> The term ‘aggregate turnover’ plays an important role in GST. It decides:
1. Whether a person is liable for registration under GST?
2. Whether a person is eligible for opting Composition Scheme?
> The term ‘aggregate turnover’ has been defined in GST law as under:
“Aggregate Turnover” means value of all taxable supply (excluding the value of inward supply on which tax is payable by a person on reverse charge basis), exempt supply, export of goods or services or both and interstate supply of persons having the same permanent account number, to be computed on all India basis but excludes central tax, state tax, union territory tax, integrated tax & cess.
> Aggregate turnover does not Include:-
1. Inward supply on which recipient is liable to pay tax under reverse charge mechanism. The value of such supply would not form part of the ‘aggregate turnover’ of the recipient of such supply. However, the value of such supplies would continue to be part of the ‘aggregate turnover’ of the supplier of such services.
2. Central tax, state tax, union territory tax, integrated tax & compensation cess.
> Aggregate turnover includes the following supplies:-
1. Taxable supplies;
2. Exempt supply:
3. Export of goods or services or both;
4. Interstate supply between units of a person having same PAN.
> The following aspects also need to be noted:
1. For an agent, the supplies made by him on behalf of all his principals would be included while calculating aggregate turnover.
2. For a job worker, the following supplies would not be included in his aggregate turnover:
√ Goods returned to the principal
√ Goods sent to another job worker on the instruction of the principal
√ Goods directly supplied from the premises of the job worker by the principal.
> Aggregate turnover is to be calculated on all- India basis.
> Whether Activities covered under schedule III are to be included while calculating the aggregate turnover?
As per the definition of aggregate turnover, it includes exempt supply & exempt supply includes non-taxable supply.
As per section 2(78), non-taxable supply means a supply of goods or services or both which is not leviable to tax under this act or under the Integrated Goods or Service Tax Act.
For a supply to be qualified as non-taxable supply, firstly it shall be a supply of goods or services or both.
As per section 7(2) (a), Activities or transactions specified in schedule III shall be treated neither as a supply of goods nor as a supply of service.
On the conjoint reading of the above, it is clear that Activities specified in Schedule III are neither supply of goods nor supply of services than question of having non-taxable supply would not arise & shall not be included while calculating aggregate turnover.
> Whether free samples, gifts would be included in aggregate turnover?
As per section 7 “supply” 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.
(c) The activities specified in Schedule I, made or agreed to be made without a consideration.
Therefore, the goods or services or both which are supplied free of cost shall not Be treated as “supply” under GST (except in cases of activities mentioned in Schedule I of the act).
> As per Para 2 of Schedule I, Supply of goods or services or both between related persons & between distinct persons as specified in section 25, when made in the course or furtherance of business.
> As per schedule I, free samples or gifts distributed to related persons & distinct persons as specified in section 25 falls within the scope of supply & shall be included in the ‘aggregate turnover’.
> Gifts or Samples which are supplied free of cost, without any consideration, do not qualify as ‘supply’ under GST, except Schedule I activities, & should not be included in calculating ‘aggregate turnover’.
> Further, clause (h) of sub-section (5) of section 17 of the said Act provides that ITC shall not be available in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Thus, it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration. However, where the activity of distribution of gifts or free samples falls within the scope of ‘supply’ on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail of the ITC.