Meaning and Scope of ‘Supply’ – Comparative view under Revised Model GST Law vis-à-vis Earlier Model GST Law
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 3-12-2016
Meaning and Scope of 'Supply' – Comparative view under Revised Model GST Law vis-à-vis Earlier Model GST Law
Whilst the Government is keen to make Goods and Services Tax (“GST”) a reality by envisaged April 1, 2017 deadline, efforts put in by the Government to look into the voluminous suggestions submitted by various stakeholders, on First cut Model GST Law (put on public domain on June 14, 2016), is indeed commendable. Honest attempt of the Government to eradicate the daunting provisions in the earlier Model GST Law, can be very well seen in the Revised Model GST Law which was made public on November 26, 2016.
Apart from addressing key concerns of the Industry in a very decent manner, the Revised Model GST Law has also proposed an anti-profiteering mechanism to ensure benefit of lowe
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e away in GST, but, simultaneously, the term 'supply' will hold the greatest significance and shall be important in determining the taxability of all transactions, whether commercial or otherwise under GST regime.
Like the Earlier Model GST Law, definition of term 'supply' is contained in Section 3 of the Model CGST/SGST Act, 2016. A comparative view of the provisions is given hereunder for easy digest:
Section
Sub
Earlier Model GST Law
Revised Model GST Law
3
(1)
Supply includes
Supply includes
(a)
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 the course or furtherance of business
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 the course or furtherance of business
No changes
* Definition of 'supply' st
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upply
(c)
a supply specified in Schedule I, made or agreed to be made without a consideration
a supply specified in Schedule I, made or agreed to be made without a consideration
No changes
* Concept of supply without consideration still continues but Schedule I revamped to done away with nightmare situations like Business Assets/ services put to private or non-business use, Assets retained after deregistration, FOC Supplies, etc.
(2)
Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services
Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services
No changes
* Supply of goods Vs. Supply of services still continues with minimal changes
(2A)
Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf
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ublic authorities as specified in Schedule IV, shall be treated neither as a supply of goods nor a supply of services
Gist of the changes
* Certain exclusions have been provided in Schedule III and IV which would be out of taxable net.
* Schedule IV dealing with activities or transactions undertaken by the Central Government, a State Government or any Local Authority in which they are engaged as public authorities, which shall neither be treated as supply of goods nor supply of services, was also present in earlier Model GST Law.
* Schedule III has been now newly added which covers activities or transactions which shall neither be treated as supply of goods nor supply of services like services by an employee to employer in course of or in relation to his employment, services of funeral, burial etc.
(3)
(4)
Subject to sub-section (2), the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as
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he changes
* The provision has been omitted in view of separate provisions inserted for taxability of services supplied through electronic commerce operator under chargeable section. Such persons would be liable to pay tax and supplies made by such persons would not be deemed supplies by them.
(5)
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The tax liability on a composite or a mixed supply shall be determined in the following manner –
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
(b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax
Gist of the changes
* Taxability of composite and mixed supplies: A new incorporation to determine taxability of bundled supplies in following manner:
* Composite supply i.e. supplies naturally bundled à It shall be treated as a supply of principal supply
* Mixed supply i.e. two or more in
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