INTERPRETATION OF CENTRAL GOODS AND SERVICES TAX (CGST) ACT (PART-4) (Meaning of Important Terms)
By: – Dr. Sanjiv Agarwal
Goods and Services Tax – GST
Dated:- 6-5-2017
This part of the series contains meanings of certain terms covered in Section 2 of the CGST Act, 2017. These are business, business vertical and casual taxable person.
Business [Section 2(17)]
'Business' includes
* any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
* any activity or transaction in connection with or incidental or ancillary to sub-clause(a);
* any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
* supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
* provision by a club, association, society, or any such
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ness, will be considered as a Supply.
It is important to note that the for the coverage under the term business, the intention to earn profit out of it will not be considered. Even if there is no intention to make profit out of it, still the transaction may be covered in the definition of 'business'. For example, supply of goods by an association to its members. It may be noted that any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities shall be deemed to be business.
This definition is an inclusive definition wherein all types of transactions including incidental or ancillary to trade, commerce, manufacture, profession, vocation, adventure, wager or other similar activities are covered. It is immaterial whether such transactions are for pecuniary benefit or not. These terms have not been defined. 'Agriculture' is specifically excluded from 'business'.
Busines
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xplanation.For the purposes of this clause, factors that should be considered in determining whether goods or services are related include
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking,
insurance, or public utilities.
Under the scheme of the CGST Act, each taxable person is required to have one registration in a state, from which it makes supplies of taxable goods or services. Even if such person has more than one place of business in a single state, still such person is required to obtain only one registration. However, an exception has been made for a separate business vertical. Thus, a taxable person having more than one business vertical in a state can consider to obtain more than one registrations in that state for each of
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the production processes.
* the type or class of customers for the products or services.
* the methods used to distribute the products or provide the services.
* if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.
Business vertical is relevant for the purpose of distribution of input credit by Input Service Distributor (ISD) and for the purpose of obtaining separate GST registration. If the entity opts to have separate registration for different business verticals, it will have more than one registration within the State.
Casual taxable person [Section 2(20)]
'Casual taxable person' means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.
Casual taxable persons are those persons who undertake busine
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