GST – GST Law and Procedure – 003 – Chapter Three The Meaning and Scope of Supply The Meaning and Scope of Supply The taxable event in GST is supply of goods or services or both. Various taxable events like manufacture, sale, rendering of service, purchase, entry into a territory of State etc. have been done away with in favour of just one event i.e. supply. The constitution defines goods and services tax as any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption. The Central and State governments will have simultaneous powers to levy the GST on intra-state supply. However, the Parliament alone shall have exclusive power to make laws with respect to levy of goods and services tax on inter-state supply. The term, supply has been inclusively defined in the Act. The meaning and scope of supply under GST can be understood in terms of following six parameters, which can be adopted to characterize a transaction as supply: 1. S
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excluded from the definition of goods as well as services, however, activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged are included in services. Schedule II to the CGST Act, 2017 lists a few activities which are to be treated as supply of goods or supply of services. For instance, any transfer of title in goods would be a supply of goods, whereas any transfer of right in goods without transfer of title would be considered as services. Further Schedule III to the CGST Act, 2017 spells out activities which shall be treated as neither supply of goods nor supply of services – in other words, outside the scope of GST.A few important ones are: – 1. Services by an employee to the employer in the course of or in relation to his employment. 2. Services of funeral, burial, crematorium or mortuary including transportation of the dec
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uts hair in exchange for a painting, hair cut is a supply of services by the barber. It is a consideration for the painting received. However, there are exceptions to the requirement of Consideration as a pre-condition for a supply to be called a supply as per GST. As per schedule to CGST Act, 2017, activities as mentioned below shall be treated as supply even if made without consideration. 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 3. Supply of goods- (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to
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charity and sells the paintings even as a one-time occurrence, the sale would constitute Supply. However, there is one exception to this Course or Furtherance of Business rule i.e., import of services for a consideration. Supply by a taxable Person A supply to attract GST should be made by a taxable person. Hence a supply between two non-taxable persons does not constitute supply under GST. A taxable person is a person who is registered or liable to be registered under section 22 or section 24. Hence even an unregistered person who is liable to be registered is a taxable person. Similarly, a person not liable to be registered but has taken voluntary registration and got himself registered is also a taxable person. It should be noted that GST in India is state-centric. Hence a person making supplies from different states need to take separate registration in each state. Further the person may take more than one registration within a state if the person has multiple business verticals.
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ther a supply is treated as an Intra State supply or an Inter State supply. Determination of the nature of supply is essential to ascertain whether integrated tax is to be paid or Central plus State tax are to be paid. Inter – State supply of goods means a supply of goods where the location of the supplier and place of supply are in different States or Union territories. Intra State supply of goods means supply of goods where the location of the supplier and place of supply are in the same State or Union territory. Imports, Supplies from and to SEZs are treated as deemed inter-State supplies. Composite/Mixed supply A composite supply means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. For instance, a travel ticket from Mumbai to Delhi may include service of food
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