Dr. Sanjiv Agarwal

‘Supply’ is going to be altogether a new concept in the indirect taxation, far away from manufacture (central excise), provision of service (service tax) or sale (value added tax). This concept will change the citus of taxation from ‘origin’ to ‘destination’ and is thus a total ‘U-turn’ from the present day taxation regime.

Meaning of Supply [Section 2(f)]

The term ‘supply’ has been defined to mean the same as defined in section 3 of the CGST Act, 2016 which provides for meaning and scope of ‘supply’.

This section provides for the meaning and scope of supply of goods and services. There is no concept of supply of goods and services in the present law either in Service Tax or Central Excise.  In the proposed law, supply of goods or services shall include the following:

(1) Sale

(2) Transfer

(3) Barter

(4) Exchange

(5) License

(6) Rental

(7) lease or disposal, and

(8) Importation of services

(9) Supply as per Schedule-I (supply without consideration)

In relation to ‘supply’ for the purpose of GST, following points may be noted –

(1) supply shall be goods and/services

(2) supply should be made or agreed to be made

(3) supply should be for a consideration

(4) supply should be made by person

(5) supply should be made in the course of or furtherance of business

(6) supply shall include importation of service, irrespective of whether for consideration or not and whether in the course of or furtherance of business or not.

(7) supply shall include supply as per Schedule-I made without a consideration

It also includes a supply which is made or agreed to be made without a consideration and specified in Schedule-I to the Act, i.e., matters to be treated as supply without consideration which are as follows:

(1) Permanent transfer/disposal of business assets.

(2) Temporary application of business assets to a private or non-business use.

(3) Services put to a private or non-business use.

(4) Self supply of goods and/or services.

(5) Assets retained after de-registration.

(6) Supply of goods/services by a taxable person to another taxable or non-taxable person in the course or furtherance of business.

As Schedule-I includes matters to be treated as supply without consideration, the scope of ‘supply’ becomes much wider or unlimited. It shall cover services put to any private or non-business use and supply of goods or services by a taxable person to another taxable or non-taxable person in the course of or furtherance of business. (e.g., free gifts or samples, free services to friends etc).

It may however, be noted that supply of goods by a registered person to a job worker as per section 43A dealing with special procedure for removal of goods will not be treated as supply of goods.

Schedule II to Model GST law shall govern supply of goods or services in relation to transfer, land and building treatment or process, transfer of business assets, certain specified services etc.

The provision empowers the Central or State Governments to specify by notification, the treatment of transactions. On the recommendation of the GST Council, such notification may notify that the transaction be treated –

(1) as supply of goods and not as a supply of services

(2) as supply of services and not as supply of goods

(3) neither as supply of goods nor as supply of services

Chapter II (section 3 and 3A) of the IGST, Act provide for the provisions for determining  supply of goods and services in the course of inter-state and intra-state trade or commerce Chapter IV (sections 5 and 6) provide for determining place of supply of goods and place of supply of services respectively.

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