Topic guide · 44 provisions

UTGST & Compensation Cess

The two Acts most people never read

The two Acts most people never read.

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The UTGST Act does for union territories without a legislature what the SGST Acts do for states. If you supply within Chandigarh, Lakshadweep, Andaman and Nicobar, Dadra and Nagar Haveli and Daman and Diu, or Ladakh, the state half of your tax is UTGST rather than SGST – mechanically identical, differently named.

The Compensation Cess Act funded the promise made to states when GST replaced their own taxes: that their revenue would be protected for a transition period. It is levied on a narrow list of demerit and luxury goods, on top of GST.

Cess has its own credit silo. Credit of compensation cess can only be used to pay compensation cess – it cannot be set off against CGST, SGST or IGST, which surprises businesses that assume all credit is fungible.

Different purposes entirely – one is a jurisdictional variant, the other an additional levy.

Worked example

Cess credit that could not be used

Compensation cess paid on inputs	₹3,40,000	Sits in its own credit silo
Output GST liability	₹5,10,000	CGST, SGST and IGST
Cess credit usable against it	₹0	Cess credit pays cess only

₹3.4 lakh of perfectly valid credit, unusable against the liability the business actually had. If you deal in cess-bearing goods, the cess ledger has to be planned separately.

The mistakes that cost people money

Not theoretical risks — the ones we actually see land on clients’ desks.

Charging SGST on a supply within a union territory that should carry UTGST.

Planning cash flow on the assumption that cess credit can offset ordinary GST. It cannot.

Overlooking cess entirely on notified goods, because the GST rate looked right on its own.

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UTGST & Compensation Cess — the complete guide

13 pages covering all 44 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.

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Every provision on utgst & compensation cess

All 44 of them, each with a plain-language explanation and the full legal text.

UTGST Act, 2017 · 29

UTGST s.1 Short title, extent and commencement UTGST s.2 Definitions UTGST s.3 Officers under this Act UTGST s.4 Authorisation of officers UTGST s.5 Powers of officers UTGST s.6 Authorisation of officers of central tax as proper officer in certain circumstances UTGST s.7 Levy and collection UTGST s.8 Power to grant exemption from tax UTGST s.8A Power not to recover Goods and Services Tax not levied or short-levied as a result of general practice. UTGST s.9 Payment of tax UTGST s.9A Utilisation of input tax credit UTGST s.9B Order of utilisation of input tax credit UTGST s.10 Transfer of input tax credit UTGST s.11 Officers required to assist proper officers UTGST s.12 Tax wrongfully collected and paid to Central Government or Union territory Government UTGST s.13 Recovery of tax UTGST s.14 Definitions UTGST s.15 Constitution of Authority for Advance Ruling UTGST s.16 Constitution of Appellate Authority for Advance Ruling UTGST s.17 Migration of existing tax payers UTGST s.18 Transitional arrangements for input tax credit UTGST s.19 Transitional provisions relating to job work UTGST s.20 Miscellaneous transitional provisions UTGST s.21 Application of provisions of Central Goods and Services Tax Act UTGST s.22 Power to make rules UTGST s.23 General power to make regulations UTGST s.24 Laying of rules, regulations and notifications UTGST s.25 Power to issue instructions or directions UTGST s.26 Removal of difficulties

GST (Compensation to States) Act, 2017 · 15

Cess Act s.1 Short title, extent and commencement Cess Act s.2 Definitions Cess Act s.3 Projected growth rate Cess Act s.4 Base year Cess Act s.5 Base year revenue Cess Act s.6 Projected revenue for any year Cess Act s.7 Calculation and release of compensation Cess Act s.8 Levy and collection of cess Cess Act s.8A Power not to recover cess not levied or short levied as a result of general practice. Cess Act s.9 Returns, payments and refunds Cess Act s.10 Crediting proceeds of cess to Fund Cess Act s.11 Other provisions relating to cess Cess Act s.12 Power to make rules Cess Act s.13 Laying of rules before Parliament Cess Act s.14 Power to remove difficulties

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