Miscellaneous – Advanced Tax Laws and Practice Important Questions
Question 1.
Write short notes on the following:
(i) Common Portal
(ii) Deemed Export
(iii) Taking Assistance from an Expert
Answer:
(i) Common Portal:
The Government may, on the recommendations of the Council, notify the common Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, e-way bill and for carrying out such other functions and for such purposes as may prescribed. Common portal is www.gst.gov.in.
(ii) Deemed Exports:
The Government may, on the recommendations of the to Council, notify certain supplies of goods as deemed exports, where goods do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.
(iii) Taking Assistance from an Expert:
Any officer not below the rank of Assistant commissioner may, having regard to the nature and complexity of the case and the Interest of revenue, take assistance of any expert at any stage of scrutiny, inquiry, investigation or any other proceedings before him.
Question 2.
What is National Anti-Profiteering Authority (NAA)?
Answer:
The National Anti-Profiteering Authority (NAA) was established under section 171 of the Central Goods and Services Tax Act, 2017. The NAA was set up to monitor and to oversee whether the reduction or benefit of input tax credit is reaching the recipient by way of appropriate reduction in prices.
National Anti-profiteering Authority (NAA) is therefore primarily constituted by the central government to analyse whether input tax credits availed by any registered person or the reduction in the tax is passed onto the consumer and he/she is protected from random price increase for self-interests in the name of GST.
The primary aim of the National Anti-profiteering Authority is to ensure the benefits of reduction or lower taxes under the new GST regime are passed onto the end consumers. Which is to determine that if any reduction in the rate of tax on supply of goods or services is passed onto the final recipient by way of proportional reduction in prices?
Apart from this, the NAA also has to identify registered people/entities who have not passed on the benefit of a reduction in the rate of tax by means of ITC and bring them to task.
Question 3.
State the duties and powers of the Anti-profiteering Committee under GST law.
Answer:
Duties of Anti-profiteering committee – Section 171(3)
The Authority would have the following duties:
(i) To determine whether any reduction in the rate of tax on any supply of goods or services or the benefit of input tax credit has been passed on to the recipient by way of commensurate reduction in prices.
(ii) To identify the registered person who has not passed on the benefit of reduction in the rate of tax on supply of goods or services or the benefit of input tax credit to the recipient by way of commensurate reduction in prices;
(iii) to order, reduction in prices; return to the receipient, an amount equivalent to the amount not passed on by way of commensurate reduction in prices along with interest at the rate of eighteen per cent, form the date of collection of the higher amount till the date of the return of such amount or recovery of the amount not returned, as the case may be, in case the eligible person does not claim return of the amount or is not identifiable, and depositing the same in the Consumer Welfare Fund;
imposition of penalty; and
Cancellation of registration.
Question 4.
What is the purpose of Compliance rating mechanism?
Answer:
As per Section 149 of the CGST/SGST Act, every registered person shall be assigned a compliance rating based on the record of compliance in respect of specified parameters. Such ratings shall also be placed in the public domain. A prospective client will be able to see the compliance ratings of suppliers and take a decision as to whether to deal with a particular supplier or not. This will create healthy competition amongst taxable persons.
Question 5.
What are the objectives of Compliance Rating?
Answer:
The following are the major benefits/objectives of compliance rating: Efficient input tax credit mechanism:
A person can claim an input tax credit in GSTR-2 (return with purchase details for the month) only when the seller also files his GSTR-1 (return with monthly sales details), and the details on both these forms reconcile or match with each other. This was not so earlier. The rating of a taxable person would be relevant to determine the eligibility of input tax credit in respect of inward supplies, selection for scrutiny and other administrative/monitoring purposes.
The rating would be based on tax payer’s record of compliance with the provisions of CGST, SGST and IGST. The details of parameters and methodology for rating would be prescribed.
Preferred supplier chosen by buyers/increase customer base:
As compliance rating increases, so is customer base, in accordance with rating and reputation. The buyer will prefer to choose those suppliers whose rating is good in the market. Will ensure healthy competition and enhanced compliances: The objective of this concept of tax administration is to make people fully GST compliant and on time with the uploading of invoices and other necessary documents, which will ensure healthy competition in the market.
Lower or poor rating may attract stricter scrutiny and surveillance:
If rules and regulations are regularly followed, then the chances of business coming under the spotlight or scrutiny of the GST authorities are significantly reduced, as the need to audit accounts will be nil.
Question 6.
Narrate all those advantages which will be available to Trade because of implementation of GST.
Answer:
The advantages because of applicability of GST to trade are:-
- Reduction in multiplicity of taxes
- Mitigation of cascading/double taxation
- More efficient neutralization of taxes especially for exports
- Simpler tax regime with fewer rates and exemptions
- Increase in cost competitiveness for domestic industries with reduction in tax cost and also reduced cost of compliance.
Question 7.
Briefly explain the following features of GST law in India:
(i) Consumption based tax
(ii) Integrated Goods and Services Tax.
Answer:
(i) GST is a consumption based tax i.e. tax payment accure to the state where consumption of supply takes place. Exports are not taxable because place of consumption is outside India whereas imports are taxable as place of consumption is in India.
(ii) Integrated Goods and Services Tax (IGST) is charged on inter-State supply of goods or services or both and collected by Central Government under IGST Act, 2017.
IGST rate is equal to CGST and SGST rates. Revenue from IGST apportions among Union and State Governments on the basis of recommendations of GST council.
Question 8.
Answer the following independent issues in the context of provisions contained under the GST Act, 2017?
(i) The different applicable rates of GST which also apply to IGST.
(ii) GST Council.
(iii) Point of Taxation.
(iv) SGST cannot be levied in a Union Territory and to plug this loophole, the GST Council had decided to have which legislature.
(v) Name the Act and the period which provides compensation to the States for the loss of revenue because of implementation of GST.
Answer:
(i) The rates of GST (CGST + SGST/UTGST) applicable for goods are Nil, 5%, 12%, 18%, and 28%. Some goods are also liable to tax at 0.2596 and 396.
(ii) GST Council means the council established under article 279A of the Constitution of India having Union Finance Minister as Chairperson, Union Minister of State in charge for Finance and State Finance Minister of every State as its member.
(iii) Point of Taxation is not used under GST. The termed used is ‘Time of Supply’. The expression ‘time of supply’ is not defined. The liability to pay GST arises at the ‘time of supply’ determined in accordance with GST Acts.
(iv) The Union Territory Goods and Service Tax Act, 2017 provides for levy of GST in Union Territories instead of State Goods and Services Tax (SGST).
(v) The Goods and Service Tax (Compensation to States) Act, 2017 for a period of 5 years.
Question 9.
State the functions of the GSTN, i.e. the role assigned to GSTN.
Answer:
Functions of the GSTN (i.e. Role assigned to GSTN):
Creation of common and shared IT infrastructure for functions facing taxpayers has been assigned to GSTN and these are:
- filing of registration application.
- filing of return.
- creation of challan for tax payment.
- settlement of IGST payment (like a clearing house).
- generation of business intelligence and analytics, etc.
All statutory functions to be performed by tax officials under the GST like approval of registration, assessment, audit, appeal, enforcement etc. will remain with the respective tax departments.
Question 10.
How to calculate Goods and Services Tax (GST)?
Answer:
GST can be calculated simply by multiplying the Taxable amount by GST rate.
The different applicable rates of GST which also apply to IGST.
(ii) GST Council.
(ill) Point of Taxation.
If CGST & SGST/UTGST is to be applied then CGST and SGST both amounts are half of the total GST amount.
Goods and Services Tax = Taxable Amount × GST Rate.
If you have the amount which is already including the GST then you can calculate the GST excluding amount by below formula:
GST excluding amount = GST including amount/(1+ GST rate/100)
For example, GST including amount is ₹525 and GST rate is 5%.
GST excluding amount = 525/(1+5/100) = 525/1.05 = 500
GST is calculated on the transaction amount and not on the MRR
Question 11.
GST law in India came into existence with effect from 1-7-2017. What are the various central taxes which are subsumed under the GST law?
Answer:
The following are the various Central Taxes subsumed under the GST Law:
Central Excise Duty
Service Tax
Additional Excise Duties
CVD (levied on imports in lieu of Excise duty)
SAD (levied on imports in lieu of VAT)
Excise Duty levied under Medicinal and Toiletries Preparations Act,
Surcharges and Cesses
Question 12.
What is GST regime? Mention the State taxes and levies that are subsumed under GST.
Answer:
The GST is a comprehensive destination-based tax levy on manufacture, sale and consumption of goods and services at a national level which will subsume most of the indirect taxes at State and Central level to provide comprehensive and continuous chain of set-off benefits throughout the value chain.
Following state taxes and levies are subsumed under GST:
(a) Octroi
(b) VAT (except on liquor for consumption)
(c) Entry tax
(d) Stamp duty
(e) Tax on consumption or sale of electricity
(f) Entertainment tax (unless it is levied by the local bodies)
(g) Luxury tax
(h) Taxes on lottery, betting and gambling
(i) State Cess and Surcharge in so far as they relate to supply of goods and services
(j) Purchase Tax
Question 13.
Which was the first country to introduce Goods and Services Tax (GST) and When? What are the functions of the GST Council in India?
Answer:
France was the pioneer who first introduced GST in the Year 1954.
Functions of the GST Council
To recommend rate of taxes, cesses and surcharges to be levied by the Centre, States and local bodies.
To list goods and services which may be subjected to or exempted from GST.
To design model of GST laws and principles.
To fix the threshold limit of turnover below which exemption may be given.
To recommend the floor rates and special rates.
To suggest special provisions for North East States and other hilly areas.
Question 14.
What is cascading effect of Tax?
Answer:
The cascading effect implies charging tax on tax. In other words, at the time of levy of tax, the total value is considered which is inclusive of all taxes paid up to that point.
In this manner, if the tax is always charged on the selling price of the product, the burden of tax keeps on increasing at each point of sales. In this process, the effect of taxation magnifies as at each level tax is calculated on value, which includes taxes already levied and paid. The charging of tax on tax is called as ‘Cascading Effect of tax’.
Question 15.
What are the advantages of IGST Model?
Answer:
The major advantages of IGST Model are:
(a) Maintenance of uninterrupted ITC chain on inter-State transactions;
(b) No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer;
(c) No refund claim in exporting State, as ITC is used up while paying the tax;
(d) Self-monitoring model;
(e) Ensures tax neutrality while keeping the tax regime simple;
(f) Simple accounting with no additional compliance burden on the tax-payer;
(g) Would facilitate in ensuring high level of compliance and thus higher collection efficiency. Model can handle ‘Business to Business’ as well as ‘Business to Consumer’ transactions.
Question 16.
What are the recognitions to a Company Secretary under GST?
Answer:
Company Secretary to act as Goods & Services Tax Practitioner (GSTP)
Section 48(1) of the Central Goods & Services Act, 2017 (CGST) provides for “the manner of approval of goods and services tax practitioners, their eligibility conditions, duties and obligations, manner of removal and other conditions relevant for their functioning shall be such as may be prescribed.”
Pursuant to section 48 of CGST Act, 2017, read with Rule 83 of the Central Goods and Services Tax Rules, 2017, any person who has passed the Final Examination of the Institute of Company Secretaries of India (ICSI) is eligible for enrolment as a Goods & Services Tax Practitioner by making an application in Form GST PCT-01 on the common portal either directly or through a Facilitation Centre notified by the Commissioner for enrolment. A Goods & Services Tax Practitioner is eligible to undertake the following tasks:
(a) furnish details of outward and inward supplies;
(b) furnish monthly, quarterly, annual or final return;
(c) make deposit for credit into the electronic cash ledger;
(d) file a claim for refund;
(e) file an application for amendment or cancellation of registration;
(f) furnish information for generation of e-way bill;
(g) furnish details of Challan in FORM GST ITC-04;
(h) file an application for amendment or cancellation of enrolment under rule 58; and
(i) file an intimation to pay tax under the composition scheme or with¬draw from the said scheme.
Company Secretary to represent before the Appellate Authority
Under Section 116 of Central Goods & Services Tax Act, 2017, read with Rule 84 of Central Goods & Services Tax Rules, 2017, a Company Secretary is entitled to appear before an officer appointed under this Act, or the Appellate Authority or the Appellate Tribunal in connection with any proceedings under this Act.
Miscellaneous Notes
Sections involved: 143 to 174 of CGST Act
- Job Work procedure (Section 143)
- Presumption as to documents in certain cases.
- Admissibility of micro films, facsimile copies of documents, and computer printout as documents and as evidence.
- Common portal (Section 146)
- Deemed Exports (Section 147)
- Special provisions for certain processes
- Goods and Services Tax compliance rating (Section 149)
- Obligation to furnish information return (Section 150)
- Power to collect statistics
- Bar on disclosure of information
- Taking assistance from an expert (Section 153)
- Power to take samples
- Burden of Proof
- Persons deemed to be public servants
- Protection of action taken under this Act
- Disclosure of information by a public servant
- Publication of information in respect of persons in certain cases
- Assessment proceedings, etc., not to be valid on certain grounds
- Rectification of errors apparent on the face of the record
- Bar on the jurisdiction of Civil courts
- Levy of fee
- Power of Government to make rules
- Power to make regulations
- Laying of rules, regulations, and notifications
- Delegation of powers
- Power to issue instructions or directions
- Service of notice in certain circumstances
- Rounding off of tax, etc.: To nearest of rupee (Section 170)
- Anti-profiteering measure (Section 171)
- Removal of difficulties
- Repeal and saving
Author’s Note:
In this topic, apart from questions relating to provisions of Chapter XXI of CGST Act which deals with “Miscellaneous”, we have also listed various questions which could not be specifically incorporated in any other topic.