Concept Of Supply under GST
- Shashank Sah
- Jul 9, 2017
- 3 min read
Introduction
The Goods and Service Tax Act passed by the Government of India is one of the most revolutionary acts in the regime of Indirect Taxation in India. GST does not only subsumes a number of indirect tax levied prior to GST but also helps to mitigate the cascading effect, of taxes, provide seamless credit and make way for a common market.
GST is a destination based tax and levied at a single point at the time of consumption of goods or services by the ultimate consumer.
Definition of GST
The term GST is defined in Article 366 (12A) to mean “Any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption”.
Thus, all supply of goods or services or both would attract CGST (to be levied by Centre) and SGST (to be levied by State) unless kept out of the purview of GST. There is no requirement of actual sale of goods under GST.
The alternative methods of supply of goods could be in the form of:
Stock transfer;
Captive consumption in another location;
Supply on consignment basis or any other basis by the principal to his agent;
Supply on job work basis (if working under returnable basis- no tax need be paid);
Any other supply such as donation, sample etc.
Definition of Supply
Supply includes
All form of supply of goods or services or both 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 Service for a consideration whether or not in the course or furtherance of business
The activities specified under Schedule 1- Deemed Supply with or without consideration
From the above it can be inferred that-
The definition of Supply is an inclusive definition, i.e. supply includes sale, transfer, barter, exchange, licence, rental, lease or disposal of goods or services or both but it is not restricted to the above items only.
The supply should have either have been made or agreed to be made for an consideration. If their is no consideration there can be no supply (except for activities specified under Schedule I)
The supply should be made a person and it should be in the course or in furtherance of the business. Supply made at a personal level or which are not in course or in furtherance of the business shall not be considered as supply under GST.
In case where the services are imported, the same shall be considered as supply, whether or not it is in the course or furtherance of the business.
Deemed Supply- As per schedule I, the following activities shall be considered as supply, whether or not with consideration.
Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
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.
Supply of goods by a principal to his agent or by an agent to his principal where the agent undertakes to supply/ receive such goods on behalf of the principal.
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.
Activities not to be considered as Supply
The following activities are not considered as supply
Services by an employee to an employer in the course of or in relation to his employment
Services by court or tribunal
Services by MP/ MLA/ Local Authority
Services by funeral, burial, crematorium etc.
Sale of Land, Sale of Building after receiving of Completion Certificate
Actionable Claims other than lottery, betting or gambling
Summary of Supply Under GST
The context of supply under GST can be summarized in the following flowchart
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