RAJA P M
("Do the Right Thing...!!!")
(128101 Points)
Replied 25 March 2018
Frequently Asked Questions
What is the meaning of ‘in the course or furtherance of business’?
The word ‘business’ has been defined in the GST law. Broadly it means any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not it is for pecuniary benefits. Any activity ancillary or incidental to these activities are also covered as business. It has also been provided that any activity or transaction falling in above categories would be business whether or not there is volume, frequency, continuity or regularity in transactions.
Considering that pecuniary benefit is not the determining criterion, issues will arise whether charitable or philanthropic activities would get covered. This would depend on facts and circumstances of each case. To give an example if a charitable medical diagnostic lab provides facilities free of cost, it would not fall in the ambit of GST as services are being provided without consideration. However, if the services are provided at subsidized rates so as to recover only the cost or part of the cost, the activities will fall in the ambit of GST as the activity need not necessarily be carried out for pecuniary benefit.
Supply of goods free of cost to a charitable organization by a business house for free distribution to meet its CSR obligations will not get covered as a taxable supply as the same is without consideration. However, this activity would be in the course of business for the business house as meeting CSR obligations is an activity ancillary or incidental to its main business. On the other hand if the charitable organization is a related person of the business house then the supply of goods free of cost to such organisation would be taxable as supplies to related persons without consideration are taxable under Schedule I.
An activity, which is carried out mainly as a hobby, such as stamp collecting, or any other personal or private activity is not a business. However, if you start to sell items you collect, or have made, on a regular and continuing basis, then your hobby could become a business for GST purposes.
There is no definite yardstick to find out whether some activity is being carried as a business or not. A body whose main activities are non-business may still have some activities which count as business for GST purposes, such as selling goods to raise funds, running a staff canteen etc. Each case would need to be examined on its facts on the touchstone of definition of ‘business’ .Supplies made not as a main activity of business gets covered under ambit of supply by use of words ‘course or furtherance’. A banking company selling hypothecated vehicles due to default in payment of instalments by borrowers sells them in the course or furtherance of business. An insurance company selling waste paper generated in its office does so in the course or furtherance of its business of insurance.
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