GST Council and its functions

What is GST council

1. In accordance with newly inserted Art. 279A of the Constitution of India, the president shall, within 60 days from the date of commencement of the Constitution (101st Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council (GST Council, in short).

2. Exercising these powers, the President has constituted the GST Council on 15 September 2016 withe the following members

(a) The Union Finance Minister ....... chairperson

(b) The Union Minister of State in charge of Revenue or Finance.... Member

(c) The Minister in charge of Finance or Taxation or any other Minister nominated by each state Government .... Members

 

3. While discharging the functions conferred by this Article, the GST Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.

Manner of decision by the GST Council

1. The GST Council shall determine the procedure in the performance of its functions.

2. One-half of the total number of members of the GST Council shall constitute the quorum at its meetings.

3. Every decision of the GST Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely.

(a) the vote of the Central Government shall have a weightage of one third of the total votes cast, and

(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

Supply - meaning, time and valuation

1. Levy of GST is based upon the term "supply". Taxability under the GST depends upon supply of goods and services.

2. Ther terms sale, purchase, service provider and service receiver are irrelevant for the purposes of GST Act.

3. The term "supply" has not been defined in the Constitution of India. However, it has been defined under the Model GST Act.

4. Therefore, the first step is to know whether a person, who is engaged in the business has made any supply of goods and/or services; and whether these supplies are taxable under the GST.

Time of supply of services subject to reverse charge (Section 13(5)

Time of supply shall be earliest of the following dates:

(a) The date of debit in the books of accounts.

(b) The date on which the payment is made (earliest of credit date in the books of accounts or debit date in the bank account).

(c) The date of receipt of invoice; or 

(d) the date of debit in the books of accounts.

Time of supply of services which ceases (Section 13 (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.

Meaning of the term "IGST" and its need

(a) IGST stands for' Integrated Goods and Services Tax.

(b) The scope of IGST Model is that Centre would levy IGST, which would be almost equal to (CGST + SGST) in the State of supply, on all inter-state transactions of taxable goods and services with appropriate provisions for consignment or stock transfer of goods and services.

(c) Power to impose GST on supply of the goods and services in the course of inter-state trade or commerce vests with the Central Government. Therefore, the

Model Integrated Goods and Services Tax (IGST) Law has also been released to determine situs of such supply.

(d) Inter-state supplier shall pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his inward supplies.

(e) The exporting state shall transfer to the Centre the credit of SGST used in payment of IGST. The Importing dealer shall claim credit of IGST while discharging his output tax liability in his own state. The Centre shall transfer to the importing state the credit of IGST used in payment of SGST.

(f) The relevant information shall also be submitted to the central agency which shall act as a clearing house, verify the claims and inform the respective government to transfer the funds.

(g) Needs for IGST Mechanism: In respect of B2B transactions, the taxes paid are taken as credit by the recipient. For B2B transactions, the location of recipient takes care of situations as further credit is to be taken by recipient since the recipient usually further supplies to another customer. The supply is consumed only when a B2B transactions further converted into a B2C transaction.

Tax on import of services

Import of services into India is taxable by the central government through reverse charge method. In relation to any taxable service provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory (India, then J &K), service tax shall be payable by the recipient of such service.