 bill no 58 of 2017 the integrated goods and services tax bill, 2017——————arrangement of clauses—————— clauses chapter i preliminary1 short title, extent and commencement 2 definitions chapter ii administration3 appointment of officers 4 authorisation of officers of state tax or union territory tax as proper officer incertain circumstances chapter iii levy and collection of tax5 levy and collection6 power to grant exemption from tax chapter iv determination of nature of supply7 inter-state supply 8 intra-state supply 9 supplies in territorial waters chapter v place of supply of goods or services or both10 place of supply of goods other than supply of goods imported into, or exportedfrom india11 place of supply of goods imported into, or exported from india12 place of supply of services where location of supplier and recepient is in india 13 place of supply of services where location of supplier or location of receipient isoutside india14 special provision for payment of tax by a supplier of online information anddatabase access or retrieval services (ii) clauses chapter vi refund of integrated tax to international tourist15 refund of integrated tax paid on supply of goods to tourist leaving india chapter vii zero rated supply16 zero rated supply chapter viii apportionment of tax and settlement of funds17 apportionment of tax and settlement of funds 18 transfer of input tax credit 19 tax wrongfully collected and paid to central government or state government chapter ix miscellaneous20 application of provisions of central goods and services tax act 21 import of services made on or after the appointed day 22 power to make rules 23 power to make regulations 24 laying of rules, regulations and notifications 25 removal of difficultiesbill no 58 of 2017 the integrated goods and services tax bill,  2017 a billto make a provision for levy and collection of tax on inter-state supply of goods or servicesor both by the central government and for matters connected therewith or incidental theretobe it enacted by parliament in the sixty-eighth year of the republic of india as follows:— chapter i preliminary51 (1) this act may be called the integrated goods and services tax act, 2017(2) it shall extend to the whole of india except the state of jammu and kashmirshort title, extent and commencement(3) it shall come into force on such date as the central government may, by notificationin the official gazette, appoint:provided that different dates may be appointed for different provisions of this actdefinitions2 in this act, unless the context otherwise requires,––(1) "central goods and services tax act" means the central goods and services tax act, 2017;5(2) ''central tax" means the tax levied and collected under the central goods and services tax act;10(3) "continuous journey" means a journey for which a single or more than one ticket or invoice is issued at the same time, either by a single supplier of service or through an agent acting on behalf of more than one supplier of service, and which involves no stopover between any of the legs of the journey for which one or more separate tickets or invoices are issuedexplanation––for the purposes of this clause, the term "stopover" means a place where a passenger can disembark either to transfer to another conveyance or break his journey for a certain period in order to resume it at a later point of time;(4) "customs frontiers of india" means the limits of a customs area as defined in section 2 of the customs act, 1962;52 of 196215(5) "export of goods" with its grammatical variations and cognate expressions, means taking goods out of india to a place outside india;(6) "export of services" means the supply of any service when,––(i) the supplier of service is located in india; (ii) the recipient of service is located outside india;20(iii) the place of supply of service is outside india; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and25(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with  explanation 1 in section 8;30(7) "fixed establishment" means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs;(8) "goods and services tax (compensation to states) act" means the goods and services tax (compensation to states) act, 2017;(9) "government" means the central government;35(10) ''import of goods" with its grammatical variations and cognate expressions, means bringing goods into india from a place outside india;(11) ''import of services" means the supply of any service, where––(i) the supplier of service is located outside india; (ii) the recipient of service is located in india; and (iii) the place of supply of service is in india;40(12) "integrated tax" means the integrated goods and services tax levied under this act;45(13) "intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;(14) "location of the recipient of services" means,––(a) where a supply is received at a place of business for which theregistration has been obtained, the location of such place of business;5(b) where a supply is received at a place other than the place of businessfor which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;(c) where a supply is received at more than one establishment, whetherthe place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and10 (d) in absence of such places, the location of the usual place of residenceof the recipient;(15) "location of the supplier of services" means,––(a) where a supply is made from a place of business for which theregistration has been obtained, the location of such place of business;15(b) where a supply is made from a place other than the place of businessfor which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;20(c) where a supply is made from more than one establishment, whetherthe place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and(d) in absence of such places, the location of the usual place of residenceof the supplier;25(16) "non-taxable online recipient" means any government, local authority,governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territoryexplanation––for the purposes of this clause, the expression "governmental authority" means an authority or a board or any other body,––(i) set up by an act of parliament or a state legislature; or30(ii) established by any government,with ninety per cent or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243w of the constitution;35(17) "online information and database access or retrieval services" meansservices whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,––(i)   advertising on the internet;40(ii)  providing cloud services; (iii) provision of e-books, movie, music, software and other intangiblesthrough telecommunication networks or internet;(iv) providing data or information, retrievable or otherwise, to any personin electronic form through a computer network;45(v) online supplies of digital content (movies, television shows, musicand the like);(vi)  digital data storage; and (vii) online gaming;(18) "output tax", in relation to a taxable person, means the integrated tax chargeable under this act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;528 of 2005(19) "special economic zone" shall have the same meaning as assigned to it in clause (za) of section 2 of the special economic zones act, 2005;28 of 2005(20) "special economic zone developer" shall have the same meaning as assigned to it in clause (g) of section 2 of the special economic zones act, 2005 and includes an authority as defined in clause (d) and a co-developer as defined in clause (f ) of section 2 of the said act;10(21) "supply" shall have the same meaning as assigned to it in section 7  of the central goods and services tax act;(22) "taxable territory" means the territory to which the provisions of this act apply;(23) "zero-rated supply" shall have the meaning assigned to it in section 16;15(24) words and expressions used and not defined in this act but defined in the central goods and services tax act, the union territory goods and services tax act and the goods and services tax (compensation to states) act shall have the same meaning as assigned to them in those acts;20(25) any reference in this act to a law which is not in force in the state of jammu and kashmir, shall, in relation to that state be construed as a reference to the corresponding law, if any, in force in that state chapter ii administrationappointment of officers3 the board may appoint such central tax officers as it thinks fit for exercising the powers under this act25304 without prejudice to the provisions of this act, the officers appointed under the state goods and services tax act or the union territory goods and services tax act are authorised to be the proper officers for the purposes of this act, subject to such exceptions and conditions as the government shall, on the recommendations of the council, by notification, specifyauthorisation of officers of state tax or union territory tax as proper officer in certain circumstances chapter iii levy and collection of taxlevy and collection355 (1) subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-state supplies of goods or services or both; except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the central goods and services tax act and at such rates, not exceeding forty per cent, as may be notified by the government on the recommendations of the council and collected in such manner as may be prescribed and shall be paid by the taxable person:4051 of 1975 52 of 1962provided that the integrated tax on goods imported into india shall be levied and collected in accordance with the provisions of section 3 of the customs tariff act, 1975 on the value as determined under the said act at the point when duties of customs are levied on the said goods under section 12 of the customs act, 196245(2) the integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the government on the recommendations of the council5(3) the government may, on the recommendations of the council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both(4) the integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both10(5) the government may, on the recommendations of the council, by notification, specify categories of services, the tax on inter-state supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:15provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:20provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay taxpower to grant exemption from tax256 (1) where the government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification30(2) where the government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable35(3) the government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be40explanation–– for the purposes of this section, where an exemption in respect of any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both chapter iv determination of nature of supplyinter-state supply457 (1) subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in––(a) two different states;(b) two different union territories; or (c) a state and a union territory,shall be treated as a supply of goods in the course of inter-state trade or commerce(2) supply of goods imported into the territory of india, till they cross the customs frontiers of india, shall be treated to be a supply of goods in the course of inter-state trade or commerce5(3) subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in––(a) two different states; (b) two different union territories; or (c) a state and a union territory, shall be treated as a supply of services in the course of inter-state trade or commerce10(4) supply of services imported into the territory of india shall be treated to be a supply of services in the course of inter-state trade or commerce(5) supply of goods or services or both,––(a)  when the supplier is located in india and the place of supply is outside india;15(b) to or by a special economic zone developer or a special economic zone unit; or(c) in the taxable territory, not being an intra-state supply and not covered elsewhere in this section,20shall be treated to be a supply of goods or services or both in the course of inter-state trade or commerceintra-state supply8 (1) subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same state or same union territory shall be treated as intra-state supply:25provided that the following supply of goods shall not be treated as intra-state supply, namely:––(i) supply of goods to or by a special economic zone developer or a special economic zone unit;(ii) goods imported into the territory of india till they cross the customs frontiers of india; or30(iii) supplies made to a tourist referred to in section 15(2) subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same state or same union territory shall be treated as intra-state supply:35provided that the intra-state supply of services shall not include supply of services to or by a special economic zone developer or a special economic zone unitexplanation 1––for the purposes of this act, where a person has,––(i) an establishment in india and any other establishment outside india; (ii) an establishment in a state or union territory and any other establishment outside that state; or40(iii) an establishment in a state or union territory and any other establishment being a business vertical registered within that state or union territory, then such establishments shall be treated as establishments of distinct personsexplanation 2––a person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory9 notwithstanding anything contained in this act,––supplies in territorial waters(a) where the location of the supplier is in the territorial waters, the location of such supplier; or(b) where the place of supply is in the territorial waters, the place of supply,5shall, for the purposes of this act, be deemed to be in the coastal state or union territory where the nearest point of the appropriate baseline is located chapter v place of supply of goods or services or both10 (1) the place of supply of goods, other than supply of goods imported into, or exported from india, shall be as under,––10(a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient;place of supply of goods otherthan supply ofgoods imported into, or exported from india15 20(b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person;(c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient;25(d) where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly;(e) where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board30(2) where the place of supply of goods cannot be determined, the place of supply shall be determined in such manner as may be prescribed11 the place of supply of goods,––(a) imported into india shall be the location of the importer; (b) exported from india shall be the location outside indiaplace of supply of goods imported into, or exported from india3512 (1) the provisions of this section shall apply to determine the place of supply of services where the location of supplier of services and the location of the recipient of services is in india(2)   the place of supply of services, except the services specified in sub-sections (3)to (14),––place of supply of services where location of supplier and recipient is in india(a) made to a registered person shall be the location of such person; (b) made to any person other than a registered person shall be,––40(i) the location of the recipient where the address on record exists; and (ii) the location of the supplier of services in other cases (3) the place of supply of services,––(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or45estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work; or (b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or5(c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or(d) any services ancillary to the services referred to in clauses (a), (b) and (c),10shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located:provided that if the location of the immovable property or boat or vessel is located or intended to be located outside india, the place of supply shall be the location of the recipient15explanation––where the immovable property or boat or vessel is located in more than one state or union territory, the supply of services shall be treated as made in each of the respective states or union territories, in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed20(4) the place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment, health service including cosmetic and plastic surgery shall be the location where the services are actually performed(5) the place of supply of services in relation to training and performance appraisal to,––(a) a registered person, shall be the location of such person;25(b) a person other than a registered person, shall be the location where the services are actually performed30(6) the place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located(7)  the place of supply of services provided by way of ,—(a) organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to  a conference, fair, exhibition, celebration or similar events; or35(b) services ancillary to organisation of any of the events or services referred to in clause (a) , or assigning of sponsorship to such events,––(i) to a registered person, shall be the location of such person;40(ii) to a person other than a registered person, shall be the place wherethe event is actually held and  if the event is held outside india, the place of supply shall be the location of the recipient45explanation––where the event is held in more than one state or union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in each of the respective states or union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed(8) the place of supply of services by way of transportation of goods, including by mail or courier to,––(a) a registered person, shall be the location of such person;5(b) a person other than a registered person, shall be the location at which suchgoods are handed over for their transportation(9) the place of supply of passenger transportation service to,—(a) a registered person, shall be the location of such person; (b) a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey:10provided that where the right to passage is given for future use and the point ofembarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2)15explanation––for the purposes of this sub-section, the return journey shall be treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time (10) the place of supply of services on board a conveyance,  including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey20(11) the place of supply of telecommunication services including data transfer, broadcasting, cable and direct to home television services to any person shall,—25(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services;(b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services;30(c) in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means,––35(i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or(ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold;40(d) in other cases, be the address of the recipient as per the records of the supplier of services and where  such address is not available, the place of supply shall be location of the supplier of services:provided that where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services:45provided further that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of supply of such services5explanation––where the leased circuit is installed in more than one state or union territory and a consolidated amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken as being in each of the respective states or union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed(12) the place of supply of banking and other financial services, including stock broking services to any person shall be the location of the recipient of services on the records of the supplier of services:10provided that if the location of recipient of services is not on the records of the supplier, the place of supply shall be the location of the supplier of services(13) the place of supply of insurance services shall,––(a) to a registered person, be the location of such person;15(b) to a person other than a registered person, be the location of the recipient of services on the records of the supplier of services20(14) the place of supply of advertisement services to the central government, a state government, a statutory body or a local authority meant for the states or union territories identified in the contract or agreement shall be taken as being in each of such states or union territories and the value of such supplies specific to each state or union territory shall be in proportion to the amount attributable to services provided by way of dissemination in the respective states or union territories as may be determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed2513 (1) the provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside india(2) the place of supply of services except the services specified in sub-sections (3)to (13) shall be the location of the recipient of services:place of supply of services where location of supplier or location of recipient is outside india30provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services(3) the place of supply of the following services shall be the location where the services are actually performed, namely:—35(a)  services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:  provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:40   provided further that nothing contained in this clause shall  apply in the case of services supplied in respect of goods which  are temporarily imported into india for repairs and are exported after repairs without being put to any other use in india, than that which is required for such repairs;45(b)  services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his  behalf, with the supplier for the supply of services5(4) the place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or intended to be located(5) the place of supply of services supplied by way of admission to, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to such admission or organisation, shall be the place where the event is actually held10(6) where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory, its place of supply shall be the location in the taxable territory15(7) where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) are supplied in more than one state or union territory, the place of supply of such services shall be taken as being in each of the respective states or union territories and the value of such supplies specific to each state or union territory shall be in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed20(8) the place of supply of the following services shall be the location of the supplier of services, namely:––(a)  services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders;25(b)  intermediary services;(c)  services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one monthexplanation––for the purposes of this sub-section, the expression,––(a) "account" means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account;302 of 1934(b) "banking company" shall have the same meaning as assigned to it under clause (a) of section 45a of the reserve bank of india act, 1934;2 of 1934(c) ''financial institution" shall have the same meaning as assigned to itin clause (c) of section 45-i of the reserve bank of india act, 1934;35(d) "non-banking financial company" means,––(i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has asits principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or40  (iii) such other non-banking institution or class of such institutions,as the reserve bank of india may, with the previous approval of the central government and by notification in the official gazette, specify(9) the place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods45(10) the place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey(11) the place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey5(12)  the place of supply of online information and database access or retrieval services shall be the location of the recipient of servicesexplanation––for the purposes of this sub-section, person receiving such services shall be deemed to be located in the taxable territory, if any two of the following noncontradictory conditions are satisfied, namely:––10(a) the location of address presented by the recipient of services through internetis in the taxable territory;(b) the credit card or debit card or store value card or charge card or smart cardor any other card by which the recipient of services settles payment has been issued in the taxable territory;15(c) the billing address of the recipient of services is in the taxable territory; (d) the internet protocol address of the device used by the recipient of servicesis in the taxable territory;(e) the bank of the recipient of services in which the account used for paymentis maintained is in the taxable territory;20(f) the country code of the subscriber identity module card used by the recipientof services is of taxable territory;(g) the location of the fixed land line through which the service is received bythe recipient is in the taxable territory25(13) in order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application of rules, the government shall have the power to notify any description of services or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service3014 (1) on supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a non-taxable online recipient, the supplier of services located in a non-taxable territory shall be the person liable for paying integrated tax on such supply of services:special provision for payment of tax by a supplier of online information and database access or retrieval services35provided that in the case of supply of online information and database access or retrieval services by any person located in a non-taxable territory and received by a nontaxable online recipient, an intermediary located in the non-taxable territory, who arranges or facilitates the supply of such services, shall be deemed to be the recipient of such services from the supplier of services in non-taxable territory and supplying such services to the non-taxable online recipient except when such intermediary satisfies the following conditions, namely:––40(a) the invoice or customer's bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question and its supplier in non-taxable territory;(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge which is that the intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-taxable online recipient and the supplier of such services;45(c) the intermediary involved in the supply does not authorise delivery; and (d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the supplier of services(2) the supplier of online information and database access or retrieval services referred to in sub-section (1) shall, for payment of integrated tax, take a single registration under the simplified registration scheme to be notified by the government:5provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay integrated tax on behalf of the supplier:provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he may appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax10 chapter vi refund of integrated tax to international tourist1515 the integrated tax paid by tourist leaving india on any supply of goods taken out of india by him shall be refunded in such manner and subject to such conditions and safeguards as may be prescribedrefund of integrated tax paid on supply of goods to tourist leaving indiaexplanation––for the purposes of this section, the term "tourist" means a person not normally resident in india, who enters india for a stay of not more than six months for legitimate non-immigrant purposes chapter vii zero rated supply20zero rated supply16 (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:––(a) export of goods or services or both; or25(b) supply of goods or services or both to a special economic zone developer or a special economic zone unit (2) subject to the provisions of sub-section (5) of section 17 of the central goods and services tax act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply(3)  a registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––30(a) he may supply goods or services or both under bond or letter of undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or35(b) he may supply goods or services or both, subject to such conditions,safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied,in accordance with the provisions of section 54 of the central goods and services tax act or the rules made thereunder chapter viii apportionment of tax and settlement of funds4017 (1)  out of the integrated tax paid to the central government,––apportionment of tax and settlement of funds(a) in respect of inter-state supply of goods or services or both to an unregisteredperson or to a registered person paying tax under section 10 of the central goods and services tax act;45(b)  in respect of inter-state supply of goods or services or both where theregistered person is not eligible for input tax credit;(c) in respect of inter-state supply of goods or services or both made in a financial year to a registered person, where he does not avail of the input tax credit within the specified period and thus remains in the integrated tax account after expiry of the due date for furnishing of annual return for such year in which the supply was made;5(d) in respect of import of goods or services or both by an unregistered person or by a registered person paying tax under section 10 of the central goods and services tax act;(e) in respect of import of goods or services or both where the registered person is not eligible for input tax credit;10(f) in respect of import of goods or services or both made in a financial year by a registered person, where he does not avail of the said credit within the specified period and thus remains in the integrated tax account after expiry of the due date for furnishing of annual return for such year in which the supply was received, the amount of tax calculated at the rate equivalent to the central tax on similar intra-state supply shall be apportioned to the central government15(2) the balance amount of integrated tax remaining in the integrated tax account in respect of the supply for which an apportionment to the central government has been done under sub-section (1) shall be apportioned to the,––(a) state where such supply takes place; and20(b) central government where such supply takes place in a union territory: provided that where the place of such supply made by any taxable person cannot be determined separately, the said balance amount shall be apportioned to,––(a) each of the states; and (b) central government in relation to union territories,25in proportion to the total supplies made by such taxable person to each of such states or union territories, as the case may be, in a financial year:30provided further that where the taxable person making such supplies is not identifiable, the said balance amount shall be apportioned to all states and the central government in proportion to the amount collected as state tax or, as the case may be, union territory tax, by the respective state or, as the case may be, by the central government during the immediately preceding financial year(3) the provisions of sub-sections (1) and (2) relating to apportionment of integrated tax shall, mutatis mutandis apply to the apportionment of interest, penalty and compounding amount realised in connection with the tax so apportioned35 40(4) where an amount has been apportioned to the central government or a state government under sub-section (1) or sub-section (2) or sub-section (3), the amount collected as integrated tax shall stand reduced by an amount equal to the amount so apportioned and the central government shall transfer to the central tax account or union territory tax account, an amount equal to the respective amounts apportioned to the central government and shall transfer to the state tax account of the respective states an amount equal to the amount apportioned to that state, in such manner and within such time as may be prescribed45(5) any integrated tax apportioned to a state or, as the case may be, to the central government on account of a union territory, if subsequently found to be refundable to any person and refunded to such person, shall be reduced from the amount to be apportioned under this section, to such state, or central government on account of such union territory, in such manner and within such time as may be prescribed18 on utilisation of credit of integrated tax availed under this act for payment of,––transfer of input tax credit5(a)  central tax in accordance with the provisions of sub-section (5) of section49 of the central goods and services tax act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so utilised and the central government shall transfer an amount equal to the amount so reduced from the integrated tax account to the central tax account in such manner and within such time as may be prescribed;10(b) union territory tax in accordance with the provisions of section 9 of theunion territory goods and services tax act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so utilised and the central government shall transfer an amount equal to the amount so reduced from the integrated tax account to the union territory tax account in such manner and within such time as may be prescribed;15(c) state tax in accordance with the provisions of the respective state goodsand services tax act, the amount collected as integrated tax shall stand reduced by an amount equal to the credit so utilised and shall be apportioned to the appropriate state government and the central government shall transfer the amount so apportioned to the account of the appropriate state government in such manner and within such time as may be prescribed20explanation––for the purposes of this chapter, "appropriate state" in relationto a taxable person, means the state or union territory where he is registered or is liable to be registered under the provisions of the central goods and services tax act2519 (1) a registered person who has paid integrated tax on a supply considered byhim to be an inter-state supply, but which is subsequently held to be an intra-state supply, shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribedtax wrongfully collected and paid to central government or state government30(2) a registered person who has paid central tax and state tax or union territory tax,as the case may be, on a transaction considered by him to be an intra-state supply, but which is subsequently held to be an inter-state supply, shall not be required to pay any interest on the amount of integrated tax payable chapter  ix miscellaneous3520 subject to the provisions of this act and the rules made thereunder, the provisions of central goods and services tax act relating to,––(i) scope of supply;application of provisions of central goods and services tax act(ii) composite supply and mixed supply; (iii) time and value of supply; (iv) input tax credit;40(v)  registration;(vi) tax invoice, credit and debit notes; (vii) accounts and records; (viii) returns, other than late fee; (ix) payment of tax;45(x)  tax deduction at source;(xi) collection of tax at source; (xii) assessment; (xiii) refunds; (xiv) audit;5(xv) inspection, search, seizure and arrest; (xvi) demands and recovery; (xvii) liability to pay in certain cases; (xviii) advance ruling; (xix) appeals and revision;10(xx) presumption as to documents; (xxi) offences and penalties; (xxii) job work; (xxiii) electronic commerce; (xxiv) transitional provisions; and15(xxv) miscellaneous provisions including the provisions  relating to theimposition of interest and penalty,shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this act:20provided that in the case of tax deducted at source, the deductor shall deduct tax at the rate of two per cent from the payment made or credited to the supplier:provided further that in the case of tax collected at source, the operator shall collect tax at such rate not exceeding two per cent, as may be notified on the recommendations of the council, of the net value of taxable supplies:25provided also that for the purposes of this act, the value of a supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this act, and the goods and services tax (compensation to states) act, if charged separately by the supplier:30provided also that in cases where the penalty is leviable under the central goods and services tax act and the state goods and services tax act or the union territory goods and services tax act, the penalty leviable under this act shall be the sum total of the said penalties21 import of services made on or after the appointed day shall be liable to tax under the provisions of this act regardless of whether the transactions for such import of services had been initiated before the appointed day:import of services made on or after the appointed day35provided that if the tax on such import of services had been paid in full under the existing law, no tax shall be payable on such import under this act:provided further that if the tax on such import of services had been paid in part under the existing law, the balance amount of tax shall be payable on such import under this act40explanation––for the purposes of this section, a transaction shall be deemed to have been initiated before the appointed day if either the invoice relating to such supply or payment, either in full or in part, has been received or made before the appointed daypower to make rules22 (1) the government may, on the recommendations of the council, by notification,make rules for carrying out the provisions of this act45(2) without prejudice to the generality of the provisions of sub-section (1), the government may make rules for all or any of the matters which by this act are required to be, or may be, prescribed or in respect of which provisions are to be or may be made by rules(3) the power to make rules conferred by this section shall include the power to give retrospective effect to the rules or any of them from a date not earlier than the date on which the provisions of this act come into force(4) any rules made under sub-section (1) may provide that a contravention thereof shall be liable to a penalty not exceeding ten thousand rupees5power to make regulations23 the board may, by notification, make regulations consistent with this act and the rules made thereunder to carry out the provisions of this act  10laying of rules, regulations and notifications1524 every rule made by the government, every regulation made by the board andevery notification issued by the government under this act, shall be laid, as soon as may be, after it is made or issued, before each house of parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the rule or regulation or in the notification, as the case may be, or both houses agree that the rule or regulation or the notification should not be made, the rule or regulation or notification, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification, as the case may be20removal of difficulties25 (1) if any difficulty arises in giving effect to any provision of this act, thegovernment may, on the recommendations of the council, by a general or a special order published in the official gazette, make such provisions not inconsistent with the provisions of this act or the rules or regulations made thereunder, as may be necessary or expedient for the purpose of removing the said difficulty: 25provided that no such order shall be made after the expiry of a period of three yearsfrom the date of commencement of this act(2) every order made under this section shall be laid, as soon as may be, after it is made, before each house of parliament statement of objects and reasonspresently, article 269 of the constitution empowers the parliament to make law on the taxes to be levied on the sale or purchase taking place in the course of inter-state trade or commerce accordingly, parliament had enacted the central sales tax act, 1956 for levy of central sales tax on the sale taking place in the course of inter-state trade or commerce the central sales tax is being collected and retained by the exporting states2 the crucial aspect of central sales tax is that it is non-vatable, ie the credit of this tax is not available as set-off for the future tax liability to be discharged by the purchaser it directly gets added to the cost of the goods purchased and becomes part of the cost of business and thereby has a direct impact on the increase in the cost of production of a particular product further, the fact that the rate of central sales tax is different from the value added tax being levied on the intra-state sale creates a tax arbitrage which is exploited by unscrupulous elements3 in view of the above, it has become necessary to have a central legislation, namely, the integrated goods and services tax bill, 2017 the proposed legislation will confer power upon the central government for levying goods and services tax on the supply of goods or services or both which takes place in the course of inter-state trade or commerce the proposed legislation will remove both the lacunas of the present central sales tax besides being vatable, the rate of tax for the integrated goods and services tax is proposed to be more or less equal to the sum total of the central goods and services tax and state goods and services tax or union territory goods and services tax to be levied on intra-state supplies  it is expected to reduce cost of production and inflation in the economy, thereby making the indian trade and industry more competitive, domestically as well as internationally  it is also expected that introduction of the integrated goods and services tax will foster a common or seamless indian market and contribute significantly to the growth of the economy4 the integrated goods and services tax bill, 2017, inter alia, provides for the following, namely :—(a) to levy tax on all inter-state supplies of goods or services or both except supply of alcoholic liquor for human consumption at a rate to be notified, not exceeding forty per cent as recommended by the goods and services tax council (the council);(b) to provide for levy of tax on goods imported into india in accordance with the provisions of the customs tariff act, 1975 read with the provisions contained in the customs act, 1962;(c) to provide for levy of tax on import of services on reverse charge basis under the proposed legislation;(d) to empower the central government to grant exemptions, by notification or by special order, on the recommendations of the council; (e) to provide for determination of the nature of supply as to whether it is an inter-state or an intra-state supply;(f) to provide elaborate provisions for determining the place of supply in relation to goods or services or both;(g) to provide for payment of tax by a supplier of online information and database access or retrieval services;(h) to provide for refund of tax paid on supply of goods to tourist leaving india; (i) to provide for apportionment of tax and settlement of funds and for transfer of input tax credit between the central government, state government and union territory;(j) to provide for application of certain provisions of the central goods and services tax act, 2017, inter alia, relating to definitions, time and value of supply, input tax credit, registration,  returns other than late fee, payment of tax, assessment, refunds, audit, inspection, search, seizure and arrest, demands and recovery, appeals and revision, offences and penalties and transitional provisions, in the proposed legislation; and(k) to provide for transitional transactions in relation to import of services made on or after the appointed day 5 the notes on clauses explain in detail the various provisions contained in the integrated goods and services tax bill, 20176 the bill seeks to achieve the above objectivesnew delhi;arun jaitleythe  23rd  march, 2017 notes on clausesclause 1 provides for short title, extent and commencement of the proposed act clause 2 defines various terms and expressions used in the proposed act clause 3 provides for appointment of commissioners and other class of officers as may be required for carrying out the purposes of the proposed actclause 4 provides for authorisation of state tax and union territory tax officers, subject to certain exceptions and conditions as shall be notified by the central government on recommendations of the council, to be proper officers for the purposes of the proposed actclause 5 provides for levy and collection of integrated tax on all inter-state supplies of goods or services or both except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the central goods and services tax act at a rate not exceeding forty per cent it further provides that integrated tax on goods imported into india shall be levied and collected under section 3 of the customs tariff act, 1975, at the time and in the manner in which customs duty shall be collected under the provisions of the customs act, on a value as determined under the provisions of the customs tariff act this clause also provides that —(i) integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel to be levied with effect from a date notified by the central government on the recommendations of the council;(ii) the central government to notify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both, on the recommendations of the council;(iii) the integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis;(iv) the central government may notify categories of services, the tax on inter-state supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, on the recommendations of the council clause 6 confers powers on central government to exempt either absolutely or conditionally goods or services or both of any specified description from the whole or part of the integrated tax, on the recommendations of the council this clause also confers powers on the central government to exempt from payment of tax any goods or services or both, by special order, on which tax is leviable on the recommendations of the councilclause 7 provides for instances where a supply of goods or services or both will be considered as inter- state supplyclause 8 provides for instances where a supply of goods or services or both will be considered as intra- state supplyclause 9 provides for supplies made in territorial waters to be deemed to be made in the states or union territories where the nearest point of the appropriate baseline is locatedclause 10 provides for the place of supply for all supplies of goods other than those goods which are imported into or exported out of indiaclause 11 provides for the place of supply for all supplies of goods which are imported into or exported out of indiaclause 12 provides for the place of supply for all supplies of services where location of supplier and recipient is in indiaclause 13 provides for the place of supply for all supplies of services where location of supplier or location of recipient is outside indiaclause 14 provides for deeming the supplier of services located in non-taxable territory to be liable to pay tax on the online information and database access or retrieval services by any person located in a non-taxable territory and received by a non- taxable online recipientclause 15 provides for refund of integrated tax paid on supply of goods to tourists leaving indiaclause 16 provides for zero rating of certain supplies namely exports and supplies made to special economic zone unit or special economic zone developer and the manner of zero ratingclause 17 provides for apportionment of integrated tax and settlement of funds between the central and state governmentclause 18 provides for utilisation of credit of integrated tax availed under the proposed act for payment of central tax, union territory tax or state taxclause 19 provides for refund of integrated tax in situations where inter-state supplies are subsequently held to be intra-state suppliesclause 20 provides for application of specific provisions of the central goods and services tax act to the proposed actclause 21 provides that all import of services made on or after the appointed day will be liable to integrated tax regardless of whether the transactions for such import of services had been initiated before the appointed dayclause 22 confers powers on the central government to make rules for carrying out the provisions of the proposed act on recommendation of the councilclause 23 confers powers on the board to make regulations for carrying out the provisions of the proposed actclause 24 provides for laying of rules, regulations and notifications made by the central government before each house of the parliamentclause 25 confers powers on the central government to make such provisions not inconsistent with the provisions of the proposed act or the rules or regulations by a general or special order, on the recommendations of the council within a period of three years from the date of commencement of the proposed act financial memorandumclauses 17 and 18 of the bill provides for apportionment of tax and settlement of funds and for transfer of input tax credit between the central government, state government and union territory2 clause 20 of the bill provides for application of provisions of the central goods and services tax bill, 2017 relating to appeals, advance ruling and anti-profiteering so authorities under the central goods and services tax act will be utilised for the purposes of the proposed legislation thus there will be no extra financial expenditure under this bill3 the total financial implications in terms of recurring and non-recurring expenditure involved in carrying out the various functions under the bill would be borne by the central government most of the existing officers and staff of the central board of excise and customs would be used for carrying out the various functions under the bill however, it is not possible to estimate the exact recurring and non-recurring expenditure from the consolidated fund of india at this stage memorandum regarding delegated legislationclause 22 of the integrated goods and services tax bill seeks to empower the central government to make rules, inter alia, in the following matters, namely:—(a) collection of taxes under section 5; (b) determination of place of supply under section 10; (c) apportionment of value of supply of services when the immovable property or boat or vessel is located in more than one state or union or when the leased circuit is installed in more than one state or union territory or when the event is held in more than one state or union territory or for advertisement services under section 12; (d) the place of supply of services referred to in section 13 when they are supplied in more than one state or union territory under that section; (e) conditions and safeguards for refund of  integrated tax paid on supply of goods to tourist leaving india under section 15; (f) procedure and safeguards for supply of goods or services under bond or on payment of integrated tax and then taking refund under section 16; (g) manner in which apportionment of tax and settlement of funds will take place under section 17; (h) manner and time in which input tax credit will be transferred under section 18; (i) manner in which tax wrongfully collected and paid to central government or state government is to be refunded under section 19; and (j) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be made, by rules 2  clause 23 of the bill empowers the board to make regulations to provide for any matter which is required to be, or may be, specified by regulation or in respect of which provision is to be made by regulations3  the matters in respect of which the said rules and regulations may be made are matters of procedure and administrative detail, and as such, it is not practicable to provide for them in the proposed bill itself the delegation of legislative power is, therefore, of a normal character———— a billto make a provision for levy and collection of tax on inter-state supply of goods or servicesor both by the central government and for matters connected therewith or incidental thereto————(shri arun jaitley, minister of finance and corporate affairs)