MEANING AND SCOPE OF ‘SUPPLY’ UNDER MODEL GST LAW
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 2-11-2016
Taxable event
The taxable event in respect of services is for the services provided or to be provided. The taxable event also depends upon the place of provision of service and point of taxation. Likewise the taxable event in excise duty is the removal of excisable goods manufactured or produced. In VAT the taxable event is the time of sale of goods. The taxable events under the existing indirect laws shall stand subsumed in the taxable event known as 'supply' in the model GST law.
Meaning and Scope of 'Supply'
Section 2(92) of the Act defines the term 'supply' as having the meaning as assigned in Section 3. Section 3(1) provides that 'supply' includes-
* all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in
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monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods and/or services, whether by the said person or by any other person.
Deposit – consideration?
The proviso to Section 2(28) provides that a deposit, whether refundable or not, given in respect of the supply of goods and/or services shall not be considered as payment made for the supply unless the supplies applies the deposit as consideration of the supply. Under service tax provisions the deposit is not liable to pay tax but the advance payment received for any service to be provided will be liable for taxation under service tax provisions. Litigation may arise for interpretation of the term 'deposit' unless it is clearly defined.
Supply without consideration
Schedule I to the Act gives the list of matters to be treated as supply without consideration-
* Permanent transfer/disposal of business assets;
* Temporary application of business
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subject to Section 3(2), the Central or the State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as-
* a supply of services and not as a supply of goods; or
* neither a supply of goods nor a supply of services.
Essential ingredients to supply
In order to constitute a 'supply' the following element are required to be satisfied-
* supply of goods and/or services;
* supply is for a consideration;
* supply is made in the course of furtherance of business;
* supply is made in the taxable territory;
* supply is a taxable supply;
* supply is made by a taxable person.
Under certain circumstances such as importation of service or supplies made without consideration, where one or more ingredients are not satisfied, it shall be treated as supply.
Inter-state self supplies such as stock transfer will be taxable as a taxable person has to take state wise registration. Such transactions have been made taxable
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ation to a person, shall mean supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made by such person in the course of furtherance of business except in case of such supplies where the tax is payable on reverse charge basis.
Continuous supply of goods
Section 2(30) defines the term 'continuous supply of goods' as a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or period basis.
Continuous supply of services
Section 2(31) defines the term 'continuous supply of services' as a supply of services which is provided or agreed to be provided, continuously or on recurrent basis, under contract, for a period exceeding three months with periodic payment obligations and includes supply of such service as the Central
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e amplitude in the Act. It finds place in many of the definitions of the Act and also in other provisions of the Act. Some important definitions may be seen.
Export of service
Section 2(44) provides that the supply of any service shall be treated as 'export of service' when-
(a) the supplier of service is located in India;
(b) the recipient of service is located outside India;
(c) the place of supply of service is outside India;
(d) the payment of such service has been received by the supplier of service in convertible foreign exchange; and
(e) the supplier of service and recipient of service are not merely establishment of a distinct person.
The explanation to this section provides that for the purposes of clause (e) an establishment of a person in India and any of his establishment outside India shall be treated as establishments of distinct persons.
Import of service
Section 2(52) provides that the supply of any service shall be treated as 'import of service', if-
(
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