The administration of GST involves a dual structure where both Central and State officers exercise powers under their respective Acts. The levy is governed by S.9 of the CGST Act (S.5 of IGST Act, corresponding SGST sections), which is the charging section prescribing that GST shall be levied on all intra-state/inter-state supplies of goods and services at notified rates.
Legal Framework
| Provision | Content |
|---|---|
| S.3 | Officers under CGST Act (appointment by Central Government) |
| S.4 | Officers under SGST Act (appointment by State Government) |
| S.5 | Powers of officers |
| S.6 | Authorisation of State/UT officers to act as proper officers under CGST |
| S.9(1) | Levy: CGST on intra-state supply at notified rates, not exceeding 20% |
| S.9(2) | Composition levy (optional for small taxpayers) |
| S.9(3) | Reverse charge mechanism (notified categories) |
| S.9(4) | Reverse charge on supplies from unregistered persons (suspended, then limited) |
| Art.279A | GST Council: composition, functions, powers |
GST Council (Art.279A)
| Element | Detail |
|---|---|
| Composition | Union Finance Minister (Chairperson) + Union MoS Revenue + Finance Ministers of all States/UTs |
| Voting | Centre: 1/3 of total votes; States collectively: 2/3 of total votes |
| Quorum | Half of total members |
| Decision | 3/4 of weighted votes of members present and voting |
| Functions | Recommend rates, exemptions, thresholds, model laws, dispute resolution between Centre/States |
| Legal status | Recommendations (not binding, but carry persuasive value) |
Why: The 3/4 majority requirement ensures both Centre and States must agree (Centre alone cannot push through changes since it has only 1/3 votes; States need Centre's concurrence too). This preserves cooperative federalism.
Officers Under CGST Act (S.3)
| Designation | Appointment |
|---|---|
| Principal Chief Commissioner / Chief Commissioner | Central Government |
| Principal Commissioner / Commissioner | Central Government |
| Additional Commissioner | Central Government |
| Joint Commissioner | Central Government |
| Deputy Commissioner | Central Government |
| Assistant Commissioner | Central Government |
| Superintendent | Central Government |
| Inspector | Central Government |
Levy and Collection (S.9 CGST)
| Sub-section | Content |
|---|---|
| S.9(1) | CGST shall be levied on all intra-state supplies of goods/services (other than alcoholic liquor) at rates notified by Government, not exceeding 20% |
| S.9(2) | Composition levy: registered person with turnover up to Rs.1.5 crore (goods) / Rs.50 lakh (services) can opt to pay tax at flat rate |
| S.9(3) | Reverse charge: recipient pays tax on notified supplies (legal services by advocate, GTA services, import of services, etc.) |
| S.9(4) | Reverse charge on supplies from unregistered persons (currently restricted to specified categories) |
Composition Scheme (S.10)
| Feature | Detail |
|---|---|
| Eligibility | Aggregate turnover up to Rs.1.5 crore (goods); Rs.50 lakh (services: S.10(2A)) |
| Tax rate (goods) | 1% (manufacturer: 0.5% CGST + 0.5% SGST) |
| Tax rate (restaurant) | 5% (2.5% + 2.5%) |
| Tax rate (services) | 6% (3% + 3%) |
| Cannot collect tax | From customers (no tax on invoice) |
| Cannot claim ITC | Input tax credit not available |
| Cannot make inter-state supply | Only intra-state supply permitted |
| Return | GSTR-4 (annual) |
Reverse Charge Mechanism (S.9(3))
| Supply category | Supplier | Recipient pays GST |
|---|---|---|
| Legal services | Advocate/law firm | Business entity |
| GTA services | Goods Transport Agency | Specified recipient |
| Sponsorship services | Any person | Body corporate/partnership |
| Security services | Individual security guard | Business entity |
| Import of services | Foreign supplier | Indian recipient |
| Directors' services | Director (not employee) | Company |
Recall Check
- What is the maximum rate at which CGST can be levied under S.9(1)?
- What is the composition of the GST Council under Art.279A?
- What is reverse charge mechanism?
Key Cases
No significant judicial decisions specifically on S.9 levy provisions. The administration/levy framework is procedural and well-settled. Most disputes arise regarding classification (rate applicable), place of supply, and valuation rather than the charging section itself.
Distinctions
| Feature | Forward Charge (Normal) | Reverse Charge (S.9(3)) | Composition (S.10) |
|---|---|---|---|
| Who pays GST | Supplier | Recipient | Supplier (at flat rate) |
| ITC availability | Recipient claims ITC | Recipient claims ITC (on RCM paid) | No ITC available |
| Invoice | Supplier issues tax invoice | Recipient issues self-invoice | Supplier issues bill of supply (no tax shown) |
| Registration threshold | Rs.40L/20L applies | Recipient must register regardless | Rs.1.5 crore turnover limit |
| Return | GSTR-1, GSTR-3B | Same (recipient reports in returns) | GSTR-4 (annual) |
| Inter-state supply | Allowed | Allowed | NOT allowed |
Flashcards
Q: What is the charging section for CGST? A: Section 9(1) of the CGST Act, 2017.
Q: What is the maximum CGST rate permissible under S.9(1)? A: 20% (so maximum combined rate = 20% CGST + 20% SGST = 40%).
Q: What is the voting structure in the GST Council? A: Centre has 1/3 of total votes; States collectively have 2/3. Decisions require 3/4 majority of weighted votes.
Q: What is the Reverse Charge Mechanism? A: Under S.9(3), the recipient of supply (not supplier) is liable to pay GST on notified categories of supplies.
Q: What is the turnover limit for composition scheme (goods)? A: Rs.1.5 crore aggregate turnover per financial year.
Q: Can a composition dealer claim ITC? A: No. Composition dealers cannot claim Input Tax Credit and cannot issue tax invoices.
Exam Scenario
ABC Pvt Ltd (turnover Rs.80 lakh) engages Advocate X to provide legal services for a fee of Rs.2 lakh. Advocate X does not charge GST on his invoice. The GST department demands tax from ABC Pvt Ltd. Is the department correct?
Approach: Under S.9(3), legal services provided by an individual advocate or firm of advocates to a business entity are subject to reverse charge. The recipient (ABC Pvt Ltd) is liable to pay GST, not the advocate. The department's demand is correct. ABC Pvt Ltd must pay 18% GST (Rs.36,000) under reverse charge and can claim ITC on the same if used for business purposes. Advocate X is not required to charge GST on this supply.