THE LIABILITY OF BEING TAXED FOR CGST/SGST

THE LIABILITY OF BEING TAXED FOR CGST/SGST :

This has been duly laid out in the Act . In the Chapter on definitions, Section 2(96) defines a taxable person which is further elaborated upon in Section 9 and Section 7(2) binds every taxable person to pay CGST/ SGST. Section 9 refers to Schedule III which explains that who is liable to be registered under the Act. Section 9 also lays down the threshold limit ( of the gross annual turnover , which would include exempt supplies and exports) which would mark the advent of anyone into the fold of being called a taxable person. It has been set as Rupees ten lakh. This limit has been set as Rupees 5 lakh in the case of North –eastern states (including Sikkim). Section 9(3) lays down that who shall not be considered as taxable persons under the Act. The relevant Sections are cited
as follows :

Section 2 (96):

taxable person shall have the meaning as assigned to it in section 9 of this Act;

Section 9:

(1) Taxable Person means a person who carries on any business at any place in India /State of ____ and who is registered or required to be registered under Schedule III of this Act:

Provided that an agriculturist shall not be considered as a taxable person.

Provided further that a person who is required to be registered under paragraph 1 of Schedule III of this Act shall not be considered as a taxable person until his aggregate turnover in a financial year exceeds [Rs ten lakh]

[This threshold of 5 lacs will apply only if a taxable person conducts his business in any of the NE States including Sikkim.]

(2) The Central Government, a State Government or any local authority shall be regarded as a taxable person in respect of activities or transactions in which they are engaged as public authorities other than the activities or transactions as specified in Schedule IV to this Act.

(3) The following persons shall not be considered as taxable persons for the purposes of this Act –

(a) any person who provides services as an employee to his employer in the course of, or in relation to his employment, or by any other legal ties creating the relationship of employer and employee as regards working conditions, remunerations and employer’s liability;

(b) any person engaged in the business of exclusively supplying goods and/or services that are not liable to tax under this Act;

(c) any person, liable to pay tax under sub-section (3) of section 7, receiving services of value not exceeding ______ rupees in a year for personal use, other than for use in the course or furtherance of his business.

Section 7(2) :

Every Taxable person shall pay CGST / SGST in accordance with theprovisions of this Act

The Proviso to Section 9(1) provides that an Agriculturist will not be included in a taxable person. In this context the Chapter on definition defines an agriculturist and agriculture as follows :

Section 2(8):

Agriculturist means a person who cultivates land personally, for the purpose of agriculture .

Section 2(7):

Agriculture with all its grammatical variations and cognate expressions, includes floriculture, horticulture, sericulture, the raising of crops, grass or garden produce and also grazing, but does not include dairy farming, poultry farming, stock breeding, the mere cutting of wood or grass, gathering of fruit, raising of manmade forest or rearing of seedlings or plants;

Explanation.– For the purpose of this clause, the expression ‘forest’ means the forest to which the Indian Forest Act, 1927 applies .

Further Section 9(2) brings government bodies within the ambit of a taxable person but making an exception at the same time that they would be excluded if they are engaged in the sort of activities listed in Schedule IV. In this context Schedule IV has been cited as follows :

SCHEDULE IV

Activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person

(Indicative List)

1. Services provided by a Government or local authority to another Government or localauthority excluding the following services:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services;

(ii) services in relation to an aircraft or a vessel , inside or outside the precincts of a port or an aircraft; or

(iii) transport of goods or passengers.

2. Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as-

(i) issuance of passport, visa, driving licence, birth certificate or death certificate; and

(ii) assignment of right to use natural resources to an individual farmer for the purpose of agriculture.

3. Services provided by a Government or local authority or a governmental authority by way of:

(i) any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution;

(ii) any activity in relation to any function entrusted to a Panchayat under article 243 G of the Constitution;

(iii) health care; and

(iv) education.

4. Services provided by Government towards-

(i) diplomatic or consular activities;

(ii) citizenship, naturalization and aliens;

(iii) admission into , and emigration and expulsion from India;

(iv) currency , coinage and legal tender , foreign exchange;

(v) trade and commerce with foreign countries , import and export across customs frontiers , interstate trade and commerce; or

(vi) maintenance of public order.

Any services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.

Services provided by a Government or a local authority by way of –

(i) tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract; or

(ii) assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016:

Provided that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in instalments, for assignment of right to use such natural resource:

Explanation.- Periodic payment required to be made not exempt.

Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import or export of cargo on payment of Merchant Overtime Charges (MOT).

Services provided by Government or a local authority by way of-

(i) registration required under any law for the time being in force; or

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

Definitions:

1. Governmental Authority means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W or a Panchayat under article 243G of the Constitution.

2. Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

3. Education services means services by way of—
i) pre-school education and education up to higher secondary school or equivalent;

ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; or

iii) education as a part of an approved vocational education course.

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