Chapter 11 Industry/Sector Specific Analysis – CS Professional Advance Tax Law Notes is designed strictly as per the latest syllabus and exam pattern.
Industry/Sector Specific Analysis – CS Professional Advance Tax Law Study Material
Question 1.
Write a short note on “educational institution
Answer
“Educational lnstitution means an institution providing services by way of,-
- pre-school education and education up to higher secondary school or equivalent;
- education as a part of a curriculum for obtaining a qualification recognised by any law for the time being In force;
- education as a part of an approved vocational education course;
Question 2.
Write a short note on approved vocational education course”
Answer:
Clause (h) to Para 2 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 defines approved vocational education course” means, –
a course run by an industrial training institute or an Industrial training centre affiliated to the National Council for Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961(52 of 1961); or
a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Training. Ministry of SkiD Development and Entrepreneurship;
Question 3.
Write a short note on “Composite and Mixed Supplies in Education services”
Answer:
Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 2(30) read with section 8 of the CGST Act, 2017. Such services in the case of boarding schools are naturally bundled and supplied in the ordinary course of business.
Therefore, the bundle of services will be treated as consisting entirely of the principal supply, which means the service which forms the predominant element of such a bundle. In this case since the predominant nature is determined by the service of education, the other service of providing residential dwelling will not be considered for the purpose of determining the tax liability and in this case the entire consideration for the supply will be exempt.
Let’s take another example where a course in a college leads to dual qualification only one of which is recognized by law. Would service provided by the college by way of such education be covered by the exemption notification? Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately.
If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a supply which is not bundled in the ordinary course of business, it shall be treated as a mixed supply as per provisions contained in section 2(74) read with section 8 of the CGST Act, 2017.
The taxability will be determined by the supply which attracts highest rate of GST. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well-being will be an example of naturally bundled course, and therefore treated as composite supply. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component viz-a-viz the recognized course. If extra billing is being done, it may be a case of artificial bundling of two different supplies, not supplied together in the ordinary course of business, and therefore will be treated as a mixed supply, attracting the rate of the higher taxed component for the entire consideration.
Question 4.
Write a short note on “GST Impact on E-commerce”
Answer:
Based on the provisions of CGST Act, 2017, e-commerce companies shall be Impacted, both positively and negatively under the GST regime.
The e-commerce companies have to revamp the current models, as the VAT rate arbitrage available in the earlier law may not be available in GST. Tax Collection at Source (TCS) provisions have been introduced on e-commerce operators in the GST Act. However, there are no provisions relating to collection of tax at source under the service tax regime.
The procedure for all the invoices / receipts towards inward and outward supplies have become cumbersome as each one of them will have to be uploaded in the system.
- The frequency and number of returns to be filed will go up.
- Mandatory registration to be taken by the e-commerce operators irrespective of the threshold limit.
- Compliances will increase.
- Enhancement of transparency in transactions
- Overall cost may increase for the ultimate consumer
In pre-GST regime, e-commerce companies faced five indirect taxes including service tax, central sales tax (CST), value-added tax (VAT) and customs duty. The centre taxes the sale of services and states tax the sales of goods. Therefore service tax, CST and customs duty had to be paid to the centre while VAT has to be remitted to the State Governments. With the GST implementation, it had become simple. Sellers on e-commerce will have to pay tax in the state where the delivery happens.
- In the long-run the creation of a unified market place may reduce the tax burden, inventory cost and logistical issues, and ensure seamless movement of goods across the country.
- Many producers, sellers and consumers will have easy access to an all-India market as there will be development of seamless national supply chain.
Question 5.
What are the activities which have been deemed as supply of service as per Schedule II to the CGST Act, 2017?
Answer:
As per Schedule II to the CGST Act, 2017, following activities have been deemed as supply of service:
1. Transfer
(a) any transfer of the title in goods is a supply of goods;
(b) any transfer ot right in goods or of undivided share in goods without the transfer of title
2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land is a supply of services;
(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.
3. Treatment or process
Any treatment or process which is applied to another person’s goods is a supply of services.
4. Transfer of business assets where, by or under the direction of a person carrying on a business, goods held or used for the purposes 0f the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services;
5. The following shall also be treated as supply of services, namely:
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.
6. Composite supply
The following composite supplies shall be treated as a supply of services, namely:
(a) works contract as defined in clause (119) of section 2; and
(b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.
Question 6.
What will be the Place of Supply of Educational Services where the location of the supplier of services or the location of the recipient of services is outside India
Answer:
As per section 13(5) of the IGST Act, 2017, the place of supply of services supplied by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration,
conference, fair, exhibition or similar events, and of services ancillary to such admission or organization, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient.
Question 7.
What are the Transactions carried out by an e-commerce operator?
Answer:
Following transactions / events take place generally, when a transactions carried out by an e-commerce operators:
- Various products and services available with e-commerce operator are displayed on his electronic platform.
- Customer visits the e-commerce platform with his requirement.
- Customer chooses the product and price and terms of e-commerce operator.
- Customer chooses the various vendors registered with e-commerce for supply to customer.
- Customer pays to e-commerce operator by one of the payment options
- E-commerce operator informs the respective vendor of the order
- The vendor concerned supplies to customer and informs to e-commerce operator.
- E-commerce operator settles the vendors payment periodically.
Industry/Sector Specific Analysis Notes
Health Care Services
Health Care sector continues to be largely exempt in the GST regime like in the pre-GST era. Generally, the services provided in the health care sector (hospitals, nursing homes etc.) comprises of the following:
(a) Out-patient Department (OPD)
(b) In-patient Department (IPD)
(c) Diagnostic services Pharmacy sales
(d) Ancillary supplies
E-Commerce
Section 2(44) of the CGST Act, 2017 defines an Electronic Commerce to mean the supply of goods and/or services, including digital products over digital or electronic network.
Thus, the scope of e-commerce is as follows:
- Supply of goods and/ or services
- Such supply or transmissions shall be over digital or an electronic network (primarily internet)
E-Commerce operator
Section 2(45) of the CGST Act, 2017 defines an Electronic Commerce Operator (Operator) as every person who, owns, operates or manages digital or electronic facility or platform for electric commerce.
Mandatory registration for E-commerce
Section 24 of the CGST Act, 2017 provides that the threshold exemption is not available to e-commerce operators and they would be liable to be registered irrespective of the value of supply made by them.
In following cases, registration under GST shall be mandatory irrespective of threshold exemption –
- person supplying goods through e-commerce operator;
- every electronic commerce operator;
However, persons making supplies of services, other than supplies specified under Section 9(5) of the CGST Act, 2017 through an electronic commerce operator who is required to collect tax at source under section 52 of the said Act, and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year, as the category of persons exempted from obtaining registration vide N. No. 65/2017-Central Tax dated 15.11.2017.
Goods Transport Agency [GTA]
As per the Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017, “Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment note by whatever name called”.
Thus, the business firms which are engaged in the transportation of goods by road and issue consignment note / LR, etc. shall be called as GTA for the purpose of above notification.
Export of services
Export of services means the supply of any service when
- the supplier of service is located in India,
- the recipient of service is located outside India,
- the place of supply of service is outside India.
- the payment for such service has been received by the supplier of service in convertible foreign exchange, and
- the supplier of service and recipient of service are not merely establishments of a distinct person.
1. The reverse charge notifications for services have been amended by Notification No. 29/2018 CT (R) dated 31.12.2018 & Notification No. 5/2019 CT (R) dated 29.03.2019 / Notification No. 30/2018 IT (R) dated 31.12.2018 & Notification No. 512019 IT (R) dated 29.03.2019 as follows:
The said provisions have been amended stipulating that reverse charge mechanism (RCM) shall not apply to services provided by a GTA, by way of transport of goods In a goods carriage by road lo-
(a) Departmentlestabllshment of Govemment/ Union territory; or
(b) local authority: or
(c) Governmental agencies
which has taken registration under the CGST Act only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.
2. Exemption to GTAs on specified input services
Apart from the exemption granted to specified output services provided by GTAs, the following input services hall also be eligible for exemption when provided to GTAs.
a. Services by way of giving on hire to a goods transport agency, a means of transportation of goods. [It may include hiring of motor vehicle or other transportation equipment such as containers, etc.]
b. Service by way of access to a road or a bridge on payment of toll charges.
c. Notification No. 12/2017 CT (R) dated 28.06.2017 which grants exemption to Intra – State supply of services from CGST, has been amended vide Notification No. 28/ 2018 CT (R) dated 31.12.2018/ Notification No. 4/2019 IT (R) dated 29.3.2019 as under:
New entry 21B has been inserted exempting Services provided by a goods transport agency, by way of transport of goods in a goods carriage, to,
(a) Department or Establishment of the Central/State Government/Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the CGST Act only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services.