Chargeability of GST in India: CGST Section 9, IGST & Goods vs Services Explained

Section:1 Short Title, Extent, Commencement 

• Short Title: The Act may be called the Central Goods and Services Tax (CGST) Act, 2017.
• Extent: It extends to the whole of India.
• Commencement: It came into force with effect from 1st July 2017.

Section:9 Charging Section

Section 9(1) & 9(2): General Levy of CGST

1. CGST is levied on intra-State supply of goods and services (excluding alcoholic liquor for human consumption)
2. Tax is charged on the assessable value of supply
3. Applicable at a rate not exceeding 20% (as per CGST Act framework)
4. Tax is collected at the time of supply
5. Liability to pay tax is on the supplier (taxable person)

Note: Petroleum products will be brought under GST from the date notified by the GST Council.

Section 9(3):  Reverse Charge on Notified Supplies

• GST is payable on certain notified goods/services (as per Notification No. 13/2017)
• In such cases, tax is collected under Reverse Charge Mechanism (RCM)
• Liability shifts from supplier to the recipient of supply

Section 9(4): Reverse Charge on Unregistered Suppliers (Specified Cases)

• Applicable when unregistered persons supply goods/services to a registered person
• Restricted mainly to specified sectors such as construction-related supplies (e.g., cement, iron rods, cement concrete mixers, architect services, etc.)
• GST is payable by the recipient under RCM

Section 9(5):  Liability on E-Commerce Operators

• For certain notified services, GST is payable by the E-Commerce Operator
• The operator must be located in India
• If not located in India, it must:
• Establish a business place in India, or
• Appoint an agent in India
• The operator is responsible for collecting and paying GST on such services

On following notified services, GST shall be collected from E-Commerce Operator, which is located in India. If not located in India, then he needs to setup a business place in India or to appoint an agent in India.

Key points: 

All other services and goods supplied through an E-Commerce Operator are governed under the TCS mechanism (discussed in detail in later the blog on TDS/TCS under GST so keep visit my website for vital information).

Important Definitions

1. Radio Taxi: A taxi equipped with two-way radio communication and enabled with GPS/GPRS tracking system. 
2. Motor Cab: A motor vehicle designed to carry not more than 6 passengers + driver (i.e., up to 7 seats including driver). 
3. Omni Bus: A motor vehicle designed to carry not more than 6 passengers + driver (i.e., up to 7 seats including driver). 
4. Maxi Cab: A motor vehicle designed to carry 8 to 13 passengers (including driver). 
5. Motor Cycle: A two-wheeled vehicle, with or without a side car.

Charging Section:5 of IGST Act Provisions under this section are same as given under the charging section of CGST Act, subject to following differences

Basis	Section 9 of CGST Act	Section 5 of IGST Act
Nature of Supply	Intra State	Inter State
Maximum Rate of GST	14%	28%
Special provision for import of goods	—	IGST on Import of Goods: The IGST on goods imported into India shall be: • Levied and collected in accordance with provisions of Section 3 of the Customs Tariff Act, 1975 • On the value as determined under the said Act • At the point when Basic Customs Duty is levied on the said goods However, in case of supply of online money gaming as goods from outside India to India, IGST shall be levied and collected under Section 5 of IGST Act, 2017 i.e. levied and collected by GST Department

Goods and Services (Under GST)

Understanding the definition of Goods and Services is crucial because GST is levied on their supply.

1. Goods

Meaning:

Goods refer to every kind of movable property.

Includes:

• Movable property: All tangible movable items are goods. 
• Things attached to earth (when agreed to be severed):

If something attached to land is intended to be separated, it is treated as goods.

Examples: signage boards, standing timber, growing crops, trees (to be cut), etc. 

• Actionable claims: Certain rights treated as goods, such as: 
• Lottery tickets 
• Betting and gambling rights 
• Unsecured debts (debtor’s claims) 

2. Services

Meaning:

Anything that is not classified as goods is treated as a service.

Types of services:

1. Positive (active) services: Doing an act. Example: consulting, repair work, transportation 
2. Negative (passive) services: Agreeing to refrain from doing something. Example: non-compete agreement, restrictive covenants
3. Neither Good nor Services. Certain items are excluded from both categories:
• Money 
• Securities 

However, activities involving money or securities for consideration are treated as services, such as:

• Forex conversion charges 
• Demand draft commission 
• Brokerage services 
• Banking and financial transaction fees

Key Takeaway

1. Goods = Tangible + specified intangible rights (like actionable claims)
2. Services = Everything else except goods
3. Money & securities are excluded, but related services are taxable