Scope of Supply Under GST

“Supply” under GST Law includes

(a) all forms 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;

(b) import of services for a consideration whether or not in the course or furtherance of business;

(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

Whether supply of goods or service or both should be made with consideration only?

As general rule, activity without consideration is not supply. However in following cases, transaction without consideration shall also be covered within ambit of meaning supply

Supplies made without a consideration treated as supply as per Schedule I

1. Permanent transfer/ disposal of business assets for which ITC availed on such assets

2. Supplies between related persons/distinct persons (as specified in section 25) in the course or furtherance of business

3. Supply of goods by principal (or agent) to agent (or principal)

4. Import of service from a related from a related person in the course or furtherance of business.

5. Gift by employer to employee exceeding Rs 50, 000 in a financial year

Whether import of services for personal use covered within supply?

Yes. Import of services for a consideration whether or not in the course or furtherance of business is covered within meaning of supply. hence import of service by an individual not having business for his personal use is also covered under GST. Say Mr Ram individual imports technical services for his personal use. It will also be covered by meaning of Supply.

Who is liable for levy and collection of GST with respect to above service?

Taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory other than non-assessee online recipient (OIDAR) is covered by reverse charges mechanism. Hence hence person importing service from person located in non-taxable territory, say outside India, is liable to pay GST under RCM irrespective of whether such import is for business or not.

Whether registration is required by person not having business or profession for importing service ?

Section 24 of CGST act requires a person, who is required to pay GST under RCM, to get registered under this Act irrespective of fact that he is in business or profession or having turnover of Rs twenty lakh or not. Hence person importing service is liable to register under this act and pay GST from one rupee.

Whether import of goods for personal use covered within supply?

No. Law has used only word “service” in section 7 of CGST act 2016. hence It is outside ambit of GST. GST is not chargeable. Say Mr Ram has imported iphone from USA, import of iphone, being goods, is not chargeable to GST.

Whether registration is required by person importing goods by individual not having registration for importing goods?

The section 9 of CGST ACT 2017 mandates that CGST respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient. Hence Individual not having registration is not required to get registered, as he is not covered by RCM notification which covers only import of services as well as Section 9 of CGST Act 2017.

Whether GST will be applicable on supply of goods or service or both by a person in course of personal Life?

No. GST is chargeable on supply of goods or service or both by person in course of business. Except specified in the act specifically, supply made by person in day to day life, GST is not attracted. However, import of service whether for business or not is covered within meaning of “Supply”

Whether GST will be attracted on advance money forfeited for supply of goods or service or Both?

The section 7 of CGST Act 2017 defining scope of Supply has word “agreed to be made” or “Made”. Hence GST will be charged completion of supply on goods or service or both” or “agreement to provide goods or service or both”

Whether two persons are required to constitute supply of goods or service or both?

No. Unlike Finance act 1994, section 7 of CGST has not used word “another person”. Hence to constitute Supply two persons need not to be present. Say Stock transfer by A ltd branch in Bangalore to A ltd branch in Delhi is also covered within meaning of Supply.

SCHEDULE II

MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES

1. Transfer

(1) Any transfer of the title in goods is a supply of goods.

(2) Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services.

(3) Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, is a supply of goods.

2. Land and Building

(1) Any lease, tenancy, easement, license to occupy land is a supply of services.

(2) 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 being applied to another person’s goods is a supply of services.

4. Transfer of business assets

(1) 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 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.

(2) 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.

(3) Where any goods, forming part of the business assets of a taxable person, are sold by any other person who has the power to do so to recover any debt owed by the taxable person, the goods shall be deemed to be supplied by the taxable person in the course or furtherance of his business.

(4) 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—

(a) the business is transferred as a going concern to another person; or

(b) the business is carried on by a personal representative who is deemed to be a taxable person.

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