(xxxiv) provide for rebate of tax paid or payable on the taxable supply of services
used as input services in the supply of goods or services exported out of
India under section 38;
(xxxv) provide for the charging of fees for the examination of goods intended for
export out of India and for rendering any other service by a GST Officer
under this Act or the rules made thereunder;
(xxxvi) authorise the Board (or competent authority) or officers of GST, as the
case may be, appointed for the purposes of this Act to provide, by written
instructions, for supplemental matters arising out of any rule made by the
Central Government (or the State Government) under this section;
(xxxvii) provide for the manner of provisional attachment of property under section
58;
(xxxviii) make provisions for determining export of taxable supply of services;
(xxxix) provide for grant of exemption to, or rebate of tax paid on, taxable supply
of services which are exported out of India;
(xl) provide for manner of administering of payment of taxes under the
compounding of tax;
(xli) provide for dealing with situations where goods are returned;
(xlii) provide for specifying the details to be given in the invoices, the
maintenance of accounts, the furnishing of audit reports, and matters
related thereto;
(xliii) provide for the qualifications and the manner of appointment of the
Advance Ruling authority under section 95 of the Act, and other matters
related to functioning of the authority;
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(xliv) provide for the qualifications of tax return preparers, tax practitioners and
authorized representatives under various provisions of the Act, the manner
of their selection or appointment or nomination, their codes of conduct,
and other matters related or incidental thereto;
(xlv) provide for matters relating to tax deducted at source;
(xlvi) provide for matters covered by Chapter XXV;
(xlvii) provide for the suspension of certain facilities admissible under this Act or
the rules made thereunder in case of repeat violations of conditions and
restrictions as may be prescribed; and
(xlviii) any other matter related to administering or enforcing the provisions of the
Act.
(3) The power to make rules conferred by this section shall on the first occasion of the
exercise thereof include the power to give retrospective effect to the rules or any of
them from a date not earlier than the date on which the provisions of this Chapter come
into force.
(4) In making rules under this section, the Central Government (or State Government)
may provide that any person committing a breach of any rule shall, where no other
penalty is provided by the Act, be liable to a penalty not exceeding ten thousand rupees.
132A. General power to make Regulations
(1) The Board or the Commissioner SGST may make regulations consistent with this Act
and rules, generally to carry out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing powers, such
regulations may provide for all or any of the following matters namely-
(a) …..
(b) ……..
(c) ………
133. Delegation of powers
The Competent Authority may, by notification in the Gazette direct that subject to such
conditions, if any, as may be specified in the notification, any power exercisable by any
authority or officer under the Act may be exercisable also by another authority or officer
as may be specified in such notification.
134. Instructions to GST Officers
The Competent Authority may, if it considers it necessary or expedient so to do for the
purpose of uniformity in the implementation of the Act, issue such orders, instructions or
directions to the GST Officers as it may deem fit, and thereupon all GST officers and all
other persons employed in the execution of the Act shall observe and follow such orders,
instructions or directions:
Provided that no such orders, instructions or directions shall be issued—
a) so as to require any GST Officer to make a particular assessment or to dispose of a
particular case in a particular manner; or
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b) so as to interfere with the discretion of the First Appellate Authority in the exercise
of his appellate functions.
135. Removal of difficulties
(1) If any difficulty arises in giving effect to any provision of the Act, the Central
Government / State Government may, by general or special order published in
the Gazette, do anything not inconsistent with the provisions of the Act which appears to
it to be necessary or expedient for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiry of a period of two years from
the date of effect of the provision giving rise to the difficulty.
(2) Every order made under this section shall be laid, as soon as may be, after it is
made, before Parliament / State Legislature.
136. Service of notice in certain circumstances
(1) Any decision, order, summons, notice or other communication under the Act or the
rules made thereunder shall be served by any one of the following methods, namely: –
(a) by giving or tendering it directly or by a messenger including a courier to the
addressee or the taxpayer or to his manager or to agent duly authorized or an advocate
or a tax practitioner holding authority to appear in the proceeding on behalf of the
taxpayer or to a person regularly employed by him in connection with the business, or to
any adult member of family residing with the taxpayer, or
(b) by post or courier with acknowledgement due, to the person for whom it is
intended or his authorised agent, if any at his last known place of business or residence,
or
(c) by facsimile message, if such address is furnished, or
(d) by sending a communication to his e-mail address, or
(e) on dashboard of the taxpayer if available on the web-site, or
(f) by sending a message on his registered mobile number, or
(g) by publication in a newspaper circulating in the locality in which the taxpayer or
the person to whom it is issued is last known to have resided, carried on business or
personally worked for gain, or
(h) if none of the modes aforesaid is practicable, by affixing it in some conspicuous
place at his last known place of business or residence, or
(i) if the mode prescribed under (h) is also not practicable for any reason, then by
affixing a copy thereof on the notice board of the officer or authority who or which
passed such decision or order or issued such summons or notice.
(2) Every decision, order, summons, notice or any communication shall be deemed to
have been served on the date on which it is tendered or published or a copy thereof is
affixed in the manner provided in sub-section (1).
(3) When such decision, order, summons, notice or any communication is sent by
registered post, it shall be deemed to have been received by the addressee at the expiry
of the period normally taken by a registered letter in transit unless the contrary is
proved.
137. Rounding off of tax etc.
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The amount of tax, interest, penalty, fine or any other sum payable, and the amount of
refund or any other sum due, under the provisions of the Act shall be rounded off to the
nearest rupee and, for this purpose, where such amount contains a part of a rupee
consisting of paise then, if such part is fifty paise or more, it shall be increased to one
rupee and if such part is less than fifty paise it shall be ignored.
138. Effect of amendments, etc., of rules, notifications or orders
Where any rule, notification or order made or issued under the Act or any notification or
order issued under such rule, is amended, repealed, superseded or rescinded, then,
unless a different intention appears, such amendment, repeal, supersession or rescinding
shall not –
(a) revive anything not in force or existing at the time at which the amendment,
repeal, supersession or rescinding takes effect; or
(b) affect the previous operation of any rule, notification or order so amended,
repealed, superseded or rescinded or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred
under any rule, notification or order so amended, repealed, superseded or rescinded; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence
committed under or in violation of any rule, notification or order so amended, repealed,
superseded or rescinded; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such
investigation, legal proceeding or remedy may be instituted, continued or enforced and
any such penalty, forfeiture or punishment may be imposed as if the rule, notification or
order, as the case may be, had not been amended, repealed, superseded or rescinded.
139. Publication of rules and notifications and laying of rules before
Parliament / State Legislature
(1) All rules made and notifications issued under the Act shall be published in the Official
Gazette.
(2) Every rule made under the Act, every notification issued under section —–, section
—-, section —– and section —– (depending on the final full draft) and every order
made under section —–, section —-, section —– and section —– (depending on the
final full draft), other than an order relating to goods or services or both of strategic,
secret, individual or personal nature, shall be laid, as soon as may be after it is made or
issued, before Parliament / State Legislature, while it is in session, for a total period of
thirty days which may be comprised in one session, or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, Parliament / State Legislature agree in making any
modification in the rule or notification or order, or Parliament / State Legislature agree
that the rule should not be made or notification or order should not be issued or made,
the rule or notification or order shall thereafter have effect only in such modified form or
be of no effect, as the case may be; so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously done under
that rule or notification or order.
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CHAPTER– XXIV
REPEAL AND SAVING
140. Repeal and saving
(1) From the date of commencement of the Act, the (State) General Sales Tax/Value
Added Tax Act, the Central Excise Act 1944, and the Central Excise Tariff Act 1985 shall
apply only in respect of goods included in the entry 84 and entry 54 of the Union List and
the State List respectively, of the Schedule VII to the Constitution of India.
Provided that the aforesaid restriction of the application of the statutes referred above
shall not—
(a) Revive anything not in force or existing at the time at which the restriction takes
effect; or
(b) Affect the previous operation of the unrestricted Acts or anything duly done or
suffered thereunder; or
(c) Affect any right, privilege, obligation, or liability acquired, accrued or incurred
under the unrestricted Acts; or
(d) Affect any tax, surcharge, penalty, interest as are due or may become due or any
forfeiture or punishment incurred or inflicted in respect of any offence or violation
committed under the provisions of the unrestricted Acts; or
(e) Affect any investigation, enquiry, assessment proceeding, any other legal
proceeding or remedy in respect of any such tax, surcharge, penalty, interest, right,
privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such
investigation, enquiry, assessment proceeding, other legal proceeding or remedy may be
instituted, continued or enforced, and any such tax, surcharge, penalty, interest,
forfeiture or punishment may be levied or imposed as if these Acts had not been so
restricted.
(f) Affect any proceeding including that relating to an appeal, revision, review
or reference, instituted before the appointed day under the earlier law and such
proceeding shall be continued under the earlier law as if this Act had not come
into force and the said law had not been repealed.
(2) The following Acts are hereby repealed, to the extent mentioned hereunder,
namely:- (as per the taxes subsumed under GST …………….)
(a) The Entry Tax Act,……………………
(b) The Entertainment Tax, ……………………
(c) The Luxury Tax Act, ……………………
(d) Duty of Excise on Medicinal and Toilet Preparation Act, …………
(e) Chapter V of the Finance Act, 1994.
(3) The repeals referred to in sub-section (2) shall not—
(a) Revive anything not in force or existing at the time at which the repeal takes
effect; or
(b) Affect the previous operation of the repealed Acts or anything duly done or
suffered thereunder; or
(c) Affect any right, privilege, obligation, or liability acquired, accrued or incurred
under the repealed Acts; or
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(d) Affect any tax, surcharge, penalty, interest as are due or may become due or any
forfeiture or punishment incurred or inflicted in respect of any offence or violation
committed under the provisions of the repealed Acts; or
(e) Affect any investigation, enquiry, assessment proceeding, any other legal
proceeding or remedy in respect of any such tax, surcharge, penalty, interest, right,
privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such
investigation, enquiry, assessment proceeding, other legal proceeding or remedy may be
instituted, continued or enforced, and any such tax, surcharge, penalty, interest,
forfeiture or punishment may be levied or imposed as if these Acts had not been
enacted.
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CHAPTER XXV
TRANSITIONAL PROVISIONS
141. General provisions
Notwithstanding anything contained elsewhere in the Act and until specifically so or
otherwise prescribed or notified or done in accordance with the provisions of the Act,
(a) All persons appointed by the respective Governments for discharging various
functions under the Central/State laws relating to taxes on goods or services (which are
being subsumed in GST) and continuing in office on the appointed day, shall be deemed
to have been appointed as GST officers/Competent Authorities under the respective
provisions of the Act.
(b) The Central Government (or the State Government) may issue orders or make rules
consistent with the need for smooth transition to GST including the need to take care of
matters not specifically covered hereinbefore so long as such matters are not in conflict
with the purposes of the Act.
142. Migration of existing taxpayers to GST
(1) On the appointed day, every person registered under any of the earlier laws shall
be issued a certificate of registration on a provisional basis in such form and
manner as may be prescribed.
(2) The certificate of registration issued under sub-section (1) shall be valid for a
period of six months from the date of its issue:
Provided that the said validity period may be extended for such further period as
the Central/State Government may, on the recommendation of the Council, notify.
(3) Every person to whom a certificate of registration has been issued under subsection
(1) shall, within the period specified under sub-section (2), furnish such
information as may be prescribed.
(4) On furnishing of such information, the certificate of registration issued under subsection
(1) shall, subject to the provisions of section 19, be granted on a final basis
by the Central/State Government.
(5) The certificate of registration issued to a person under sub-section (1) may be
cancelled if such person fails to furnish, within the time specified under sub-section
(2), the information prescribed under sub-section (3).
(6) The certificate of registration issued to a person under sub-section (1) shall be
deemed to have not been issued if the said registration is cancelled in pursuance of
an application filed by such person that he was not liable to registration under
section 19.
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143. Amount of CENVAT credit carried forward in a return to be allowed
as input tax credit
(1) A registered taxable person shall be entitled to take, in his electronic credit ledger,
credit of the amount of cenvat credit carried forward in a return, furnished under the
earlier law by him, in respect of the period ending with the day immediately preceding
the appointed day in such manner as may be prescribed:
Provided that the taxable person shall not be allowed to take credit unless the said
amount was admissible as cenvat credit under the earlier law and is also admissible as
input tax credit under this Act.
(2) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(CGST Law)
(1) A registered taxable person shall be entitled to take, in his electronic credit ledger,
credit of the amount of Value Added Tax carried forward in a return, furnished under the
earlier law by him, in respect of the period ending with the day immediately preceding
the appointed day in such manner as may be prescribed:
Provided that the taxable person shall not be allowed to take credit unless the said
amount was admissible as credit of input tax under the earlier law and is so admissible
under this Act.
(2) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(SGST Law)
144. Unavailed cenvat credit on capital goods, not carried forward in a return,
to be allowed in certain situations
(1) A registered taxable person shall be entitled to take, in his electronic credit ledger,
credit of the unavailed cenvat credit in respect of capital goods, not carried forward in a
return, furnished under the earlier law by him, for the period ending with the day
immediately preceding the appointed day in such manner as may be prescribed:
Provided that the taxable person shall not be allowed to take credit unless the said credit
was admissible as cenvat credit under the earlier law and is also admissible as input tax
credit under this Act:
Explanation 1.- For the purposes of this section, the expression “unavailed cenvat
credit” means the amount that remains after subtracting the amount of cenvat credit
Page 135 of 190
already availed in respect of capital goods by the taxable person under the earlier law
from the aggregate amount of cenvat credit to which the said person was entitled in
respect of the said capital goods under the earlier law.
Explanation 2.- Capital goods means the goods as defined under clause (a) of rule 2 of
CENVAT Credit Rules, 2004.
(2) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(CGST Law)
(1) A registered taxable person shall be entitled to take, in his electronic credit ledger,
credit of the unavailed input tax credit in respect of capital goods, not carried forward in
a return, furnished under the earlier law by him, for the period ending with the day
immediately preceding the appointed day in such manner as may be prescribed :
Provided that the taxable person shall not be allowed to take credit unless the said credit
was admissible as input tax credit under the earlier law and is so admissible under this
Act:
Explanation.- For the purposes of this section, the expression “unavailed input tax credit”
means the amount that remains after subtracting the amount of input tax credit already
availed in respect of capital goods by the taxable person under the earlier law from the
aggregate amount of input tax credit to which the said person was entitled in respect of
the said capital goods under the earlier law.
(2) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(SGST Law)
145. Credit of eligible duties and taxes in respect of inputs held in stock to be
allowed in certain situations
(1) A registered taxable person, who was not liable to be registered under the earlier law
or who was engaged in the manufacture of exempted goods under the earlier law but
which are liable to tax under this Act, shall be entitled to take, in his electronic credit
ledger, credit of eligible duties and taxes in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock on the appointed day subject
to the following conditions:
(i) such inputs and / or goods are used or intended to be used for making taxable
supplies under this Act;
Page 136 of 190
(ii) the said taxable person was eligible for cenvat credit on receipt of such inputs and/or
goods under the earlier law but for his not being liable for registration or the goods
remaining exempt under the said law;
(iii) the said taxable person is eligible for input tax credit under this Act;
(iv) the said taxable person is in possession of invoice and/or other prescribed
documents evidencing payment of duty / tax under the earlier law in respect of inputs
held in stock and inputs contained in semi-finished or finished goods held in stock on the
appointed day; and
(v) such invoices and /or other prescribed documents were issued not earlier than twelve
months immediately preceding the appointed day.
(2) The amount of credit under sub-section (1) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
(3) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
Explanation.— For the purpose of this section and section 146, the expression “eligible
duties and taxes” means-
(i) the duty of excise specified in the First Schedule to the Central Excise Tariff Act,
1985(5 of 1986);
(ii) the duty of excise specified in the Second Schedule to the Central Excise Tariff
Act, 1985(5 of 1986);
(iii) the additional duty of excise leviable under section 3 of the Additional Duties of
Excise (Textile and Textile Articles) Act, 1978 (40 of 1978);
(iv) the additional duty of excise leviable under section 3 of the Additional Duties of
Excise (Goods of Special Importance) Act, 1957(58 of 1957);
(v) the National Calamity Contingent Duty leviable under section 136 of the Finance
Act, 2001(14 of 2001);
(vi) the additional duty leviable under sub-section (1) of section 3 of the Customs
Tariff Act, 1975 (51 of 1975);
(vii) the additional duty leviable under sub-section (5) of section 3 of the Customs
Tariff Act, 1975 (51 of 1975); and
(viii) the service tax leviable under section 66B of the Finance Act, 1994 (32 of
1994);—
in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the appointed day.
Page 137 of 190
(CGST Law)
(1) A registered taxable person, who was not liable to be registered under the earlier law
or who was engaged in the sale of exempted goods under the earlier law but which are
liable to tax under this Act, shall be entitled to take, in his electronic credit ledger, credit
of the Value Added Tax in respect of inputs held in stock and inputs contained in semifinished
or finished goods held in stock on the appointed day subject to the following
conditions:
(i) such inputs and / or goods are used or intended to be used for making taxable
supplies under this Act;
(ii) the said taxable person was eligible for input tax credit on purchase of such inputs
and/or goods under the earlier law but for his not being liable for registration or the
goods remaining exempt under the said law;
(iii) the said taxable person is eligible for input tax credit under this Act;
(iv) the said taxable person is in possession of invoice and/or other prescribed
documents evidencing payment of tax under the earlier law in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock on the
appointed day; and
(v) such invoice and /or other prescribed documents were issued not earlier than twelve
months immediately preceding the appointed day.
(2) The amount of credit under sub-section (1) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
(3) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(SGST Law)
146. Credit of eligible duties and taxes on inputs held in stock to be
allowed to a taxable person switching over from composition scheme
(1) A registered taxable person, who was either paying tax at a fixed rate or paying a
fixed amount in lieu of the tax payable under the earlier law (hereinafter referred to in
this section as a “composition taxpayer”), shall be entitled to take, in his electronic credit
ledger, credit of eligible duties and taxes in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock on the appointed date subject
to the following conditions:
(i) such inputs and / or goods are used or intended to be used for making taxable
supplies under this Act;
(ii) the said person is not paying tax under section 8;
Page 138 of 190
(iii) the said taxable person was eligible for cenvat credit on receipt of such inputs and/or
goods under the earlier law but for his being a composition taxpayer under the said law;
(iv) the said taxable person is eligible for input tax credit under this Act;
(v) the said taxable person is in possession of invoice and/or other prescribed documents
evidencing payment of duty / tax under the earlier law in respect of inputs held in stock
and inputs contained in semi- finished or finished goods held in stock on the appointed
day; and
(vi) such invoices and /or other prescribed documents were issued not earlier than
twelve months immediately preceding the appointed day.
(2) The amount of credit under sub-section (1) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
(3) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(CGST Law)
(1) A registered taxable person, who was either paying tax at a fixed rate or paying a
fixed amount in lieu of the tax payable under the earlier law (hereinafter referred to in
this section as a “composition taxpayer”), shall be entitled to take, in his electronic credit
ledger, credit of Value Added Tax in respect of inputs held in stock and inputs contained
in semi-finished or finished goods held in stock on the appointed date subject to the
following conditions:
(i) such inputs and / or goods are used or intended to be used for making taxable
supplies under this Act;
(ii) the said person is not paying tax under section 8;
(iii) the said taxable person was eligible to claim input tax credit on purchase of such
inputs and/or goods under the earlier law but for his being a composition taxpayer
under the said law;
(iv) the said taxable person is eligible for input tax credit under this Act;
(v) the said taxable person is in possession of invoice and/or other prescribed documents
evidencing payment of tax under the earlier law in respect of inputs held in stock and
inputs contained in semi- finished or finished goods held in stock on the appointed day;
and
(vi) such invoices and /or other prescribed documents were issued not earlier than
twelve months immediately preceding the appointed day.
Page 139 of 190
(2) The amount of credit under sub-section (1) shall be calculated in accordance with
generally accepted accounting principles in such manner as may be prescribed.
(3) The amount taken as credit under sub-section (1) shall be recovered as an arrear of
tax under this Act from the taxable person if the said amount is found to be recoverable
as a result of any proceeding instituted, whether before or after the appointed day,
against such person under the earlier law.
(SGST Law)
147. Amount payable in the event of a taxable person switching over to
composition scheme
(1) Where a taxable person who has carried forward the amount of eligible credit in a
return, furnished under the earlier law, in respect of the period ending with the day
immediately preceding the appointed day, switches over to the composition scheme
under section 8, he shall pay an amount, by way of debit in the electronic credit ledger
or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or finished goods held in stock on the day
immediately preceding the date of such switch over:
Provided that after payment of such amount, the balance of input tax credit, if any lying
in his electronic credit ledger shall lapse.
(CGST Law)
(1) Where a taxable person who has carried forward the amount of eligible credit on
account of Value Added Tax in a return, furnished under the earlier law, in respect of
the period ending with the day immediately preceding the appointed day, switches over
to the composition scheme under section 8, he shall pay an amount, by way of debit in
the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax
in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the date of such switch over:
Provided that after payment of such amount, the balance of input tax credit, if any lying
in his electronic credit ledger shall lapse.
(SGST Law)
148. Exempted goods returned to the place of business on or after the
appointed day
Where any goods on which duty had been exempt under the earlier law at the
time of removal thereof, not being earlier than six months prior to the appointed
day, are returned to any place of business on or after the appointed day, no tax
shall be payable thereon if such goods are returned to the said place of business
within a period of six months from the appointed day and such goods are
identifiable to the satisfaction of the proper officer:
Provided that tax shall be payable by the person returning the goods if the said
goods are liable to tax under this Act and are returned after a period of six
months from the appointed day.
(CGST Law)
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Where any goods on which tax had been exempt under the earlier law at the time
of sale thereof, not being earlier than six months prior to the appointed day, are
returned to any place of business on or after the appointed day, no tax shall be
payable thereon if such goods are returned to the said place of business within a
period of six months from the appointed day and such goods are identifiable to
the satisfaction of the proper officer:
Provided that tax shall be payable by the person returning the goods if the said
goods are liable to tax under this Act and are returned after a period of six
months from the appointed day.
149. Duty paid goods returned to the place of business on or after the
appointed day
(1) Where any goods on which duty had been paid under the earlier law at the
time of removal thereof, not being earlier than six months prior to the appointed
day, are returned to any place of business on or after the appointed day, no tax
shall be payable thereon if such goods are returned to the said place of business
within a period of six months from the appointed day and such goods are
identifiable to the satisfaction of the proper officer:
Provided that tax shall be payable by the taxable person returning the goods if the
said goods are liable to tax under this Act and are returned after a period of six
months from the appointed day.
(2) Every taxable person who receives such goods within a period of six months
shall be entitled to take credit of the duty paid earlier at the time of removal.
(CGST Law)
(1) Where any goods on which tax had been paid under the earlier law at the time
of sale thereof, not being earlier than six months prior to the appointed day, are
returned to the supplier thereof on or after the appointed day, no tax shall be
payable thereon if such goods are returned to the said supplier within a period of
six months from the appointed day and such goods are identifiable to the
satisfaction of the proper officer:
Provided that tax shall be payable by the person returning the goods if the said
goods are liable to tax under this Act and are returned after a period of six
months from the appointed day.
(2) Every taxable person who receives such goods within a period of six months
shall be entitled to take credit of the tax paid earlier at the time of sale.
(SGST Law)
Page 141 of 190
150. Inputs removed for job work and returned on or after the appointed
day
(1) Where any inputs received in a factory had been removed as such or removed
after being partially processed to a job worker for further processing, testing,
repair, reconditioning or any other purpose in accordance with the provisions of
earlier law prior to the appointed day and such inputs, after completion of the job
work, are returned to the said factory on or after the appointed day, no tax shall
be payable if such inputs are returned to the said factory within six months from
the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Provided further that tax shall be payable by the job worker if such inputs are
liable to tax under this Act, and are returned after a period of six months or the
extended period, as the case may be, from the appointed day:
Provided also that tax shall be payable by the manufacturer if such inputs are
liable to tax under this Act, and are not returned within a period of six months or
the extended period , as the case may be, from the appointed day.
(2) The provisions of sub-section (1) shall apply only if the manufacturer and the
job worker declare the details of the inputs held in stock by the job worker on
behalf of the manufacturer on the appointed day in such form and manner and
within such time as may be prescribed.
(CGST Law)
(1) Where any inputs received at a place of business had been despatched as such
or despatched after being partially processed to a job worker for further
processing, testing, repair, reconditioning or any other purpose in accordance with
the provisions of earlier law prior to the appointed day and such inputs, after
completion of the job work, are returned to the said place of business on or after
the appointed day, no tax shall be payable if such inputs are returned to the said
place of business within six months from the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Provided further that tax shall be payable by the job worker if such inputs are
liable to tax under this Act, and are returned after a period of six months or the
extended period, as the case may be, from the appointed day:
Page 142 of 190
Provided also that tax shall be payable by the person despatching the inputs if
such inputs are liable to tax under this Act, and are not returned within a period of
six months or the extended period, as the case may be, from the appointed day.
(2) The provisions of sub-section (1) shall apply only if the person despatching the
inputs and the job worker declare the details of the goods held in stock by the job
worker on behalf of the said person on the appointed day in such form and
manner and within such time as may be prescribed.
(SGST Law)
151. Semi-finished goods removed for job work and returned on or after
the appointed day
(1) Where any semi-finished goods had been removed from the factory to any
other premises for carrying out certain manufacturing processes in accordance
with the provisions of earlier law prior to the appointed day and such goods after
undergoing manufacturing processes (herein after referred to as “the said goods”)
are returned to the said factory on or after the appointed day, no tax shall be
payable if the said goods are returned to the said factory within six months from
the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Provided further that tax shall be payable by the person returning the said goods
if such goods are liable to tax under this Act and are returned after a period of six
months or the extended period, as the case may be, from the appointed day:
Provided also that tax shall be payable by the manufacturer if such goods are
liable to tax under this Act, and are not returned within a period of six months or
the extended period, as the case may be, from the appointed day:
Provided also that the manufacturer may, in accordance with the provisions of the
earlier law, transfer the said goods to the premises of any registered taxable
person for the purpose of supplying therefrom on payment of tax in India or
without payment of tax for exports within six months or the extended period, as
the case may be, from the appointed day.
(2) The provisions of sub-section (1) shall apply only if the manufacturer and the
job-worker declare the details of the goods held in stock by the job-worker on
behalf of the manufacturer on the appointed day in such form and manner and
within such time as may be prescribed.
(CGST Law)
(1) Where any semi-finished goods had been despatched from the place of
business to any other premises for carrying out certain manufacturing processes
in accordance with the provisions of earlier law prior to the appointed day and
such goods after undergoing manufacturing processes (herein after referred to as
the “said goods”) are returned to the said place of business on or after the
Page 143 of 190
appointed day, no tax shall be payable if the said goods are returned to such place
within six months from the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Provided further that tax shall be payable by the person returning the said goods
if such goods are liable to tax under this Act and are returned after a period of six
months or the extended period, as the case may be, from the appointed day:
Provided also that tax shall be payable by the person despatching the goods if
such goods are liable to tax under this Act, and are not returned to him within a
period of six months or the extended period, as the case may be, from the
appointed day:
Provided also that the person despatching the goods may, in accordance with the
provisions of the earlier law, transfer the said goods to the premises of any
registered taxable person for the purpose of supplying therefrom on payment of
tax in India or without payment of tax for exports within six months or the
extended period, as the case may be, from the appointed day.
(2) The provisions of sub-section (1) shall apply only if the person despatching the
goods and the job worker declare the details of the goods held in stock by the job
worker on behalf of the said person on the appointed day in such form and
manner and within such time as may be prescribed.
(SGST Law)
152. Finished goods removed for carrying out certain processes and
returned on or after the appointed day
Where any excisable goods manufactured in a factory had been removed without
payment of duty for carrying out tests or any other process not amounting to
manufacture, to any other premises, whether registered or not, in accordance
with the provisions of earlier law prior to the appointed day and such goods, after
undergoing tests or any other process (herein after referred to as the “said
goods”) are returned to the said factory on or after the appointed day, no tax shall
be payable if the said goods are returned to the said factory within six months
from the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period of two
months:
Provided further that tax shall be payable by the person returning the said goods
if such goods are liable to tax under this Act and are returned after a period of six
months or the extended period, as the case may be, from the appointed day:
Provided also that the manufacturer may, in accordance with the provisions of the
earlier law, transfer the said goods from the said other premises on payment of
Page 144 of 190
tax in India or without payment of tax for exports within six months or the
extended period, as the case may be, from the appointed day.
(CGST Law)
Where any goods had been despatched from the place of business without
payment of tax for carrying out tests or any other process, to any other premises,
whether registered or not, in accordance with the provisions of earlier law prior to
the appointed day and such goods, after undergoing tests or any other process
(herein after referred to as the “said goods”) are returned to the said place of
business on or after the appointed day, no tax shall be payable if the said goods
are returned to such place within six months from the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Provided further that tax shall be payable by the person returning the said goods
if such goods are liable to tax under this Act and are returned after a period of six
months or the extended period, as the case may be, from the appointed day:
Provided also that the person despatching the goods may, in accordance with the
provisions of the earlier law, transfer the said goods from the said other premises
on payment of tax in India or without payment of tax for exports within six
months or the extended period, as the case may be, from the appointed day.
(SGST Law)
153. Issue of supplementary invoices, debit or credit notes where price is
revised in pursuance of a contract
(1) Where, in pursuance of a contract entered into prior to the appointed day, the
price of any goods and/or services is revised upwards on or after the appointed
day, the taxable person who had removed / provided such goods and/or services
may issue to the recipient a supplementary invoice or debit note, containing such
particulars as may be prescribed, within thirty days of such price revision and for
the purposes of this Act such supplementary invoice or debit note shall be deemed
to have been issued in respect of an outward supply made under this Act.
(CGST Law)
(1) Where, in pursuance of a contract entered into prior to the appointed day, the
price of any goods is revised upwards on or after the appointed day, the taxable
person who had sold such goods may issue to the recipient a supplementary
invoice or debit note, containing such particulars as may be prescribed, within
thirty days of such price revision and for the purposes of this Act such
supplementary invoice or debit note shall be deemed to have been issued in
respect of an outward supply made under this Act.
(SGST Law)
Page 145 of 190
(2) Where, in pursuance of a contract entered into prior to the appointed day, the
price of any goods and/or services is revised downwards on or after the appointed
day, the taxable person who had removed / provided such goods and/or services
may issue to the recipient a supplementary invoice or credit note, containing such
particulars as may be prescribed, within thirty days of such price revision and for
the purposes of this Act such supplementary invoice or credit note shall be
deemed to have been issued in respect of an outward supply made under this Act:
Provided that the taxable person shall be allowed to reduce his tax liability on
account of issue of the said invoice or credit note only if the recipient of the
invoice or credit note has reduced his input tax credit corresponding to such
reduction of tax liability.
(CGST Law)
(2) Where, in pursuance of a contract entered into prior to the appointed day, the
price of any goods is revised downwards on or after the appointed day, the
taxable person who had sold such goods may issue to the recipient a
supplementary invoice or credit note, containing such particulars as may be
prescribed, within thirty days of such price revision and for the purposes of this
Act such supplementary invoice or credit note shall be deemed to have been
issued in respect of an outward supply made under this Act:
Provided that the taxable person shall be allowed to reduce his tax liability on
account of issue of the said invoice or credit note only if the recipient of the
invoice or credit note has reduced his input tax credit corresponding to such
reduction of tax liability.
(SGST Law)
154. Pending refund claims to be disposed of under earlier law
Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax
or any other amount, filed by any person before the appointed day, shall be
disposed of in accordance with the provisions of earlier law and any amount
eventually accruing to him shall be paid in cash, notwithstanding anything to the
contrary contained under the provisions of earlier law other than the provisions of
sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944):
Provided that where any claim for refund is fully or partially rejected, the amount
so rejected shall lapse.
(CGST Law)
Every claim for refund of any tax and interest, if any, paid on such tax or any
other amount, filed by any person before the appointed day, shall be disposed of
in accordance with the provisions of earlier law and any amount eventually
accruing to him shall be refunded to him in accordance with the provisions of the
said law:
Page 146 of 190
Provided that where any claim for refund is fully or partially rejected, the amount
so rejected shall lapse.
(SGST Law)
155. Claim of cenvat credit to be disposed of under the earlier law
(1) Every proceeding of appeal, revision, review or reference relating to a claim
for CENVAT credit under the earlier law shall be disposed of in accordance with the
provisions of earlier law, and any amount of credit found to be admissible to the
claimant shall be refunded to him in cash, notwithstanding anything to the
contrary contained under the provisions of earlier law other than the provisions of
sub-section (2) of section 11B of the Central Excise Act, 1944 and shall not be
admissible as input tax credit under this Act.
(CGST Law)
(2)Every proceeding of appeal, revision, review or reference relating to recovery
of CENVAT credit under the earlier law shall be disposed of in accordance with the
provisions of earlier law, and if any amount of credit becomes recoverable as a
result of appeal, revision, review or reference, the same shall be recovered as an
arrear of tax under this Act and the amount so recovered shall not be admissible
as input tax credit under this Act.
(CGST Law)
(1) Every proceeding of appeal, revision, review or reference relating to a claim
for input tax credit under the earlier law shall be disposed of in accordance with
the provisions of earlier law, and any amount of credit found to be admissible to
the claimant shall be refunded to him in accordance with the provisions of the
earlier law and shall not be admissible as input tax credit under this Act.
(SGST Law)
(2) Every proceeding of appeal, revision, review or reference relating to recovery
of input tax credit under the earlier law shall be disposed of in accordance with the
provisions of earlier law, and if any amount of credit becomes recoverable as a
result of appeal, revision, review or reference, the same shall be recovered as an
arrear of tax under this Act and the amount so recovered shall not be admissible
as input tax credit under this Act.
(SGST Law)
156. Finalization of proceedings relating to output duty liability
(1) Every proceeding of appeal, revision, review or reference relating to any
output duty liability initiated before the appointed day, shall be disposed of in
accordance with the provisions of the earlier law, and if any amount becomes
recoverable as a result of such appeal, revision, review or reference, the same
shall be recovered as an arrear of tax under this Act and amount so recovered
shall not be admissible as input tax credit under this Act.
Page 147 of 190
(2)Every proceeding of appeal, revision, review or reference relating to any output
duty liability initiated before the appointed day, shall be disposed of in accordance
with the provisions of the earlier law, and any amount found to be admissible to
the claimant shall be refunded to him in cash, notwithstanding anything to the
contrary contained under the provisions of earlier law other than the provisions of
sub-section (2) of section 11B of the Central Excise Act, 1944and shall not be
admissible as input tax credit under this Act.
(CGST Law)
(1) Every proceeding of appeal, revision, review or reference relating to any
output tax liability initiated before the appointed day, shall be disposed of in
accordance with the provisions of the earlier law, and if any amount becomes
recoverable as a result of such appeal, revision, review or reference, the same
shall be recovered as an arrear of tax under this Act and amount so recovered
shall not be admissible as input tax credit under this Act.
(2) Every proceeding of appeal, revision, review or reference relating to any
output tax liability initiated before the appointed day, shall be disposed of in
accordance with the provisions of the earlier law, and any amount found to be
admissible to the claimant shall be refunded to him in accordance with the
provisions of the earlier law and shall not be admissible as input tax credit under
this Act.
(SGST Law)
157. Treatment of the amount recovered or refunded in pursuance of
assessment or adjudication proceedings
(1) Where in pursuance of an assessment or adjudication proceedings
instituted, whether before or after the appointed day, under the earlier law, any
amount of tax, interest, fine or penalty becomes recoverable from the taxable
person, the same shall be recovered as an arrear of tax under this Act and the
amount so recovered shall not be admissible as input tax credit under this Act.
(CGST Law)
(1) Where in pursuance of an assessment proceedings instituted, whether before
or after the appointed day, under the earlier law, any amount of tax, interest, fine
or penalty becomes recoverable from the taxable person, the same shall be
recovered as an arrear of tax under this Act and the amount so recovered shall
not be admissible as input tax credit under this Act.
(SGST Law)
(2) Where in pursuance of an assessment or adjudication proceedings
instituted, whether before or after the appointed day, under the earlier law, any
amount of tax, interest, fine or penalty becomes refundable to the taxable person,
the same shall be refunded to him in cash under the earlier law, notwithstanding
anything to the contrary contained in the said law other than the provisions of
sub-section (2) of section 11B of the Central Excise Act, 1944.
(CGST Law)
Page 148 of 190
(2) Where in pursuance of an assessment proceedings instituted, whether
before or after the appointed day, under the earlier law, any amount of tax,
interest, fine or penalty becomes refundable to the taxable person, the same shall
be refunded to him in accordance with the provisions of earlier law.
(SGST Law)
158. Treatment of the amount recovered or refunded pursuant to revision
of returns
(1) Where any return, furnished under the earlier law, is revised and if,
pursuant to such revision, any amount is found to be recoverable from the taxable
person, the same shall be recovered as an arrear of tax under this Act and the
amount so recovered shall not be admissible as input tax credit under this Act.
(CGST Law)
(1) Where any return, furnished under the earlier law, is revised and if,
pursuant to such revision, any amount is found to be recoverable from the taxable
person, the same shall be recovered as an arrear of tax under this Act and the
amount so recovered shall not be admissible as input tax credit under this Act.
(SGST Law)
(2) Where any return, furnished under the earlier law, is revised and if,
pursuant to such revision, any amount is found to be refundable to any taxable
person, the same shall be refunded to him in cash under the earlier law,
notwithstanding anything to the contrary contained in the said law other than the
provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.
(CGST Law)
(2) Where any return, furnished under the earlier law, is revised and if,
pursuant to such revision, any amount is found to be refundable to any taxable
person, the amount shall be refunded to the said person in accordance with the
provisions of the earlier law.
(SGST Law)
159. Treatment of long term construction / works contracts
The goods and/or services supplied on or after the appointed day in pursuance of
a contract entered into prior to the appointed day shall be liable to tax under the
provisions of this Act.
(CGST Law)
The goods and/or services supplied on or after the appointed day in pursuance of
a contract entered into prior to the appointed day shall be liable to tax under the
provisions of this Act.
(SGST Law)
Page 149 of 190
160. Progressive or periodic supply of goods or services
Notwithstanding anything contained in section 12 and 13, no tax shall be payable
on the supply of goods and/or services made on or after the appointed day if the
consideration for the said supply has been received prior to the appointed day and
the duty or tax payable thereon has already been paid under the earlier law.
(CGST Law)
Notwithstanding anything contained in section 12 and 13, no tax shall be payable
on the supply of goods and/or services made on or after the appointed day if the
consideration for the said supply has been received prior to the appointed day and
the duty or tax payable thereon has already been paid under the earlier law.
(SGST Law)
161. Treatment of retention payments
Notwithstanding anything contained in section 12 and 13, no tax shall be payable
on the supply of goods and/or services made before the appointed day where a
part consideration for the said supply is received on or after the appointed day,
but the full duty or tax payable on such supply has already been paid under the
earlier law.
(CGST Law)
Notwithstanding anything contained in section 12 and 13, no tax shall be payable
on the supply of goods and/or services made before the appointed day where a
part consideration for the said supply is received on or after the appointed day,
but the full duty or tax payable on such supply has already been paid under the
earlier law.
(SGST Law)
162. Credit distribution of service tax by ISD
Notwithstanding anything to the contrary contained in this Act, the input tax credit
on account of any services received prior to the appointed day by an Input Service
Distributor shall be eligible for distribution as credit under this Act even if the
invoice(s) relating to such services is received on or after the appointed day.
(CGST Law)
162A.Tax paid on goods lying with agents to be allowed as credit
Where any goods belonging to the principal are lying at the premises of the agent
on the appointed day, the agent shall be entitled to take credit of the tax paid on
such goods subject to fulfilment of the following conditions:
Page 150 of 190
(i) the agent is a registered taxable person under this Act;
(ii) both the principal and the agent declare the details of stock of goods lying
with such agent on the date immediately preceding the appointed dayin such
form and manner and within such time as may be prescribed in this behalf;
(iii) the invoices for such goods had been issued not earlier than twelve months
immediately preceding the appointed day; and
(iv) the principal has either reversed or not availed of the input tax credit in
respect of such goods.
(Only in SGST Law)
162B. Tax paid on capital goods lying with agents to be allowed as credit
Where any capital goods belonging to the principal are lying at the premises of the
agent on the appointed day, the agent shall be entitled to take credit of the tax
paid on such capital goods subject to fulfillment of the following conditions:
(i) the agent is a registered taxable person under this Act;
(ii) both the principal and the agent declare the details of the stock of capital
goods lying with such agent on the date immediately preceding the
appointed day in such form and manner and within such time as may be
prescribed in this behalf;
(iii) the invoices for such capital goods had been issued not earlier than twelve
months immediately preceding the appointed day; and
(iv) the principal has either not availed of the input tax credit in respect of such
capital goods or, having availed of such credit, has reversed the said credit,
to the extent availed of by him.
(Only in SGST Law)
162C. Treatment of branch transfers
Notwithstanding anything to the contrary contained in this Act, any amount of
input tax credit reversed prior to the appointed day shall not be admissible as
credit of input tax under this Act.
(Only in SGST Law)
162D. Goods sent on approval basis returned on or after the appointed
day
Where any goods sent on approval basis, not earlier than six months before the
appointed day, are rejected or not approved by the buyer and returned to the
seller on or after the appointed day, no tax shall be payable thereon if such goods
are returned within six months from the appointed day:
Provided that the aforesaid period of six months may, on sufficient cause being
shown, be extended by the competent authority for a further period not exceeding
two months:
Page 151 of 190
Provided further that the tax shall be payable by the person returning the goods if
such goods are liable to tax under this Act, and are returned after a period of six
months or the extended period, as the case may be, from the appointed day:
Provided also that tax shall be payable by the person who has sent the goods on
approval basis if such goods are liable to tax under this Act, and are not returned
within a period of six months or the extended period , as the case may be, from
the appointed day.
(SGST Law)
162 E. Deduction of tax source
Where a supplier has made any sale of goods in respect of which tax was required
to be deducted at source under the earlier law and has also issued an invoice for
the same before the appointed day, no deduction of tax at source under section
37 shall be made by the deductor under the said section where payment to the
said supplier is made on or after the appointed day.
Page 152 of 190
SCHEDULE I
MATTERS TO BE TREATED AS SUPPLY WITHOUT CONSIDERATION
1. Permanent transfer/disposal of business assets.
2. Temporary application of business assets to a private or non-business use.
3. Services put to a private or non-business use.
4. Assets retained after deregistration.
5. Supply of goods and / or services by a taxable person to another taxable or nontaxable
person in the course or furtherance of business.
Provided that the supply of goods by a registered taxable person to a job-worker in
terms of section 43A shall not be treated as supply of goods.
***
Page 153 of 190
SCHEDULE II
MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES
1. Transfer
(1) Any transfer of the title in goods is a supply of goods.
(2) Any transfer of goods or of right in goods or of undivided share in goods without
the transfer of title thereof, is a supply of services.
(3) Any transfer of title in goods under an agreement which stipulates that property
in goods will pass at a future date upon payment of full consideration as agreed, is a
supply of goods.
2. Land and Building
(1) Any lease, tenancy, easement, licence to occupy land is a supply of services.
(2) Any lease or letting out of the building including a commercial, industrial or
residential complex for business or commerce, either wholly or partly, is a supply of
services.
3. Treatment or process
Any treatment or process which is being applied to another person’s goods is a
supply of services.
4. Transfer of business assets
(1) Where goods forming part of the assets of a business are transferred or disposed
of by or under the directions of the person carrying on the business so as no longer to
form part of those assets, whether or not for a consideration, such transfer or disposal is
a supply of goods by the person.
(2) Where, by or under the direction of a person carrying on a business, goods held
or used for the purposes of the business are put to any private use or are used, or made
available to any person for use, for any purpose other than a purpose of the business,
whether or not for a consideration, the usage or making available of such goods is a
supply of services.
(3) Where any goods, forming part of the business assets of a taxable person, are
sold by any other person who has the power to do so to recover any debt owed by the
taxable person, the goods shall be deemed to be supplied by the taxable person in the
course or furtherance of his business.
(4) Where any person ceases to be a taxable person, any goods forming part of the
assets of any business carried on by him 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, unless—
(a) the business is transferred as a going concern to another person; or
(b) the business is carried on by a personal representative who is deemed to
be a taxable person.
5. The following shall be treated as “supply of service”
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where the
Page 154 of 190
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or before its first occupation, whichever is earlier.
Explanation.- For the purposes of this clause-
(1) the expression “competent authority” means the Government or any authority
authorized to issue completion certificate under any law for the time being in force and
in case of non-requirement of such certificate from such authority, from any of the
following, namely:–
(i) an architect registered with the Council of Architecture constituted under the
Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or
development or planning authority;
(2) the expression “construction” includes additions, alterations, replacements or
remodeling of any existing civil structure;
(c) temporary transfer or permitting the use or enjoyment of any intellectual property
right;
(d)development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of information technology software;
(e)agreeing to the obligation to refrain from an act, or to tolerate an act or a situation,
or to do an act;
(f) works contract including transfer of property in goods (whether as goods or in some
other form) involved in the execution of a works contract;
(g) transfer of the right to use any goods for any purpose (whether or not for a specified
period) for cash, deferred payment or other valuable consideration; and
(h) supply, by way of or as part of any service or in any other manner whatsoever, of
goods, being food or any other article for human consumption or any drink (other than
alcoholic liquor for human consumption), where such supply or service is for cash,
deferred payment or other valuable consideration.
6. The following shall be treated as supply of goods
(a) supply of goods by any unincorporated association or body of persons to a member
thereof for cash, deferred payment or other valuable consideration.
Page 155 of 190
SCHEDULE III
LIABILITY TO BE REGISTERED
1. Every supplier shall be liable to be registered under this Act in the State from
where he makes a taxable supply of goods and/or services if his aggregate turnover in a
financial year exceeds [Rs nine lakh]:
1. Every supplier shall be liable to be registered under this Act in the State from
where he makes a taxable supply of goods and/or services if his aggregate turnover in a
financial year exceeds [Rs. four lakh]:
[This threshold of four lakh will apply only if the taxable person conducts his business in
any of the NE States including Sikkim.]
Provided that the supplier shall not be liable to registration if his aggregate turnover
consists of only goods and/or services which are not liable to tax under this Act.
Explanation 1.- The taxable threshold shall include all supplies made by the taxable
person, whether on his own account or made on behalf of all his principals.
Explanation 2.- The supply of goods, after completion of job-work, by a registered jobworker
shall be treated as the supply of goods by the “principal” referred to in section
43A, and the value of such goods shall not be included in the aggregate turnover of the
registered job worker.
2. Subject to the provisions of paragraph 1, every person who, on the day
immediately preceding the appointed day, is registered or holds a license under an
earlier law, shall be liable to be registered under this Act with effect from the appointed
day.
3. Where a business carried on by a taxable person registered under this Act is
transferred, whether on account of succession or otherwise, to another person as a going
concern, the transferee, or the successor, as the case may be, shall be liable to be
registered with effect from the date of such transfer or succession.
4. Notwithstanding anything contained in paragraph 1 and 2 above, in a case of
transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as
the case may be, de-merger of two or more companies by an order of a High Court, the
transferee shall be liable to be registered, where required, with effect from the date on
which the Registrar of Companies issues a certificate of incorporation giving effect to
such order of the High Court.
5. Notwithstanding anything contained in paragraph 1 and 2 above, the following
categories of persons shall be required to be registered under this Act:
(i) persons making any inter-State taxable supply, irrespective of the threshold
specified under paragraph 1;
(ii) casual taxable persons, irrespective of the threshold specified under paragraph 1;
(iii) persons who are required to pay tax under reverse charge, irrespective of the
threshold specified under paragraph 1;
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(iv) non-resident taxable persons, irrespective of the threshold specified under
paragraph 1;
(v) persons who are required to deduct tax under section 37;
(vi) persons who supply goods and/or services on behalf of other registered
taxable persons whether as an agent or otherwise, irrespective of the
threshold specified under paragraph 1;
(vii) input service distributor;
(viii) persons who supply goods and/or services, other than branded services, through
electronic commerce operator, irrespective of the threshold specified in paragraph
1;
(ix) every electronic commerce operator, irrespective of the threshold specified in
paragraph 1;
(x) an aggregator who supplies services under his brand name or his trade name,
irrespective of the threshold specified in paragraph 1; and
(xi) such other person or class of persons as may be notified by the Central
Government or a State Government on the recommendations of the Council.
***
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SCHEDULE IV
Activities or transactions in respect of which the Central Government, a State
Government or any Local Authority shall not be regarded as a taxable person
(Indicative List)
1. Services provided by a Government or local authority to another Government or
local authority excluding the following services:
(i) services by the Department of Posts by way of speed post, express parcel
post, life insurance and agency services;
(ii) services in relation to an aircraft or a vessel , inside or outside the
precincts of a port or an aircraft; or
(iii) transport of goods or passengers.
2. Services provided by a Government or local authority to individuals in discharge
of its statutory powers or functions such as-
(i) issuance of passport, visa, driving licence, birth certificate or death
certificate; and
(ii) assignment of right to use natural resources to an individual farmer for the
purpose of agriculture.
3. Services provided by a Government or local authority or a governmental authority
by way of:
(i) any activity in relation to any function entrusted to a municipality under
article 243 W of the Constitution;
(ii) any activity in relation to any function entrusted to a Panchayat under
article 243 G of the Constitution;
(iii) health care; and
(iv) education.
4. Services provided by Government towards-
(i) diplomatic or consular activities;
(ii) citizenship, naturalization and aliens;
(iii) admission into , and emigration and expulsion from India;
(iv) currency , coinage and legal tender , foreign exchange;
(v) trade and commerce with foreign countries , import and export across
customs frontiers , interstate trade and commerce; or
(vi) maintenance of public order.
5. Any services provided by a Government or a local authority in the course of
discharging any liability on account of any tax levied by such Government or authority.
6. Services provided by a Government or a local authority by way of –
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(i) tolerating non-performance of a contract for which consideration in the form of
fines or liquidated damages is payable to the Government or the local authority
under such contract; or
(ii) assignment of right to use any natural resource where such right to use was
assigned by the Government or the local authority before the 1st April, 2016:
Provided that the exemption shall apply only to service tax payable on one time charge
payable, in full upfront or in installments, for assignment of right to use such natural
resource:
Explanation.- Periodic payment required to be made not exempt.
7. Services provided by Government by way of deputing officers after office hours or
on holidays for inspection or container stuffing or such other duties in relation to
import or export of cargo on payment of Merchant Overtime Charges (MOT).
8. Services provided by Government or a local authority by way of-
(i) registration required under any law for the time being in force; or
(ii) testing, calibration, safety check or certification relating to protection or
safety of workers, consumers or public at large, required under any law for
the time being in force.
Definitions:
1. Governmental Authority means a board, or an authority or any other body
established with 90% or more participation by way of equity or control by Government
and set up by an Act of the Parliament or a State Legislature to carry out any function
entrusted to a municipality under article 243W or a Panchayat under article 243G of the
Constitution.
2. Health care services means any service by way of diagnosis or treatment or care
for illness, injury, deformity, abnormality 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 anatomy or functions of
body affected due to congenital defects, developmental abnormalities, injury or trauma.
3. Education services means 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; or
iii) education as a part of an approved vocational education course.
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GST Valuation (Determination of the Value of Supply of Goods and Services)
Rules, 2016
1. Short title, commencement and application.
(1) These rules may be called the GST Valuation (Determination of Value of Supply of
Goods and Services) Rules, 2016.
(2) These Rules shall come into force on the day the Act comes into force.
(3) They shall apply to the supply of goods and/or services under the
IGST/CGST/SGST Act.
2. Definitions
(1) In these rules, unless the context otherwise requires:
(a) “Act” means the IGST Act or the CGST Act or, as the case may be, the SGST Act;
(b) “goods of like kind and quality” means goods which are identical or similar in
physical characteristics, quality and reputation as the goods being valued, and
perform the same functions or are commercially interchangeable with the goods
being valued and supplied by the same person or by a different person;
(c) “services of like kind and quality” means services which are identical or similar in
nature, quality and reputation as the services being valued and supplied by the
same person or by a different person; and
(d) “transaction value” means the value of goods and/or services within the meaning
of section 15 of the CGST Act.
(2) Words, expressions and terms not defined in these Rules shall have the same
meaning as is assigned to them in the Act.
3. Methods of determination of value
(1) Subject to rule 7, the value of goods and/or services shall be the transaction value.
(2) The “transaction value” shall be the value determined in monetary terms.
(3) Where the supply consists of both taxable and non-taxable supply, the taxable
supply shall be deemed to be for such part of the monetary consideration as is
attributable thereto.
(4) The transaction value shall be accepted even where the supplier and recipient of
supply are related, provided that the relationship has not influenced the price.
(5) Where goods are transferred from—
(a) one place of business to another place of the same business,
(b) the principal to an agent or from an agent to the principal,
whether or not situated in the same State, the value of such supply shall be the
transaction value.
(6) The value of supplies specified in sub-section (4) of section 15 of the Act shall be
determined by proceeding sequentially through rules 4 to 6.
4. Determination of value of supply by comparison
(1) Where the value of a supply cannot be determined under rule 3, the value shall be
determined on the basis of the transaction value of goods and/or services of like kind
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and quality supplied at or about the same time to other customers, adjusted in
accordance with the provisions of sub-rule (2).
(2) In determining the value of goods and/or services under sub-rule (1), the proper
officer shall make such adjustments as appear to him reasonable, taking into
consideration the relevant factors, including-
(a) difference in the dates of supply,
(b) difference in commercial levels and quantity levels,
(c) difference in composition, quality and design between the goods and/or services
being valued and the goods and/or services with which they are compared,
(d) difference in freight and insurance charges depending on the place of supply.
5. Computed value method
If the value cannot be determined under rule 4, it shall be based on a computed value
which shall include the following:-
(a) the cost of production, manufacture or processing of the goods or, the cost of
provision of the services;
(b) charges, if any, for the design or brand;
(c) an amount towards profit and general expenses equal to that usually reflected in
supply of goods and/or services of the same class or kind as the goods and/or services
being valued which are made by other suppliers.
6. Residual method
Where the value of the goods and/or services cannot be determined under the provisions
of rule 5, the value shall be determined using reasonable means consistent with the
principles and general provisions of these rules.
7. Rejection of declared value
(1)(a) When the proper officer has reason to doubt the truth or accuracy of the value
declared in relation to any goods and/or services, he may ask the supplier to furnish
further information, including documents or other evidence and if, after receiving such
further information, or in the absence of any response from such supplier, the proper
officer still has reasonable doubt about the truth or accuracy of the value so declared, it
shall be deemed that the transaction value of such goods and/or services cannot be
determined under the provisions of sub-rule (1) of rule 3.
(b) The reasons to doubt the truth or accuracy of the value of the supply declared by the
supplier shall include, but not be limited to the following:
(i) the significantly higher value at which goods and/or services of like kind or quality
supplied at or about the same time in comparable quantities in a comparable
commercial transaction were assessed;
(ii) the significantly lower or higher value of the supply of goods and/or services
compared to the market value of goods and/or services of like kind and quality at
the time of supply; or
(iii) any mis-declaration of goods and/or services in parameters such as description,
quality, quantity, year of manufacture or production.
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(2) The proper officer shall intimate the supplier in writing the grounds for doubting the
truth or accuracy of the value declared in relation to the supply of goods and/or services
by such supplier and provide a reasonable opportunity of being heard, before taking a
final decision under sub-rule (1).
(3) If after hearing the supplier as aforesaid, the proper officer is, for reasons to be
recorded in writing, not satisfied with the value declared, he shall proceed to determine
the value in accordance with the provisions of rule 4 or rule 5 or rule 6, proceeding
sequentially.
Explanation.- For removal of doubts, it is hereby declared that this rule by itself does not
provide a method for determination of value. It provides a mechanism and procedure
for rejection of declared value in cases where there is reasonable doubt that the declared
value does not represent the transaction value.
8. Valuation in certain cases
(1) Pure Agent
(a) Notwithstanding anything contained in these rules, the expenditure or costs incurred
by the service provider as a pure agent of the recipient of service, shall be excluded from
the value of the taxable service if all the following conditions are satisfied, namely:-
(i) the service provider acts as a pure agent of the recipient of service when he makes
payment to third party for the goods and/or services procured;
(ii) the recipient of service receives and uses the goods and/or services so procured by
the service provider in his capacity as pure agent of the recipient of service;
(iii) the recipient of service is liable to make payment to the third party;
(iv) the recipient of service authorises the service provider to make payment on his
behalf;
(v) the recipient of service knows that the goods and/or services for which payment has
been made by the service provider shall be provided by the third party;
(vi) the payment made by the service provider on behalf of the recipient of service has
been separately indicated in the invoice issued by the service provider to the recipient of
service;
(vii) the service provider recovers from the recipient of service only such amount as has
been paid by him to the third party; and
(viii) the goods and/or services procured by the service provider from the third party as
a pure agent of the recipient of service are in addition to the services he provides on his
own account.
Explanation.- For the purposes of this sub-rule, “pure agent” means a person who–
(a) enters into a contractual agreement with the recipient of service to act as his pure
agent to incur expenditure or costs in the course of providing taxable service;
(b) neither intends to hold nor holds any title to the goods and/or services so procured
or provided as pure agent of the recipient of service;
(c) does not use such goods and/or services so procured; and
(d) receives only the actual amount incurred to procure such goods and/or services.
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(2) Money Changer
The value of taxable service provided for the services in so far as it pertains to purchase
or sale of foreign currency, including money changing, shall be determined by the
service provider in the following manner:-
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.
***
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THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016
CHAPTER- I
PRELIMINARY
1. Short title, extent and commencement
2. Definitions
CHAPTER– II
PRINCIPLES FOR DETERMINING SUPPLY OF GOODS AND/OR SERVICES
IN THE COURSE OF INTER-STATE TRADE OR COMMERCE
3. Supplies of goods and/or services in the course of inter-State trade or commerce
CHAPTER– III
LEVY AND COLLECTION OF TAX
4. Levy and collection of Integrated Goods and Services Tax
CHAPTER– IV
PLACE OF SUPPLY OF GOODS AND/OR SERVICES
5. Place of supply of goods
6. Place of supply of services
CHAPTER–V
PAYMENT OF TAX
7. Payment of tax, interest, penalty and other amounts
CHAPTER– VI
INPUT TAX CREDIT
8. Claim of input tax credit and provisional acceptance, matching, reversal and reclaim
thereof
9. Transfer of input tax credit
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CHAPTER– VII
APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS
10. Apportionment of tax collected under the Act and settlement of funds
CHAPTER – VIII
SETTLEMENT OF CASES
11. Definitions
12. Constitution of National Goods and Services Tax Settlement Commission
13. Jurisdiction and powers of Settlement Commission
14. Decisions to be by majority
15. Application for settlement of cases
16. Procedure for settlement on receipt of an application under section 15
17. Power of Settlement Commission to order provisional attachment to protect revenue
18. Power of Settlement Commission to reopen completed proceedings
19. Inspection, etc. of reports
20. Power of Settlement Commission to grant immunity from prosecution and penalty
21. Power of Settlement Commission to send a case back to the IGST officer
22. Order of settlement to be conclusive
23. Bar on subsequent application for settlement in certain cases
24. Rectification of mistakes by Settlement Commission
25. Powers of Settlement Commission
26. Procedure of Settlement Commission
CHAPTER– IX
MISCELLANEOUS
27. Application of certain provisions of the CGST Act, 2016
28. Power to make rules
29. Interest on delayed payment of tax
30. Tax wrongfully collected and deposited with the Central or a State Government
CHAPTER– X
TRANSITIONAL PROVISIONS
31. Import of services or inter-state supply of goods and/or services made on
or after the appointed day
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CHAPTER– XI
ADMINISTRATION
32. Classes of officers under the Integrated Goods and Services Tax Act, 2016
33. Appointment of officers under the Integrated Goods and Services Tax Act, 2016
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THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016
CHAPTER– I
PRELIMINARY
1. Short title, extent and commencement
(1) This Act may be called the Integrated Goods and Services Tax Act, 2016.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be appointed for
different provisions of this Act.
2. Definitions
(1) In this Act, unless the context otherwise requires,-
(a) “appropriate State”, in relation to a taxable person, means that State where he
is registered or liable to be registered under section 19 of the Central Goods and
Services Tax Act, 2016.
Explanation: For the purpose of this Act, “State” includes Union Territory with
Legislature.
(b) “Government” means the Central Government;
(c) “Integrated Goods and Services Tax” (IGST) means tax levied under this Act
on the supply of any goods and/or services in the course of inter-State trade or
commerce.
Explanation 1.- A supply of goods and/or services in the course of import into the
territory of India shall be deemed to be a supply of goods and/or services in the course
of inter-State trade or commerce.
Explanation 2.- An export of goods and/or services shall be deemed to be a supply of
goods and/or services in the course of inter-State trade or commerce.
(d) “input tax” in relation to a taxable person, means the Integrated Goods and
Services Tax, Central Goods and Services Tax or State Goods and Services Tax, as the
case may be, charged on any supply of goods and/or services to him which are used, or
are intended to be used, in the course or furtherance of his business and includes the tax
payable under sub-section (3) of section 4;
(e) “input tax credit” means credit of ‘input tax’ as defined in clause (d) of subsection
(1) of section 2;
(f) “supply” has the same meaning as assigned to it in section 3 of the CGST Act,
2016;
(g) “output tax” in relation to a taxable person, means the IGST chargeable under the
Act on taxable supply of goods and/or services by him or his agent and excludes tax
payable by him on reverse charge basis;
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(2) Words and expressions not defined in this Act shall have the meaning assigned to
them in the Central Goods and Service Tax Act, 2016.
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CHAPTER- II
PRINCIPLES FOR DETERMINING SUPPLY OF GOODS AND/OR SERVICES IN THE
COURSE OF INTER-STATE TRADE OR COMMERCE
3. Supplies of goods and/or services in the course of inter-State trade or
commerce
(1) Subject to the provisions of section 5, supply of goods in the course of inter-State
trade or commerce means any supply where the location of the supplier and the place of
supply are in different States.
(2) Subject to the provisions of section 6, supply of services in the course of inter-
State trade or commerce means any supply where the location of the supplier and the
place of supply are in different States.
3A. Supplies of goods and/or services in the course of intra-State trade or
commerce
(1) Subject to the provisions of section 5, intra-state supply of goods means any
supply where the location of the supplier and the place of supply are in the same State.
(2) Subject to the provisions of section 6, intra-state supply of services means any
supply where the location of the supplier and the place of supply are in the same State.
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CHAPTER– III
LEVY AND COLLECTION OF TAX
4. Levy and collection of Integrated Goods and Services Tax
(1) There shall be levied a tax called the Integrated Goods and Services Tax on all
supplies of goods and/or services made in the course of inter-State trade or commerce
at the rate specified in the Schedule to this Act and collected in such manner as may be
prescribed.
(2) The Integrated Goods and Services Tax shall be paid by every taxable person in
accordance with the provisions of this Act.
(3) Notwithstanding anything contained in sub-section (2), the Central Government
may, on recommendation of the Council, by notification, specify categories of supply of
goods and/or services the tax on which is payable on reverse charge basis and the tax
thereon shall be paid by the person receiving such goods and/or services and all the
provisions of this Act shall apply to such person as if he is the person liable for paying
the tax in relation to such goods and/or services.
(4) Notwithstanding anything contained in sub-section (1) but subject to such
conditions as may be notified in this behalf, no tax under this Act shall be payable by any
taxable person in respect of such supplies of goods and/or services as are specified in
Schedule . . . to the Act.
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CHAPTER– IV
PLACE OF SUPPLY OF GOODS AND/OR SERVICES
5. Place of supply of goods
(1) The provisions of this section shall apply to determine the place of supply of
goods.
(2) Where the supply involves movement of goods, whether by the supplier or the
recipient or by any other person, the place of supply of goods shall be the location of the
goods at the time at which the movement of goods terminates for delivery to the
recipient.
(2A) 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.
(3) 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.
(4) Where the goods are assembled or installed at site, the place of supply shall be
the place of such installation or assembly.
(5) Where the goods are supplied on board a conveyance, such as 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.
(6) Where the place of supply of goods cannot be determined in terms of sub-section
(2), (3), (4) and (5), the same shall be determined by law made by the Parliament in
accordance with the recommendation of the Council.
6. Place of supply of services
(1) The provisions of this section shall apply to determine the place of supply of
services.
(2) The place of supply of services, except the services specified in sub-sections (4),
(5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15), made to a registered person
shall be the location of such person.
(3) The place of supply of services, except the services specified in sub-sections (4),
(5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15), made to any person other
than a registered person shall be
(i) the location of the recipient where the address on record exists, and
(ii) the location of the supplier of services in other cases.
(4) The place of supply of services, –
(a) 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
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(b) by way of lodging accommodation by a hotel, inn, guest house, homestay, club or
campsite, by whatever name called and including a house boat or any other vessel, or
(c) by way of accommodation in any immovable property for organizing any marriage
or reception or matters related therewith, official, social, cultural, religious or business
function including services provided in relation to such function at such property, or
(d) any services ancillary to the services referred to in clause (a), (b) and (c),
shall be the location at which the immovable property or boat or vessel is located or
intended to be located.
Explanation.- Where the immovable property or boat or vessel is located in more than
one State, the supply of service shall be treated as made in each of the States 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 reasonable basis as may be prescribed in this behalf.
(5) 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.
(6) 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;
(b) a person other than a registered person, shall be the location where the services
are actually performed.
(7) The place of supply of services provided by way of admission to a cultural,
artistic, sporting, scientific, educational, or 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.
(8) The place of supply of services provided by way of—
(a) organization of a cultural, artistic, sporting, scientific, educational or
entertainment event including supply of service in relation to a conference, fair,
exhibition, celebration or similar events, or
(b) services ancillary to organization of any of the above events or services, or
assigning of sponsorship of any of the above events,
to
(i) a registered person, shall be the location of such person;
(ii) a person other than a registered person, shall be the place where the event is
actually held.
Explanation.- Where the event is held in more than one State 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 the each of the States in proportion to the value of
services so provided in each State as ascertained from the terms of the contract or
agreement entered into in this regard or, in absence of such contract or agreement, on
such other reasonable basis as may be prescribed in this behalf.
(9) The place of supply of services by way of transportation of goods, including by
mail or courier to,
(a) a registered person, shall be the location of such person;
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(b) a person other than a registered person, shall be the location at which such goods
are handed over for their transportation.
(10) The place of supply of passenger transportation service to
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the place where the passenger
embarks on the conveyance for a continuous journey:
Provided that where the right to passage is given for future use and the point of
embarkation is not known at the time of issue of right to passage, the place of supply of
such service shall be determined in the manner specified in sub-sections (2) or (3), as
the case may be.
Explanation.- For the purposes of this sub-section, the return journey shall be treated as
a separate journey even if the right to passage for onward and return journey is issued
at the same time.
(11) The place of supply of services on board a conveyance such as vessel, aircraft,
train or motor vehicle, shall be the location of the first scheduled point of departure of
that conveyance for the journey.
(12) The place of supply of telecommunication services including data transfer,
broadcasting, cable and direct to home television services to any person shall—
(a) in case of services by way of fixed telecommunication line, leased circuits,
internet leased circuit, cable or dish antenna, be the location where the
telecommunication line, leased circuit or cable connection or dish antenna is installed for
receipt of services;
(b) in case of mobile connection for telecommunication and internet services provided
on post-paid basis, be the location of billing address of the recipient of services on record
of the supplier of services;
(c) in cases where mobile connection for telecommunication and internet service are
provided on pre-payment through a voucher or any other means, be the location where
such pre-payment is received or such vouchers are sold:
Provided that if such pre-paid service is availed or the recharge is made through internet
banking or other electronic mode of payment, the location of the recipient of services on
record of the supplier of services shall be the place of supply of such service.
(13) 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 service is not linked to the account of the recipient of services, the
place of supply shall be location of the supplier of services.
(14) The place of supply of insurance services shall:
(a) to a registered person, be the location of such person;
(b) to a person other than a registered person, be the location of the recipient of
services on the records of the supplier of services.
(15) The place of supply of advertisement services to the Central Government, a State
Government, a statutory body or a local authority meant for identifiable States, shall be
taken as located in each of such States and the value of such supplies specific to each
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State shall be in proportion to amount attributable to service provided by way of
dissemination in the respective States as may be 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 reasonable basis as may be prescribed in this behalf.
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CHAPTER-V
PAYMENT OF TAX
7. Payment of tax, interest, penalty and other amounts
(1) Every deposit made towards tax, interest, penalty, fee or any other amount by a
taxable person by internet banking or by using credit/debit cards or National Electronic
Fund Transfer or Real Time Gross Settlement or by any other mode, subject to such
conditions and restrictions as may be prescribed in this behalf, shall be credited to the
electronic cash ledger of such person to be maintained in the manner as may be
prescribed.
Explanation.- The date of credit to the account of the appropriate Government in the
authorized bank shall be deemed to be the date of deposit.
(2) The input tax credit as self-assessed in the return of a taxable person shall be
credited to his electronic credit ledger to be maintained in the manner as may be
prescribed.
(3) The amount available in the electronic cash ledger may be used for making any
payment towards tax, interest, penalty, fees or any other amount payable under the
provisions of the Act or the rules made thereunder in such manner and subject to such
conditions and within such time as may be prescribed.
(4) The amount available in the electronic credit ledger may be used for making any
payment towards tax payable under the provisions of the Act or the rules made
thereunder in such manner and subject to such conditions and within such time as may
be prescribed.
(5)(a) The amount of input tax credit on account of IGST available in the electronic
credit ledger shall first be utilized towards payment of IGST and the amount remaining,
if any, may be utilized towards the payment of CGST and SGST, in that order.
(b) The amount of input tax credit on account of CGST available in the electronic credit
ledger shall first be utilized towards payment of CGST and the amount remaining, if any,
may be utilized towards the payment of IGST.
(c) The amount of input tax credit on account of SGST available in the electronic
credit ledger shall first be utilized towards payment of SGST and the amount remaining,
if any, may be utilized towards the payment of IGST.
(6) The balance in the cash or credit ledger after payment of tax, interest, penalty,
fee or any other amount payable under the Act or the rules made thereunder may be
refunded in accordance with the provisions of section 38 of the CGST Act and the
amount collected as IGST shall stand reduced to that extent.
(7) All liabilities of a taxable person under this Act shall be recorded and maintained
in an electronic register as may be prescribed.
(8) Every taxable person shall discharge his tax and other dues under this Act or the
rules made thereunder in the following order:
(a) self-assessed tax, and other dues related to returns of previous tax periods;
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(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under the Act or the rules made thereunder including
the demand determined under section 51 of the CGST Act.
(9) Every person who has paid the tax on goods and/or services under this Act shall,
unless the contrary is proved by him, be deemed to have passed on the full incidence of
such tax to the recipient of such goods and/or services.
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CHAPTER– VI
INPUT TAX CREDIT
8. Claim of input tax credit, provisional acceptance, matching, reversal and
reclaim thereof
(1) Every registered taxable person shall, subject to such conditions and restrictions
as may be prescribed in this behalf, be entitled to take credit of input tax, as selfassessed,
in his return and such amount shall be credited, on a provisional basis, to his
electronic credit ledger to be maintained in the manner as may be prescribed.
(2) The provisions of section 29 of the CGST Act, 2016 relating to matching, reversal and
reclaim of input tax credit shall apply mutatis mutandis to the matching, reversal and
reclaim of input tax credit under this section.
9. Transfer of input tax credit
(1) On utilization of input tax credit availed under this Act for payment of tax dues
under the CGST Act as per sub-section (5) of section 7, the amount collected as IGST
shall stand reduced by an amount equal to the credit so utilized and the Central
Government shall transfer an amount equal to the amount so reduced from the IGST
account to the CGST account in the manner and time as may be prescribed.
(2) On utilization of input tax credit availed under this Act for payment of tax dues
under the SGST Act as per sub-section (5) of section 7, the amount collected as IGST
shall stand reduced by an amount equal to the credit so utilized and the Central
Government shall transfer an amount equal to the amount so reduced from the IGST
account to the SGST account of the appropriate State Government in the manner and
time as may be prescribed.
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CHAPTER- VII
APPORTIONMENT OF TAX AND SETTLEMENT OF FUNDS
10. Apportionment of tax collected under the Act and settlement of funds
(1) Out of the IGST paid to the Central Government in respect of inter-State supply
of goods and/or services to an unregistered person or to a taxable person paying tax
under section 8 of the CGST Act, the amount of tax calculated at the rate equivalent to
the CGST on similar intra-state supply shall be apportioned to the Central Government.
(2) Out of the IGST paid to the Central Government in respect of inter-State supply
of goods and/or services made in a year to a registered taxable person, where such
taxable person is either not eligible for input tax credit or where he does not avail of the
said credit within the specified period and thus remains in the IGST account after expiry
of the due date for filing of annual return for such year in which the supply was made,
the amount of tax calculated at the rate equivalent to the CGST on similar intra-state
supply shall be apportioned to the Central Government.
(3) Out of the IGST paid to the Central Government in respect of import of goods and
/ or services by an unregistered person or by a taxable person paying tax under section
8 of the CGST Act, the amount of tax calculated at the rate equivalent to the CGST on
similar intra-state supply shall be apportioned to the Central Government.
(4) Out of the IGST paid to the Central Government in respect of import of goods and
/ or services made in a year by a registered taxable person, where the such taxable
person is either not eligible for input tax credit or where he does not avail of the said
credit within the specified period and thus remains in the IGST account after expiry of
the due date for filing of annual return for such year in which the supply was received,
the amount of tax calculated at the rate equivalent to the CGST on similar intra-state
supply shall be apportioned to the Central Government.
(5) The balance amount of tax remaining in the IGST account in respect of the supply
for which an apportionment to the Central Government has been done under sub-section
(1), (2) or (3) shall be apportioned, in the manner and time as may be prescribed, to the
State where such supply takes place as per section9 5 or 6.
(6) The provisions of sub-sections (1), (2), (3), (4) and (5) relating to apportionment of
tax shall mutatis mutandis apply to the apportionment of interest and penalty realized in
connection with the tax so apportioned.
(7) Where an amount has been apportioned to the Central Government or a State
Government under sub-sections (1), (2), (3), (4), (5) and (6), the amount collected as
IGST shall stand reduced by an amount equal to the amount so apportioned and the
Central Government shall transfer to the CGST account an amount equal to an amount
apportioned to the Central Government and shall transfer to the SGST account of the
State an amount equal to an amount apportioned to that State, in the manner and time
as may be prescribed.
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CHAPTER – VIII
SETTLEMENT OF CASES
11. Definitions
(a) “Bench” means a Bench of the Settlement Commission;
(b) “case” means any proceeding under this Act for the levy, assessment and collection
of IGST before an IGST officer, or before a First Appellate Authority in connection with
such levy, assessment or collection of IGST pending on the date on which an application
under sub-section (1) of section 15 is made:
Provided that where an order is passed by an adjudicating authority and for which
the appeal period has not expired shall also be deemed to be a proceeding pending
within the meaning of this clause:
Provided further that where any appeal has been preferred after expiry of the
period specified for filing such appeal under this Act and which has not been admitted,
such appeal shall not be deemed to be a proceeding pending within the meaning of this
clause:
Provided also that where any Court or Appellate Tribunal or the First Appellate
Authority refers a case back to the original adjudicating authority or the First Appellate
Authority, as the case may be, for a fresh adjudication or decision, such proceeding shall
not be deemed to be a proceeding pending within the meaning of this clause;
(c) “Designated Officer” means an officer of the IGST appointed in the Settlement
Commission to conduct inquiry or investigation for the purpose of this Chapter;
(d)”Member” means a Member of the Settlement Commission and includes the
National/State Chairman;
(e)“Settlement Commission” means the National Goods and Services Tax Settlement
Commission constituted under section 12.
12. Constitution of National Goods and Services Tax Settlement Commission
(1) The Central Government shall on the recommendation of the Council constitute a
National Goods and Services Tax Settlement Commission for settlement of cases under
this Act.
(2) The Settlement Commission shall be headed by a National Chairman.
(3) The Settlement Commission shall have one bench for one or more states, which
shall be called the State Settlement Commission.
(4) Every State Settlement Commission shall be headed by a State Chairman.
(5) Every State Settlement Commission shall consist of a Chairman and as many
Members (Technical –IGST) as may be prescribed, to exercise the powers and discharge
the functions conferred on the Settlement Commission by this Act.
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(6) The National Chairman/State Chairman shall be a person who is or has been a judge
of the High Court.
(7) The qualifications, eligibility conditions and the manner of selection and
appointment of the National Chairman, the State Chairman, and the Members shall be
such as may be prescribed on the recommendations of the Council.
(8) The National Chairman and the State Chairman shall exercise such powers and
discharge such functions as may be prescribed on the recommendations of the Council.
13. Jurisdiction and powers of Settlement Commission
(1) The jurisdiction of the State Settlement Commission constituted under this Act shall
extend to the …… (name(s) of States).
(2) Each Bench shall be presided over by the State Chairman and shall consist of two
other Members.
(3) Notwithstanding anything contained in the foregoing provisions of this section, and
subject to any rules that may be made in this behalf, when one of the persons
constituting a Bench (whether such person is the presiding officer or other Member of
the Bench) is unable to discharge his functions owing to absence, illness or any other
cause or in the event of the occurrence of any vacancy either in the office of the
presiding officer or in the office of one or the other Members of the Bench, the remaining
Members may function as the Bench and if the presiding officer of the Bench is not one
of the remaining Members, the senior among the remaining Members shall act as the
presiding officer of the Bench.
14. Decisions to be by majority
(1) If the Members of a Bench differ in opinion on any point, the point shall be decided
according to the opinion of the majority.
(2) In a case where the decision is taken by a two member Bench as provided under
sub-section (3) of section 13 and Members are equally divided, the matter will be
referred to the third Member and the decision will be according to the opinion of the
majority.
15. Application for settlement of cases
(1) A taxable person may, in respect of a case or identical cases involving periodical
show cause notices relating to him and pending before the adjudicating authority or the
First Appellate Authority under the Act, make an application, in such form and in such
manner as may be prescribed, containing a full and true disclosure of his tax liability
which has not been disclosed before the jurisdictional IGST officer, the manner in which
such liability has been derived, the additional amount of tax accepted to be payable by
him and such other particulars as may be prescribed, to the Settlement Commission to
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have the case(s)settled and any such application shall be disposed of in the manner
hereinafter provided:
Provided that no such application shall be made unless,-
(a) the applicant has furnished the return(s), which he is or was required to furnish
under the provisions of this Act;
(b) a show cause notice for demand of tax issued by the IGST officer has been received
by the applicant or an order confirming the demand of tax has been issued by the
IGST officer and the same is pending before the First Appellate Authority;
(c) the additional amount of tax accepted by the applicant in his application exceeds
five lakh rupees; and
(d) the applicant has paid the additional amount of tax accepted by him along with
interest due thereon under section 36 of the CGST Act:
Provided further that the Settlement Commission, if it is satisfied that the circumstances
exist for not filing the return(s) referred to in clause (a) of the first proviso to subsection
(1), may, after recording the reasons thereof, allow the applicant to make such
application.
(2) No application shall be entertained by the Settlement Commission under sub-section
(1) in cases which are pending with the Appellate Tribunal or any Court.
(3) No application under sub-section (1) shall be made for determination of any
question having a bearing on the rate of tax or determination of liability to pay tax on
goods and/or services under the Act.
(4) Every application made under sub-section (1) shall be accompanied by such fees as
may be prescribed.
(5) An application made under sub-section (1) shall not be allowed to be withdrawn by
the applicant.
16. Procedure for settlement on receipt of an application under section 15
(1) On receipt of an application under sub-section (1) of section 15, the Settlement
Commission shall, within seven days from the date of receipt of the application, issue a
notice to the applicant to explain in writing as to why the application made by him
should be allowed to be proceeded with, and after taking into consideration the
explanation provided by the applicant, it shall, within a period of forty five days from the
date of the notice, by an order, allow the application to be proceeded with, or reject the
application as the case may be, and the proceedings before the Settlement Commission
shall abate on the date of rejection :
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Provided that an application shall not be rejected unless an opportunity has been given
to the applicant of being heard;
Provided further that where no notice has been issued or no order has been passed
within the aforesaid period by the Settlement Commission, the application shall be
deemed to have been allowed to be proceeded with.
(2) A copy of every order under sub-section (1), shall be sent to the applicant and to the
jurisdictional IGST officer.
(3) Where an application is allowed under sub-section (1), the Settlement Commission
shall, within seven days from the date of order under sub-section (1), call for a report
along with the relevant records from the jurisdictional IGST officer and such officer shall
furnish the report within a period of sixty days of the receipt of communication from the
Settlement Commission:
Provided that where the jurisdictional IGST officer does not furnish the report within the
aforesaid period of sixty days, the Settlement Commission shall proceed further in the
matter without the report of the said officer.
(4) After examination of the report of the jurisdictional IGST officer received under subsection
(3), if the Settlement Commission is of the opinion that any further enquiry or
investigation in the matter is necessary, it may, within 15 days of the receipt of the
report, direct, for reasons to be recorded in writing, the Designated Officer to make
such further enquiry or investigation and furnish a report within a period of ninety days
of the receipt of such direction, on the matters covered by the application and any other
matter relating to the case :
Provided that where the Designated Officer does not furnish the report within the
aforesaid period, the Settlement Commission shall proceed to pass an order under subsection
(5) without such report.
(5) After examination of the records and the report of the jurisdictional IGST officer
received under sub-section (3), and the report, if any, of the Designated Officer under
sub-section (4), and after giving an opportunity to the applicant and to the jurisdictional
IGST officer to be heard, either in person or through an authorised representative, and
after examining such further evidence as may be placed before it or obtained by it, the
Settlement Commission may pass such order as it thinks fit on the matters covered by
the application and any other matter relating to the case not covered by the application,
but referred to in the report of the jurisdictional IGST officer and Designated Officer
under sub-section (3) or sub-section (4), as the case may be.
Explanation.- For the purposes of this sub-section, “authorised representative” shall have
the meaning assigned to it in section 86 of the CGST Act.
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(6) An order under sub-section (5) shall not be passed in respect of an application after
twelve months from the last day of the month in which the application was made, failing
which the settlement proceedings shall abate, and the adjudicating authority or the First
Appellate Authority, as the case may be, before whom the proceeding at the time of
making the application was pending, shall dispose of the case in accordance with the
provisions of this Act as if no application under section 15 had been made.
Provided that the period specified under this sub- section may, for reasons to be
recorded in writing, be extended by the Settlement Commission for a further period not
exceeding three months.
(7) For the purposes of the time limit under section 51 or section 79, as the case may
be, of the CGST Act and for the purposes of interest under section 36 of the said Act, in
a case referred to in sub-section (1) or sub-section (6), as the case may be, the period
commencing on and from the date of the application to the Settlement Commission
under section 15 and ending with the date of abatement, shall be excluded.
(8) The order passed under sub-section (5) shall provide for the terms of settlement
including any demand by way of tax, interest, fine or penalty, the manner in which any
sums due under the settlement shall be paid and all other matters to make the
settlement effective and in case of rejection contain the reasons therefor:
Provided that the amount of settlement ordered by the Settlement Commission shall not
be less than the tax liability admitted by the applicant under section 15.
(9) Settlement arrived under sub-section (5) shall be void if it is subsequently found by
the Settlement Commission that it has been obtained by fraud or misrepresentation of
facts.
(10) Where any tax, interest, fine and penalty payable in pursuance of an order under
sub-section (5) is not paid by the taxpayer within thirty days of receipt of a copy of the
order by him, or within such period as extended by the Settlement Commission not
exceeding three months, the amount which remains unpaid, shall be recovered along
with interest due thereon at the rate prescribed under section 36 of the CGST Act, as the
sums due to the Central/ State Government by the jurisdictional IGST officer in
accordance with the provisions of section 54 of the CGST Act.
(11) Where a settlement becomes void as provided under sub-section (9), the
proceedings with respect to the matters covered by the settlement shall be deemed to
have been revived from the stage at which the application was allowed to be proceeded
with by the Settlement Commission and the jurisdictional IGST officer or the First
Appellate Authority, as the case may be, may, notwithstanding anything contained in
any other provision of this Act, complete such proceedings before the expiry of two years
from the date of the receipt of communication that the settlement became void.
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17. Power of Settlement Commission to order provisional attachment to protect
revenue
(1) Where during the pendency of any proceeding before it, the Settlement Commission
is of the opinion that for the purpose of protecting the interests of revenue it is
necessary so to do, it may, by order, attach provisionally any property belonging to the
applicant in the manner as may be prescribed.
(2) Every provisional attachment made by the Settlement Commission under subsection
(1) shall cease to have effect from the date, the sums due to the Central
Government / the State Government for which such attachment is made are discharged
by the applicant and evidence to that effect is submitted to the Settlement Commission.
18. Power of Settlement Commission to reopen completed proceedings
If the Settlement Commission is of the opinion (the reasons for such opinion to be
recorded by it in writing) that, for the proper disposal of the case pending before it, it is
necessary or expedient to reopen any proceeding connected with the case but which has
been completed under this Act before application for settlement under section 15 was
made, it may, with the concurrence of the applicant, reopen such proceeding and pass
such order thereon as it thinks fit, as if the case in relation to which the application for
settlement had been made by the applicant under that section covered such proceeding
also :
Provided that no proceeding shall be reopened by the Settlement Commission under this
section after the expiry of five years from the date of application.
19. Inspection, etc. of reports
The Settlement Commission shall, on an application made in this behalf, and on payment
of the prescribed fee bythe applicant, for the purpose of rebutting any evidence brought
on record against him in any report made by any IGST Officer or Designated officer,
furnish to him a certified copy of any such report or part thereof relevant for the
purpose.
20. Power of Settlement Commission to grant immunity from prosecution and
penalty
(1) The Settlement Commission may, if it is satisfied that any person who made the
application for settlement under section 15 has co-operated with the Settlement
Commission in the proceedings before it and has made a full and true disclosure of his
tax liability, grant to such person, subject to such conditions as it may think fit to
impose, immunity from prosecution for any offence under this Act and also either wholly
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or in part from the imposition of any penalty and fine under this Act, with respect to the
case covered by the settlement :
Provided that no such immunity shall be granted by the Settlement Commission in cases
where the proceedings for the prosecution for any such offence have been instituted
before the date of receipt of the application under section 15.
(2) An immunity granted to a person under sub-section (1) shall stand withdrawn if such
person fails to pay any sum specified in the order of the settlement passed under subsection
(5) of section 16 within the time specified in such order or within such extended
period as permitted by the Settlement Commission or fails to comply with any other
condition subject to which the immunity was granted and thereupon the provisions of
this Act shall apply as if such immunity had not been granted.
(3) An immunity granted to a person under sub-section (1) may, at any time, be
withdrawn by the Settlement Commission, if it is satisfied that such person had, in the
course of the settlement proceedings, concealed any particular material to the
settlement or had given false evidence, and thereupon such person may be tried for the
offence with respect to which the immunity was granted or for any other offence of
which he appears to have been guilty in connection with the settlement and shall also
become liable to the imposition of any penalty under this Act to which such person would
have been liable, had no such immunity been granted.
21. Power of Settlement Commission to send a case back to the IGST officer
(1) The Settlement Commission may, if it is of opinion that any person who made an
application for settlement under section 15 has not co-operated with the Settlement
Commission in the proceedings before it, send the case back to the jurisdictional IGST
officer or the First Appellate Authority, as the case may be, who shall thereupon dispose
of the case in accordance with the provisions of this Act as if no application under section
15 had been made.
(2) For the purpose of sub-section (1), the jurisdictional IGST Officer or the First
Appellate Authority, as the case may be, shall be entitled to use all the materials and
other information produced by the taxable person before the Settlement Commission or
the results of the inquiry held or evidence recorded by the Settlement Commission in the
course of the proceedings before it as if such materials, information, inquiry and
evidence had been produced before such IGST Officer or the First Appellate Authority, as
the case may be, or held or recorded by him in the course of the proceedings before
him.
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(3) For the purposes of the time limit under section 51 or section 79, as the case may
be, of the CGST Act and for the purposes of interest under section 36 of the said Act, in
a case referred to in sub-section (1), the period commencing on and from the date of the
application to the Settlement Commission under section 15 and ending with the date of
receipt by the jurisdictional IGST Officer or the First Appellate Authority, as the case may
be, of the order of the Settlement Commission sending the case back to the jurisdictional
IGST officer or the First Appellate Authority, as the case may be, shall be excluded.
22. Order of settlement to be conclusive
Every order of settlement passed under sub-section (5) of section 16 shall be conclusive
as to the matters stated therein and no matter covered by such order shall, save as
otherwise provided in this Chapter, be reopened in any proceeding under this Act or
under any other law for the time being in force.
23. Bar on subsequent application for settlement in certain cases
(1) Where-
(i) after the passing of an order of settlement under sub- section (5) of section 16, in
relation to a case, such person is convicted of any offence under this Act in relation to
that case; or
(ii) the case of such person is sent back to the jurisdictional IGST Officer or the First
Appellate Authority, as the case may be, by the Settlement Commission under section
21;
then, he shall not be entitled to apply for settlement under section 15 in relation to any
other matter.
(2) No person shall be allowed to avail of the facility of settlement under this Chapter
more than twice.
24. Rectification of mistakes by Settlement Commission
The Settlement Commission may amend any order passed by it under section 16 so as
to rectify any mistake apparent from the record, if such mistake is noticed by the
Settlement Commission on its own accord, or is brought to its notice by the
jurisdictional IGST officer or the applicant within a period of three months from the
date of the order:
Provided that no rectification, which has the effect of enhancing the liability of the
applicant, shall be made under this section, unless the Settlement Commission has given
notice to the applicant and the jurisdictional IGST officer of its intention to do so and has
allowed the applicant and the jurisdictional IGST officer a reasonable opportunity of
being heard.
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25. Powers of Settlement Commission
(1) The Settlement Commission shall, for the purpose of exercising its powers regarding
discovery and inspection, enforcing the attendance of any person and examining him on
oath, issuing commissions and compelling production of books of account and other
records, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of
1908).
(2) The Settlement Commission shall be deemed to be a civil court for the purposes of
section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure,
1973 (2 of 1974), and every proceeding before the Settlement Commission shall be
deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for
the purpose of section 196, of the Indian Penal Code (45 of 1860).
26. Procedure of Settlement Commission
The Settlement Commission shall, subject to the provisions of this Chapter, have power
to regulate its own procedure in all matters arising out of the exercise of its powers
under the Act.
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CHAPTER– IX
MISCELLANEOUS
27. Application of certain provisions of the CGST Act, 2016
The provisions relating to registration, valuation, time of supply of goods, time of supply
of services, change in rate of tax in respect of supply of services, exemption from
payment of tax, input tax credit and utilization thereof, accounts and records, payment,
return, audit, assessment, adjudication, demands, refunds, interest, recovery of tax,
offences and penalties, inspection, search and seizure, prosecution and power to arrest,
appeals, review, advance ruling and compounding shall apply, so far as may be, in
relation to the levy of tax under this Act as they apply in relation to levy of tax under the
CGST Act, 2016.
28. Power to make rules
(1) The Central Government may, on the recommendation of the Council, by
notification, make rules for carrying out the purposes of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such
rules may
(i) provide for settlement of cases in accordance with Chapter VIIA of this Act;
(ii) provide for all or any of the matters which under any provision of this Act are
required to be prescribed or to be provided for by rules.
29. Interest on delayed payment of tax
(1) Every person liable to pay tax in accordance with the provisions of this Act or rules
made there under, who fails to pay the tax or any part thereof to the account of the
Central Government within the period prescribed, shall, on his own, for the period for
which the tax or any part thereof remains unpaid, pay interest at such rate as may be
notified, on the recommendation of the Council, by the Central Government.
(2) The interest under sub-section (1) shall be calculated from the first day such tax was
due to be paid.
(3) In case a taxable person makes an undue or excess claim of input tax credit under
sub-section (10) of section 29 of the CGST Act, he shall be liable to pay interest on such
undue or excess claim at the prescribed rate for the period computed in the manner
prescribed.
30. Tax wrongfully collected and deposited with the Central or a State
Government
A taxable person who has paid IGST on a transaction considered by him to be an interstate
supply, but which is subsequently held to be an intra-state supply, shall, upon
payment of CGST and SGST in the appropriate State, be allowed to take the amount of
IGST so paid as refund subject to the provisions of section 38 of the CGST Act, 2016 and
such other conditions as may be prescribed.
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CHAPTER– X
TRANSITIONAL PROVISIONS
31. Import of services or inter-state supply of goods and/or services made
on or after the appointed day
Notwithstanding anything contained in section 12 and 13 of the CGST Act, import of
services or inter-state supply of goods and/or services made after the appointed day
shall be liable to tax under the provisions of this Act regardless of whether the
transactions for such import of services or inter-state supply had been initiated before
the appointed day:
Provided that if the tax on such import or inter-state supply had been paid in full under
the earlier law, no tax shall be payable on such import or inter-state supply under this
Act:
Provided further that if the tax on such import of services had been paid in part under the
earlier law, balance amount of tax shall be payable on such import or inter-state supply
under this Act.
Explanation.- For the purpose of this section, a transaction shall be deemed to have been
initiated before the appointed day if either the invoice relating to such supply or
payment, either in full or in part, has been received or made before the appointed day.
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CHAPTER- XI
ADMINISTRATION
32. Classes of officers under the Integrated Goods and Services Tax Act,
2016
(1) There shall be the following classes of officers under the Integrated Goods and
Services Tax Act, 2016 namely;
(a) Principal Chief Commissioners of IGST or
Principal Directors General of IGST,
(b) Chief Commissioners of IGST or
Directors General of IGST,
(c) Principal Commissioners of IGST or
Principal Additional Directors General of IGST,
(d) Commissioners of IGST or
Additional Directors General of IGST,
(e) First Appellate Authority
(f) Additional Commissioners of IGST or
Additional Directors of IGST,
(g) Joint Commissioners of IGST or
Joint Directors of IGST,
(h) Deputy Commissioners of IGST or
Deputy Directors of IGST,
(i) Assistant Commissioners of IGST or
Assistant Directors of IGST, and
(j) such other class of officers as may be appointed for the purposes of this Act.
33. Appointment of officers under the Integrated Goods and Services Tax
Act, 2016
(1) The Board may appoint such persons as it may think fit to be officers under the
Integrated Goods and Services Tax Act, 2016.
(2) Without prejudice to the provisions of sub-section (1), the Board may authorize a
Principal Chief Commissioner/Chief Commissioner of Central Goods and Services Tax or a
Principal Commissioner/Commissioner of Central Goods and Services Tax or an
Additional/Joint or Deputy/Assistant Commissioner of Central Goods and Service Tax to
appoint officers of Integrated Goods and Services Tax below the rank of Assistant
Commissioner of Integrated Goods and Services Tax Act, 2016.
*******

Pick of the day

Pick of the day

Bajaj Auto.

Companies Act

Companies Act

Companies 1.1 One-person company: The 2013 Act introduces a new type of entity to the existing list i.e. apart from forming a public or private limited company, the 2013 Act enables the formation of a new entity a ‘one-person company’ (OPC). An OPC means a […]

Indian Accounting Standards

Indian Accounting Standards

First-time Adoption of Indian Accounting Standards
Indian Accounting Standard (Ind AS) 101
First-time Adoption of Indian
Accounting Standards
Contents
Paragraphs
OBJECTIVE 1
SCOPE 2–5
RECOGNITION AND MEASUREMENT 6–19
Opening Ind-AS Balance Sheet 6
Accounting policies 7–12
Exceptions to the retrospective application of
other Ind-ASs 13–17
Estimates 14–17
Exemptions from other Ind-ASs 18–19
PRESENTATION AND DISCLOSURE 20–33
Comparative information 21–22
Non-Ind-AS comparative information and historical summaries 22
Explanation of transition to Ind-ASs 23–33
Reconciliations 24–28
Designation of financial assets or financial liabilities 29-29A
Use of fair value as deemed cost 30
Use of deemed cost for investments in subsidiaries,
jointly controlled entities and associates 31
Use of deemed cost for oil and gas assets 31A
Interim financial reports 32–33
Indian Accounting Standards
2
APPENDICES
A Defined terms
B Exceptions to the retrospective application of other Ind-ASs
C Exemptions for business combinations
D Exemptions from other Ind-ASs
E Short-term exemptions from Ind-ASs
F Implementation Guidance
I Comparison with IFRS 1, First-time Adoption of International
Financial Reporting Standards
3
First-time Adoption of Indian Accounting Standards
Indian Accounting Standard (Ind AS) 101
First-time Adoption of Indian
Accounting Standards
(This Indian Accounting Standard includes paragraphs set in bold type
and plain type, which have equal authority. Paragraphs in bold type
indicate the main principles.)
Objective
1 The objective of this Indian Accounting Standard (Ind AS) is to
ensure that an entity’s first Ind-AS financial statements, and its interim
financial reports for part of the period covered by those financial
statements, contain high quality information that:
(a) is transparent for users and comparable over all periods
presented;
(b) provides a suitable starting point for accounting in
accordance with Ind-ASs; and
(c) can be generated at a cost that does not exceed the benefits.
Scope
2 An entity shall apply this Ind-AS in:
(a) its first Ind-AS financial statements and
(b) each interim financial report, if any, that it presents in
accordance with Ind AS 34 Interim Financial Reporting for
part of the period covered by its first Ind-AS financial
statements.
Indian Accounting Standards
4
3 An entity’s first Ind-AS financial statements are the first annual
financial statements in which the entity adopts Ind-ASs, in accordance
with Ind-ASs notified under the Companies Act, 1956 and makes an
explicit and unreserved statement in those financial statements of
compliance with Ind-ASs.
4 [Refer to Appendix 1]
5 This Indian Accounting Standard does not apply to changes in
accounting policies made by an entity that already applies Ind-ASs.
Such changes are the subject of:
(a) requirements on changes in accounting policies in Ind AS 8
Accounting Policies, Changes in Accounting Estimates and
Errors; and
(b) specific transitional requirements in other Ind-ASs.
Recognition and measurement
Opening Ind-AS Balance Sheet
6 An entity shall prepare and present an opening Ind-AS Balance
Sheet at the date of transition to Ind-ASs. This is the starting point for
its accounting in accordance with Ind-ASs.
Accounting policies
7 An entity shall use the same accounting policies in its opening
Ind-AS Balance Sheet and throughout all periods presented in its
first Ind-AS financial statements. Those accounting policies shall
comply with each Ind-AS effective at the end of its first Ind-AS
reporting period, except as specified in paragraphs 13–19 and
Appendices B–E.
8 An entity shall not apply different versions of Ind-ASs that were
effective at earlier dates. An entity may apply a new Ind-AS that is not
yet mandatory if that Ind-AS permits early application.
5
First-time Adoption of Indian Accounting Standards
Example: Consistent application of latest version of Ind-ASs
Background
The end of entity A’s first Ind-AS reporting period is 31 March 2014.
Entity A presented financial statements in accordance with its
previous GAAP annually to 31 March each year up to, and including,
31 March 2013.
Application of requirements
Entity A is required to apply the Ind-ASs effective for financial year/
periods ending on 31 March 2014 in:
(a) preparing and presenting its opening Ind-AS Balance Sheet as
at 1 April 2013 which is the date of transition to Ind-AS; and
(b) preparing and presenting its Balance Sheet as at 31 March
2014,statement of profit and loss and statement of cash flows
for the year ending 31 March 2014 and disclosures.
If Entity A; decides to present comparative information in those
financial statements for one year (see paragraph 21).the requirements
apply as follows:
Entity A is required to apply the Ind-ASs effective for financial year/
periods ending on 31 March 2014 in:
(a) preparing and presenting its opening Ind-AS Balance Sheet as
at 1 April, 2012 on a memorandum basis for compilation of
comparative period financial statements assuming that deemed
date of transition is April 1, 2012; and
(b) preparing and presenting its opening Ind-AS Balance Sheet as
at 1 April 2013 which is the date of transition to Ind-AS
(c) preparing and presenting its Balance Sheet as at 31 March
2014 (including comparative amounts for 31 March, 2013),
Indian Accounting Standards
6
statement of profit and loss and statement of cash flows for the
year ending 31 March 2014 (including comparative amounts for
corresponding periods of year ending 31 March, 2013) and
disclosures (including comparative information for previous
period).
If a new Ind-AS is not yet mandatory but permits early application,
entity A is permitted, but not required, to apply that Ind-AS in its first
Ind-AS financial statements.
9 The transitional provisions in other Ind-ASs apply to changes in
accounting policies made by an entity that already uses Ind-ASs; they
do not apply to a first-time adopter’s transition to Ind-ASs, except as
specified in Appendices B–E.
10 Except as described in paragraphs 13–19 and Appendices B–E,
an entity shall, in its opening Ind-AS Balance Sheet:
(a) recognise all assets and liabilities whose recognition is
required by Ind-ASs;
(b) not recognise items as assets or liabilities if Ind-ASs do not
permit such recognition;
(c) reclassify items that it recognised in accordance with
previous GAAP as one type of asset, liability or component
of equity, but are a different type of asset, liability or
component of equity in accordance with Ind-ASs; and
(d) apply Ind-ASs in measuring all recognised assets and
liabilities.
11 The accounting policies that an entity uses in its opening Ind-AS
Balance Sheet may differ from those that it used for the same date
using its previous GAAP. The resulting adjustments arise from events
and transactions before the date of transition to Ind-ASs. Therefore, an
entity shall recognise those adjustments directly in retained earnings
7
First-time Adoption of Indian Accounting Standards
(or, if appropriate, another category of equity) at the date of transition
to Ind-ASs.
12 This Indian Accounting Standard establishes two categories of
exceptions to the principle that an entity’s opening Ind-AS Balance Sheet
shall comply with each Ind-AS:
(a) paragraphs 14–17 and Appendix B prohibit retrospective
application of some aspects of other Ind-ASs.
(b) Appendices C–E grant exemptions from some requirements
of other Ind-ASs.
Exceptions to the retrospective application of other
Ind-ASs
13 This Indian Accounting Standard prohibits retrospective application
of some aspects of other Ind-ASs. These exceptions are set out in
paragraphs 14–17 and Appendix B.
Estimates
14 An entity’s estimates in accordance with Ind-ASs at the date of
transition to Ind-ASs shall be consistent with estimates made for the
same date in accordance with previous GAAP (after adjustments to
reflect any difference in accounting policies), unless there is objective
evidence that those estimates were in error.
15 An entity may receive information after the date of transition to
Ind-ASs about estimates that it had made under previous GAAP. In
accordance with paragraph 14, an entity shall treat the receipt of that
information in the same way as non-adjusting events after the reporting
period in accordance with Ind AS 10 Events after the Reporting Period.
For example, assume that an entity’s date of transition to Ind-ASs is 1
April 2011 and new information on 15 May 2011 requires the revision of
an estimate made in accordance with previous GAAP at 31 March 2011.
The entity shall not reflect that new information in its opening Ind-AS
Balance Sheet (unless the estimates need adjustment for any differences
Indian Accounting Standards
8
in accounting policies or there is objective evidence that the estimates
were in error). Instead, the entity shall reflect that new information in
profit or loss (or, if appropriate, other comprehensive income) for the
year ended 31 March 2012.
16 An entity may need to make estimates in accordance with Ind-
ASs at the date of transition to Ind-ASs that were not required at that
date under previous GAAP. To achieve consistency with Ind AS 10,
those estimates in accordance with Ind-ASs shall reflect conditions that
existed at the date of transition to Ind-ASs. In particular, estimates at
the date of transition to Ind-ASs of market prices, interest rates or
foreign exchange rates shall reflect market conditions at that date.
17 Paragraphs 14–16 apply to the opening Ind-AS Balance Sheet.
In addition, they also apply to a comparative period presented in an
entity’s first Ind-AS financial statements, where an entity decides to
present comparative information in those financial statements for one
year (see paragraph 21), in which case the references to the date of
transition to Ind-ASs are replaced by references to the end of that
comparative period.
Exemptions from other Ind-ASs
18 An entity may elect to use one or more of the exemptions
contained in Appendices C–E. An entity shall not apply these exemptions
by analogy to other items.
19 Some exemptions in Appendices C–E refer to fair value. In
determining fair values in accordance with this Ind-AS, an entity shall
apply the definition of fair value in Appendix A and any more specific
guidance in other Ind-ASs on the determination of fair values for the
asset or liability in question. Those fair values shall reflect conditions
that existed at the date for which they were determined.
Presentation and disclosure
20 This Indian Accounting Standard does not provide exemptions
from the presentation and disclosure requirements in other Ind-ASs.
9
First-time Adoption of Indian Accounting Standards
Comparative information
21 To comply with Ind AS 1, an entity’s first Ind-AS financial
statements shall include at least three Balance Sheets (including two
statements of changes in equity), two statements of profit and loss, two
statements of cash flows and related notes for those periods. However,
in accordance with this Ind-AS, a first time adopter need not provide
the corresponding previous period financial statements in accordance
with Ind-AS when it reports its first Ind-AS financial statements.
Irrespective of any of the following two options elected, in terms of this
Ind AS the first time adopter shall present latest corresponding previous
periods’ financial statements prepared as per the previous GAAP when
presenting its first Ind-AS financial statements:
(a) The first Ind-AS financial statements includes only two
Balance Sheets (including one statement of changes in
equity) and one statement of profit and loss, one statement
of cash flows and related notes for the financial year
prepared under Ind-AS. This first Ind-AS financial statements
would include the previous years’ comparative figures as
per the previous GAAP. For example, a first time adopter
for whom the first reporting period is financial statements
for the year ending March 31, 2012 would only provide two
Balance Sheets (including one statement of changes in
equity ) i.e. April 1, 2011 and March 31, 2012 and one
statement of profit and loss, one statement of cash flows
and related notes for the financial year ending March 31,
2012, accompanied by reclassified previous years financial
statements for the year ending March 31, 2011 as per the
previous GAAP to the extent practicable, or
(b) In addition to (a) above, voluntarily provide the previous
years’ comparatives corresponding to the first Ind-AS
financial statements also under Ind-AS on a memorandum
basis. Only for compilation of previous years comparative
financial statements under Ind-ASs on a memorandum basis
the entity shall assume that the deemed date of transition
as at the beginning of the comparative period. For example,
the first time adopter for whom the first reporting period is
Indian Accounting Standards
10
financial statements for the year ending March 31, 2012
would provide four Balance Sheets (including two statements
of changes in equity) i.e. April 1, 2010, March 31, 2011,
April 1, 2011 and March 31, 2012, two statements of profit
and loss, two statements of cash flows and related notes
i.e. for the financial year ending March 31, 2012 and for the
corresponding comparative period under Ind-AS. In addition,
the first Ind-AS financial statements would include the
reclassified financial statements of the entity for the year
ending March 31, 2011 as per the previous GAAP to the
extent practicable.
An entity’s comparative financial statements under Ind-ASs
should:
i. Apply consistent accounting policies for the first Ind-
AS financial statements and comparative period
ii. Apply the optional exemptions (set out in Appendices
C-E) andexceptions (set out in paragraph 14-17 and
Appendix B) consistently both as at the date of
transition, i.e, beginning date of the financial year for
which an entity presents financial information under
Ind-ASs and deemed date of transition, i.e, beginning
date of the comparative financial year for which an
entity presents financial information under Ind-ASs. For
example, the first time adopter for whom the first
reporting period is financial statements for the year
ending March 31, 2012 would apply the exceptions
and exceptions as at April 1, 2010 and April 1, 2011;
accordingly the Balance Sheet as at end of March 31,
2011 may not be equivalent to the opening Balance
Sheet as at April 1, 2011.
Non-Ind-AS comparative information and historical summaries
22 [Refer to Appendix 1]
11
First-time Adoption of Indian Accounting Standards
Explanation of transition to Ind-ASs
23 An entity shall explain how the transition from previous GAAP
to Ind-ASs affected its reported Balance Sheet, financial
performance and cash flows.
Reconciliations
24 To comply with paragraph 23, an entity’s first Ind-AS financial
statements shall include:
(a) reconciliation of its equity reported in accordance with Ind-
ASs to its equity in accordance with previous GAAP on the
date of transition to Ind-ASs.
(b) significant differences between previous GAAP and Ind-AS
in respect of its total comprehensive income (or if it did not
report such a total, profit or loss).
For example, a first time adopter for whom the first reporting
period as per Ind-AS is year ending March 31, 2012; would
provide significant differences explaining the impact on the
total comprehensive income for the year ending on that date
arising from adoption of the Ind-AS.
(c) if the entity recognised or reversed any impairment losses
for the first-time in preparing its opening Ind-AS Balance
Sheet, the disclosures that Ind AS 36 Impairment of Assets
would have required if the entity had recognised those
impairment losses or reversals in the period beginning with
the date of transition to Ind-ASs.
(d) where however, an entity decides to provide one year
comparative information in accordance with paragraph 21(b)
of this Ind-AS then instead of disclosures in (b) above such
an entity shall provide
i. a reconciliation of its equity in accordance with Ind-
AS as at deemed date of transition, i.e, beginning of
Indian Accounting Standards
12
the comparative financial year for which an entity
presents financial information under Ind-ASs to its
equity reported in accordance with previous GAAP;
ii. a reconciliation of its equity in accordance with Ind-
AS as at the end of the comparative period presented
to its equity reported in accordance with previous
GAAP; and
iii. a reconciliation of its total comprehensive income in
accordance with Ind-AS compiled on a memorandum
basis to its total comprehensive income (or if it did
not report such a total, profit or loss) in accordance
with previous GAAP for the comparative period.
For example, a first time adopter for whom the first reporting period as
per Ind-AS is year ending March 31, 2012 along with one year
comparative in accordance with paragraph 21(b) of this Ind-AS would
provide a reconciliation explaining the impact on the total comprehensive
income for the year ending March 31, 2011 and on the equity as at
April 1, 2010 and March 31, 2011 arising from adoption of the Ind-AS.
The equity in accordance as at March 31, 2011 may not be equal to the
equity as at April 1, 2011 because the comparatives financial under
Ind-AS would be compiled on a memorandum basis based on the
assumption that the deemed date of transition for the comparative period
would be April 1, 2010 where as the date of transition for the year
ended March 31, 2012 will be April 1, 2011
25 The disclosures required by paragraphs 24(a),(b) and (d) shall
give sufficient detail to enable users to understand the material
adjustments to the Balance Sheet and statement of profit and loss. If
an entity presented a statement of cash flows under its previous GAAP,
it shall also explain the material adjustments to the statement of cash
flows.
26 If an entity becomes aware of errors made under previous GAAP,
the disclosures required by paragraphs 24(a),(b) and (d) shall distinguish
the correction of those errors from changes in accounting policies.
13
First-time Adoption of Indian Accounting Standards
27 Ind AS 8 does not apply to changes in accounting policies an
entity makes when it adopts Ind-ASs or to changes in those policies
until after it presents its first Ind-AS financial statements. Therefore,
Ind AS 8’s requirements about changes in accounting policies do not
apply in an entity’s first Ind-AS financial statements.
27A If during the period covered by its first Ind-AS financial statements
an entity changes its accounting policies or its use of the exemptions
contained in this Ind-AS, it shall explain the changes between its first
Ind-AS interim financial report and its first Ind-AS financial statements,
in accordance with paragraph 23, and it shall update the disclosures
required by paragraph 24(a), (b) and (d).
27B If an entity adopts the first time exemption option provided in
accordance with paragraph D7A, the fact and the accounting policy
shall be disclosed by the entity until such time that significant block of
such assets is fully depreciated or derecognised from the entity’s
Balance Sheet.
28 If an entity did not present financial statements for previous
periods, its firstInd-AS financial statements shall disclose that fact.
Designation of financial assets or financial liabilities
29 An entity is permitted to designate a previously recognised
financial asset or financial liability as a financial asset or financial liability
at fair value through profit or loss or a financial asset as available for
sale in accordance with paragraph D19. The entity shall disclose the
fair value of financial assets or financial liabilities designated into each
category at the date of designation and their classification and carrying
amount in the previous financial statements.
Use of fair value as deemed cost
30 If an entity uses fair value in its opening Ind-AS Balance Sheet
as deemed cost for an item of property, plant and equipment, an
investment property or an intangible asset (see paragraphs D5 and
D7), the entity’s first Ind-AS financial statements shall disclose, for
each line item in the opening Ind-AS Balance Sheet:
Indian Accounting Standards
14
(a) the aggregate of those fair values; and
(b) the aggregate adjustment to the carrying amounts reported
under previous GAAP
Use of deemed cost for investments in subsidiaries, jointly
controlled entities and associates
31 Similarly, if an entity uses a deemed cost in its opening Ind-AS
Balance Sheet for an investment in a subsidiary, jointly controlled entity
or associate in its separate financial statements (see paragraph D15),
the entity’s first Ind-AS separate financial statements shall disclose:
(a) the aggregate deemed cost of those investments for which
deemed cost is their previous GAAP carrying amount;
(b) the aggregate deemed cost of those investments for which
deemed cost is fair value; and
(c) the aggregate adjustment to the carrying amounts reported
under previous GAAP.
Use of deemed cost for oil and gas assets
31A If an entity uses the exemption in paragraph D8A(b) for oil and
gas assets, it shall disclose that fact and the basis on which carrying
amounts determined under previous GAAP were allocated.
Use of deemed cost for operations subject to rate regulation
31B If an entity uses the exemption in paragraph D8B for operations
subject to rate regulation, it shall disclose that fact and the basis on
which carrying amounts were determined under previous GAAP.
Interim financial reports
32 To comply with paragraph 23, if an entity presents an interim
financial report in accordance with Ind AS 34 for part of the period
15
First-time Adoption of Indian Accounting Standards
covered by its first Ind-AS financial statements, the entity shall provide
either of the following disclosures in addition to the requirements of Ind
AS 34:
(a) where, an entity decides not to provide one year comparative
period in accordance with paragraph 21(a) of this Ind-AS:
provide the disclosures described in paragraph 24(a) and
24(b) for the part period and year to date covered by its
first Ind-AS financial statements (supplemented by the
details required by paragraphs 25 and 26) or a crossreference
to another published document that includes these
disclosures; or
(b) where, an entity decides to provide one year comparative
period in accordance with paragraph 21(b) of this Ind-AS:
provide
i. the reconciliations described in paragraph 24(a)
(supplemented by the details required by paragraphs
25 and 26) or a cross-reference to another published
document that includes these reconciliations.
ii. a reconciliation of its equity in accordance with Ind-
AS as at deemed date of transition, i.e, beginning of
the comparative interim period for which an entity
presents financial information under Ind-ASs to its
equity reported in accordance with previous GAAP;
iii. a reconciliation of its equity in accordance with Ind-
AS at the end of that comparable interim period to its
equity in accordance with previous GAAP at that date;
and
iv. a reconciliation of total comprehensive income in
accordance with Ind-AS compiled on a memorandum
basis with its total comprehensive income (or if it did
not report such a total, profit or loss) in accordance
with previous GAAP for that comparable interim period
(current and year to date).
Indian Accounting Standards
16
(c) Refer to Appendix 1)
32A If an entity changes its accounting policies or its use of the
exemptions contained in this Ind-AS, it shall explain the changes in
each such interim financial report in accordance with paragraph 23 and
update the reconciliations required by 32(a) or 32(b).
33 Ind AS 34 requires minimum disclosures, which are based on the
assumption that users of the interim financial report also have access
to the most recent annual financial statements. However, Ind AS 34
also requires an entity to disclose ‘any events or transactions that are
material to an understanding of the current interim period’. Therefore, if
a first-time adopter did not, in its most recent annual financial statements
in accordance with previous GAAP, disclose information material to an
understanding of the current interim period, its interim financial report
shall disclose that information or include a cross-reference to another
published document that includes it.
17
First-time Adoption of Indian Accounting Standards
Appendix A
Defined terms
This appendix is an integral part of this Ind-AS.
date of transition The beginning date of financial year on or
to Ind-AS after 1 April 2011 for which an entity
presents financial information under Ind-ASs
in its first Ind-AS financial statements.
deemed cost An amount used as a surrogate for cost or
depreciated cost at a given date.
Subsequent depreciation or amortisation
assumes that the entity had initially
recognised the asset or liability at the given
date and that its cost was equal to the
deemed cost.
fair value The amount for which an asset could be
exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s
length transaction.
first Ind-AS financial The first annual financial statements in
statements which an entity adopts Indian Accounting
Standards (Ind-ASs), by an explicit and
unreserved statement of compliance with
Ind-ASs.
first Ind-AS reporting The latest reporting period covered by an
period entity’s first Ind-AS financial statements.
first-time adopter An entity that presents its first Ind-AS
financial statements.
Indian Accounting Standards
18
Indian Accounting Indian Accounting Standards are Accounting
Standards (Ind-ASs) Standards prescribed under Section 211(3C)
of the Companies Act, 1956.
opening Ind-AS An entity’s Balance Sheet at the date of
Balance Sheet transition to Ind-AS
previous GAAP The basis of accounting that a first-time
adopter used immediately before adopting
Ind-ASs for its reporting requirements in
India. For instance, for companies preparing
their financial statements in accordance with
the existing Accounting Standards notified
under the Companies (Accounting
Standards) Rules, 2006 shall consider those
financial statements as previous GAAP
financial statements.
19
First-time Adoption of Indian Accounting Standards
Appendix B
Exceptions to the retrospective application of
other Ind-ASs
This appendix is an integral part of this Ind-AS.
B1 An entity shall apply the following exceptions:
(a) derecognition of financial assets and financial liabilities
(paragraphs B2 and B3);
(b) hedge accounting (paragraphs B4–B6); and
(c) non-controlling interests (paragraph B7)
Derecognition of financial assets and financial
liabilities
B2 Except as permitted by paragraph B3, a first-time adopter shall
apply the derecognition requirements in Ind AS 39 Financial Instruments:
Recognition and Measurement prospectively for transactions occurring
on or after date of transition to Ind-AS. In other words, if a first-time
adopter derecognised non-derivative financial assets or non-derivative
financial liabilities in accordance with its previous GAAP as a result of
a transaction that occurred before date of transition to Ind-AS, it shall
not recognise those assets and liabilities in accordance with Ind-ASs
(unless they qualify for recognition as a result of a later transaction or
event).
B3 Notwithstanding paragraph B2, an entity may apply the
derecognition requirements in Ind AS 39 retrospectively from a date of
the entity’s choosing, provided that the information needed to applyInd
AS 39 to financial assets and financial liabilities derecognised as a
result of past transactions was obtained at the time of initially accounting
for those transactions.
Indian Accounting Standards
20
Hedge accounting
B4 As required by Ind AS 39, at the date of transition to Ind-ASs, an
entity shall:
(a) measure all derivatives at fair value; and
(b) eliminate all deferred losses and gains arising on derivatives
that were reported in accordance with previous GAAP as if
they were assets or liabilities.
B5 An entity shall not reflect in its opening Ind-AS Balance Sheet a
hedging relationship of a type that does not qualify for hedge accounting
in accordance with Ind AS 39 (for example, many hedging relationships
where the hedging instrument is a cash instrument or written option;
where the hedged item is a net position; or where the hedge covers
interest risk in a held-to-maturity investment). However, if an entity
designated a net position as a hedged item in accordance with previous
GAAP, it may designate an individual item within that net position as a
hedged item in accordance with Ind-ASs, provided that it does so no
later than the date of transition to Ind-ASs.
B6 If, before the date of transition to Ind-ASs, an entity had
designated a transaction as a hedge but the hedge does not meet the
conditions for hedge accounting in Ind AS 39, the entity shall apply
paragraphs 91 and 101 of Ind AS 39 to discontinue hedge accounting.
Transactions entered into before the date of transition to Ind-ASs shall
not be retrospectively designated as hedges.
Non-controlling interests
B7 A first-time adopter shall apply the following requirements of Ind
AS 27 prospectively from the date of transition to Ind-ASs:
(a) the requirement in paragraph 28 that total comprehensive
income is attributed to the owners of the parent and to the
non-controlling interests even if this results in the noncontrolling
interests having a deficit balance;
21
First-time Adoption of Indian Accounting Standards
(b) the requirements in paragraphs 30 and 31 for accounting
for changes in the parent’s ownership interest in a subsidiary
that do not result in a loss of control; and
(c) the requirements in paragraphs 34–37 for accounting for a loss
of control over a subsidiary, and the related requirements of
paragraph 8A of Ind AS 105 Non-current Assets Held for Sale
and Discontinued Operations.
However, if a first-time adopter elects to apply Ind AS 103 Business
Combinations retrospectively to past business combinations, it shall
also apply Ind AS 27 in accordance with paragraph C1 of this Ind-AS.
Indian Accounting Standards
22
Appendix C
Exemptions for business combinations
This appendix is an integral part of this Ind-AS. An entity shall apply
the following requirements to business combinations that the entity
recognised before the date of transition to Ind-ASs.
C1 A first-time adopter may elect not to apply Ind AS 103 Business
Combinations retrospectively to past business combinations (business
combinations that occurred before the date of transition to Ind-ASs).
However, if a first-time adopter restates any business combination to
comply with Ind AS 103, it shall restate all later business combinations
and shall also apply Ind AS 27 from that same date. For example, if a
first-time adopter elects to restate a business combination that occurred
on 30 June 2006, it shall restate all business combinations that occurred
between 30 June 2006 and the date of transition to Ind-ASs, and it
shall also apply Ind AS 27 from 30 June 2006.
C2 An entity need not apply Ind AS 21 The Effects of Changes in
Foreign Exchange Rates retrospectively to fair value adjustments and
goodwill arising in business combinations that occurred before the date
of transition to Ind-ASs. If the entity does not apply Ind AS 21
retrospectively to those fair value adjustments and goodwill, it shall
treat them as assets and liabilities of the entity rather than as assets
and liabilities of the acquiree. Therefore, those goodwill and fair value
adjustments either are already expressed in the entity’s functional
currency or are non-monetary foreign currency items, which are reported
using the exchange rate applied in accordance with previous GAAP.
C3 An entity may apply Ind AS 21 retrospectively to fair value
adjustments and goodwill arising in either:
(a) all business combinations that occurred before the date of
transition to Ind-ASs; or
23
First-time Adoption of Indian Accounting Standards
(b) all business combinations that the entity elects to restate to
comply with Ind AS 103, as permitted by paragraph C1
above.
C4 If a first-time adopter does not apply Ind AS 103 retrospectively
to a past business combination, this has the following consequences
for that business combination:
(a) The first-time adopter shall keep the same classification
(as an acquisition by the legal acquirer, a reverse acquisition
by the legal acquiree, or a uniting of interests) as in its
previous GAAP financial statements.
(b) The first-time adopter shall recognise all its assets and
liabilities at the date of transition to Ind-ASs that were
acquired or assumed in a past business combination, other
than:
(i) some financial assets and financial liabilities
derecognised in accordance with previous GAAP (see
paragraph B2); and
(ii) assets, including goodwill, and liabilities that were not
recognised in the acquirer’s consolidated Balance
Sheet in accordance with previous GAAP and also
would not qualify for recognition in accordance with
Ind-ASs in the separate Balance Sheet of the acquiree
(see (f)–(i) below).
The first-time adopter shall recognise any resulting change
by adjusting retained earnings (or, if appropriate, another
category of equity), unless the change results from the
recognition of an intangible asset that was previously
subsumed within goodwill (see (g)(i) below).
(c) The first-time adopter shall exclude from its opening Ind-AS
Balance Sheet any item recognised in accordance with
previous GAAP that does not qualify for recognition as an
Indian Accounting Standards
24
asset or liability under Ind-ASs. The first-time adopter shall
account for the resulting change as follows:
(i) the first-time adopter may have classified a past
business combination as an acquisition and recognised
as an intangible asset an item that does not qualify
for recognition as an asset in accordance with Ind AS
38 Intangible Assets. It shall reclassify that item (and,
if any, the related deferred tax and non-controlling
interests) as part of goodwill (unless it deducted
goodwill directly from equity in accordance with
previous GAAP, see (g)(i) and (i) below) or capital
reserve to the extent not exceeding the balance
available in that reserve.
(ii) the first-time adopter shall recognise all other resulting
changes in retained earnings1.
(d) Ind-ASs require subsequent measurement of some assets
and liabilities on a basis that is not based on original cost,
such as fair value. The first-time adopter shall measure
these assets and liabilities on that basis in its opening Ind-
AS Balance Sheet, even if they were acquired or assumed
in a past business combination. It shall recognise any
resulting change in the carrying amount by adjusting retained
earnings (or, if appropriate, another category of equity),
rather than goodwill/capital reserve.
(e) Immediately after the business combination, the carrying
amount in accordance with previous GAAP of assets
acquired and liabilities assumed in that business
combination shall be their deemed cost in accordance with
1 Such changes include reclassifications from or to intangible assets if goodwill
was not recognised in accordance with previous GAAP as an asset. This
arises if, in accordance with previous GAAP, the entity (a) deducted goodwill
directly from equity or (b) did not treat the business combination as an acquisition
or (c) recognised capital reserve in a business combination accounted for as
an acquisition and the amount of reclassification mentioned in (i) above exceeds
the balance available in that reserve.
25
First-time Adoption of Indian Accounting Standards
Ind-ASs at that date. If Ind-ASs require a cost-based
measurement of those assets and liabilities at a later
date,that deemed cost shall be the basis for cost-based
depreciation or amortisation from the date of the business
combination.
(f) If an asset acquired, or liability assumed, in a past business
combination was not recognised in accordance with previous
GAAP, it does not have a deemed cost of zero in the opening
Ind-AS Balance Sheet. Instead, the acquirer shall recognise
and measure it in its consolidated Balance Sheet on the
basis that Ind-ASs would require in the Balance Sheet of
the acquiree. To illustrate: if the acquirer had not, in
accordance with its previous GAAP, capitalised finance
leases acquired in a past business combination, it shall
capitalise those leases in its consolidated financial
statements, as Ind AS 17 Leases would require the acquiree
to do in its Ind-AS Balance Sheet. Similarly, if the acquirer
had not, in accordance with its previous GAAP, recognised
a contingent liability that still exists at the date of transition
to Ind-ASs, the acquirer shall recognise that contingent
liability at that date unless Ind AS 37 Provisions, Contingent
Liabilities and Contingent Assets would prohibit its
recognition in the financial statements of the acquiree.
Conversely, if an asset or liability was subsumed in goodwill/
capital reserve in accordance with previous GAAP but would
have been recognised separately under Ind AS 103, that
asset or liability remains in goodwill/capital reserve unless
Ind-ASs would require its recognition in the financial
statements of the acquiree.
(g) The carrying amount of goodwill or capital reserve in the
opening Ind-AS Balance Sheet shall be its carrying amount
in accordance with previous GAAP at the date of transition
to Ind-ASs, after the following two adjustments:
(i) If required by (c)(i) above, the first-time adopter shall
increase the carrying amount of goodwill or decrease the
carrying amount of capital reserve when it reclassifies an
Indian Accounting Standards
26
item that it recognised as an intangible asset in
accordance with previous GAAP. Similarly, if (f) above
requires the first-time adopter to recognise an intangible
asset that was subsumed in recognised goodwill or capital
reserve in accordance with previous GAAP, the first-time
adopter shall decrease the carrying amount of goodwill or
increase the carrying amount of capital reserve accordingly
(and, if applicable, adjust deferred tax and non-controlling
interests).
(ii) Regardless of whether there is any indication that the
goodwill may be impaired, the first-time adopter shall
apply Ind AS 36 in testing the goodwill for impairment
at the date of transition to Ind-ASs and in recognising
any resulting impairment loss in retained earnings (or,
if so required by Ind AS 36, in revaluation surplus).
The impairment test shall be based on conditions at
the date of transition to Ind-ASs.
(h) No other adjustments shall be made to the carrying amount
of goodwill/capital reserve at the date of transition to Ind-
ASs. For example, the first-time adopter shall not restate
the carrying amount of goodwill/capital reserve:
(i) to exclude in-process research and development
acquired in that business combination (unless the
related intangible asset would qualify for recognition
in accordance with Ind AS 38 in the Balance Sheet of
the acquiree);
(ii) to adjust previous amortisation of goodwill;
(iii) to reverse adjustments to goodwill that Ind AS 36 would
not permit, but were made in accordance with previous
GAAP because of adjustments to assets and liabilities
between the date of the business combination and the
date of transition to Ind-ASs.
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First-time Adoption of Indian Accounting Standards
(i) If the first-time adopter recognised goodwill in accordance
with previous GAAP as a deduction from equity:
(i) it shall not recognise that goodwill in its opening Ind-
AS Balance Sheet. Furthermore, it shall not reclassify
that goodwill to profit or loss if it disposes of the
subsidiary or if the investment in the subsidiary
becomes impaired.
(ii) adjustments resulting from the subsequent resolution
of a contingency affecting the purchase consideration
shall be recognised in retained earnings.
(j) In accordance with its previous GAAP, the first-time adopter
may not have consolidated a subsidiary acquired in a past
business combination (for example, because the parent did
not regard it as a subsidiary in accordance with previous
GAAP or did not prepare consolidated financial statements).
The first-time adopter shall adjust the carrying amounts of
the subsidiary’s assets and liabilities to the amounts that
Ind-ASs would require in the subsidiary’s Balance Sheet.
The deemed cost of goodwill equals the difference at the
date of transition to Ind-ASs between:
(i) the parent’s interest in those adjusted carrying
amounts; and
(ii) the cost in the parent’s separate financial statements
of its investment in the subsidiary.
(k) The measurement of non-controlling interests and deferred
tax follows from the measurement of other assets and
liabilities. Therefore, the above adjustments to recognised
assets and liabilities affect non-controlling interests and
deferred tax.
C5 The exemption for past business combinations also applies to
past acquisitions of investments in associates and of interests in joint
ventures. Furthermore, the date selected for paragraph C1 applies
equally for all such acquisitions.
Indian Accounting Standards
28
Appendix D
Exemptions from other Ind-ASs
This appendix is an integral part of this Ind-AS.
D1 An entity may elect to use one or more of the following
exemptions:
(a) share-based payment transactions (paragraphs D2 and D3);
(b) insurance contracts (paragraph D4);
(c) deemed cost (paragraphs D5–D8B);
(d) leases (paragraphs D9 and D9A);
(e) employee benefits (paragraphs D10 and D11);
(f) cumulative translation differences and accumulated
exchange differences (paragraphs D12 -D13A);
(g) investments in subsidiaries, jointly controlled entities and
associates (paragraphs D14 and D15);
(h) assets and liabilities of subsidiaries, associates and joint
ventures (paragraphs D16 and D17);
(i) compound financial instruments (paragraph D18);
(j) designation of previously recognised financial instruments
(paragraph D19-D 19B);
(k) fair value measurement of financial assets or financial
liabilities at initial recognition (paragraph D20);
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First-time Adoption of Indian Accounting Standards
(l) decommissioning liabilities included in the cost of property,
plant and equipment (paragraphs D21 and D21A);
(m) financial assets or intangible assets accounted for in accordance
with Appendix A to Ind AS 11 Service Concession Arrangements
(paragraph D22);
(n) borrowing costs (paragraph D23);
(o) transfers of assets from customers (paragraph D24).
(p) extinguishing financial liabilities with equity instruments (paragraph
D25); and
(q) non-current assets held for sale and discontinued operations
(paragraph D26).
An entity shall not apply these exemptions by analogy to other items.
Share-based payment transactions
D2 A first-time adopter is encouraged, but not required, to apply Ind
AS 102 Share-based Payment to equity instruments that vested before
date of transition to Ind-ASs. However, if a first-time adopter elects to
apply Ind AS 102 to such equity instruments, it may do so only if the
entity has disclosed publicly the fair value of those equity instruments,
determined at the measurement date, as defined in Ind AS 102. For all
grants of equity instruments to which Ind AS 102 has not been applied
i.e. equity instruments vested but not settled before date of transition to
Ind-ASs, a first-time adopter shall nevertheless disclose the information
required by paragraphs 44 and 45 of Ind AS 102. If a first-time adopter
modifies the terms or conditions of a grant of equity instruments to
which Ind AS 102 has not been applied, the entity is not required to
apply paragraphs 26–29 of Ind AS 102 if the modification occurred
before the date of transition to Ind-ASs.
D3 A first-time adopter is encouraged, but not required, to apply Ind
AS 102 to liabilities arising from share-based payment transactions that
were settled before the date of transition to Ind-ASs.
Indian Accounting Standards
30
Insurance contracts
D4 An entity shall apply Ind AS 104 Insurance Contracts for annual
periods beginning on or after date of transition to Ind-AS. Earlier
application is encouraged. If an entity applies this Ind AS 104 for an
earlier period, it shall disclose that fact.
In applying paragraph 39(c)(iii), of Ind AS 104 an entity need not disclose
information about claims development that occurred earlier than five
years before the end of the first financial year in which it applies Ind AS
104. Furthermore, if it is impracticable, when an entity first applies Ind
AS 104, to prepare information about claims development that occurred
before the beginning of the earliest period for which an entity presents
information that complies with this Ind AS, the entity shall disclose that
fact.
When an insurer changes its accounting policies for insurance liabilities,
it is permitted, but not required, to reclassify some or all of its financial
assets as ‘at fair value through profit or loss’. This reclassification is
permitted if an insurer changes accounting policies when it first applies
Ind AS 104 and if it makes a subsequent policy change permitted by
paragraph 22. The reclassification is a change in accounting policy and
Ind AS 8 applies.
Deemed cost
D5 A first-time adopter may elect to measure an item of property,
plant and equipment at the date of transition to Ind-ASs at its fair value
and use that fair value as its deemed cost at that date.
D6 A first-time adopter may elect to use a previous GAAP revaluation of
an item of property, plant and equipment at, or before, the date of transition
to Ind-ASs as deemed cost at the date of the revaluation, if the revaluation
was, at the date of the revaluation, broadly comparable to:
(a) fair value; or
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First-time Adoption of Indian Accounting Standards
(b) cost or depreciated cost in accordance with Ind-ASs,
adjusted to reflect, for example, changes in a general or
specific price index.
D7 The elections in paragraphs D5 and D6 are also available for:
(a) investment property, accounted for in accordance with the
cost model in Ind AS 40 Investment Property; and
(b) intangible assets that meet:
(i) the recognition criteria in Ind AS 38 (including reliable
measurement of original cost); and
(ii) the criteria in Ind AS 38 for revaluation (including the
existence of an active market).
An entity shall not use these elections for other assets or for
liabilities.
D7A A first-time adopter may elect to continue with the carrying value
for all of its property, plant and equipment as recognised in the financial
statements as at the date of transition measured as per the previous
GAAP and use that as its deemed cost as at date of transition after
making necessary adjustments in accordance with paragraph D21 and
D21A of this standard. In the financial statements of an entity where
property, plant and equipment of subsidiaries, joint ventures or
associates have been measured as per the previous GAAP for the
purpose of consolidation/equity accounting/proportionate consolidation
or equity accounting, then the amounts so used for the purpose of
consolidation/equity accounting/proportionate consolidation or equity
accounting, may be considered for the aforesaid optional exemption.
If an entity is preparing its financial statements in which its subsidiaries/
associates/jointly controlled entities are consolidated/accounted as per
the equity method/proportionately consolidated or accounted as per the
equity method for the first time and if any of its subsidiaries, jointly
controlled entities or associates has not measured property, plant and
equipment in accordance with the previous GAAP, then to that extent
Indian Accounting Standards
32
the first time adopter may recompute carrying values of the property,
plant and equipment in accordance with the principles of Ind AS 16:
Property, Plant and Equipment as on the date of transition to Ind-AS
after considering the first time adoption exemption available in this
standard for that subsidiary, jointly controlled entity or associate.
The above option can also be availed for intangible assets covered by
Ind AS 38 Intangible Assets and investment property covered by Ind AS
40 Investment Property.
D8 A first-time adopter may have established a deemed cost in
accordance with previous GAAP for some or all of its assets and
liabilities by measuring them at their fair value at one particular date
because of an event such as a privatisation or initial public offering. It
may use such event-driven fair value measurements as deemed cost
for Ind-ASs at the date of that measurement.
D8A Under some GAAPs exploration and development costs for oil
and gas properties in the development or production phases2 are
accounted for in cost centres that include all properties in a large
geographical area. A first-time adopter using such accounting under
previous GAAP may elect to measure oil and gas assets at the date of
transition to Ind-ASs on the following basis:
(a) exploration and evaluation assets at the amount determined
under the entity’s previous GAAP; and
(b) assets in the development or production phases at the
amount determined for the cost centre under the entity’s
previous GAAP. The entity shall allocate this amount to the
cost centre’s underlying assets pro rata using reserve
volumes or reserve values as of that date.
The entity shall test exploration and evaluation assets and assets
in the development and production phases for impairment at the
2 Ind AS 106, Exploration for and Evaluation of Mineral Resources, is under
consideration and may not be notified in the present form. Accordingly,
provisions given in this regard would be effective from the date this Standard
comes into effect.
33
First-time Adoption of Indian Accounting Standards
date of transition to Ind-ASs in accordance with Ind AS 106
Exploration for and Evaluation of Mineral Resources or Ind AS
36 respectively and, if necessary, reduce the amount determined
in accordance with (a) or (b) above. For the purposes of this
paragraph, oil and gas assets comprise only those assets used
in the exploration, evaluation, development or production of oil
and gas.
D8B Some entities hold items of property, plant and equipment or
intangible assets that are used, or were previously used, in operations
subject to rate regulation. The carrying amount of such items might
include amounts that were determined under previous GAAP but do not
qualify for capitalisation in accordance with Ind-ASs. If this is the case,
a first-time adopter may elect to use the previous GAAP carrying amount
of such an item at the date of transition to Ind-ASs as deemed cost. If
an entity applies this exemption to an item, it need not apply it to all
items. At the date of transition to Ind-ASs, an entity shall test for
impairment in accordance with Ind AS 36 each item for which this
exemption is used. For the purposes of this paragraph, operations are
subject to rate regulation if they provide goods or services to customers
at prices (i.e. rates) established by an authorised body empowered to
establish rates that bind the customers and that are designed to recover
the specific costs the entity incurs in providing the regulated goods or
services and to earn a specified return. The specified return could be a
minimum or range and need not be a fixed or guaranteed return.
Leases3
D9 A first-time adopter may apply paragraphs 6-9 of the Appendix C
of Ind AS 17 Determining whether an Arrangement contains a Lease to
determine whether an arrangement existing at the date of transition to
Ind-ASs contains a lease on the basis of facts and circumstances existing
at the date of transition to Ind-AS except where the effect is expected
to be not material.
3 Notification of Appendix C of Ind AS 17, Determining whether an Arrangement
contains a Lease, has been deferred. Accordingly, provisions given in this
regard would be effective from the date this Appendix comes into effect.
Indian Accounting Standards
34
D9A If a first-time adopter made the same determination of whether
an arrangement contained a lease in accordance with previous GAAP
as that required by Appendix C of Ind AS 17 – but at a date other than
that required by D9 above, the first-time adopter need not reassess
that determination when it adopts Ind-ASs. For an entity to have made
the same determination of whether the arrangement contained a lease
in accordance with previous GAAP, that determination would have to
have given the same outcome as that resulting from applying Ind AS 17
Leases and Appendix C of Ind AS 17.
Employee benefits
D10 [Refer to Appendix 1]
D11 An entity may disclose the amounts required by paragraph 120A(p)
of Ind AS 19 as the amounts are determined for each accounting period
prospectively from the date of transition to Ind-ASs.
D11A Ind AS 19 requires recognition of actuarial gains and losses for
post-employment defined benefit plans and other long-term employment
benefit plans in other comprehensive income immediately and are not
reclassified to profit or loss in a subsequent period. However, a firsttime
adopter may elect to recognise all cumulative actuarial gains and
losses subsequent to the date of transition to Ind-AS in other
comprehensive income.
Cumulative translation differences and accumulated
exchange differences
D12 Ind AS 21 requires an entity:
(a) to recognise some translation differences in other
comprehensive income and accumulate these in a separate
component of equity; and
(b) on disposal of a foreign operation, to reclassify the cumulative
translation difference for that foreign operation (including, if
35
First-time Adoption of Indian Accounting Standards
applicable, gains and losses on related hedges) from equity to
profit or loss as part of the gain or loss on disposal.
D13 However, a first-time adopter need not comply with these
requirements for cumulative translation differences that existed at the
date of transition to Ind-ASs. If a first-time adopter uses this exemption:
(a) the cumulative translation differences for all foreign
operations are deemed to be zero at the date of transition
to Ind-ASs; and
(b) the gain or loss on a subsequent disposal of any foreign
operation shall exclude translation differences that arose
before the date of transition to Ind-ASs and shall include
later translation differences.
D13A On the date of transition, if there are long-term monetary assets
or long-term monetary liabilities mentioned in paragraph 29A of Ind AS
21, an entity may exercise the option mentioned in that paragraph either
retrospectively or prospectively. If this option is exercised prospectively,
the accumulated exchange differences in respect of those items are
deemed to be zero on the date of transition.
Investments in subsidiaries, jointly controlled entities
and associates
D14 When an entity prepares separate financial statements, Ind AS
27 requires it to account for its investments in subsidiaries, jointly
controlled entities and associates either:
(a) at cost; or
(b) in accordance with Ind AS 39.
D15 If a first-time adopter measures such an investment at cost in
accordance with Ind AS 27, it shall measure that investment at one of
the following amounts in its separate opening Ind-AS Balance Sheet:
(a) cost determined in accordance with Ind AS 27; or
Indian Accounting Standards
36
(b) deemed cost. The deemed cost of such an investment shall
be its:
(i) fair value (determined in accordance with Ind AS 39 )
at the entity’s date of transition to Ind-ASs in its
separate financial statements; or
(ii) previous GAAP carrying amount at that date.
A first-time adopter may choose either (i) or (ii) above to measure
its investment in each subsidiary, jointly controlled entity or
associate that it elects to measure using a deemed cost.
Assets and liabilities of subsidiaries, associates and
joint ventures
D16 If a subsidiary becomes a first-time adopter later than its parent,
the subsidiary shall, in its financial statements, measure its assets and
liabilities at either:
(a) the carrying amounts that would be included in the parent’s
consolidated financial statements, based on the parent’s
date of transition to Ind-ASs, if no adjustments were made
for consolidation procedures and for the effects of the
business combination in which the parent acquired the
subsidiary; or
(b) the carrying amounts required by the rest of this Ind-AS, based
on the subsidiary’s date of transition to Ind-ASs. These carrying
amounts could differ from those described in (a):
(i) when the exemptions in this Ind-AS result in
measurements that depend on the date of transition to
Ind-ASs.
(ii) when the accounting policies used in the subsidiary’s
financial statements differ from those in the
consolidated financial statements. For example, the
37
First-time Adoption of Indian Accounting Standards
subsidiary may use as its accounting policy the cost
model in Ind AS 16 Property, Plant and Equipment,
whereas the group may use the revaluation model.
A similar election is available to an associate or joint venture
that becomes a first-time adopter later than an entity that
has significant influence or joint control over it.
D17 However, if an entity becomes a first-time adopter later than its
subsidiary (or associate or joint venture) the entity shall, in its consolidated
financial statements, measure the assets and liabilities of the subsidiary (or
associate or joint venture) at the same carrying amounts as in the financial
statements of the subsidiary (or associate or joint venture), after adjusting
for consolidation and equity accounting adjustments and for the effects of
the business combination in which the entity acquired the subsidiary.
Compound financial instruments
D18 Ind AS 32 Financial Instruments: Presentation requires an entity to
split a compound financial instrument at inception into separate liability and
equity components. If the liability component is no longer outstanding,
retrospective application of Ind AS 32 involves separating two portions of
equity. The first portion is in retained earnings and represents the cumulative
interest accreted on the liability component. The other portion represents
the original equity component. However, in accordance with this Ind-AS, a
first-time adopter need not separate these two portions if the liability
component is no longer outstanding at the date of transition to Ind-ASs.
Designation of previously recognised financial
instruments
D19 An entity is permitted to designate financial asset and liability in
accordance with Ind AS 39 as on the date of transition to Ind-AS’s.
Accordingly
(a) an entity is permitted to make an available-for-sale designation
at the date of transition to Ind-ASs.
Indian Accounting Standards
38
(b) an entity is permitted to designate, at the date of transition
to Ind-ASs, any financial asset or financial liability as at fair
value through profit or loss provided the asset or liability
meets the criteria as per Ind AS 39 at that date.
D19A Financial instruments carried at amortised cost should be
measured in accordance with Ind-AS 39 from the date of recognition of
financial instruments unless it is impracticable (as defined in Ind AS 8)
for an entity to apply retrospectively the effective interest method or the
impairment requirements in paragraphs 58–65 and AG84–AG93 of Ind
AS 39.If it is impracticable then the fair value of the financial instrument
at the date of transition to Ind-ASs shall be the new amortised cost of
that financial instrument at the date of transition to Ind-ASs.
D19B Financial instruments measured at fair value shall be measured
at fair value as on the date of transition to Ind-AS.
Fair value measurement of financial assets or financial
liabilities at initial recognition
D20 Notwithstanding the requirements of paragraphs 7 and 9, an entity
may apply the requirements in the last sentence of Ind AS 39 paragraph
AG76 and in paragraph AG76A, prospectively to transactions entered into
after financial years beginning on or after date of transition to Ind-ASs
Decommissioning liabilities included in the cost of
property, plant and equipment
D21 Appendix ‘A’ to Ind AS 16 Changes in Existing Decommissioning,
Restoration and Similar Liabilities requires specified changes in a
decommissioning, restoration or similar liability to be added to or
deducted from the cost of the asset to which it relates; the adjusted
depreciable amount of the asset is then depreciated prospectively over
its remaining useful life. A first-time adopter need not comply with these
requirements for changes in such liabilities that occurred before the
date of transition to Ind-ASs. If a first-time adopter uses this exemption,
39
First-time Adoption of Indian Accounting Standards
it shall:
(a) measure the liability as at the date of transition to Ind-ASs
in accordance with Ind AS 37;
(b) to the extent that the liability is within the scope of Appendix
A of Ind AS 16, estimate the amount that would have been
included in the cost of the related asset when the liability
first arose, by discounting the liability to that date using its
best estimate of the historical risk-adjusted discount rate(s)
that would have applied for that liability over the intervening
period; and
(c) calculate the accumulated depreciation on that amount, as
at the date of transition to Ind-ASs, on the basis of the
current estimate of the useful life of the asset, using the
depreciation policy adopted by the entity in accordance with
Ind-ASs.
D21A An entity that uses the exemption in paragraph D8A(b) (for oil
and gas assets in the development or production phases accounted for
in cost centres that include all properties in a large geographical area
under previous GAAP) shall, instead of applying paragraph D21 or
Appendix A of Ind AS 16:
(a) measure decommissioning, restoration and similar liabilities
as at the date of transition to Ind-ASs in accordance with
Ind AS 37; and
(b) recognise directly in retained earnings any difference
between that amount and the carrying amount of those
liabilities at the date of transition to Ind-ASs determined
under the entity’s previous GAAP.
Indian Accounting Standards
40
Financial assets or intangible assets accounted for in
accordance with Appendix A to Ind AS 114
D22 A first-time adopter may apply the following provisions while applying
the Appendix A to Ind AS 11:
(i) Subject to paragraph (ii), changes in accounting policies are
accounted for in accordance with Ind AS 8, i.e. retrospectively.
(ii) If, for any particular service arrangement, it is impracticable for
an operator to apply this Appendix retrospectively at the date
of transition, it shall:
(a) recognise financial assets and intangible assets that
existed at the date of transition;
(b) use the previous carrying amounts of those financial and
intangible assets (however previously classified) as their
carrying amounts as at that date; and
(c) test financial and intangible assets recognised at that date
for impairment, unless this is not practicable, in which
case the amounts shall be tested for impairment as at the
start of the current period.
(iii) There are two aspects to retrospective determination:
reclassification and remeasurement. It will usually be practicable
to determine retrospectively the appropriate classification of all
amounts previously included in an operator’s balance sheet,
but that retrospective remeasurement of service arrangement
assets might not always be practicable. However, the fact should
be disclosed.
Borrowing costs
D23 [Refer to Appendix 1]
4 Notification of Appendix A of Ind AS 11, Service Concession Arrangements,
has been deferred. Accordingly, provisions given in this regard would be effective
from the date this Appendix comes into effect.
41
First-time Adoption of Indian Accounting Standards
Transfers of assets from customers
D24 A first time adopter shall apply Appendix D of Ind AS 18
prospectively to transfers of assets from customers received on or after
the date of transition to Ind-AS, Earlier application is permitted provided
the valuations and other information needed to apply Appendix D of Ind
AS 18 to past transfers were obtained at the time those transfers
occurred. An entity shall disclose the date from which the Appendix D
of Ind AS 18 was applied.
Extinguishing financial liabilities with equity instruments
D25 A first-time adopter may apply Appendix E of Ind AS 39
Extinguishing Financial Liabilities with Equity Instruments from the date
of transition to Ind-AS.
Non-current assets held for sale and discontinued
operations
D26 Ind AS 105 requires non-current assets (or disposal groups) that
meet the criteria to be classified as held for sale, non-current assets
(or disposal groups) that are held for distribution to owners and
operations that meet the criteria to be classified as discontinued and
carried at lower of its carrying amount and fair value less cost to sell on
the initial date of such identification. A first time adopter can:
(a) measure such assets or operations at the lower of carrying
value and fair value less cost to sell as at the date of
transition to Ind-ASs in accordance with Ind AS 105; and
(b) recognise directly in retained earnings any difference
between that amount and the carrying amount of those
assets at the date of transition to Ind-ASs determined under
the entity’s previous GAAP.
Indian Accounting Standards
42
Appendix E
Short-term exemptions from Ind-ASs
[Appendix reserved for future possible short-term exemptions]
This appendix is an integral part of the Ind-AS.
43
First-time Adoption of Indian Accounting Standards
Appendix F
Guidance on implementing
Ind-as 101 First-time Adoption of Indian Accounting
Standards
Contents
INTRODUCTION IG1
Ind AS 10 Events after the Reporting Period IG2–IG4
Ind AS 12 Income Taxes IG5–IG6
Ind AS16 Property, Plant and Equipment IG7–IG13
Ind AS 17 Leases G14–IG16
Ind AS 18 Revenue IG17
Ind AS 19 Employee Benefits IG18–IG21
Ind AS 21 The Effects of Changes in Foreign
Exchange Rates IG21A
Ind AS 103 Business Combinations IG22
Ind AS 23 Borrowing Costs IG23–IG25
Ind AS 27 Consolidated and Separate Financial
Statements IG26–IG31
Ind AS 29 Financial Reporting in Hyperinflationary
Economies IG32–IG34
Ind AS 32 Financial Instruments: Presentation IG35–IG36
Ind AS 34 Interim Financial Reporting IG37–IG38
Ind AS 36 Impairment of Assets and
Ind AS 37 Provisions, Contingent Liabilities and
Contingent Assets IG39–IG43
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Ind AS 38 Intangible Assets IG44–IG51
Ind AS 39 Financial Instruments: Recognition and
Measurement IG52– IG60B
Recognition IG53–IG54
Embedded derivatives IG55
Measurement IG56–IG58
Transition adjustments IG58A–IG59
Hedge accounting IG60–IG60B
Ind AS 40 Investment Property IG61–IG62
Ind AS 105 Non-current Assets Held for Sale and
Discontinued Operations IG62A–IG62A
Explanation of transition to Ind-ASs IG63
Ind AS 102 Share-based Payment IG64–IG65
Appendices to Indian Accounting Standards
Appendix A to Ind AS 16 Changes in Existing
Decommissioning, Restoration and Similar Liabilities IG201–IG203
Appendix C to Ind AS 17 Determining whether an
Arrangement contains a Lease IG204–IG206
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First-time Adoption of Indian Accounting Standards
List of Examples
1 Estimates IG3
2 Business combination IG22
3 Business combination–restructuring provision IG22
4 Business combination–intangible assets IG22
5 Business combination–goodwill deducted from equity
and treatment of related intangible assets IG22
6 Business combination–subsidiary not consolidated in
accordance with previous GAAP IG22
7 Business combination–finance lease not capitalised
in accordance with previous GAAP IG22
8 Parent adopts Ind-ASs before subsidiary IG29
9 Subsidiary adopts Ind-ASs before parent IG29
10 Interim financial reporting IG38
11A Reconciliation of equity and total comprehensive
income IG63
11B Format for reconciliation in accordance with IG 63
paragraph 24(a) and (d) for an entity that elects
to apply paragraph 21(b)
11C Format for reconciliation in accordance with IG 63
paragraph 24(a) and (b)for an entity that elects
to apply paragraph 21(a)
201 Changes in existing decommissioning, restoration
and similar liabilities IG203
202 Determining whether an arrangement contains a lease IG205
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Guidance on implementing Ind-AS 101 First-time
Adoption of Indian Accounting Standards
This guidance accompanies, but is not part of, Ind-AS 101.
Introduction
IG1 This implementation guidance:
(a) explains how the requirements of this Ind-AS interact with
the requirements of some other Ind-ASs (paragraphs IG2–
IG62, IG64 and IG65). This explanation addresses those
Ind-ASs that are most likely to involve questions that are
specific to first-time adopters.
(b) includes an illustrative example to show how a first-time
adopter might disclose how the transition to Ind-ASs affected
its reported financial position, financial performance and
cash flows, as required by paragraphs 24(a) (b) and (d), 25
and 26 of this Ind-AS (paragraph IG63).
Ind AS 10 Events after the Reporting Period
IG2 Except as described in paragraph IG3, an entity applies Ind AS
10 in determining whether:
(a) its opening Ind-AS Balance Sheet reflects an event that
occurred after the date of transition to Ind-ASs; and .
(b) where an entity decides to provide one year comparative
information under Ind-AS then, comparative amounts in its
first Ind-AS financial statements reflect an event that
occurred after the end of that comparative period.
IG3 Paragraphs 14 –17 of this Ind-AS require some modifications to
the principles in Ind AS 10 when a first-time adopter determines whether
changes in estimates are adjusting or non-adjusting events at the date
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First-time Adoption of Indian Accounting Standards
of transition to Ind-ASs (or, when applicable, the end of the comparative
period). Cases 1 and 2 below illustrate those modifications. In case 3
below, paragraphs 14–17 of this Ind-AS do not require modifications to
the principles in Ind AS 10.
(a) Case 1—Previous GAAP required estimates of similar items
for the date of transition to Ind-ASs, using an accounting
policy that is consistent with Ind-ASs. In this case, the
estimates in accordance with Ind-ASs need to be consistent
with estimates made for that date in accordance with
previous GAAP, unless there is objective evidence that those
estimates were in error (see Ind AS 10 Accounting Policies,
Changes in Accounting Estimates and Errors). The entity
reports later revisions to those estimates as events of the
period in which it makes the revisions, rather than as
adjusting events resulting from the receipt of further
evidence about conditions that existed at the date of
transition to Ind-ASs.
(b) Case 2—Previous GAAP required estimates of similar items
for the date of transition to Ind-ASs, but the entity made
those estimates using accounting policies that are not
consistent with its accounting policies in accordance with
Ind-ASs. In this case, the estimates in accordance with Ind-
ASs need to be consistent with the estimates required in
accordance with previous GAAP for that date (unless there
is objective evidence that those estimates were in error),
after adjusting for the difference in accounting policies. The
opening Ind-AS Balance Sheet reflects those adjustments
for the difference in accounting policies. As in case 1, the
entity reports later revisions to those estimates as events
of the period in which it makes the revisions.
For example, previous GAAP may have required an entity to
recognise and measure provisions on a basis consistent with
Ind AS 37 Provisions, Contingent Liabilities and Contingent
Assets, except that the previous GAAP measurement was on
an undiscounted basis. In this example, the entity uses the
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estimates in accordance with previous GAAP as inputs in making
the discounted measurement required by Ind AS 37.
(c) Case 3—Previous GAAP did not require estimates of similar
items for the date of transition to Ind-ASs. Estimates in
accordance with Ind-ASs for that date reflect conditions
existing at that date. In particular, estimates of market prices,
interest rates or foreign exchange rates at the date of
transition to Ind-ASs reflect market conditions at that date.
This is consistent with the distinction in Ind AS 10 between
adjusting events after the reporting period and non-adjusting
events after the reporting period.
IG Example 1 Estimates
(illustration assuming the company has elected not to provide prior
period comparatives in accordance with Ind-AS)
Background
Entity A’s first Ind-AS financial statements are for a period that ends
on 31 March 2012. In its previous GAAP financial statements for 31
March 2011, entity A:
(a) made estimates of accrued expenses and provisions at
those dates;
(b) accounted on a cash basis for a defined benefit pension
plan; and
(c) did not recognise a provision for a court case arising from
events that occurred in December 2010. When the court
case was concluded on 30 June 2011, entity A was
required to pay Rs,1,000 and paid this on 10 July 2011.
In preparing its first Ind-AS financial statements, entity A concludes
that its estimates in accordance with previous GAAP of accrued
expenses and provisions at 31 March 2011 were made on a basis
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First-time Adoption of Indian Accounting Standards
consistent with its accounting policies in accordance with Ind-ASs.
Although some of the accruals and provisions turned out to be
overestimates and others to be underestimates, entity A concludes
that its estimates were reasonable and that, therefore, no error had
occurred. As a result, accounting for those overestimates and
underestimates involves the routine adjustment of estimates in
accordance with Ind AS 8.
Application of requirements
In preparing its opening Ind-AS Balance Sheet at April 1, 2011,
entity A:
(a) does not adjust the previous estimates for accrued
expenses and provisions; and
(b) makes estimates (in the form of actuarial assumptions)
necessary to account for the pension plan in accordance
with Ind AS 19 Employee Benefits. Entity A’s actuarial
assumptions at April 1, 2011 do not reflect conditions that
arose after those dates. For example, entity A’s:
(i) discount rates at March 31, 2011 for the pension
plan and for provisions reflect market conditions at
those dates; and
(ii) actuarial assumptions at March 31, 2011 about future
employee turnover rates do not reflect conditions that
arose after those dates—such as a significant
increase in estimated employee turnover rates as
a result of a curtailment of the pension plan in
2011-12.
(c) The treatment of the court case at 31 March 2011 depends
on the reason why entity A did not recognise a provision
in accordance with previous GAAP at that date.
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Assumption 1 – Previous GAAP was consistent with Ind AS 37
Provisions, Contingent Liabilities and Contingent Assets. Entity A
concluded that the recognition criteria were not met. In this case,
entity A’s assumptions in accordance with Ind-ASs are consistent
with its assumptions in accordance with previous GAAP. Therefore,
entity A does not recognise a provision at 31 March 2011.
Assumption 2 – Previous GAAP was not consistent with Ind AS 37.
Therefore, entity A develops estimates in accordance with Ind AS
37. Under Ind AS 37, an entity determines whether an obligation
exists at the end of the reporting period by taking account of all
available evidence, including any additional evidence provided by
events after the reporting period. Similarly, in accordance with Ind
AS 10 Events after the Reporting Period, the resolution of a court
case after the reporting period is an adjusting event after the reporting
period if it confirms that the entity had a present obligation at that
date. In this instance, the resolution of the court case confirms that
entity A had a liability in December 31, 2010 (when the events
occurred that gave rise to the court case). Therefore, entity A
recognises a provision at 31 March 2011. Entity A measures that
provision by discounting the Rs 1,000 paid on 10 September 2011 to
its present value, using a discount rate that complies with Ind AS 37
and reflects market conditions at 31 March 2011.
IG4 Paragraphs 14–17 of this Ind-AS do not override requirements in
other Ind-ASs that base classifications or measurements on
circumstances existing at a particular date.
Examples include:
(a) the distinction between finance leases and operating leases
(see Ind AS 17 Leases);
(b) the restrictions in Ind AS 38 Intangible Assets that prohibit
capitalisation of expenditure on an internally generated
intangible asset if the asset did not qualify for recognition
when the expenditure was incurred; and
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First-time Adoption of Indian Accounting Standards
(c) the distinction between financial liabilities and equity instruments
(see Ind AS 32 Financial Instruments: Presentation).
Ind AS 12 Income Taxes
IG5 An entity applies Ind AS 12 to temporary differences between the
carrying amount of the assets and liabilities in its opening Ind-AS
Balance Sheet and their tax bases.
IG6 In accordance with Ind AS 12, the measurement of current and
deferred tax reflects tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period. An entity
accounts for the effect of changes in tax rates and tax laws when those
changes are enacted or substantively enacted.
Ind AS 16 Property, Plant and Equipment
IG7 If an entity’s depreciation methods and rates in accordance with
previous GAAP are acceptable in accordance with Ind-ASs, it accounts
for any change in estimated useful life or depreciation pattern
prospectively from when it makes that change in estimate (paragraphs
14 and 15 of the Ind-AS and paragraph 61 of Ind AS 16). However, in
some cases, an entity’s depreciation methods and rates in accordance
with previous GAAP may differ from those that would be acceptable in
accordance with Ind-ASs (for example, if they were adopted solely for
tax purposes and do not reflect a reasonable estimate of the asset’s
useful life). If those differences have a material effect on the financial
statements, the entity adjusts accumulated depreciation in its opening
Ind-AS Balance Sheet retrospectively so that it complies with Ind-ASs.
IG7A In accordance with paragraph D7A a first-time adopter may elect
to continue with the carrying value of all of its property, plant and
equipment as at the date of transition measured as per the previous
GAAP and use that as its deemed cost at the date of transition. However,
if a first time adopter opts for exemption in paragraph D7A then it has
following consequences for property, plant and equipment:
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(a) recognising all assets whose recognition is required by Ind-
AS and not recognizing items of assets if Ind-AS do not
permit such recognition. For example Appendix A of Ind AS
17: Leases and Appendix A of Ind AS 11: Construction
Contracts.
(b) reclassify items that it recognised in accordance with
previous GAAP as one type of asset but are a different type
of asset in accordance with Ind-AS. For example Ind AS
105: Non-current Assets Held for Sale and Discontinued
Operations and Ind AS 40: Investment Property.
(c) derecognise the carrying value of decommissioning, restoration
or similar liability recognised as cost of asset and a
corresponding provision in accordance with previous GAAP if
any and recognise decommissioning, restoration or similar
liability in accordance with paragraph D21 of this standard.
(d) Identify each part of an item of property, plant and equipment
with a cost that is significant in relation to the total cost of
the item of property, plant and equipment as at the date of
transition and subsequent depreciation of each significant
part in accordance with Ind AS 16: Property, Plant and
Equipment.
IG8 An entity may elect to use one of the following amounts as the
deemed cost of an item of property, plant and equipment:
(a) fair value at the date of transition to Ind-ASs (paragraph D5
of this Ind-AS), in which case the entity gives the disclosures
required by paragraph 30 of this Ind-AS;
(b) a revaluation in accordance with previous GAAP that meets
the criteria in paragraph D6 of this Ind-AS;
(c) fair value at the date of an event such as a privatisation or
initial public offering (paragraph D8 of this Ind-AS); or
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First-time Adoption of Indian Accounting Standards
(d) an allocation of an amount determined under previous GAAP
that meets the criteria in paragraph D8A of this Ind-AS.
(e) the carrying amount under previous GAAP of an item of
property, plant and equipment that is used, or was previously
used, in operations (paragraph D7A and D8B of the Ind-
AS).
IG9 Subsequent depreciation is based on that deemed cost and starts
from the date for which the entity established the deemed cost.
IG10 If an entity chooses as its accounting policy the revaluation model
in Ind AS 16 for some or all classes of property, plant and equipment, it
presents the cumulative revaluation surplus as a separate component
of equity. The revaluation surplus at the date of transition to Ind-ASs is
based on a comparison of the carrying amount of the asset at that date
with its cost or deemed cost. If the deemed cost is the fair value at the
date of transition to Ind-ASs, the entity gives the disclosures required
by paragraph 30 of this Ind-AS.
IG11 If revaluations in accordance with previous GAAP did not satisfy
the criteria in paragraph D6 or D8 of this Ind-AS, an entity measures
the revalued assets in its opening Balance Sheet on one of the following
bases:
(a) cost (or deemed cost) less any accumulated depreciation
and any accumulated impairment losses under the cost
model in Ind AS 16;
(b) deemed cost, being the fair value at the date of transition
to Ind-ASs (paragraph D5 of this Ind-AS); or
(c) revalued amount, if the entity adopts the revaluation model
in Ind AS 16 as its accounting policy in accordance with
Ind-ASs for all items of property, plant and equipment in
the same class.
IG12 Ind AS 16 requires each part of an item of property, plant and
equipment with a cost that is significant in relation to the total cost of
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the item to be depreciated separately. However, Ind AS 16 does not
prescribe the unit of measure for recognition of an asset, i.e. what
constitutes an item of property, plant and equipment. Thus, judgement
is required in applying the recognition criteria to an entity’s specific
circumstances (see Ind AS 16 paragraphs 9 and 43).
IG13 In some cases, the construction or commissioning of an asset
results in an obligation for an entity to dismantle or remove the asset
and restore the site on which the asset stands. An entity applies Ind AS
37 Provisions, Contingent Liabilities and Contingent Assets in
recognising and measuring any resulting provision. The entity applies
Ind AS 16 in determining the resulting amount included in the cost of
the asset, before depreciation and impairment losses. Items such as
depreciation and, when applicable, impairment losses cause differences
between the carrying amount of the liability and the amount included in
the carrying amount of the asset. An entity accounts for changes in
such liabilities in accordance with Appendix A to Ind AS 16 -Changes in
Existing Decommissioning, Restoration and Similar Liabilities.
However, paragraph D21 of Ind-AS 101 provides an exemption for
changes that occurred before the date of transition to Ind-ASs, and
prescribes an alternative treatment where the exemption is used. An
example of the first-time adoption of Appendix A to Ind AS 16, which
illustrates the use of this exemption, is given at paragraphs IG201–
IG203.
Ind AS 17 Leases
IG14 At the date of transition to Ind-ASs, a lessee or lessor classifies
leases as operating leases or finance leases on the basis of
circumstances existing at the inception of the lease (Ind AS 17 paragraph
13). In some cases, the lessee and the lessor may agree to change the
provisions of the lease, other than by renewing the lease, in a manner
that would have resulted in a different classification in accordance with
Ind AS 17 had the changed terms been in effect at the inception of the
lease. If so, the revised agreement is considered as a new agreement
over its term. However, changes in estimates (for example, changes in
estimates of the economic life or of the residual value of the leased
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First-time Adoption of Indian Accounting Standards
property) or changes in circumstances (for example, default by the
lessee) do not give rise to a new classification of a lease.
IG 15 [Refer to Appendix 1]
IG16 [Refer to Appendix 1]
Ind AS 18 Revenue
IG17 If an entity has received amounts that do not yet qualify for
recognition as revenue in accordance with Ind AS 18 (for example, the
proceeds of a sale that does not qualify for revenue recognition), the
entity recognises the amounts received as a liability in its opening Ind-
AS Balance Sheet and measures that liability at the amount received.
Ind AS 19 Employee Benefits
IG18 [Refer to Appendix 1]
IG19 An entity’s actuarial assumptions at the date of transition to Ind-
ASs are consistent with actuarial assumptions made for the same date
in accordance with previous GAAP (after adjustments to reflect any
difference in accounting policies), unless there is objective evidence
that those assumptions were in error (paragraph 14 of this Ind-AS). The
impact of any later revisions to those assumptions is an actuarial gain
or loss of the period in which the entity makes the revisions.
IG20 An entity may need to make actuarial assumptions at the date of
transition to Ind-ASs that were not necessary in accordance with its
previous GAAP. Such actuarial assumptions do not reflect conditions
that arose after the date of transition to Ind-ASs. In particular, discount
rates and the fair value of plan assets at the date of transition to Ind-
ASs reflect market conditions at that date. Similarly, the entity’s actuarial
assumptions at the date of transition to Ind-ASs about future employee
turnover rates do not reflect a significant increase in estimated employee
turnover rates as a result of a curtailment of the pension plan that
occurred after the date of transition to Ind-ASs (paragraph 16 of this
Ind-AS).
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IG21 An entity’s first Ind-AS financial statements will reflect
measurements of employee benefit obligations at the following dates:
the end of the first Ind-AS reporting period, the date of the comparative
where an entity has decided to provide comparative financial information
in accordance with Ind-AS balance sheet and the date of transition to
Ind-ASs. Ind AS 19 encourages an entity to involve a qualified actuary
in the measurement of all material post-employment benefit obligations.
To minimise costs, an entity may request a qualified actuary to carry
out a detailed actuarial valuation at one or two of these dates and roll
the valuation(s) forward or back to the other date(s). Any such roll
forward or roll back reflects any material transactions and other material
events (including changes in market prices and interest rates) between
those dates (Ind AS 19).
Ind AS 21 The Effects of Changes in Foreign
Exchange Rates
IG21A An entity may, in accordance with previous GAAP, have treated
goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising
on the acquisition of that foreign operation as assets and liabilities of
the entity rather than as assets and liabilities of the foreign operation.
If so, the entity is permitted to apply prospectively the requirements of
paragraph 47 of Ind AS 21 to all acquisitions occurring after the date of
transition to Ind-ASs.
Ind AS 103 Business Combinations
IG22 The following examples illustrate the effect of Appendix C to the
Ind-AS, assuming that a first-time adopter uses the exemption.
IG Example 2 Business combination
Background
Entity B’s first Ind-AS financial statements are for a period that ends
on 31 March 2012 and has elected not to provide comparative
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information for the year ending 31 March, 2011 under this Ind-AS.
On 1 July 2010, entity B acquired 100 per cent of subsidiary C. In
accordance with its previous GAAP, entity B:
(a) classified the business combination as an acquisition by
entity B.
(b) measured the assets acquired and liabilities assumed at
the following amounts in accordance with previous GAAP
at 1 April 2011 (date of transition to Ind-ASs):
(i) identifiable assets less liabilities for which Ind-ASs
require cost-based measurement at a date after the
business combination: Rs 200 (with a tax base of
Rs150 and an applicable tax rate of 30 per cent).
(ii) pension liability (for which the present value of the
defined benefit obligation measured in accordance
with AS 15 (Revised 20XX) Employee Benefits is
Rs 130 and the fair value of plan assets is Rs100):
nil (because entity B used a pay-as-you-go cash
method of accounting for pensions in accordance with
its previous GAAP). The tax base of the pension
liability is also nil.
(iii) goodwill: Rs180.
(c) did not, at the acquisition date, recognise deferred tax
arising from temporary differences associated with the
identifiable assets acquired and liabilities assumed.
Application of requirements
In its opening (consolidated) Ind-AS Balance Sheet, entity B:
(a) classifies the business combination as an acquisition
by entity B even if the business combination would
have qualified in accordance with Ind AS 103 as a
reverse acquisition by subsidiary C (paragraph C4(a) of this
Ind-AS).
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(b) does not adjust the accumulated amortisation of goodwill.
Entity B tests the goodwill for impairment in accordance
with Ind AS 36 Impairment of Assets and recognises any
resulting impairment loss, based on conditions that existed
at the date of transition to Ind-ASs. If no impairment exists,
the carrying amount of the goodwill remains at Rs 180
(paragraph C4(g) of this Ind-AS).
(c) for those net identifiable assets acquired for which Ind-
ASs require cost-based measurement at a date after the
business combination, treats their carrying amount in
accordance with previous GAAP immediately after the
business combination as their deemed cost at that date
(paragraph C4(e) of this Ind-AS).
(d) does not restate the accumulated depreciation and
amortisation of the net identifiable assets in (c), unless
the depreciation methods and rates in accordance with
previous GAAP result in amounts that differ materially from
those required in accordance with Ind-ASs (for example,
if they were adopted solely for tax purposes and do not
reflect a reasonable estimate of the asset’s useful life in
accordance with Ind-ASs). If no such restatement is made,
the carrying amount of those assets in the opening Ind-
AS Balance Sheet equals their carrying amount in
accordance with previous GAAP at the date of transition
to Ind-ASs (Rs 200) (paragraph IG7).
(e) if there is any indication that identifiable assets are
impaired, tests those assets for impairment, based on
conditions that existed at the date of transition to Ind-ASs
(see Ind AS 36).
(f) recognises the pension liability, and measures it, at the
present value of the defined benefit obligation (Rs 130)
less the fair value of the plan assets (Rs 100), giving a
carrying amount of Rs 30, with a corresponding debit
of Rs 30 to retained earnings (paragraph C4(d) of this
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First-time Adoption of Indian Accounting Standards
Ind-AS). However, if subsidiary C had already adopted
Ind-ASs in an earlier period, entity B would measure the
pension liability at the same amount as in subsidiary C’s
financial statements (paragraph D17 of this Ind-AS and IG
Example 9).
(g) recognises a net deferred tax liability of Rs 6 (Rs 20 at 30
per cent) arising from:
(i) the taxable temporary difference of Rs 50 (Rs 200
less Rs 150) associated with the identifiable assets
acquired and non-pension liabilities assumed, less
(ii) the deductible temporary difference of Rs 30 (Rs 30
less nil) associated with the pension liability.
The entity recognises the resulting increase in the deferred
tax liability as a deduction from retained earnings
(paragraph C4(k) of this Ind-AS). If a taxable temporary
difference arises from the initial recognition of the goodwill,
entity B does not recognise the resulting deferred tax
liability (paragraph 15(a) of Ind AS 12 Income Taxes).
IG Example 3 Business combination—restructuring provision
Background
Entity D’s first Ind-AS financial statements are for a period that ends
on 31 March 2012 and has elected not to provide comparative
information for the year ending 31 March, 2011 under Ind-AS. On 1
January 2011, entity D acquired 100 per cent of subsidiary E. In
accordance with its previous GAAP, entity D recognised an
(undiscounted) restructuring provision of Rs 100 that would not have
qualified as an identifiable liability in accordance with Ind AS 103.
The recognition of this restructuring provision increased goodwill by
Rs 100. At 31 March 2011 (date of transition to Ind-ASs ), entity D:
(a) had paid restructuring costs of Rs 60; and
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(b) estimated that it would pay further costs of Rs 40 in 2011-
12 and that the effects of discounting were immaterial. At
31 March 2011, those further costs did not qualify for
recognition as a provision in accordance with Ind AS 37
Provisions, Contingent Liabilities and Contingent Assets.
Application of requirements
In its opening Ind-AS Balance Sheet, entity D:
(a) does not recognise a restructuring provision (paragraph C4(c)
of this Ind-AS).
(b) does not adjust the amount assigned to goodwill. However,
entity D tests the goodwill for impairment in accordance with
Ind AS 36 Impairment of Assets, and recognises any resulting
impairment loss (paragraph C4(g) of this Ind-AS).
(c) as a result of (a) and (b), reports retained earnings in its
opening Ind-AS Balance Sheet that are higher by Rs 40 (before
income taxes, and before recognising any impairment loss)
than in the Balance Sheet at the same date in accordance
with previous GAAP.
IG Example 4 Business combination—intangible assets
Background
Entity F’s first Ind-AS financial statements are for a period that ends on
31 March 2012 and has elected not to provide comparative information
for the year ending 31 March, 2011 under Ind-AS.
On 1 October 2009 entity F acquired 75 per cent of subsidiary G. In
accordance with its previous GAAP, entity F assigned an initial carrying
amount of Rs 200 to intangible assets that would not have qualified for
recognition in accordance with Ind AS 38 Intangible Assets. The tax
base of the intangible assets was nil, giving rise to a deferred tax liability
(at 30 per cent) of Rs 60.
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First-time Adoption of Indian Accounting Standards
On 31 March 2011 (the date of transition to Ind-ASs) the carrying
amount of the intangible assets in accordance with previous GAAP
was Rs 160, and the carrying amount of the related deferred tax
liability was Rs 48 (30 per cent of Rs 160).
Application of requirements
Because the intangible assets do not qualify for recognition as
separate assets in accordance with Ind AS 38, entity F transfers
them to goodwill, together with the related deferred tax liability
(Rs 48) and non-controlling interests (paragraph C4(g)(i) of this Ind-
AS). The related non-controlling interests amount to Rs 28 (25 per
cent of [Rs 160 –Rs 48 = Rs 112]). Thus, the increase in goodwill is
Rs 84—intangible assets (Rs 160) less deferred tax liability (Rs 48)
less non-controlling interests (Rs 28).
Entity F tests the goodwill for impairment in accordance with Ind AS
36 Impairment of Assets and recognises any resulting impairment
loss, based on conditions that existed at the date of transition to
Ind-ASs (paragraph C4(g)(ii) of this Ind-AS).
IG Example 5 Business combination—goodwill deducted from
equity and treatment of related intangible assets
Background
Entity H acquired a subsidiary before the date of transition to Ind-
ASs. In accordance with its previous GAAP, entity H:
(a) recognised goodwill as an immediate deduction from
equity;
(b) recognised an intangible asset of the subsidiary that does
not qualify for recognition as an asset in accordance with
Ind AS 38 Intangible Assets; and
(c) did not recognise an intangible asset of the subsidiary
that would qualify in accordance with Ind AS 38 for
recognition as an asset in the financial statements of the
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subsidiary. The subsidiary held the asset at the date of its
acquisition by entity H.
Application of requirements
In its opening Ind-AS Balance Sheet, entity H:
(a) does not recognise the goodwill, as it did not recognise the
goodwill as an asset in accordance with previous GAAP
(paragraph C4(g)–(i) of this Ind-AS).
(b) does not recognise the intangible asset that does not qualify
for recognition as an asset in accordance with Ind AS 38.
Because entity H deducted goodwill from equity in accordance
with its previous GAAP, the elimination of this intangible asset
reduces retained earnings (paragraph C4(c)(ii) of this Ind-
AS).
(c) recognises the intangible asset that qualifies in accordance
with Ind AS 38 for recognition as an asset in the financial
statements of the subsidiary, even though the amount assigned
to it in accordance with previous GAAP in entity H’s
consolidated financial statements was nil (paragraph C4(f) of
this Ind-AS). The recognition criteria in Ind AS 38 include the
availability of a reliable measurement of cost (paragraphs
IG45–IG48) and entity H measures the asset at cost less
accumulated depreciation and less any impairment losses
identified in accordance with Ind AS 36 Impairment of Assets.
Because entity H deducted goodwill from equity in accordance
with its previous GAAP, the recognition of this intangible asset
increases retained earnings (paragraph C4(c)(ii) of this Ind-
AS). However, if this intangible asset had been subsumed in
goodwill recognised as an asset in accordance with previous
GAAP, entity H would have decreased the carrying amount of
that goodwill accordingly (and, if applicable, adjusted deferred
tax and non-controlling interests) (paragraph C4(g)(i) of this
Ind-AS).
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First-time Adoption of Indian Accounting Standards
IG Example 6 Business combination—subsidiary not consolidated
in accordance with previous GAAP
Background
Parent J’s date of transition to Ind-ASs is 1 April 2011. In accordance
with its previous GAAP, parent J did not consolidate its 75 per cent
subsidiary K, acquired in a business combination on 15 October
2009. On 1 April 2011:
(a) the cost of parent J’s investment in subsidiary K is Rs 180.
(b) in accordance with Ind-ASs, subsidiary K would measure
its assets at Rs 500 and its liabilities (including deferred
tax in accordance with Ind AS 12 Income Taxes) at Rs 300.
On this basis, subsidiary K’s net assets are Rs 200 in
accordance with Ind-ASs.
Application of requirements
Parent J consolidates subsidiary K. The consolidated Balance Sheet
at 1 April 2011 includes:
(a) subsidiary K’s assets at Rs 500 and liabilities at Rs 300;
(b) non-controlling interests of Rs 50 (25 per cent of [Rs 500
–Rs 300]); and
(c) goodwill of Rs 30 (cost of Rs180 less 75 per cent of [Rs
500 –Rs 300]) (paragraph C4(j) of this Ind-AS). Parent J
tests the goodwill for impairment in accordance with Ind
AS 36 Impairment of Assets and recognises any resulting
impairment loss, based on conditions that existed at the
date of transition to Ind-ASs (paragraph C4(g)(ii) of this
Ind-AS).
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64
IG Example 7 Business combination—finance lease not capitalised
in accordance with previous GAAP
Background
Parent L’s date of transition to Ind-ASs is 1 April 2011. Parent L
acquired subsidiary M on 15 April 2009 and did not capitalise
subsidiary M’s finance leases. If subsidiary M prepared financial
statements in accordance with Ind-ASs, it would recognise finance
lease obligations of 300 and leased assets of 250 at 1 April 2011.
Application of requirements
In its consolidated opening Ind-AS Balance Sheet, parent L
recognises finance lease obligations of Rs 300 and leased assets of
Rs 250, and charges Rs 50 to retained earnings (paragraph C4(f)).
Ind AS 23 Borrowing Costs
IG23 [Refer to Appendix 1]
IG24 [Refer to Appendix 1]
IG25 [Refer to Appendix 1]
Ind AS 27 Consolidated and Separate Financial
Statements
IG26 A first-time adopter consolidates all subsidiaries (as defined in
Ind AS 27), unless Ind AS 27 requires otherwise.
IG27 If a first-time adopter did not consolidate a subsidiary in
accordance with previous GAAP, then:
(a) in its consolidated financial statements, the first-time adopter
measures the subsidiary’s assets and liabilities at the same
carrying amounts as in this Ind-AS financial statements of
65
First-time Adoption of Indian Accounting Standards
the subsidiary, after adjusting for consolidation procedures
and for the effects of the business combination in which it
acquired the subsidiary (paragraph D17 of this Ind-AS). If
the subsidiary has not adopted Ind-ASs in its financial
statements, the carrying amounts described in the previous
sentence are those that Ind-ASs would require in those
financial statements (paragraph C4(j) of this Ind-AS).
(b) if the parent acquired the subsidiary in a business
combination before the date of transition to Ind-AS, the
parent recognises goodwill, as explained in IG Example 6.
(c) if the parent did not acquire the subsidiary in a business
combination because it created the subsidiary, the parent
does not recognise goodwill.
IG28 When a first-time adopter adjusts the carrying amounts of assets
and liabilities of its subsidiaries in preparing its opening Ind-AS Balance
Sheet, this may affect non-controlling interests and deferred tax.
IG29 IG Examples 8 and 9 illustrate paragraphs D16 and D17 of this
Ind-AS, which address cases where a parent and its subsidiary become
first-time adopters at different dates.
IG Example 8 Parent adopts Ind-ASs before subsidiary
Background
Parent N presents its (consolidated) first Ind-AS financial statements
for the year ended March 31, 2012. Its foreign subsidiary O, wholly
owned by parent N since formation, prepares information in accordance
with Ind-ASs for internal consolidation purposes from that date, but
subsidiary O does not present its first Ind-AS financial statements until
March 31, 2014.
Application of requirements
If subsidiary O applies paragraph D16(a) of this Ind-AS, the carrying
amounts of its assets and liabilities are the same in both its opening
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66
Ind-AS Balance Sheet at 1 April 2014 and parent N’s consolidated
Balance Sheet (except for adjustments for consolidation procedures)
and are based on parent N’s date of transition to Ind-ASs.
Alternatively, subsidiary O may, in accordance with paragraph D16(b)
of this Ind-AS, measure all its assets or liabilities based on its own
date of transition to Ind-ASs (1 April 1, 2014). However, the fact that
subsidiary O becomes a first-time adopter in 2014-15 does not change
the carrying amounts of its assets and liabilities in parent N’s
consolidated financial statements.
IG Example 9 Subsidiary adopts Ind-ASs before parent
Background
Parent P presents its (consolidated) first Ind-AS financial statements
in 2013-14. Its subsidiary Q, wholly owned by parent P since formation,
presented its first Ind-AS financial statements in 2011-12. Until 2013-
2014, subsidiary Q prepared information for internal consolidation
purposes in accordance with parent P’s previous GAAP.
Application of requirements
The carrying amounts of subsidiary Q’s assets and liabilities at 1 April
2013 are the same in both parent P’s (consolidated) opening Ind-AS
Balance Sheet and subsidiary Q’s financial statements (except for
adjustments for consolidation procedures) and are based on subsidiary
Q’s date of transition to Ind-ASs. The fact that parent P becomes a
first-time adopter in 2013-14 does not change those carrying amounts
(paragraph D17 of this Ind-AS).
IG30 Paragraphs D16 and D17 of this Ind-AS do not override the
following requirements:
(a) to apply Appendix C to this Ind-AS to assets acquired, and
liabilities assumed, in a business combination that occurred
before the acquirer’s date of transition to Ind-ASs. However,
the acquirer applies paragraph D17 to new assets acquired,
and liabilities assumed, by the acquiree after that business
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First-time Adoption of Indian Accounting Standards
combination and still held at the acquirer’s date of transition
to Ind-ASs.
(b) to apply the rest of this Ind-AS in measuring all assets and
liabilities for which paragraphs D16 and D17 are not
relevant.
(c) to give all disclosures required by this Ind-AS as of the
first-time adopter’s own date of transition to Ind-ASs.
IG31 Paragraph D16 of this Ind-AS applies if a subsidiary becomes a
first-time adopter later than its parent, for example if the subsidiary
previously prepared a reporting package in accordance with Ind-ASs
for consolidation purposes but did not present a full set of financial
statements in accordance with Ind-ASs. This may be relevant not only
when a subsidiary’s reporting package complies fully with the recognition
and measurement requirements of Ind-ASs, but also when it is adjusted
centrally for matters such as review of events after the reporting period
and central allocation of pension costs. For the disclosure required by
paragraph 26 of this Ind-AS, adjustments made centrally to an
unpublished reporting package are not corrections of errors. However,
paragraph D16 does not permit a subsidiary to ignore misstatements
that are immaterial to the consolidated financial statements of its parent
but material to its own financial statements.
Ind AS 29 Financial Reporting in
Hyperinflationary Economies
IG32 An entity complies with Ind AS 21 The Effects of Changes in
Foreign Exchange Rates in determining its functional currency and
presentation currency. When the entity prepares its opening Ind-AS
Balance Sheet, it applies Ind AS 29 to any periods during which the
economy of the functional currency or presentation currency was
hyperinflationary.
IG33 An entity may elect to use the fair value of an item of property,
plant and equipment at the date of transition to Ind-ASs as its deemed
Indian Accounting Standards
68
cost at that date (paragraph D5 of this Ind-AS), in which case it gives
the disclosures required by paragraph 30 of this Ind-AS.
IG34 If an entity elects to use the exemptions in paragraphs D5–D8 of
this Ind-AS, it applies Ind AS 29 to periods after the date for which the
revalued amount or fair value was determined.
Ind AS 32 Financial Instruments: Presentation
IG35 In its opening Ind-AS Balance Sheet, an entity applies the criteria
in Ind AS 32 to classify financial instruments issued (or components of
compound instruments issued) as either financial liabilities or equity
instruments in accordance with the substance of the contractual
arrangement when the instrument first satisfied the recognition criteria
in Ind AS 32 (paragraphs 15 and 30), without considering events after
that date (other than changes to the terms of the instruments).
IG36 For compound instruments outstanding at the date of transition
to Ind-ASs, an entity determines the initial carrying amounts of the
components on the basis of circumstances existing when the instrument
was issued (Ind AS 32 paragraph 30). An entity determines those
carrying amounts using the version of Ind AS 32 effective at the end of
its first Ind-AS reporting period. If the liability component is no longer
outstanding at the date of transition to Ind-ASs, a first-time adopter
need not separate the initial equity component of the instrument from
the cumulative interest accreted on the liability component (paragraph
D18 of this Ind-AS).
Ind AS 34 Interim Financial Reporting
IG37 Ind AS 34 applies if an entity is required, or elects, to present an
interim financial report in accordance with Ind-AS. Accordingly, neither
Ind AS 34 nor this Ind-AS requires an entity:
(a) to present interim financial reports that comply with Ind AS
34; or
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First-time Adoption of Indian Accounting Standards
(b) to prepare new versions of interim financial reports
presented in accordance with previous GAAP. However, if
an entity presents an interim financial report in accordance
with Ind AS 34 for part of the period covered by its first Ind-
AS financial statements, the entity restates the comparative
information presented in that report so that it complies with
Ind ASs, if an entity has opted to present the comparatives
in accordance with paragraph 21(b) of this Ind AS.
IG38 An entity applies this Ind-AS in each interim financial report that
it presents in accordance with Ind AS 34 for part of the period covered
by its first Ind-AS financial statements. In particular, paragraph 32 of
the Ind-AS 101 requires an entity to disclose various reconciliations
(see IG Example 10).
IG Example 10 Interim financial reporting
Background
Entity R’s first Ind-AS financial statements are for a period that ends on
31 March 2012, and its first interim financial report in accordance with
Ind AS 34 is for the quarter ended 30 June 2011. Entity R prepared
previous GAAP annual financial statements for the year ended 31 March
2011, and prepared quarterly reports throughout 2010-11.
Application of requirements
Situation A:
Where, an entity decides not to provide one year comparative period
in accordance with paragraph 21(a) of this Ind-AS; In each quarterly
interim financial report for 2011-12, entity R includes:
reconciliation of its equity reported in accordance with Ind-ASs to its
equity in accordance with previous GAAP as on 1 April 2011 being
the date of transition to Ind-ASs; and significant differences between
previous GAAP and Ind-AS in respect of its total comprehensive
income (or if it did not report such a total, profit or loss) for the
quarter ended 30 June 2011.
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70
Situation B:
Where, an entity decides to provide one year comparative period in
accordance with paragraph 21(b) of this Ind-AS; in each quarterly
interim financial report for 2011-12, entity R provides reconciliation:
(a) of its equity reported in accordance with Ind-ASs to its equity
in accordance with previous GAAP as on as on the date
of transition, i.e.,1 April 2010, and
(b) of its equity reported in accordance with Ind-ASs to Ind-
AS to its equity in accordance with previous GAAP as on
the deemed date of transition, i.e.,1 April 2010, and
(c) of its equity in accordance with Ind-AS at the end of the
comparable quarter of 2010-11 to its equity in accordance
with previous GAAP at that date; and
(d) of its total comprehensive income in accordance with Ind-
AS for the comparable quarter of 2010-11 (current and
year to date) to its total comprehensive income (or, if it
did not report such a total, profit or loss) in accordance
with previous GAAP.
Each of the above reconciliations gives sufficient detail to enable
users to understand the material adjustments to the Balance Sheet
and statement of comprehensive income. Entity R also explains the
material adjustments to the statement of cash flows.
If entity R becomes aware of errors made in accordance with previous
GAAP, the reconciliations distinguish the correction of those errors
from changes in accounting policies.
If entity R did not, in its most recent annual financial statements in
accordance with previous GAAP, disclose information material to an
understanding of the current interim period, its interim financial
reports for 2011-12 disclose that information or include a crossreference
to another published document that includes it (paragraph
33 of this Ind-AS).
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First-time Adoption of Indian Accounting Standards
Ind AS 36 Impairment of Assets and Ind AS 37
Provisions, Contingent Liabilities and
Contingent Assets
IG39 An entity applies Ind AS 36 in:
(a) determining whether any impairment loss exists at the date
of transition to Ind-ASs; and
(b) measuring any impairment loss that exists at that date, and
reversing any impairment loss that no longer exists at that
date. An entity’s first Ind-AS financial statements include
the disclosures that Ind AS 36 would have required if the
entity had recognised those impairment losses or reversals
in the period beginning with the date of transition to Ind-
ASs (paragraph 24(c) of this Ind-AS).
IG40 The estimates used to determine whether an entity recognises
an impairment loss or provision (and to measure any such impairment
loss or provision) at the date of transition to Ind-ASs are consistent
with estimates made for the same date in accordance with previous
GAAP (after adjustments to reflect any difference in accounting policies),
unless there is objective evidence that those estimates were in error
(paragraphs 14 and 15 of this Ind-AS). The entity reports the impact of
any later revisions to those estimates as an event of the period in
which it makes the revisions.
IG41 In assessing whether it needs to recognise an impairment loss or
provision (and in measuring any such impairment loss or provision) at
the date of transition to Ind-ASs, an entity may need to make estimates
for that date that were not necessary in accordance with its previous
GAAP. Such estimates and assumptions do not reflect conditions that
arose after the date of transition to Ind-ASs (paragraph 16 of this Ind-
AS).
IG42 [Refer to Appendix 1].
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72
IG43 Ind AS 36 requires the reversal of impairment losses in some
cases. If an entity’s opening Ind-AS Balance Sheet reflects impairment
losses, the entity recognises any later reversal of those impairment
losses in profit or loss (except when Ind AS 36 requires the entity to
treat that reversal as a revaluation). This applies to both impairment
losses recognised in accordance with previous GAAP and additional
impairment losses recognised on transition to Ind-ASs.
Ind AS 38 Intangible Assets
IG44 An entity’s opening Ind-AS Balance Sheet:
(a) excludes all intangible assets and other intangible items
that do not meet the criteria for recognition in accordance
with Ind AS 38 at the date of transition to Ind-ASs; and
(b) includes all intangible assets that meet the recognition
criteria in Ind AS 38 at that date, except for intangible assets
acquired in a business combination that were not recognised
in the acquirer’s consolidated statement of Balance Sheet
in accordance with previous GAAP and also would not qualify
for recognition in accordance with Ind AS 38 in the separate
Balance Sheet of the acquiree (see paragraph C4 (f) of the
Ind-AS).
IG45 The criteria in Ind AS 38 require an entity to recognise an
intangible asset if, and only if:
(a) it is probable that the future economic benefits that are
attributable to the asset will flow to the entity; and
(b) the cost of the asset can be measured reliably.
Ind AS 38 supplements these two criteria with further, more
specific, criteria for internally generated intangible assets.
IG46 In accordance with paragraphs 65 and 71 of Ind AS 38, an entity
capitalises the costs of creating internally generated intangible assets
prospectively from the date when the recognition criteria are met. Ind
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First-time Adoption of Indian Accounting Standards
AS 38 does not permit an entity to use hindsight to conclude
retrospectively that these recognition criteria are met. Therefore, even
if an entity concludes retrospectively that a future inflow of economic
benefits from an internally generated intangible asset is probable and
the entity is able to reconstruct the costs reliably, Ind AS 38 prohibits it
from capitalising the costs incurred before the date when the entity
both:
(a) concludes, based on an assessment made and documented
at the date of that conclusion, that it is probable that future
economic benefits from the asset will flow to the entity; and
(b) has a reliable system for accumulating the costs of internally
generated intangible assets when, or shortly after, they are
incurred.
IG47 If an internally generated intangible asset qualifies for recognition
at the date of transition to Ind-ASs, an entity recognises the asset in its
opening Ind-AS Balance Sheet even if it had recognised the related
expenditure as an expense in accordance with previous GAAP. If the
asset does not qualify for recognition in accordance with Ind AS 38
until a later date, its cost is the sum of the expenditure incurred from
that later date.
IG48 The criteria discussed in paragraph IG45 also apply to an
intangible asset acquired separately. In many cases, contemporaneous
documentation prepared to support the decision to acquire the asset
will contain an assessment of the future economic benefits. Furthermore,
as explained in paragraph 26 of Ind AS 38, the cost of a separately
acquired intangible asset can usually be measured reliably.
IG49 For an intangible asset acquired in a business combination before
the date of transition to Ind-ASs, its carrying amount in accordance
with previous GAAP immediately after the business combination is its
deemed cost in accordance with Ind-ASs at that date (paragraph C4(e)
of this Ind-AS). If that carrying amount was zero, the acquirer does not
recognise the intangible asset in its consolidated opening Ind-AS Balance
Sheet, unless it would qualify in accordance with Ind AS 38, applying
the criteria discussed in paragraphs IG45–IG48, for recognition at the
Indian Accounting Standards
74
date of transition to Ind-ASs in the Balance Sheet of the acquiree
(paragraph C4(f) of this Ind-AS). If those recognition criteria are met,
the acquirer measures the asset on the basis that Ind AS 38 would
require in the Balance Sheet of the acquiree. The resulting adjustment
affects goodwill (paragraph C4(g)(i) of this Ind-AS).
IG50 A first-time adopter may elect to use the fair value of an intangible
asset at the date of an event such as a privatisation or initial public
offering as its deemed cost at the date of that event (paragraph D8 of
this Ind-AS), provided that the intangible asset qualifies for recognition
in accordance with Ind AS 38 (paragraph 10 of this Ind-AS). In addition,
if, and only if, an intangible asset meets both the recognition criteria in
Ind AS 38 (including reliable measurement of original cost) and the
criteria in Ind AS 38 for revaluation (including the existence of an active
market), a first-time adopter may elect to use one of the following
amounts as its deemed cost (paragraph D7 of this Ind-AS):
(a) fair value at the date of transition to Ind-ASs (paragraph D5
of this Ind-AS), in which case the entity gives the disclosures
required by paragraph 30 of this Ind-AS; or
(b) revaluation in accordance with previous GAAP that meets
the criteria in paragraph D6 of this Ind-AS.
IG51 If an entity’s amortisation methods and rates in accordance with
previous GAAP would be acceptable in accordance with Ind-ASs, the
entity does not restate the accumulated amortisation in its opening Ind-
AS Balance Sheet. Instead, the entity accounts for any change in
estimated useful life or amortisation pattern prospectively from the period
when it makes that change in estimate (paragraph 13 of this Ind-AS
and paragraph 104 of Ind AS 38). However, in some cases, an entity’s
amortisation methods and rates in accordance with previous GAAP may
differ from those that would be acceptable in accordance with Ind-ASs
(for example, if they were adopted solely for tax purposes and do not
reflect a reasonable estimate of the asset’s useful life). If those
differences have a material effect on the financial statements, the entity
adjusts the accumulated amortisation in its opening Ind-AS Balance
Sheet retrospectively so that it complies with Ind-ASs (paragraph 14 of
this Ind-AS). However, if an entity uses the exemption in paragraph
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First-time Adoption of Indian Accounting Standards
D8B, it uses the carrying amount of the intangible asset at the date of
transition to Ind-ASs as deemed cost as if it had acquired an intangible
asset with the same remaining service potential for that amount at the
date of transition to Ind-ASs. Subsequent amortisation is based on that
deemed cost and starts from the date of transition to Ind-ASs.
Ind AS 39 Financial Instruments: Recognition
and Measurement
IG52 An entity recognises and measures all financial assets and
financial liabilities in its opening Ind-AS. Balance Sheet in accordance
with Ind AS 39, except as specified in paragraphs B2–B6 of this Ind-
AS, which address derecognition and hedge accounting.
Recognition
IG53 An entity recognises all financial assets and financial liabilities
(including all derivatives) that qualify for recognition in accordance with
Ind AS 39 and have not yet qualified for derecognition in accordance
with Ind AS 39, except non-derivative financial assets and non-derivative
financial liabilities derecognised in accordance with previous GAAP
before date of transition, to which the entity does not choose to apply
paragraph B3 (see paragraphs B2 and B3 of this Ind-AS). For example,
an entity that does not apply paragraph B3 does not recognise assets
transferred in a securitisation, transfer or other derecognition transaction
that occurred before date of transition if those transactions qualified for
derecognition in accordance with previous GAAP. However, if the entity
uses the same securitisation arrangement or other derecognition
arrangement for further transfers after date of transition, those further
transfers qualify for derecognition only if they meet the derecognition
criteria of Ind AS 39 .
IG54 An entity does not recognise financial assets and financial
liabilities that do not qualify for recognition in accordance with Ind AS
39 or have already qualified for derecognition in accordance with Ind
AS 39 .
Indian Accounting Standards
76
Embedded derivatives
IG55 When Ind AS 39 requires an entity to separate an embedded
derivative from a host contract , the initial carrying amounts of the
components at the date when the instrument first satisfies the recognition
criteria in Ind AS 39 reflect circumstances at that date (Ind AS 39
paragraph 11). If the entity cannot determine the initial carrying amounts
of the embedded derivative and host contract reliably, it designates the
entire combined contract as at fair value through profit or loss (Ind AS
39 paragraph 12).This results in fair value measurement (except when
the entity cannot determine a reliable fair value, see Ind AS 39 paragraph
51(c), with changes in fair value recognised in profit or loss.
Measurement
IG56 In preparing its opening Ind-AS Balance Sheet, an entity applies
the criteria in Ind AS 39 to identify those financial assets and financial
liabilities that are measured at fair value and those that are measured
at amortised cost. In particular:
(a) to comply with Ind AS 39 paragraph 51, classification of
financial assets as held-to-maturity investments relies on a
designation made by the entity in applying Ind AS 39
reflecting the entity’s intention and ability at the date of
transition to Ind-ASs. It follows that sales or transfers of
held-to-maturity investments before the date of transition to
Ind-ASs do not trigger the ‘tainting’ rules in Ind AS 39
paragraph 9.
(b) to comply with Ind AS 39 paragraph 9, the category of ‘loans
and receivables’ refers to the circumstances when the
financial asset first satisfied the recognition criteria in Ind
AS 39.
(c) in accordance with Ind AS 39 paragraph 9, derivative
financial assets and derivative financial liabilities are always
deemed held for trading (except for a derivative that is a
financial guarantee contract or a designated and effective
hedging instrument). The result is that an entity measures
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First-time Adoption of Indian Accounting Standards
at fair value all derivative financial assets and derivative
financial liabilities that are not financial guarantee contracts.
(d) to comply with Ind AS 39 paragraph 50, an entity classifies
a non-derivative financial asset or non-derivative financial
liability in its opening Ind-AS Balance Sheet as at fair value
through profit or loss only if the asset or liability was:
i. acquired or incurred principally for the purpose of
selling or repurchasing it in the near term;
ii. at the date of transition to Ind-ASs, part of a portfolio
of identified financial instruments that were managed
together and for which there was evidence of a recent
actual pattern of short-term profit-taking; or
iii. designated as at fair value through profit or loss at
the date of transition to Ind-ASs.
(e) to comply with Ind AS 39 paragraph 9, available-for-sale
financial assets are those non-derivative financial assets
that are designated as available for sale and those nonderivative
financial assets that are not in any of the previous
categories.
IG57 For those financial assets and financial liabilities measured at
amortised cost in the opening Ind-AS Balance Sheet, an entity
determines their cost on the basis of circumstances existing when the
assets and liabilities first satisfied the recognition criteria in Ind AS 39.
However, if the entity acquired those financial assets and financial
liabilities in a past business combination, their carrying amount in
accordance with previous GAAP immediately following the business
combination is their deemed cost in accordance with Ind-ASs at that
date (paragraph C4(e) of this Ind-AS).
IG58 An entity’s estimates of impairments of financial assets measured
at amortised cost at the date of transition to Ind-ASs are consistent
with estimates made for the same date in accordance with previous
GAAP (after adjustments to reflect any difference in accounting policies),
Indian Accounting Standards
78
unless there is objective evidence that those assumptions were in error
(paragraph 14 of this Ind-AS). The entity treats the impact of any later
revisions to those estimates as impairment losses (or, if the criteria in
Ind AS 39 are met, reversals of impairment losses) of the period in
which it makes the revisions.
Transition adjustments
IG58A An entity shall treat an adjustment to the carrying amount of a
financial asset or financial liability as a transition adjustment to be
recognised in the opening balance of retained earnings at the date of
transition to Ind-ASs only to the extent that it results from adopting Ind
AS 39. Because all derivatives, other than those that are financial
guarantee contracts or are designated and effective hedging instruments,
are classified as held for trading, the differences between the previous
carrying amount (which may have been zero) and the fair value of the
derivatives are recognised as an adjustment of the balance of retained
earnings at the transition date (other than for a derivative that is a
financial guarantee contract or a designated and effective hedging
instrument).
IG58B Ind AS 8 applies to adjustments resulting from changes in
estimates. If an entity is unable to determine whether a particular portion
of the adjustment is a transition adjustment or a change in estimate, it
treats that portion as a change in accounting estimate in accordance
with Ind AS 8, with appropriate disclosures (Ind AS 8 paragraphs
32–40).
IG59 An entity may, in accordance with its previous GAAP, have
measured investments at fair value and recognised the revaluation gain
outside profit or loss. If an investment is classified as at fair value
through profit or loss, the pre- Ind AS 39 revaluation gain that had been
recognised outside profit or loss is reclassified into retained earnings
on initial application of Ind AS 39. If, on initial application of Ind AS 39,
an investment is classified as available-for-sale then the pre- Ind AS 39
revaluation gain is recognised in a separate component of equity.
Subsequently, the entity recognises gains and losses on the availablefor-
sale financial asset in other comprehensive income and accumulates
the cumulative gains and losses in that separate component of equity
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First-time Adoption of Indian Accounting Standards
until the investment is impaired, sold, collected or otherwise disposed
of. On subsequent derecognition or impairment of the available-for-sale
financial asset, the entity reclassifies to profit or loss the cumulative
gain or loss remaining in equity (Ind AS 39, paragraph 61(b)).
Hedge accounting
IG60 Paragraphs B4–B6 of this Ind-AS deal with hedge accounting.
The designation and documentation of a hedge relationship must be
completed on or before the date of transition to Ind-ASs if the hedge
relationship is to qualify for hedge accounting from that date. Hedge
accounting can be applied prospectively only from the date that the
hedge relationship is fully designated and documented.
IG60A An entity may, in accordance with its previous GAAP, have
deferred or not recognised gains and losses on a fair value hedge of a
hedged item that is not measured at fair value. For such a fair value
hedge, an entity adjusts the carrying amount of the hedged item at the
date of transition to Ind-ASs. The adjustment is the lower of:
(a) that portion of the cumulative change in the fair value of
the hedged item that ref lects the designated hedged risk
and was not recognised in accordance with previous GAAP;
and
(b) that portion of the cumulative change in the fair value of
the hedging instrument that reflects the designated hedged
risk and, in accordance with previous GAAP, was either
(i)not recognised or (ii) deferred in the Balance Sheet as an
asset or liability.
IG60B An entity may, in accordance with its previous GAAP, have
deferred gains and losses on a cash flow hedge of a forecast transaction.
If, at the date of transition to Ind-ASs, the hedged forecast transaction
is not highly probable, but is expected to occur, the entire deferred gain
or loss is recognised in equity. Any net cumulative gain or loss that has
been reclassified to equity on initial application of Ind AS 39 remains in
equity until (a) the forecast transaction subsequently results in the
recognition of a non-financial asset or non-financial liability, (b) the
Indian Accounting Standards
80
forecast transaction affects profit or loss or (c) subsequently
circumstances change and the forecast transaction is no longer expected
to occur, in which case any related net cumulative gain or loss is
reclassified from equity to profit or loss. If the hedging instrument is
still held, but the hedge does not qualify as a cash flow hedge in
accordance with Ind AS 39 hedge accounting is no longer appropriate
starting from the date of transition to Ind-ASs.
Ind AS 40 Investment Property
IG61 [Refer to Appendix 1]
IG62 In respect of investment property accounted for in accordance
with Ind AS 40, an entity applies paragraphs IG7–IG13 on property,
plant and equipment.
Ind AS 105 Non-current Assets Held for Sale
and Discontinued Operations
IG62A Ind AS 105 requires that an entity shall classify a non-current
asset (or disposal group) as held for sale if its carrying amount will be
recovered principally through a sale transaction rather than through
continuing use as at the date of transition to Ind-AS. However a first
time adopter may measure non-current assets (or disposal groups) that
meet the criteria to be classified as held for sale or for distribution to
the owners and operations as at the date of transition to Ind-AS rather
than going back to the date when the criteria to classify a non-current
asset (or disposal group) as held for sale is met.
Explanation of transition to Ind-ASs
IG63 Paragraphs 24(a), (b) and (d), 25 and 26 of this Ind-AS require a
first-time adopter to provide certain disclosures that give sufficient detail
to enable users to understand the material adjustments to the Balance
Sheet, statement of profit and loss and, if applicable, statement of cash
flows.
81
First-time Adoption of Indian Accounting Standards
The following two examples relate to a situation where an entity has elected
to apply paragraph 21(b):
IG Example 11A shows one way of satisfying requirements of paragraph
24(a) i.e reconciliation of equity at the date of transition to Ind-AS and
reconciliation of total comprehensive income.
IG Example 11B shows another way of satisfying requirements of paragraph
24(a) i.e reconciliation of equity at the date of transition to Ind-AS, and 24
(d) i.e reconciliation of equity and total comprehensive Income for the
comparative year.
Paragraph 24(a), and (b) requires specific reconciliations of equity and total
comprehensive income where an entity elects to apply paragraph 21(a).
IG Example 11C shows one way of satisfying requirements of paragraph
24(a) i.e reconciliation of equity at the date of transition to Ind-AS, and
24(b) i.e reconciliation of equity and total comprehensive income for the
year of transition to Ind-AS .
IG Example 11A Reconciliation of equity and total comprehensive
income.
Background
An entity first adopted Ind-ASs in 2011-12, with a date of transition to
Ind-ASs of 1 April 2011. Its last financial statements in accordance with
previous GAAP were for the year ended 31 March 2011.
Application of requirements
The entity’s first Ind-AS financial statements include the reconciliations
and related notes shown below.
Among other things, this example includes a reconciliation of equity at
the date of transition to Ind-ASs (1 April 2011).
In practice, it may be helpful to include cross-references to accounting
policies and supporting analyses that give further explanation of the
adjustments shown in the reconciliations below.
Indian Accounting Standards
82
If a first-time adopter becomes aware of errors made in accordance with
previous GAAP, the reconciliations distinguish the correction of those
errors from changes in accounting policies (paragraph 26 of this Ind-
AS). This example does not illustrate disclosure of a correction of an
error.
Reconciliation of equity at 1 April 2011 (date of transition to Ind-
ASs) –
Notes Reclassified Effect of
Previous transition Ind-
GAAP to Ind-ASs ASs
Rs Rs Rs
1 Property, plant and equipment 8,299 100 8,399
2 Goodwill 1,220 150 1,370
2 Intangible assets 208 (150) 58
3 Financial assets 3,471 420 3,891
Total non-current assets 13,198 520 13,718
Trade and other receivables 3,710 0 3,710
4 Inventories 2,962 400 3,362
5 Other receivables 333 431 76
Cash and cash equivalents 748 0 748
Total current assets 7,753 831 8,584
Total assets 20,951 1,351 22,302
Interest-bearing loans 9,396 0 9,396
Trade and other payables 4,124 0 4,124
6 Employee benefits 0 66 66
7 Restructuring provision 250 (250) 0
Current tax liability 42 0 42
8 Deferred tax liability 579 460 1,039
Total liabilities 14,391 276 14,667
Total assets less total liabilities 6,560 1,075 7,635
Issued capital 1,500 0 1,500
3 Other reserves 0 294 294
5,9 Retained earnings 5,060 781 5,841
Total equity 6,560 1,075 7,635
83
First-time Adoption of Indian Accounting Standards
Notes to the reconciliation of equity at 1 April 2011:
1. Depreciation was influenced by tax requirements in accordance
with previous GAAP, but in accordance with Ind-ASs reflects the
useful life of the assets. The cumulative adjustment increased the
carrying amount of property, plant and equipment by Rs. 100.
2. Intangible assets in accordance with previous GAAP included
Rs 150 for items that are transferred to goodwill because they do
not qualify for recognition as intangible assets in accordance with
Ind-ASs
3. Financial assets are all classified as at available for sale in
accordance with Ind-ASs and are carried at their fair value of Rs
3,891. They were carried at cost of Rs 3,471 in accordance with
previous GAAP. The resulting gain of Rs 294 (Rs 420, less related
deferred tax of Rs 126) is included in the other reserves.
4. Inventories include fixed and variable production overhead of Rs
400 in accordance with Ind-ASs, but this overhead was excluded
in accordance with previous GAAP.
5. Unrealised gains of Rs 431 on unmatured forward foreign exchange
contracts are recognised in accordance with Ind-ASs, but were
not recognised in accordance with previous GAAP. The resulting
gains of Rs 302 (Rs 431, less related deferred tax of Rs 129) are
included in the retained earnings.
6. A pension liability of Rs 66 is recognised in accordance with Ind-
ASs, but was not recognised in accordance with previous GAAP,
which used a cash basis.
7. A restructuring provision of Rs 250 relating to head office activities
was recognised in accordance with previous GAAP, but does not
qualify for recognition as a liability in accordance with Ind-ASs.
8. The above changes increased the deferred tax liability as follows:
Rs
Other reserves (note 3) 126
Indian Accounting Standards
84
Retained earnings 334
Increase in deferred tax liability 460
Because the tax base at 1 April 2011 of the items reclassified
from intangible assets to goodwill (note 2) equaled their carrying
amount at that date, it is assumed for the purposes of this
illustration that the reclassification did not affect deferred tax
liabilities.
9. The adjustments to retained earnings are as follows
Rs
Depreciation (note 1) 100
Production overhead (note 4) 400
Pension liability (note 6) (66)
Restructuring provision (note 7) 250
Unrealised gain on forward contracts (note 5) 431
Tax effect of the above (334)
Total adjustment to retained earnings 781
Reconciliation of total comprehensive income for 2011-12:
Note Reclassified Effect of
Previous transition
GAAP to Ind-ASs Ind-ASs
Rs Rs Rs
Revenue 20,910 (47) 20,863
1 Cost of sales (15,283) – (15,283)
2 Employee benefits (1,907) (130) (2,037)
4 Other expenditure (2,842) (150) (2,992)
5 Forward contract – (40) (40)
Finance income 1,446 – 1,446
6 Finance costs (1,902) 7 (1,895)
Profit before tax 422 (360) 62
8 Tax expense (148) 120 (28)
Profit (loss) for the year 274 (240) 34
7 Available-for-sale financial
assets – 180 180
85
First-time Adoption of Indian Accounting Standards
8 Tax relating to other
comprehensive income – (60) (60)
Other comprehensive
income – 120 120
Total comprehensive
income 274 (120) 154
Notes to the reconciliation of total comprehensive income for
Year 2011-12:
1 Revenue under Ind-AS is lower by Rs.47 because fair value
of revenue allocated to customer loyalty programme has been
deferred in accordance with Ind-ASs but not in accordance
with previous GAAP.
2 A termination benefit is recognised in accordance with
Ind-AS, but was not to be recognised in accordance with
previous GAAP. The pension liability increased by Rs. 130
during 2011-12.
3 Depreciation was influenced by tax requirements in accordance
with previous GAAP, but reflects the useful life of the assets
in accordance with Ind-ASs. The effect on the profit for 2011-
12 was not material.
4 A restructuring provision of Rs 150 which was accounted in
accordance with previous GAAP prior to transition date i.e
April 1, 2011 in this example, but did not qualify for recognition
in accordance with Ind-ASs until subsequent to the transition
date. This increases administrative expenses for 2011-12 in
accordance with Ind-ASs.
5 Forward exchange contracts are fair valued as at each balance
sheet date under Ind-AS. The fair value of forward foreign
exchange contracts decreased by Rs 40 during 2011-12.
6 Finance cost decreased by Rs. 7 on under Ind-AS on application of
effective interest rate method.
Indian Accounting Standards
86
7 Available-for-sale financial assets carried at fair value in
accordance with Ind-ASs increased in value by Rs 180 during
2011-12. They were carried at cost in accordance with previous
GAAP. Fair value changes have been included in other
comprehensive income.
8 Adjustments 1-6 above lead to a reduction of Rs 120 in
deferred tax expenses and adjustment 7 above lead to an
increase of Rs 60 in deferred tax expense recognized in other
comprehensive income.
Explanation of material adjustments to the statement of cash
flows for 2011-12
Income taxes of Rs 133 paid during 2011-12 are classified as
operating cash flows in accordance with Ind-ASs, but were included
in a separate category of tax cash flows in accordance with previous
GAAP. There are no other material differences between the statement
of cash flows presented in accordance with Ind-ASs and the statement
of cash flows presented in accordance with previous GAAP.
IG Example 11B Format for reconciliation in accordance with
paragraph 24(a) and (d) for an entity that elects to apply
paragraph 21(b)
A. Reconciliation of equity:
For the Year ended April 1, March April 1,
2010 31, 2011 2011
Equity in accordance with Ind-AS xxx xxx Xxx
Reconciling GAAP differences
Property, Plant and Equipment
(note x) xx xx xx
Inventory (note x) xx xx xx
Employee benefits (note x) xx xx xx
Restructuring provision (note x) xx xx xx
Financial Assets (note x) xx xx xx
Unpaid Dividend (xx) (xx) (xx)
87
First-time Adoption of Indian Accounting Standards
Deferred Tax Liabilities (note x) (xx) (xx) (xx)
Total adjustment to equity xx xx xx
Equity in accordance with previous
GAAP as per the most recent
annual financial statements xx xx xx
Provide explanatory note to reconciling items on the lines of example
11A above.
B. Reconciliation of total comprehensive income:
For the Year ended March 31, 2011
Total comprehensive income in accordance
with Ind-AS xxx
Reconciling GAAP differences:
Depreciation (note x) xx
Production overhead (note x) xx
Pension liability (note x) xx
Restructuring provision (note x) xx
Unrealised gain on forward contracts (note x) xx
Tax effect of the above (note x) (xx)
Adjustment to total comprehensive income xx
Profit and Loss in accordance with previous
GAAP as per the most recent annual financial
statements xx
Provide explanatory note to reconciling items on the lines of example
11A above.
Indian Accounting Standards
88
IG Example 11C Format for reconciliation in accordance with
paragraph 24(a) and (b) for an entity that elects to apply paragraph
21(a)
A. Reconciliation of equity:
For the Year ended April 1, 2011
Equity in accordance with Ind-AS xxx
Reconciling GAAP differences
Property, Plant and Equipment (note x) xx
Inventory (note x) xx
Employee benefits (note x) xx
Restructuring provision (note x) xx
Financial Assets (note x) xx
Unpaid Dividend (xx)
Deferred Tax Liabilities (note x) (xx)
Total adjustment to equity xx
Equity in accordance with previous GAAP as per
the most recent annual financial statements xx
Provide explanatory note to reconciling items on the lines of example
11A above.
B. Reconciliation of total comprehensive income:
For the Year ended March 31, 2012
Total comprehensive Income in accordance
with Ind-AS xxx
Significant GAAP differences:
Depreciation (note x) xx
Production overhead (note x) xx
Pension liability (note x) xx
Restructuring provision (note x) xx
Unrealised gain on forward contracts (note x) xx
Tax effect of the above (note x) (xx)
Adjustment to total comprehensive income Xx
Profit and Loss in accordance with previous GAAP Xx
Provide explanatory note to reconciling items on the lines of example
11A above.
89
First-time Adoption of Indian Accounting Standards
Ind AS 102 Share-based Payment
IG64 A first-time adopter is encouraged, but not required, to apply Ind
AS 102 Share-based Payment to equity instruments that were vested
before the date of transition to Ind-ASs.
IG65 For example, if an entity’s date of transition to Ind_ASs is 1 April
2011, the entity applies Ind AS 102 to shares, share options or other
equity instruments that had not yet vested at 1 April 2011.
[Paragraphs IG66–IG200 reserved for possible guidance on future
standards]
Appendices to Indian Accounting Standards
Appendix A to Ind AS 16 Changes in Existing
Decommissioning, Restoration and Similar Liabilities
IG201 Ind AS 16 requires the cost of an item of property, plant and
equipment to include the initial estimate of the costs of dismantling and
removing the asset and restoring the site on which it is located. Ind AS
37 requires the liability, both initially and subsequently, to be measured
at the amount required to settle the present obligation at the end of the
reporting period, reflecting a current market-based discount rate.
IG202 Appendix A to Ind AS 16 requires that, subject to specified
conditions, changes in an existing decommissioning, restoration or
similar liability are added to or deducted from the cost of the related
asset. The resulting depreciable amount of the asset is depreciated
over its useful life, and the periodic unwinding of the discount on the
liability is recognised in profit or loss as it occurs.
IG203 Paragraph D21 of Ind-AS 101 provides a transitional exemption.
Instead of retrospectively accounting for changes in this way, entities
can include in the depreciated cost of the asset an amount calculated
by discounting the liability at the date of transition to Ind-ASs back to,
and depreciating it from, when the liability was first incurred. IG Example
201 illustrates the effect of applying this exemption, assuming that the
Indian Accounting Standards
90
entity accounts for its property, plant and equipment using the cost
model.
IG Example 201 Changes in existing decommissioning,
restorationand similar liabilities
Background
An entity’s first Ind-AS financial statements are for a period that
ends on 31 March 2012 and with transition date of 1 April, 2011.
The entity acquired an energy plant on 1 April 2008, with a life of 40
years. As at the date of transition to Ind-ASs, the entity estimates
the decommissioning cost in 37 years’ time to be Rs 470, and
estimates that the appropriate risk-adjusted discount rate for the
liability is 5 per cent. It judges that the appropriate discount rate has
not changed since 1 April 2008.
Application of requirements
The decommissioning liability recognised at the transition date is
Rs77 (Rs 470 discounted for 37 years at 5 per cent).
Discounting this liability back for a further three years to 1 April
2008 gives an estimated liability at acquisition, to be included in the
cost of the asset, of Rs 67. Accumulated depreciation on the asset
is Rs 67 × 3/40 = Rs 5.
The amounts recognised in the opening Ind-AS Balance Sheet on
the date of transition to Ind-ASs (1 April, 2011) are, in summary:
Rs
Decommissioning cost included in cost of plant 67
Accumulated depreciation (5)
Decommissioning liability (77)
Net assets/retained earnings (15)
91
First-time Adoption of Indian Accounting Standards
Appendix C to Ind AS 17 Determining whether an
Arrangement contains a Lease
IG204 Appendix C to Ind AS 17 specifies criteria for determining, at
the inception of an arrangement, whether the arrangement contains a
lease. It also specifies when an arrangement should be reassessed
subsequently.
IG205 Paragraph D9 of the Ind-AS provides a transitional exemption.
Instead of determining retrospectively whether an arrangement contains
a lease at the inception of the arrangement and subsequently
reassessing that arrangement as required in the periods before transition
to Ind-ASs, entities may determine whether arrangements in existence
on the date of transition to Ind-ASs contain leases by applying
paragraphs 6–9 of Appendix C to Ind AS 17 to those arrangements on
the basis of facts and circumstances existing on that date.
IG Example 202 Determining whether an arrangement contains a
lease
Background
An entity’s first Ind-AS financial statements are for a period that
ends on 31 March 2012. Its date of transition to Ind-ASs is therefore
1 April 2011.
On 1 April 2010 the entity entered into a take-or-pay arrangement to
supply gas. On 1 April 2011, there was a change in the contractual
terms of the arrangement.
Application of requirements
On 1 April 2011 the entity may determine whether the arrangement
contains a lease by applying the criteria in paragraphs 6–9 of
Appendix C to Ind AS 17 on the basis of facts and circumstances
existing on that date. Alternatively, the entity applies those criteria
on the basis of facts and circumstances existing on 1 April 2010 and
reassesses the arrangement on 1 April 2011. If the arrangement is
Indian Accounting Standards
92
determined to contain a lease, the entity follows the guidance in
paragraphs IG14–IG16.
IG206 Paragraph D9A of Ind-AS 101 provides a transitional exemption
in addition to that discussed in paragraph IG205. The exemption in
paragraph D9A applies only to arrangements that were assessed in the
same manner as required by Appendix C to Ind AS 17. If arrangements
exist at the date of transition to Ind-ASs that an entity did not assess
under previous GAAP in the same manner as required by Appendix C
to Ind AS 17 to determine whether they contain a lease, the entity may
apply the transition exemption discussed in paragraph IG205.
93
First-time Adoption of Indian Accounting Standards
Appendix 1
Comparison with IFRS 1, First-time Adoption of
International Financial Reporting Standards
Note: This Appendix is not a part of the Indian Accounting Standard
(Ind AS) 101, First-time Adoption of Indian Accounting Standards. The
purpose of this Appendix is only to highlight differences between Ind
AS 101 and corresponding International Financial Reporting Standard
(IFRS) 1, First-time Adoption of International Financial Reporting
Standards.
1 Paragraph 3 of Ind-AS 101 specifies that an entity’s first Ind-AS
financial statements are the first annual financial statements in which
the entity adopts Ind-ASs in accordance with Ind-ASs notified under the
Companies Act, 1956 whereas IFRS 1 provides various examples of
first IFRS financial statements.
2 Paragraph 4 of IFRS 1 provides various examples of instances
when an entity does not apply this IFRS. Ind AS 101 does not provides
the same. In order to maintain consistency with paragraph numbers of
IFRS 1, the paragraph number is retained in Ind AS 101.
3 Paragraph 32 (c) of IFRS 1 has been deleted in Ind AS 101 and
included as paragraph 32A as a consequence of redrafting of the paragraph
32 in Ind AS 101. In order to maintain consistency with paragraph numbers
of IFRS 1, the paragraph number is retained in Ind AS 101.
4 IFRS 1 defines transitional date as beginning of the earliest period
for which an entity presents full comparative information under IFRS. It
is this date which is the starting point for IFRS and it is on this date the
cumulative impact of transition is recorded based on assessment of
conditions at that date by applying the standards retrospectively except
to the extent specifically provided in this standard as optional exemptions
and mandatory exceptions.
Ind-AS 101, however, provides that the date of transition is the beginning
of the current period and in addition provides an option to present
Indian Accounting Standards
94
comparative financial statements in accordance with Ind-AS on a
memorandum basis.
Arising from this fundamental change, there are other consequential
changes to Ind-AS 101. For example, disclosures required under
paragraph 21 and reconciliations under paragraphs 24 to 26, Ind-AS
101 have been modified to accommodate this option available under
Ind-AS 101. In addition, these have been modified to include the latest
corresponding previous periods’ financial statements as per the previous
GAAP when presenting its first Ind-AS financial statements. The relevant
Implementation Guidance and illustrative examples have been
appropriately modified to reflect the option provided to transitioning
entities.
5 IFRS 1 defines previous GAAP as the basis of accounting that a
first-time adopter used immediately before adopting IFRS.
Ind-AS 101, however, defines previous GAAP as the basis of accounting
that a first-time adopter used immediately before adopting Ind-AS for
complying with the reporting requirements in India.
The change makes it mandatory for Indian entities to consider the
financial statements prepared in accordance with existing notified Indian
accounting standards as was applicable to them as previous GAAP
when it transitions to Ind-AS.
6 Paragraph 22 of IFRS 1 requires specific disclosures if the entity
provides non-IFRS comparative information and historical summaries.
Such disclosures are not required under Ind-AS 101. In order to maintain
consistency with paragraph numbers of IFRS 1, the paragraph number
is retained in Ind AS 101.
7 IFRS requires reconciliations for opening equity, total comprehensive
income, cash flow statement and closing equity for the comparative period
to explain the transition to IFRS from previous GAAP.
Ind-AS 101, provides an option to provide a comparative period financial
statements on memorandum basis. Accordingly, entities that do not
95
First-time Adoption of Indian Accounting Standards
provide comparatives need not provide reconciliation for total
comprehensive income, cash flow statement and closing equity in the
first year of transition but are expected to disclose significant differences
pertaining to total comprehensive income. Entities that provide
comparatives would have to provide reconciliations which are similar to
IFRS.
8 All transitional provisions related to Ind ASs, wherever considered
appropriate have been included in Ind AS 101. The following paragraphs
provides the transitional provisions which are included in the other Ind
ASs:
(i) Paragraph D4 includes the transitional provisions of IFRS 4;
(ii) Paragraph D22 includes the transitional provisions of
IFRIC 12.
9 IFRS 1 provides for various optional exemptions that an entity
can seek while an entity transitions to IFRS from its previous GAAP.
Similar provisions have been retained under Ind-AS 101. However,
there are few changes that have been made, which can be broadly
categorized as follows:
(a) Elimination of effective dates prior to transition date. IFRS
1 provides for various dates from which a standard could
have been implemented. For example,
• Paragraph B2 of IFRS 1 provides that, an entity would
have had to adopt the de-recgonition requirements for
transactions entered after 1 January, 2004. However,
for Ind-AS 101 purposes, all these dates have been
changed to coincide with the transition date elected
by the entity adopting these converged standards i.e.
Ind-AS;
• Paragraph D2 of IFRS 1 provides that an entity is
encouraged, but not required, to apply IFRS 2 Sharebased
Payment to equity instruments that were granted
on or before 7 November 2002 or to instruments that
Indian Accounting Standards
96
were granted after 7 November 2002 and vested before
the later of (a) the date of transition to IFRSs and (b)
1 January 2005. However, for Ind-AS 101 purposes,
all these dates have been changed to coincide with
the transition date elected by the entity adopting these
converged standards i.e. Ind-AS;
(b) Deletion of certain exemptions not relevant for India. Certain
instances of such items are as follows:
• Paragraph D10 of IFRS 1 provides an entity that
adopted the corridor approach for recording actuarial
gain and losses arising from accounting for employee
obligations with an option to recognize the entire such
gain or loss to retained earnings, at the date of
transition, rather than requiring them to split such gains
and losses as recognized and unrecognized gains and
losses. In India, since corridor approach is not elected,
the resultant first time transition provision has been
deleted. In order to maintain consistency with
paragraph numbers of IFRS 1, the paragraph number
is retained in Ind AS 101;
• Paragraph D23 of IFRS 1 provides for transitional
adjustment requiring companies to apply the provisions
of IAS 23 to be applied prospectively after the transition
date. However, this was considered as not relevant in
Indian situation as Ind AS 23 AS 16 always required
an entity to capitalize borrowing costs as compared to
IAS 23 where it provided an option to expense out
such borrowing cost. Consequently, paragraphs IG 23
and IG 24 have also been deleted. In order to maintain
consistency with paragraph numbers of IFRS 1, the
paragraph numbers are retained in Ind AS 101, and
(c) Inclusion/modification of existing exemptions to make it
relevant for India. For example,
97
First-time Adoption of Indian Accounting Standards
• Paragraph D7A has been added to provide for
transitional relief from the retrospective application of
Ind AS 16: Property, Plant and Equipment. Paragraph
D7A provides an entity option to use carrying values
of all such assets as on the date of transition in
accordance with previous GAAP as an acceptable
starting point under Ind-AS. Paragraph 27B has been
included in Ind AS 101 which requires the disclosure
that if an entity adopts for first time exemption the
option provided in accordance with paragraph D7A,
the fact and the accounting policy shall be disclosed
by the entity until such time that significant block of
such assets is fully depreciated or derecognised from
the entity’s Balance Sheet.
• Paragraph D9 provides for transitional relief from
retrospective application of paragraphs 6-9 of the
Appendix C of Ind AS 17.
• Paragraph D11A has been added to provide the
transitional relief from the retrospective application of
Ind AS 19 that a first-time adopter may elect to
recognise all cumulative actuarial gains and losses
subsequent to the date of transition to Ind-AS in other
comprehensive income as Ind AS 19 requires
recognition of actuarial gains and losses for postemployment
defined benefit plans and other long-term
employment benefit plans in other comprehensive
income immediately and are not reclassified to profit
or loss in a subsequent period.
• Paragraph D13 A has been added to provide exemption
as a consequence of optional treatment for certain
exchange differences given in Ind AS 21.
• Paragraph D19A has been added to provide that the
financial instruments carried at amortised cost should
be measured in accordance with Ind-AS 39 from the
Indian Accounting Standards
98
date of recognition of financial instruments unless it is
impracticable (as defined in Ind AS 8) for an entity to
apply retrospectively the effective interest method or
the impairment requirements in paragraphs 58–65 and
AG84–AG93 of Ind AS 39.If it is impracticable then
the fair value of the financial instrument at the date of
transition to Ind-ASs shall be the new amortised cost
of that financial instrument at the date of transition to
Ind-ASs.
• D19B has been added to provide that financial
instruments measured at fair value shall be measured
at fair value as on the date of transition to Ind-AS.
• Paragraph D-26 has been added to provide for
transitional relief while applying Ind AS 105 – Noncurrent
Assets Held for Sale and Discontinued
Operations. Paragraph D26 provides an entity to use
the transitional date circumstances to measure such
assets or operations at the lower of carrying value
and fair value less cost to sell.
10 Paragraphs IG 15 and IG 16 of Appendix F have been deleted in
Ind AS 101 as they are with reference to the earlier version of Ind AS
17, hence are not relevant. In order to maintain consistency with
paragraph numbers of IFRS 1, the paragraph numbers are retained in
Ind AS 101.
11 Paragraphs IG 18 and IG 42 of Appendix F has been deleted in
Ind AS 101 as these are not relevant. In order to maintain consistency
with paragraph number of IFRS 1, the paragraph numbers are retained
in Ind AS 101.
12 Paragraph IG 61 has been deleted in Ind AS 101 as it is with
reference to fair value model which is not permitted under Ind AS 40. In
order to maintain consistency with of paragraph number of IFRS 1 , the
same is retained in Ind AS 101
99
First-time Adoption of Indian Accounting Standards
13 Different terminology is used in this standard, e.g., the term
‘balance sheet’ is used instead of ‘Statement of financial position’ and
‘Statement of profit and loss’ is used instead of ‘Statement of
comprehensive income’.
14 Paragraph IG 25 of Appendix F appears as ‘Deleted ‘in IFRS 1.
In order to maintain consistency with paragraph number of IFRS 1, the
same is retained in Ind AS 101.

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