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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

Before 1 July 2017 a Chennai firm received a foreign design service, and the invoice was received before the appointed day. Service tax under the existing law was paid on the import in part only. Under Section 21 of the IGST Act, 2017, what is the position?

Only the balance tax is payable under the IGST Act. Section 21 makes import of services on or after the appointed day taxable even if initiated earlier, and its second proviso says that where tax was paid in part under the existing law, the balance is payable.

  1. ANo tax is payable under the IGST Act, since the transaction was initiated before the appointed day
  2. BThe full tax is payable under the IGST Act, ignoring the earlier payment
  3. COnly the balance amount of tax is payable under the IGST ActCorrect
  4. DTax is payable under the IGST Act only if payment was also made after the appointed day

Explanation

Section 21 makes imports on or after the appointed day liable even if initiated earlier. Under the second proviso, if tax was paid in part under the existing law, the balance is payable. Option A applies only where tax was paid in full.

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