Confused about the upcoming Goods and Services Tax (GST) and what it means to your business? Send your queries to our expert today and watch out for the answers in this column. Mail your queries to askbl@thehindu.co.in.
K Vaitheeswaran, an advocate and tax consultant based in Chennai, takes on readers’ questions here.
I am a trader in chemicals based in Ahmedabad having both imports as well as inter–State purchases from manufacturers who charge excise duty. The business has a VAT registration and does not have excise registration. Are there any transition benefits?
A trader is liable to pay VAT or CST on sale of goods in the current regime. Going forward, supply of goods would attract GST. In case there is a supply within the State of Gujarat, CGST and Gujarat GST is payable. Since CGST is payable for the first time and these goods have attracted Central Government levies earlier, there is relief through the transitional mechanism. So long as the trader is in possession of excise duty invoices and Bill of Entry reflecting the duty, the trader is entitled to take the credit of the duties paid subject to conditions. The relief is with reference to invoices that are issued not earlier than 12 months immediately preceding the appointed day.
Is all form of alcohol out of GST?
GST as a law is enacted based on the changes made to the Constitution of India through the Constitutional (101st Amendment) Act, 2016. Entry 54 which empowers the levy of tax on sale of goods is now confined to certain petroleum products and alcoholic liquor for human consumption.
The Constitution defines GST on tax on supply of goods or services or both except taxes on the supply of alcoholic liquor for human consumption.
Thus there is no GST on alcoholic liquor for human consumption but these goods would be subject to existing State levies.
Ethyl alcohol and other spirits, denatured, of any strength is liable to GST at the rate of 18 per cent.
Will consignment sales be affected under GST?
When goods are stock transferred by the principal from one State to another, it is considered as supply and would attract IGST. The agent would qualify for input tax credit and can set off the same against the GST payable when the agent supplies the goods.
There are specific rules for valuation with reference to such transactions. While inter-State stock transfers are thus getting taxed, the current complexities around stock transfer; Form-F; pre-determined buyer; etc. would become history.