ACTIVITIES TO BE TREATED AS ‘SUPPLY’ EVEN IF MADE WITHOUT CONSIDERATION UNDER ‘CGST ACT’
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 10-5-2017
Scope of 'supply'
Section 7 of the Central Goods and Services Tax Act, 2017 ('Act' for short) provides the scope of 'supply'. Section 7(1) provides that for the purposes of this Act, the expression 'supply' includes-
*
all forms of supply of goods or services or such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
*
import of services for a consideration whether or not in the course or furtherance of business;
*
the activities specified in Schedule I, made or agreed to be made without a consideration; and
* the activities to be treated as supply of goods or supply of services referred to in Schedule II.
Consideration
Section 2(d) of the Contract Act, 1872 def
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or selling agent gets such ticket.
The definition of 'consideration' in CGST Act also contains inclusive clause as in the Finance Act, 1994. Section 2(31) of the Act defines the term 'consideration' in relation to the supply of goods or services or both includes-
* any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
* the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
The proviso to this section provides that a deposit given in respect of supply of the goods or services or both shall not be considered as payment
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lated person or from any of his other establishments outside India, in the course or furtherance of business.
Permanent transfer or disposal business assets
The permanent transfer or disposal of business assets, if input tax credit has been availed on such assets, through, such transactions are made without consideration, it would amount to 'supply'.
Transfer of business assets-
* where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;
* where, by or under the direction or a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making a
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person, not falling within any of the above.
The proviso to section15 provides that for the purposes of this act-
-the persons shall be deemed to be 'related persons' if-
* such persons are officers or directors of one another's business;
* such persons are legally recognized partners in business;
* such persons are employer and employee;
* any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock or shares of both of them;
* one of them directly or indirectly controls the other;
* both of them are directly or indirectly controlled by a third person;
* together they director indirectly control a third person; or they are members of the same family.
-the term 'person' also includes legal person;
-persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.
The supply of goods or services o
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treated as supply of goods or services or both. If the gift by the employer to employee is exceeding ₹ 50,000/- then it would amount to supply. Gift is normally given by one person to another person without consideration. Such gift would amount to 'supply' and liable to tax under GST regime.
Principal and agent
In a business the contract between the principal and agent is common. The agent is working on behalf of the principal is entitled to commission as per agreement. He may act on behalf of the principal and even business decisions can be taken by him. Such transactions between principal and agent will not be under consideration. Schedule I provides that supply of goods by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal or by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
Import from a related person
Clause 4 of the Schedule I provides that import of services by a t
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