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TMI BlogCritical study of provisions of CENTRAL GOODS AND SERVICES TAX ACT, 2017–( in (short CGST) from clause 51 to clause 75 of section 2. – Third articleX X X X Extracts X X X X X X X X Extracts X X X X ..... Critical study of provisions of CENTRAL GOODS AND SERVICES TAX ACT, 2017–( in (short CGST) from clause 51 to clause 75 of section 2. – Third article - By: - DEV KUMAR KOTHARI - Goods and Services Tax - GST - Dated:- 11-7-2022 - - Earlier article in series can be easily found with search facility on this website. In this series of articles author has made attempt for critical study of the preamble and part of Chapter 1 of CGST Act from S.2(51) to S.2 (75) . Other clauses of definition clause will be taken up in another article. In this and subsequent articles there can be reference to earlier article and some portions necessary for subsequent articles may find repetition for convenience of readers. Section 2 is def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition clauses. Broadly, we find four types of definitions in CGST. In the table below, in left column provisions are reproduced with highlights and in right column some observations and remarks are given by the author for critical aspects. Statutory Provisions CENTRAL GOODS AND SERVICES TAX ACT, 2017 From provisions with highlights for catch words, critical words having special significance. { }are used when clause is divided in parts which are long. Observations / remarks Definitions. 2. In this Act, unless the context otherwise requires, In definition clauses we find use of words means (at 102 places), includes ( at 18 places) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall have ( at eight places) is used when definition from any other enactment is adopted. When opening word means is used, it must be definite meaning and not subject to context. When there is adoption of definition in another enactment, the scope of that expression shall be as used in that enactment and shall also be changed if there is change in that enactment. In some definitions other provisions of CGST itself are adopted/ referred for meaning. (51) Fund means the Consumer Welfare Fund established under section 57 ; See S. 57 and 58 for constitution of fund and utilization of fund. (52) goods means every kind of movable property other th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Meaning, exclusion by way of other then ... inclusion by way of but includes ...... However, it can be said that it will include only movable property at the time of taxable event that can be sale or purchase. (53) Government means the Central Government; (54) Goods and Services Tax (Compensation to States) Act means the Goods and Services Tax (Compensation to States) Act, 2017 ; (55) goods and services tax practitioner means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person who has been approved under section 48 to act as such practitioner; (56) India means the territory of India as referred to in article 1 of the Constitution , its territorial waters, seabed and sub-soil underlying such waters , continental shelf , exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976 ), and the air space above its territory and territorial waters; (57) Integrated Goods and Services Tax Act means the Integrated Goods and Services Tax Act, 2017 ; (58) integrated tax means th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e integrated goods and services tax levied under the Integrated Goods and Services Tax Act ; levied under the IGST Act. (59) input means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business; Capital goods are excluded. Any other goods purchased which are used and also which are intended to be used are covered. Therefore, closing stock of such goods is covered.. (60) input service means any service used or intended to be used by a supplier in the course or furtherance of business; Capital services are not excluded like capital goods. any service used o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r intended to be used by a supplier will be covered. Therefore, a service purchased which is not yet used but will be used in future or can also be used in future are included. (61) Input Service Distributor means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office; (62) input tax in relation to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person , means the central tax , State tax , integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes (a) the integrated goods and services tax charged on import of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9 ; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Services Tax Act, but does not include the tax paid under the composition levy; In case of a registered person all taxes levied by his suppliers in tax invoices of goods and services or both which are his inputs, under various GST provisions and also tax collected by himself on inputs under reverse charge mechanism seems covered. Not included: the tax paid on inputs purchased from supplier who has paid tax under the composition levy for such supplier. Small suppliers are provided simple scheme of composition levy. However, such suppliers find reluctance from customers who can avail ITC. Many large organizations do not register them as supplier. Therefore, even small suppliers are force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to get registered under normal procedure. (63) input tax credit means the credit of input tax; (64) intra-State supply of goods shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act ; (65) intra-State supply of services shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act ; (66) invoice or tax invoice means the tax invoice referred to in section 31; (67) inward supply in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other means with or without consideration; (68) job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly; (69) 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 Government or any State Government with the control or management of a municipal or local fund; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 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 7 [ and article 371J ] of the Constitution ; or (g) a Regional Council constituted under article 371A of the Constitution ; Various provisions of the Constitution of India and following up of procedures and related notifications are to be read to understand these expressions and to verify status. General expressions or impression may not be correct. Because disputes arises on eligibility of many such organizations who on fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st impression may appears to be such an institution. (70) location of the recipient of services means, (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) 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 (d) in absence of such places, the locatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the usual place of residence of the recipient; (71) location of the supplier of services means, (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) 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 provisions of the supply ; and (d) in absence of such places, the location of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he usual place of residence of the supplier ; (72) manufacture means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term manufacturer shall be construed accordingly; There should be processing of raw material or inputs A new product must emerge from such processes. Such new product must have: distinct name, distinct character and distinct use. These requirements seems cumulative and independent of each other. (73) market value shall mean the full amount which a recipient of a supply is required to pay in order to obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related; Broadly speaking price at prevailing market rate at which such supply can be obtained under similar commercial conditions about goods, market place, volume and other terms and conditions from any unrelated person (74) mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply ; Illustration: A supply of a package consisting of canned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. There should be two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other. for a single price such supply should not constitute a composite supply; this is an example of gift pack which is usually tailor made. If single price is charged , then it will be a mixed supply. If individual price is charged for each item then it will not be mixed supply. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case there is standard packaging of such gift items then it will be a mixed supply, even if prices are charged separately. Lot of scope of disputes and harassment can be found in such cases including meaning of composite supply as per S.2.30 discussed in earlier article. (75) money means the 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 other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its numismatic value ; It seems only to exclude money from scope of goods and services. Is it that in absence of this definition even consideration of money and various instruments could be taxable as goods? This seems result of too many artificial meanings, which tax authorities can draw. No one having common sense will consider any of these items which are used to settle accounts as goods. Does it mean that any currency that is held for its numismatic value, can be considered goods- answer is yes. Initially GST was fixed @ 12% as per GST Council meeting held on 18.05.2017 but it was reduced to 5% in meeting of council on 11.06.2017 Readers are requested to enlighten other significances of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sertion of this definition in GST laws. For the purpose of definition and even meaning to be applied in particular context, other provisions of the GST laws need to be considered in a harmonious manner. This is because whole enactment is an integrated code. Clauses (76) onwards will be discussed in next part of the article for purpose of critical analysis. Learned readers are requested to share their views and experience. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... 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