Summary: Under Schedule III of the CGST Act, certain activities are classified as neither a supply of goods nor a supply of services and are thus not liable for GST. These include services rendered by employees to employers during the course of employment, services by courts or tribunals, and functions performed by elected representatives or constitutional post holders. Duties performed by individuals as chairpersons or directors in government bodies, provided they are not employees, also fall outside GST’s scope. Funeral services, including cremation and mortuary services, are excluded. The sale of land and, subject to specific conditions, the sale of completed buildings are also not considered supplies. Actionable claims are excluded except those related to betting, casinos, gambling, horse racing, lotteries, and online money gaming. Additionally, GST does not apply to the supply of goods between two non-taxable territories outside India, nor to the supply of warehoused goods before they are cleared for home consumption. Similar exclusions apply to goods sold via endorsement of title documents while still in transit. Further, the internal arrangement between insurers and co-insurers in co-insurance agreements, including premium apportionment, is not treated as a supply if taxes are appropriately paid by the lead insurer and reinsurer. These provisions define the boundaries of GST applicability and help clarify tax obligations.
As per schedule III of CGST Act read with section 7(2) of, following matters will not be treated as supply of goods or services.
Schedule III [Section 7] of CGST Act
Activities or transaction which shall be treated neither as supply of goods nor a supply of services.
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or tribunal established under any law for the time being in force. Term “court” includes District Court, High Court and Supreme Court.
3. (a) The functions performed by the Members of Parliament, Member of State Legislature, Member of Panchayat, Member of Municipalities, and Member of other local authorities
(b) The duties performed by any person who holds any post in pursuance of the provision of the Constitution in that capacity.
(c) 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 [true indeed].
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased [small mercy after death].
5. Sale of land and, subject to para 5(b) of schedule II, sale of building [ para 5(b) covers sale of flat in a complex after completion or after its function occupation].
6. Actionable Claims, other than (i) betting (ii) casinos (iii) gambling (iv) horse racing (v) lottery (vi) online money gaming
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.
8. (a)Supply of warehouse goods to any person before clearance for home consumption. Expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962 (50 of 1962).
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.
9. Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreement, subject to the condition that the lead insurer pays the central tax, the state tax, the union territory tax, and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission.
10. Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the central tax, the State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission
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