Apportionment of tax to Centre and State in certain cases [ Sec 10 ]:

In case of B2B transaction where the recipient of supplies takes ITC of IGST paid on input supplies, the tax collected on such input supplies is revenue neutral and therefore there is no requirement of apportioning the tax. Only where there is a cross utilisation of such ITC of IGST there arises a need of transfer of amount to State or CGST account equal to the amount so cross utilised, as discussed in details above.

However, B2C transactions are distinct. These are not the revenue neutral transaction. The tax paid on B2C transaction is a real revenue at consumption point for the consuming state. Similarly, even in case of B2B supplies that are not eligible as inputs for availing ITC or where the recipient business is not able to avail ITC are akin to B2C transaction in so far as revenue accrual to a consuming state is concerned. Section 10 provides for apportionment of tax amount to respective government in such cases.

The manner of apportionment has been prescribed as follows,

• Apportion CGST equivalent involved in B2C domestic supply and imports to Central Government

• Apportion CGST equivalent involved in B2B supplies domestic supply and imports on which ITC not eligible or not taken to Central Government

• Balance amount shall be apportioned to the State in which place of supply is located in terms of section 5 and section 6 of the Act

• The above provision would mutatis mutandis apply to interest and penalty.