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1. BBA 309
Goods & Services tax (GST)
Dr. Mohita

4. • Types of Taxes???
• Recall the name of taxes recently paid by you or heard about them
• 2021-22 marks the highest tax-GDP ratio of 11.7%, with direct tax to GDP ratio
at 6.1% and indirect tax to GDP ratio at 5.6%. The tax buoyancy (which is a
measure of growth in tax revenues as compared to GDP growth) is at a very
healthy figure of 1.9, with 2.8 for direct taxes and 1.1 for indirect taxes
• https://www.businesstoday.in/latest/economy/story/direct-tax-collection-in-
fy22-grew-49-indirect-tax-collection-30-revenue-secy-329167-2022-04-08
• https://economictimes.indiatimes.com/small-biz/gst/gst-revision-can-enable-
india-achieve-5-trillion-economy-ey/articleshow/93877560.cms
• https://www.thehindu.com/news/national/tamil-nadu/states-own-tax-
revenue-grew-over-50-in-the-first-quarter-of-this-fiscal/article65822748.ece
• https://economictimes.indiatimes.com/automakers-divided-over-safety-tax-
benefit-for-small-cars/articleshow/56486350.cms?from=mdr
• https://pib.gov.in/Pressreleaseshare.aspx?PRID=1703238

5. • Regressive Tax & Progressive Tax
• Union list, State List and Concurrent List
• Ad valorem
• Policy announcement related to Taxation?..........................
• Excise Duty raised on petroleum products, ATF refined in India
• Tax credit
• VAT is state implemented tax, state decides, custom duty, octroi, excise
(CVAT), Service Tax, GST,
• The Central Government of India levies taxes such as customs duty, income
tax, service tax, and central excise duty.

6. Indian Taxation System
• Origin of the word Tax is from the latin word “Taxare”. The word means: to
estimate or to Value
• According to Indian Constitution, Article 265, Government can only collect tax
when it is approved by the law/ an act has been passed
• In accordance with the rules and regulations mentioned in the Act, taxes are
imposed and collected
• India has 3 tier system of Tax
• Level 1: Central Government
• Level 2: State Government
• Level 3: Municipal / Local Government

7. Tax Authorities: India
• Revenue authorities
• CBDT: Department of Revenue, MoF, Income tax depatt
• CBEC: Excise and customs & service tax
• CBIC: Indirect taxes and customs
• Consolidated Funds of India
• Territorial Waters (TWI), Contiguous Zone & EEZ (Exclusive Economic Zone)

8. Tax / Duty
•Tax: Tax is the compulsory payment made by public to the
government, it does not follow Quid Pro Quo (receiving equal
value in return), no predetermined use
•Duty: Certain degree of “Quid Pro quo”, as government
provides some benefit or infrastructure of the tax collected ,
custom duty, earlier excise duty eg: infrastructure for
production

9. Cess & Surcharge
• Cess: Tax on Tax, special tax for a specific purpose
• The money collected can only be used to meet the objective for which the cess is
applied
• Article 270 of the Constitution allows cess to be excluded from the purview of
the divisible pool of taxes that the Union government must share with the States.
• Applicable on both Direct & Indirect Tax
Eg: Education Cess, health Cess, Infrastructure Cess, Swacch Bharat Cess
• Surcharge: it is also known as Tax on Tax but the tax is applicable only on tax
payer above a certain amount.
• Can be used for any purpose and is deposited in consolidated funds of India
• Surcharge is levied on Income Tax and is levied if Income is more than Rs. 50 Lakhs in
case of Individuals and Rs. 1 Crores in case of Companies

10. Rate of Surcharge
• Individuals, HUF, Association of Persons, Body of Individuals, Artificial
Judicial Persons
Level of Income Surcharge on Income Tax
Less than Rs. 50 Lakhs Nil
Rs. 50 Lakhs to Rs. 1 Crore 10%
Rs. 1 Crore to Rs. 2 Crores 15%
Rs. 2 Crores to Rs. 5 Crores 25%
More than Rs. 5 Crores 37%
https://www.charteredclub.com/surcharge-on-income-tax/

11. Indirect Tax
• It is a tax levied on consumption of goods & services
• It is not levied on Income
• It is the tax in which the Incidence and Impact of the tax does not fall on
the same entity
• In Indirect Tax the burden of the Tax Payer is shifted to someone else
• Different types of Indirect Taxes are: GST, Excise Duty, Custom Duty,

12. Central Excise Duty
• https://www.cbic.gov.in/htdocs-cbec/excise/cx-act/cx-act-idx
• There are 2 Acts governing the Central Excise Act
• Central Excise Act 1944
• Central Excise Tariff Act 1985
• 2 types of duties are collected:
• Basic Rate (Schedule 1)
• Special Rate (Schedule 2)
• Additional duty of textile and textile articles & good of special importance: Schedule 1
• National Calamity and Contingent duty: Pan Masala, Tobacco, Oil
NCCD: https://www.business-standard.com/article/current-affairs/karnataka-high-court-
back-simultaneous-levy-of-excise-duty-gst-on-tobacco-122043000251_1.html
https://economictimes.indiatimes.com/industry/cons-products/tobacco/public-health-
groups-doctors-urge-govt-to-hike-excise-duty-on-tobacco-products-in-next-union-
budget/articleshow/88239405.cms?from=mdr

13. • Central Excise Law comprise of: Central Excise Act 1944 (provisions), valuation
rules, 2000, 2002, CENVAT Credit rules 2004, goods of special importance rules
• Rates are specified under Excise Tariff Act
Central Excise Tariff Act, 1985 (earlier it was in Central excise 1944),
2 schedules were made
Tariff scheduled was introduced based on Harmonized system of
nomenclature (International Standard)
Helps in classification of Excisable Goods
• Notifications, circulars, Tribunal for dispute resolution (Case Laws)
• Excise duty is levied on the goods manufactured by a manufacturer / producer
• Tax on manufactured goods not on sale or proceed of goods
• Excise, MODVAT (Modified VAT), CENVAT (Central VAT, Basic Excise Duty)

14. • The Act extends to whole of India
• Further extended to designated area and continental shelf & Ex Economic Zone
(upto 200 NM)
• No excise duty on area beyond 200 Nm and SEZ (in India)
• Excisable Goods: All the goods which are covered in the Schedule 1 of the
central Excise Act 1944, Salt is covered Ladoo / Samosa / Kachori is not covered
• Goods (though not defined in the Act) Movable & Marketable, actual sale may
or may not be there and mere saleability is not enough, it must have whole
sale market, commercially saleable
https://indiankanoon.org/doc/127314728/ (pt 2 & 3)
Excisable good are those goods which are included in the Schedule I (Basic excise
duty & Additional duty on goods of special importance)and Schedule II (special
excise duty and textile& Textile articles) of the CETA 1985 including salt

15. Manufacturing
• CETA 1985 tells us about the Tax rates
• Nil rate of duty is a rate of Duty
• Goods included which include manufacturing / Production
• Manufacturing includes when a new product emerges with distinct name,
character & use
• Main Product and By Product (whether intentional or unintentional), waste
which is arising during the manufacturing process is excisable.
• Manufacturing includes any process. Process which is incidental or ancillary
to the completion of the manufactured product
• Deemed Manufacture (in the absence of Service Tax)
• https://indiankanoon.org/doc/1899201/
• https://indiankanoon.org/doc/160284/

16. • BY-product is a product that is not intended to manufacture but emerges during
the process of manufacturing a particular goods. Essentially by-product is a
secondary and sometimes unexpected consequence and is made during the
manufacture of something else.
• Whereas an intermediate goods is a goods that is manufactured with a
purpose, which can be either used for the manufacture of an intended final
product as such or sold as a final product itself. If you use it,, within your own
factory, in the manufacture of a final product using this intermediate product it
is called captive consumption.
• Excise Tax is per unit tax. It is a fixed amount which need to be paid to the
government on per unit basis. Excise duty is applicable now only on the
production of Tobacco, Alcohol, Gasoline and other fuels, products made from
non renewable sources of production, non essential items, luxury goods,
electronic equipment etc

17. • BY Product: excise duty need to be paid when the by product are removed
from the factory
• Scrap: For scrap to be dutiable it has to arise continuosly and regularly in the
course of manufacture
• Waste / Residue: Waste products are rubbish and not useful, if sold in the
same form, it is not dutiable unless they can be re processed to make a
product eg:
• Kumbhikasari SSK ltd Vs CCE Pune II (Sugar & Brown Sugar)
• CCE Kanpur Vs Gayathri Glass Works (Broken or molten glass)

18. • The term 'excisable goods' means the goods which are specified in the first
schedule and the second schedule to the Central Excise Tariff Act, 1985, as
being subject to a duty of excise and includes salt. Liability to pay excise duty
• State government is given the permission of collecting excise on narcotic
drugs, Tobacco and Liquor except alcohol for medicinal and toilet preparations

19. Salient Features of Central Excise Duty Act 1944
• Central excise is collected by the central government
• Central excise is collected on the goods manufactured except
• Liquor for Human consumption
• Narcotic Drugs
• Indian Hemp
All three are covered under State Excise
• If alcoholic liqueur for toiletries is claimed by Central Government
• Manufacturing is treated as process which involves: new good with difference
name, characteristic and difference in use

20. Registration Under Central Excise
• In current environment post GST, only the manufacturers planning to start
business in tobacco and liquor products, need to get excise registration
• Every manufacturer requires Excise License
• Licensing process is online
• Post filing the application online, manufacturer need to visit the excise office
to submit the requisite documents
• Documents required: PAN Card, Aadhar, Electricity Bill Bank Details, Photo
• The process is executed post OTP verification
• Registration is done through the website of CBIC
• Automation of Central Excise and Service Tax (ACES) is the e-governance
initiative by Central Board of Excise and Customs (CBIC), Department of
Revenue, Ministry of Finance.

21. • New registration will get 3 types of Login details
• TRN: Temporary Reference Number
• ARN: Application Reference Number
• GSTIN/ECC
• The 15 digits in the ECC (Excise Control Code) number indicate:
1. Digits 1 to 10 – PAN of the assesse;
2. Digits 11 and 12 – Excise manufacturer or dealer (EM or ED)
3. Digits 13, 14 & 15 – Unique System generated serial number

22. Details to be furnished: Form 1 A (New Central
Excise Registration form )
• Name
• PAN card
• Manufacturer Category
• Constitution of Business
• Address of the Premises with detailed boundary extension
• Type of ownership of the premises
• Head Office Address and other details
• Investment in land, plant & machinery
• Details of the signatory of application form
• Bank Account Details
• Registration number obtained from other regulatory agencies
• Details of the Directors
• Details of the excisable goods to be manufactured
• https://www.cbic.gov.in/resources//htdocs-cbec/excise/cx-forms/a-1.pdf

23. CENVAT & MODVAT
• Government of India introduced the concept of VAT in the year 1986
• With the introduction of VAT, Tax credit system was introduced
• Tax Credit system enables manufacturer to claim Tax which is paid by their
supplier of raw material (already paid excise duty)
• Initially it was allowed only for few manufacturers, especially those
manufacturers who were purchasing raw material from other vendors who are
availing excise duty credit
• Modified Value Added Tax or MODVAT is slightly modified version of the VAT.
Manufacturers of the goods who were dependent on the raw materials from
the other manufacturers are given excise credit on all the raw materials to
avoid double taxation/ cascading effect.
• Rules 57A to 57U of the Central Excise Rules contained provisions for MODVAT

24. • Later in the year 2004, MODVAT was converted into CENVAT (Central Value
added Tax)
• The government used the MODVAT platform to make certain small changes to
VAT, restructuring it to CENVAT
• Under the CENVAT system, rates were consolidated for most of the products
and This system has only one basic excise duty of 16% that is applicable to
almost all goods except some goods which attract special excise duties of 8%,
16% or 20%

25. Exemption to Small Scale Industry
• Small Scale Industry is provided with a relief under the Central Excise
Act of non payment of duty
• According to a notification issued in the year 2003, general exemption
of goods manufactured by SSI are exempted from excise duty
• The duty is payable on Aggregate Turnover
• Aggregate turnover is calculated under a single ownership
• SSI exemption is given to organization whose turnover is more than 4
cr. In the previous financial year
• The exemption is given upto the level of first 1.5 crore
• NO exemption in branded goods

26. Branded goods exemptions
• Factory in rural area
• Packaging material
• Original equipment manufacturer
• Account books manufacturer, writing pads etc
• With the name of