Critical study of provisions of CENTRAL GOODS AND SERVICES TAX ACT, 2017–( in (short CGST) from clause 36 to clause 50 of section 2. - Part 2

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)

‘shall 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.

(36) “Council” means the Goods and Services Tax Council established under article 279A of the Constitution;

This is not a definition clause but is about Constitution of GST Council.

The Article 279A of the Constitution provisions are made for constitution of GST Council. Some other important provisions of COI about GST council  include

Art.246A- Special provision with respect to goods and services tax.

Definition clause in COI that is article 366 vide sub clause (26B)  mentions that  “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature] ;

Article 368 is about Power of Parliament to amend the Constitution and procedure therefor.

It provides that an amendment to Article 279A  shall also require to be ratified by the Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent.

(37) “credit note” means a document issued by a registered person under sub-section (1) of section 34;

We need to refer CHAPTER VII TAX INVOICE, CREDIT AND DEBIT NOTES

(38) “debit note” means a document issued by a registered person under sub-section (3) of section 34;

We need to refer CHAPTER VII TAX INVOICE, CREDIT AND DEBIT NOTES.

This suggest that Debit note and Credit note referred herein can only be issued by the supplier  and not by the buyer, for purpose of GST.

(39) “deemed exports” means such supplies of goods as may be notified under section 147;

147. Deemed exports.- The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied 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.

We need to keep track of notifications and amendment thereto regularly and as and when required.

(40) “designated authority” means such authority as may be notified by the Board;

We need to keep track of notifications and amendment thereto regularly and as and when required.

(41) “document” includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000 (21 of 2000);

General meaning and also as per S.2(t) of I.Tec. Act and its amendments.

(42) ―drawback‖ in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such goods;

It is only in respect of any goods manufactured in India and exported.

Drawback can be by way of rebate  of  levies stated which are in respect of inputs  goods and  services  used in the manufacture of goods exported.

(43) “electronic cash ledger” means the electronic cash ledger referred to in sub-section (1) of section 49;

Section 49 is about payment of tax, interest, penalty and other amounts  through electronic cash ledger.

(44) “electronic commerce” means the supply of goods or services or both,including digital productsover digital or electronic network;

 Expression ‘over digital or electronic network’ is an important factor.

If it is without such a network, it will not be covered.

(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

(46) “electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;

Section 49 is about payment of tax, interest, penalty and other amounts through electronic cash ledger.

(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includesnon-taxable supply;

Here also we find a definite meaning which get expanded by use of includes . This is therefore a field of litigation and makes things very complex.  

(48) “existing law” means any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or bothpassed ormade before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation; 

(49) “family” means,––

(i) the spouse and children of the person, and

(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person;

The meaning appears to be definite .

So far clause (i) relating to  spouse and children of the person are concerned, for them dependency is not required.

Only wholly or mainly dependent persons mentioned in clause (ii) will be part of family. Therefore, changes in dependency will have a telling effect, if any such person is part of family or not.

(50) “fixed establishment” means a place (other than the registered 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;

Registered place of business has its own significance. It may or may not be a fixed establishment.

There seems no definition of ‘registered place of business’ in CGST Act. We find use of expression ‘place of business’ 34 times, ‘fixed place of business’ 2 times in the Act.

In certificate of registration prescribed in Form GST REG-06 under  Rule 10(1)] we find mention about Address of Principal Place of Business, and f Additional Places of Business.

The registration certificate is required to be prominently displayed at all places of business in the State

Therefore, it can be inferred that any place, for which a registration is obtained or places which are  indicated in certificate of registration are  deemed registered place of business.

 “Fixed establishment” is characterised by :

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.