Indirect Tax Laws and Practice
What the paper tests
Indirect Tax Laws and Practice is GST-centric: charge, supply, place and time of supply, valuation, input tax credit, registration, invoicing, returns, refunds, demand and appeal procedure.
Core rules
- Section 7 of the CGST Act defines supply; composite supplies are naturally bundled and taxed at the principal supply's rate, mixed supplies at the highest rate.
- Place of supply for goods follows movement, so destination governs; for services, section 12 covers domestic and section 13 cross-border cases, with special rules for immovable property and events.
- Section 15 value includes incidental costs such as packing and freight, unless freight is billed separately by a GTA under reverse charge.
- Section 16(2) conditions: tax invoice, receipt of goods or services, tax actually paid, supplier's return filed, and the invoice appearing in GSTR-2B.
- Section 17(5) blocks credit on motor vehicles except specified uses, food and beverages, club membership, works contract for immovable property and free samples.
Worked example
A Karnataka supplier sells machinery for ₹5,00,000 to a Tamil Nadu buyer and recovers ₹20,000 freight on the same invoice. Goods move across State lines, so it is an inter-State supply: IGST at 18% on ₹5,20,000 = ₹93,600. Splitting into CGST and SGST would be wrong - that split belongs only to intra-State supplies.
Traps
- Claiming credit on an invoice missing from GSTR-2B, then reversing it with interest.
- Overlooking the 180-day reversal under Rule 37 where the recipient fails to pay the supplier.
- Charging GST on advances for goods; tax there arises on invoice, while advances for services are taxable.