Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – 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 defines contract as when at the desire of the promissory, the promise or any other person has done or abstained from doing or does or abstains fro
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he 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 made for such supply unless the supplier applies such deposit as consideration for the said supply. Schedule I Schedule I to the Act provides the activities that are to be
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s 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 available or such goods is a supply; Supply between related persons Since the expression related person finds in two places in the schedule I we have to refer the definition of related person . Section 2(84) defines
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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 or both taken between the related person as aforesaid shall be treated as supply even the supply is made without consideration. Supply between distinct persons Section 25 of the Act deals with the procedure of registration by a taxable person. If a taxable person has business more than one State, then he is required t
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ness 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 taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business is considered as supply even though it is not for consideration. The term related person is discussed above is also applicable to this clause. The transactions between the branches or establishments of
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