'Supply' is an important parameter in GST regime on which tax would be levied for supply of goods or service or both, however under central excise tax would be on manufacturing product the same can be levied at the time of clearance and Service Tax can be at the time of providing of service and in the case of VAT would be levied at the time of actual sales.
So hereafter we all known that tax will be applicable only on 'supply' no such other concept as like in earlier indirect tax regime.
Let us analyze what is supply and what are all the transactions causes under the definition of supply.
CGST Act 2017 Section 7 defines:-
1. 'Supply' includes -
- all forms of supply of goods or services or both 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;
- 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 as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1), -
(a) Activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the council, shall be treated neither as a supply of goods nor a supply of services.
As reading above supply is giving wider and inclusive definition in GST, its begins with 'all forms of supply of goods or service or both' made or agreed to be made for consideration by a person for the purpose of business is called supply. So it seems that no way to keep out of supply definition, so all the transactions are falling under the definition of supply so tax will be levied subjected to the condition.
Therein need to pay attention for the word 'consideration' where such consideration is in silent, means if such supply of goods or service or both without consideration, would not be eligible for 'supply' so this will not be considered as a taxable supply. And also if such supply is not for the purpose of business it cannot be called as supply so no tax would be applicable.
Herein need glimpse in 'By a person' made or agreed to be made for a consideration by a person in the course or furtherance of business, as understanding this phrase of 'by a Person' if person supplying to own for consideration is also covered under the head of supply so tax will be levied.
Moreover definition specifically talking about such as:-
'Sale' where the act of selling specifically transfer of ownership of title to property from one person to another person for the monetary benefit is called sale so deemed supply tax would be applicable.
'Transfer' where the goods transferring within the unit that means within related person or associated person for consideration is also deemed supply tax would be levied.
'License' where the person providing rights use on such license to any other third person for consideration is called supply under GST so there would be applicable tax.
'Exchange/barter" where the person act of giving one thing to receive another thing for consideration in course or for the purpose of business is called supply. To say he is in the business of Inverter manufacturing and providing his product to other person in the intension to receive cables from where such person is in cable manufacturing.
'Rental/lease' where the person giving commercial building and factory space to another person for the purpose of commercial is also called supply.
Disposal of goods for consideration is also called supply.
As above analysis of CGST Act 2017 and Section 7 (a) must be for 'consideration' and 'for the purpose of business' or else it would not be eligible for supply so that same would not be applicable for tax.
(b) Where the person importing of services for the consideration whether it is for the purpose of business or not is called supply so tax can be levied.
SCHEDULE 1 - talking about activities to be treated as supply even if made without consideration.
i. Permanent transfer or disposal of business asset where input tax credit has been availed on such Asset deemed supply, even if cleared without consideration.
ii. And where such credit is not availed on such asset it could not be supply so no tax payable on it.
iii. Where supply of goods or service or both between related person or between distinct person in the course or furtherance of business is deemed to be supply, so tax would be applicable.
iv. And provided that where employer to an employee providing services by way of gift if exceeding fifty thousand rupees in financial year is deemed to be a supply so there will be a taxable supply.
v. Supply of goods by a principal to his agent where such agent undertakes such supply on behalf of principal is deemed taxable supply.
vi. Supply of goods by agent to principal where agent undertakes to receive such goods on behalf of the principal.
vii. Import of services by taxable person from a related person or from any of his other establishment outside India is deemed to be a taxable supply.
SCHEDULE 2 - talking about activity which is to be treated as supply of goods or supply of services.
1. Transfer
- any transfer of the title in goods is a supply of goods;
- any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services;
- any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods.
2. Land and Building
- any lease, tenancy, easement, licence to occupy land is a supply of services;
- any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.
3. Treatment or process
Any treatment or process which is applied to another person's goods is a supply of services.
4. Transfer of business assets
i. 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;
ii. where, by or under the direction of 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 of such goods is a supply of services;
iii. where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless-
- the business is transferred as a going concern to another person; or
- the business is carried on by a personal representative who is deemed to be a taxable person.
5. Supply of services
The following shall be treated as supply of services, namely:
i. renting of immovable property;
ii. construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation,
Whichever is earlier?
- temporary transfer or permitting the use or enjoyment of any intellectual property right;
- development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software;
- agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and
- Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.
Composite supply
The following composite supplies shall be treated as a supply of services, namely:
- works contract as defined in clause (119) of section 2; and
- Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.
Supply of Goods
The following shall be treated as supply of goods, namely:
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.
SCHEDULE 3 - talking about Activities or transactions which shall be treated neither as a supply of goods nor a supply of service
1. Services by an employee to the employer in the course of or in relation to his employment is not supply of goods or services so no tax payable for the same.
2. Services by any court or Tribunal established under any law for the time being in force is not supply of services so tax would not be applicable (includes District Court, High Court and Supreme Court).
3. Below functionaries continue to enjoy, as enjoyed in earlier tax regime details or given below:-
i. the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
ii. the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
iii. the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building
6. Actionable claims, other than lottery, betting and gambling.
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