CS Devender Jaglan
Devender Jaglan

Statutes generally contain a “definitions” section that sets forth and defines the key terms used in the statute. You might find these definitions either in the section of the statute you are analyzing, or more likely, in one of the first sections of the act viz. Section 2 of the Model GST Law. Sometimes these specific terms are codified as definitions for a chapter or part of the relevant statute, meaning that they are intended to apply to the entire chapter or part (unless otherwise specified) viz Section 113 of the Model GST Law. These definitions are important because they suggest that meaning intended for a term to have a specific meaning that might differ in important ways from its common usage.

GST is a destination based tax on consumption of goods and services. It is proposed to be levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as set- off. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer.

In GST era the tax will be levied on the supply of Goods and/or Services. Therefore, it is important to know the meaning of these two terms ‘Goods and Services. In this article the author has tried to elaborate and decode these two terms.


Section 2(49) of the Model GST Law defines the term goods as “GOODS’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;

The goods definition has two limbs, the first one is

“Goods means every kind of movable property other than money and securities”

and the second one is

but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;”

The first limb of the definition is wide enough to include every kind of movable property in its ambit except money and securities. Though the term movable property is not defined under Model GST Law. As per Section 3(36) of the General Clauses Act 1897 “Movable property” shall mean property of every description, except immovable property.

Further in H. Anraj Etc vs Government of Tamilnadu [AIR 63, 1985 SCR Supl. (3) 342], the Honorable Supreme Court said that the expression “movable property occurring therein must mean property of every description except immovable property.

The second limb includes in its ambit other kind of movable property viz actionable claim. Internationally actionable claims has different treatment so far taxability point is concerned. Some categorize it as deemed goods and some otherwise i.e. services and tax accordingly.

The First Model GST Law that released in June 2016 excluded actionable claim from the definition of goods. Whereas the Revised Model GST Law released in November 2016 included it to make it taxable as goods.

Further ‘Actionable Claim’ is defined under Section 2(1) of the Model GST Law as actionable claim” shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882);

Section 3 of the Transfer of Property Act, 1882 defined actionable claim as “actionable claim” means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;

So largely what does goods mean?

Goods mean something that is movable. So for it to be goods or to make it taxable under GST Law as goods it must fulfill the criteria of movability.

Let’s understand it with an example. Whether a machinery installed in a factory premises be treated as goods?

The machinery can be treated as goods if it can be moved from one place to another place in its original shape or if it is fastened or attached to the earth, if it can be removed as such. Otherwise it will obtain the characteristic of immovability, therefore not falling within the ambit of definition of goods.


Secttion 2(92) of the Model GST Law define the term as “services’’ means anything other than goods;

Explanation 1- Services include transactions in money but does not include money and securities;

Explanation 2 – Services does not include transaction in money other than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

Definition of the services is so precise and outright to include everything that is not goods. The word ‘anything’ appear in the definition has enlarge the scope of services to include everything that is not goods. To check whether an activity or transaction fall within the purview of services, one has to first check whether it is a good or not. If it’s not a good than certainly it will fall within the purview of the services.

Money and securities are neither goods nor services but the conversion of money is covered under the ambit of services. One thing to note here is that the money involve in the conversion is not liable to GST but the charges undertaken for the said conversion is liable for GST. For example, Mr. A get his Rs. 100000 converted into USD then Rs. 100000 is not liable to tax rater conversion charges are liable to be taxed.


The legislature has made a clear distinction between goods and services. Anything liable to be taxed under GST, will be taxed either as goods or services. If it is goods it will be taxed as goods. If it is not good then certainly it will be fall within the purview of the services.

There has been many debatable issues in the past whether the particular transaction should be treated as goods or services, viz software. Some of the issues has already been resolved by Schedule II specifying therein matter to be treated as supply of goods or services. More will be resolved once the GST Law will become reality.


The above article is solely for informational purpose. It does not constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and does not accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided herein above.

Section 2(65) “money” means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;

Section 2(90) “securities” shall have meaning assigned to it in sub-section (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

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3 responses to “Decoding Definitions of Goods and Services under Revised Model GST Law”

  1. Tarun K Roy says:

    Earlier (before this article) I was confused as to what sort of goods the GST would be applied.
    Now I find, with the clear definition of goods, that securities and immovable property are not defined as goods.
    Thus one who buys and sells shares (securities) through some broker at a stock exchange will not be liable to register under GST. Am I right?
    This is also the case in Buying/selling land/house?
    Please clarify.


    Dear Sir,
    I have a query and such query is based on following example-
    There are three parties
    a) Ayyub ( a unregistered car rental provider)
    b) Vinod tour & travel ( a registered Tour and Travel firm which provides car to tourists and E-commerce Tour and Travel Co. and such car is provided by Ayyub to Vinod, Vinod submit tax @5% on behalf ayyub under Reverse Charge mechanism.)
    c) Car rental Pvt. Ltd. an E commerce Co. based on online booking follow reverse charge mechanism and pays tax @5% on behalf of Vinod.
    My question is that-
    Can Vinod tours claim Input ?
    Can Car rental pvt. ltd. claim input?
    If yes then refer section please

  3. shubham barua says:

    hello sir ,
    I have resigned and i have made the payment Bond amount on 1st of july but now my employer is saying that i have to pay extra 18% GST amount on the bond amount.
    But in the service agreement bond the amount was final and was not subjected to change
    Is it legal then to ask for extra tax from me ?

    please help me with this

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