Goods and Services Tax revolves around the occurrence of the event “supply”, the whole concept of indirect taxation in the new GST regime have changed from the point of ‘manufacture’ under erstwhile central excise law or providing of ‘service’ under erstwhile service tax law or point of ‘sale’ under erstwhile Sales Tax/ VAT law to the point of ‘supply’ under the new GST law.
GST can be levied inaccordance to Section 9 on the ‘supplies’ of ‘goods’ or ‘services’ or both and scope of supply has been provided in Section 71 of the CGST Act 2017, so first, we need to understand that whether the event of occurrence of a transaction falls within the ambit of ‘Scope of Supply’ and the Schedules prescribed therewith.
In the light of the ‘Scope of Supply’ as provided in Section 7 and the Schedules prescribed therein under the CGST Law, it is also essential to critically analyse the event of occurrence of a transaction that whether it is a transaction of ‘goods’ or a transaction of ‘service’ specially in the light of the deeming fiction used in the legislation. The provisions for application of the GST Law has been separately provided for a transaction of ‘goods’ and a transaction of ‘service’ like time, place and value of the supply of goods and service are quite different and need to be carefully applied and analysed. The provisions of the Input Tax Credit as well as the various Notifications issued under GST Law needs to be appropriately identified and applied inrelation to the specific facts and circumstances of the event of the occurrence of a ‘supply’ transaction in either case of an ‘outward supply’ or an ‘inward supply.’
The taxation in GST is primarily based on ‘outward supply’ which have been defined in Section 2(83) of the CGST Act 2017 as ‘outward supply’ in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, license, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business”.2 Since scope of this Article is confined to issues relating to outward supply we are not touching the other areas of supply mainly ‘inward supply’ in the GST which in itself needs detailed analysis.
While, considering ‘outward supply’ we need to recognise the concept of ‘taxable person’, ‘goods’, ‘services’, ‘sale’, ‘transfer’, ‘barter’, ‘exchange’, ‘license’, ‘rental’, ‘lease’, ‘disposal’ etc., as first by their definition provided in the GST Law and also their legal meaning from the jurisprudence. The colour from correct interpretation of each of the segment of ‘Outward Supply’ is essential to be recognised. Lot of established law from the Indian Courts as well as International Courts are available on these words which may be considered in the light of the specific definitions wherever provided under the GST Law.
The determination of the GST liability is the ultimate requirement of disclosure in the Annual Return, so we need to determine every ingredient or requirement to logically decide by dissecting in the light of the provisions of GST Law for the ‘outward supply’. The process of determination of nature of the transaction and the tax due thereon under GST Law starts from the very beginning i.e., at the time of issue of tax invoice or even prior to that i.e. at the time of receiving the advance for the expected supply of goods or service or both, so we need to be careful in determining every relevant attribute of an outward supply transaction at the time of structuring the transaction itself at the very initial stage. Thus, the determination of the tax liability in accordance to the nature of the transaction has already happened at the time of performing the transaction and recording it in the books of account, which is also being disclosed to the Government either by way of tax invoice being raised on the webportal itself or through the supporting e-way Bill being issued from the web-portal of the Government. However, the further disclosure of the transaction is again required to be made at the time of filing the Monthly/Quarterly Return in GSTR-13or GSTR-3B or GSTR-44 while the Annual Return in GSTR-95 or GSTR-9A6 are the summary of the transactions already disclosed and declared in the Monthly/Quarterly Returns.
Now, we need to discuss within the scope of this Article viz., Issues relating to determining and disclosing outward supply in Annual Return, so we are confining to the details of outward supplies which have been specified in Part-II of Form GSTR-9 as prescribed u/r. 80 known as ‘Annual Return’.7
In Part-II of Form GSTR-9 i.e., Annual Return the details of outward supply and inward supply during the Financial Year in the tabular form in following categories has been required with their taxable value, Central Tax, State/UT Tax, Integrated Tax and Cess. It is important to note that not only the taxable value and tax payable thereon for a completed supply, but also the advance received have to be disclosed. The calculation of the ‘taxable value’ should be inaccordance to the provisions of the GST Law and also should be as declared in the returns filed during the financial year i.e., Monthly/Quarterly Returns regularly filed as required under the provisions of GST Law. Thus, the Annual Return in Form GSTR-9 is precisely a consolidated statement/summary of the Monthly/Quarterly Returns. However the various categories of supplies needs to be differently disclosed in the Annual Return than they were earlier disclosed in the Monthly/Quarterly Return, so care must be taken to understand the requirement of exact disclosure in Annual Return.
Under the same Notification and Provisions of Law as referred above, the Annual Return i.e., Form GSTR-9A has also been prescribed for ‘composition tax payers’.8 The details required for outward supply and for inward supply in GSTR-9A are quite simpler to analyse, calculate and disclose as well as are also different than the GSTR-9.
Now, brief discussion about the specifically required information viz., ‘taxable value’ and ‘tax payable’ thereon under various categories of the ‘Outward supplies’ in Part-II Column 4 of GSTR-9 shall be made in the sequence as they are required in the ‘Annual Return’:-
A. Supplies made to Unregistered customers (B to C)
Aggregate value of supplies made to consumers and unregistered persons on which tax has been paid shall be declared in this column. These will include details of supplies made through e-Commerce operators and are to be declared as net of credit notes or debit notes issued in this regard. Table 5 i.e., outward interstate supply to unregistered dealers, Table 7 i.e., Inter-State supply alongwith respective amendments in Table 9 and Table 10 i.e., Amendments for outward supplies of Form GSTR-1 may be used for filling-up these details.
B. Supplies made to registered person (B to B)
Aggregate value of supplies made to registered persons under GST (including supplies made to UINs) on which tax has been paid shall be declared in this column. This also includes business to business transactions. These will include supplies made through e-Commerce operators, but shall not include supplies on which tax is to be paid by the recipient on reverse charge basis. Details of debit and credit notes are to be mentioned separately. Table 4A i.e. details of invoice details of all supplies (rate wise) other than reverse charge/made through e-commerce operator and Table 4C i.e., meant for invoice details of supplies (operator-wise and rate-wise) effected through e-Commerce Operator attracting collection of tax at source of Form GSTR-1 may be used for filling up these details.
C. Zero-rated supplies on payment of tax (except supplies to SEZ)
Zero rated supply are the supply on which 0% GST is to be discharged while making an outward supply of goods, e.g., Supply made for exports of goods or services under GST. Assessee gets the ITC on inputs used for making such supplies subject to ITC restrictions under Sec. 17.
Aggregate value of exports (except supplies to SEZs) on which tax has been paid shall be declared in this column. Table 6A of Form GSTR-1 may be used for filling-up these details. Care is to be made by recognising the distinction between an export without payment of tax e.g., export under LUT9 or export with payment of tax or purchase of export goods from domestic market at concessional rate of 0.1%.10
D. Any supplies which are made to SEZs
Aggregate value of supplies to SEZs on which tax has been paid shall be declared in this column. Table 6B of GSTR-1 may be used for filling up these details. The concerns as explained above for exports also needs to be considered.
E. Deemed Exports
It means such supplies of goods as may be notified under section 147.11 Section 147 says, Government can notify deemed export of goods 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. The legal position needs to be examined with regard to the deemed export transaction for claim of the exemption or concession under the GST Law.
Aggregate value of supplies in the nature of deemed exports on which tax has been paid shall be declared here. Table 6C of Form GSTR-1 may be used for filling-up these details.
F. Advances on which tax has been paid but invoice has not been issued.
Details of all unadjusted advances as on 31st March, advance has been received and tax has been paid, but invoice has not been issued in the current year shall be declared in this column. Table 11A of Form GSTR-1 may be used for filling-up these details.
G. Inward supplies on which tax is to be paid on reverse charge basis.
Aggregate value of all inward supplies (including advances and net of credit and debit notes) on which tax is to be paid by the recipient (i.e., by the person filing the Annual Return) on reverse charge basis. This shall include supplies received from unregistered persons on which tax is levied on reverse charge basis. This shall also include aggregate value of all import of services. Table 3.1 (d) of Form GSTR-3B may be used for filling-up these details.
H. Credit Notes issued in respect of transactions specified in Item (B) to Item E above (-)
Aggregate value of credit notes issued in respect of B to B supplies (4B), export (4C), supplies to SEZs (4D) and deemed exports (4E) shall be declared here. Table 9B of Form GSTR-1 may be used for filling-up their details.
I. Debit Notes issued in respect of transactions specified in Item (B) to Item (E) above (+)
Aggregate value of debit notes issued in respect of B to B supplies (4B) exports (4C), supplies to SEZs (4D) and deemed exports (4E) shall be declared here. Table 9B of Form GSTR-1 may be used for filling-up these details.
J. Supplies/tax declared through amendments (+)
K. Supplies/tax reduced through amendments (-)
Details of amendments made to B to B supplies item (4B), exports item (4C), supplies to SEZ’s item (4D) and deemed exports item (4E), credit notes item (4I), debit notes item (4J) and refund vouchers shall be declared in column J and K. Table 9A and Table 9C of Form GSTR-1 may be used for filling-up these details.
Details of outward supplies on which tax is not payable as declared in monthly/quarterly returns filed during the financial year.
A. Zero rated supply (Export) without payment of tax
Aggregate value of export (except supplies to SEZs) on which tax has not been paid shall be declared in this column. Table 6A of Form GSTR-1 may be used for filling-up the details.
B. Supply to SEZs without payment of tax
Aggregate value of supplies to SEZs on which tax has not been paid shall be declared in this column. Table 6B of GSTR-1 may be used for filling-up these details.
C. Supplies on which tax is to be paid by the recipient on reverse charge basis
Aggregate value of supplies made to registered persons on which tax is payable by the recipient on reverse charge basis shall be declared in this column. Details of debit note and credit notes are to be mentioned separately. Table 4B of Form GSTR-1 may be used for filling-up the details.
The supplies made under Schedule-III as prescribed u/s 7 of the CGST Act is to be declared under the category of exempted as legally they are supplies covered under GST Act, but specifically exempted from payment of tax. The value of ‘no supply’ shall also be declared here.
E. NIL rated
F. Non-GST Supply
Aggregate value of exempted, NIL rated and non GST supplies shall be declared in columns D, E and F respectively. Table 8 of Form GSTR-1 may be used for filling-up these details.
The ‘HSN-wise summary of Outward Supplies’ have been required in Part-VI Column 17 of GSTR-9 which needs to be carefully segregated inaccordance to the correct classification of the goods or service. For the Annual return to be filed by 31st December 2018 i.e., for the period from1st July 207 to 31st March 2018 of Financial Year 2017-18 the Government has given leverage that tax payer having turnover in the preceding year upto ₹ 1.50 crore has an option not to give any of these details, while it is mandatory to report HSN Code at 2 digits level for tax payers having annual turnover in the preceding year from ₹ 1.5 crore upto ₹ 5 crore and at 4 digits level for tax payers having Annual Turnover above ₹ 5 crore. UQC i.e. Unique Quantity Code is only to be furnished for supply of goods. It is important to note that the quantity is to be reported net of the quantity of goods return. Table 12 of Form GSTR-1 may be used for filling-up details in Table 17.
As the name suggests ‘Annual Return’ i.e. GSTR-9 acts as a consolidated statement of all the previous returns like GSTR-1 and GSTR-3B for an entity. Since, the tax liability arises when the chain of outward supply continues, the discussion above should be of sufficient help to file Annual Return. It is important to note that the Annual Return in Form GSTR-9 reports all the outward as well as inward supply of the entity and its quantum value. The important point that is to be noted in the return is with respect to correct entry being made under relevant heading. Even though GST is new law for Indian businessman, lot of improvements and modifications have been made to ease the working of entity and enable smooth supply of goods and/or services in the country. GSTR-9 also aims the same and meets continuous changes to avoid multiple interpretations. There are numerous intricate issues of interpretation on the basis of which different course of action arises for filing of the Annual Return, we need to dwell upon them in depth to arrive at an appropriate decision.
Some pertinent issues have been raised in respect to preparation and filing of Annual Return for which discussions seems to be necessary, so they are placed in the shape of queries and their clarification.
How and which Annual Return to be filed if the Composition Scheme has been opted by a dealer for part of the Financial Year and for the balance period GSTR-3B were filed?
ANS. The tax payer-assesse who is registered in GST under the special category known as ‘Composition Dealer’ need not to file GSTR-9 which is quite exhaustive and required extensive details about the Outward and Inward Supplies, but they have to file Quarterly Return in Form GSTR-4 and Annual Return in Form GSTR-9A. This facility with the aim of reducing tedious procedural formalities is only for composition dealers whose turnover is upto ₹ 1 crore as discharge their GST liability on their total taxable turnover. The limit of total taxable turnover is
₹ 75 lakhs for ones in Himachal Pradesh or north eastern states.
If a particular dealer has opted ‘Composition Scheme’ only for some part of the Financial Year while he had paid tax due under GST as a normal dealer than such dealer has to file Annual Returns in GSTR-9 as well as GSTR-9A for the respective periods otherwise there would be a mis-match from the Monthly Return filed under Form GSTR-1 and GSTR-3B as normal dealer vis-à-vis GSTR-4 as Composition Dealer in the respective periods.
Which ‘turnover’ as per audited final accounts is to be declared in GSTR-9C?
ANS. The word ‘turnover’ has not been defined under CGST Act while the concept of ‘total turnover’ and what components are included in ‘total turnover’ has been referred in Forms for Annual Return. However, the term “aggregate turnover” has been defined which means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.
In the ‘Reconciliation Statement’ i.e. Form GSTR-9C the turnover to be declared in Part-II Column 5A has been mentioned as ‘Turnover (including exports) as per audited financial statements for the State/UT(for multi-GSTIN Units under same PAN the turnover shall be derived from the audited annual financial statement)’. This amount of ‘turnover’ needs to be reconciled with the amount in Part-II Column Q which mentions ‘turnover as declared in Annual Return (GSTR-9)’ which is as per Part-II Column 5N of GSTR-9 viz. Total Turnover (including advances) and has been explained in the footnotes as Total Turnover including the sum of all the supplies (with additional supplies and amendments) on which tax is payable and tax is not payable. It has further been explained that this Total Turnover shall also include amount of advances on which tax is paid but invoices have not been issued in the current year. However, this turnover shall not include the aggregate value of Inward Supplies on which tax is paid by the recipient (i.e. by the person filing the Annual Return) on reverse charge basis. It is important to mention that additions and deletions needs to be made with their reasons and of course subjected to verification to reconcile the turnover declared in Item A and Item Q of Column 5 of Part-II of GSTR-9C. Further, taxable turnover needs to be arrived after certain adjustments in-accordance to the provisions of GST Law to calculate the correct liability of GST by the tax payer.
Whether the turnover declared in GSTR-9 to include for the full Financial Year i.e. including the turnover declared under VAT or under Central Excise Act of the earlier period?
ANS. The GSTR-9 is the Annual Return prescribed and mandatorily required under the GST Law, the turnover after the implementation of GST i.e., w.e.f. 1st July 2017 is subject to GST, so the turnover for the period from 1st July 2017 to 31st March 2018 i.e., for 9 months needs to be disclosed in GSTR-9. The turnover for the period of April to June 2017 is subject to earlier laws of VAT or Service Tax or Central Excise and so the requirements provided under such laws needs to be adhered with.
Whether the ‘rate of tax’ on ‘outward supply’ needs to be examined and verified while filing of the Annual Return GSTR-9?
ANS. Yes. ‘Rate of tax’ applicable on the goods or service or composite supply or mixed supply is a matter of classification of the supply based on various factors and interpretations of the established analysis of HSN/ SAC Codes and the respective entries of the goods or services. The question of applicability of correct rate of tax on the supply is an important factor and must be properly examined and verified in-accordance to the existing provisions of the Law. The correct rate applicable for the period for which the Annual Return is being filed is necessary to be verified from all angles.
Whether the Foreign Exchange gain or loss on a supply transaction which is subsequently arrived could be a part of the taxable turnover?
ANS. The component for foreign exchange gain or loss specifically attributable to a transaction of supply of export or import shall be considered as a part of the taxable turnover and needs to be taxed inaccordance to the provisions of GST Law and has to be accordingly declared in the Annual Return.
What will be the treatment of ‘Sale of Assets’ under GST and how will it be declared in GSTR-9?
ANS. Sale of Assets is a usual transaction of outward Supply of goods and as such it will be subject to GST as a usual transaction of supply of goods under the classification appropriate to such asset. This transaction of supply of goods as assets shall be declared in the category of supply as required in GSTR-9.
Should the verification of valuation of outward supply be made for disclosure of turnover in respective categories of GSTR-9?
ANS. Correct valuation of supply and its proper disclosure is of great importance as the liability of tax due is based on the valuation. Valuation of goods and service is a ticklish issue and must be verified at the time of filing of the Annual Return as wrong declaration may lead to penalties and interest. Valuation of supply between the related parties is a sensitive issue and needs to be dealt-with carefully. The provisions of valuation must be appropriately applied considering the facts and circumstances of the transaction of supply. However, it would be much prudent to examine the issue of valuation of supply in an intricate transaction at the time of the transaction itself i.e., at the time of issuing the tax invoice, as once the tax invoice is issued and the transaction is reported in GSTR-1 then it would be little critical to rectify the same.
1 Gives the meaning of expression “supply”
2 CGST Act 2017, S. 2 (83)
3 Details of outwards supplies of goods or services
4 Quarterly return for registered persons opting composition levy
5 Rule 80 of CGST rules 2017
6 Provision of Rule 80(1) of CGST rules 2017
7 Notification No. 39/2018-CENTRAL Tax, dated 4th September 2018 as gazetted at Entry No. 613, Part-II, Section 3(i) dated 4th September 2018 on Page 21.
8 Sec. 10 CGST Act 2017
9 Vide circular No. 40/14/2018-GST dated 6/4/2018
10 Vide Notification no. 41/2017- Integrated tax(Rate) dated 23/04/2017
11 CGST Act 2017, Sec. 2 (39)