The Central Goods and Services Tax Act, 2017

What it does

The Act levies the Union's tax on the supply of goods or services made within a State. Its chargeable event is a supply, which the Act defines widely to cover sale, transfer, barter, exchange, licence, rental, lease or disposal made for a consideration in the course or furtherance of business, and some supplies made without consideration. The rate is not in the Act. It is set by notification on the recommendation of the Goods and Services Tax Council, which is why a rate question is usually a question about a notification and its serial number.

Around the charge sit the rules that decide what a business actually pays. Registration, the time and value of a supply, the tax invoice, the return and the payment of tax are all provided in the Act. So is the input tax credit, the mechanism by which tax paid on inputs is set against tax on outputs. The credit is conditional: it depends on a tax invoice, receipt of the goods or services, payment of the tax by the supplier and the filing of returns, and some credit is blocked outright for particular kinds of expenditure.

Who it binds

A person who makes a taxable supply and is registered, or is required to be. Registration turns on turnover thresholds and on categories where it is compulsory whatever the turnover. The Act also binds recipients, who may have to pay tax under reverse charge, and it reaches e-commerce operators, input service distributors and persons who deduct or collect tax at source. A supply between States is outside it and falls under the Integrated Goods and Services Tax Act, 2017.

What has changed, and when

• The Act took effect on 1 July 2017 as part of the introduction of GST, and it replaced a large number of Union and State indirect taxes.
• The Central Goods and Services Tax (Amendment) Act, 2018 amended it, and later Finance Acts have amended it again, so the text read at the time of a dispute must be the text as it stood for the period in question.
• The Finance (No. 2) Act, 2024 inserted section 74A, a single demand section covering both fraud-based and other cases, for the financial year 2024-25 onward. Sections 73 and 74, which dealt with those two kinds of case separately, continue for earlier periods.

What turns on it in practice

Most GST disputes are about one of four things. The first is credit: whether the conditions for it were met, whether a supplier's default can be visited on the buyer, and whether an item falls within the blocked categories. The second is classification and rate, where the answer is in the notification rather than the Act. The third is limitation and the character of the notice, since a demand framed as fraud has a longer period than one that is not, and a notice that alleges the wrong ground can fail for that reason alone. The fourth is procedure: whether the show cause notice was properly served, whether the proper officer gave a hearing, and whether the order stays within the notice.

The appeal route is part of the Act and has its own conditions. An appeal to the first appellate authority is subject to a pre-deposit of part of the disputed tax, and the further appeal lies to an Appellate Tribunal, then to the High Court on a question of law. A taxpayer that misses a time limit may lose the right to appeal, because the authority's power to condone delay is itself limited.

Advisory and litigation on GST, whether before the departmental officers or the appellate forums, is part of the taxation work of this practice, and the Act is the starting point for each of those questions.