CA Umesh Sharma

Arjuna (Fictional Character): Krishna, presently, the festival of Navratri is being celebrated everywhere. The youths are busy in playing ‘dandiya’. Then what will happen if the dandiya is played between goods and services withholding supply as per GST? Let’s discuss about it.

Krishna (Fictional Character): Arjuna, as per the GST law, the “supply” will determine the levy of tax. The definition of supply is most important in the law of GST. Also, there has been a debate on the levy of tax on goods and services. Currently, VAT is levied on goods and Service Tax is levied on services. But many goods and services are inseparable, and then there is a debate about who will levy tax and also there are litigations on this.  In GST, the levy of tax will be decided on the basis of supply of goods or services. Because of this let’s see how the game of dandiya is played in between goods and services as per supply.+

gst-dandiya

Arjuna (Fictional Character): Krishna, what is the definition of supply in GST?

Krishna (Fictional Character): Arjuna, the following things will be included in supply as per the model law of GST:

1. All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease,etc.

2. Supply includes service rendered, whether or not for consideration, the transactions entered into between principal and agent for goods or services i.e. the transaction entered into with commission agent. Similarly, the services provided by branded agency are included in the definition of supply. For e.g. Amazon, Flipkart, etc.

Arjuna (Fictional Character): Krishna, what does supply of goods consists of?

Krishna (Fictional Character): Arjuna,

1. When there is a transfer of title in goods, it is considered as supply of goods.

2. 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.

3. Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the owner 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.

4. If goods forming part of business assets of any taxable person are used for paying off the debts owed by the business, then such transfer of goods will be included in the definition of supply of goods.

5. The supply of goods by any unregistered association or body of persons will be included in the definition of supply of goods.

Arjuna (Fictional Character): Krishna, what does supply of services consists of?

Krishna (Fictional Character): Arjuna,

1. Any supply of goods without transfer of title will be included in the definition of supply of services.

2. Service in any kind of lease tenancy, place, license for business, etc. will be considered as a supply of service.

3. Renting or leasing a part or whole building, for e.g., Industrial, commercial, residential, will be included in definition of supple of service.

4. Any process carried on the goods of other person, will be included in definition of supple of service.

5. Where goods forming part of the assets of a business are used for any reason other than for business or transferred to any person on the directions of the owner of business is a supply of service.

6. Supply of service includes renting of immovable property.

7. Construction of a complex, building, civil structure including a complex or building intended for sale except where entire consideration has been received after issuance of completion certificate, will be considered as a supply of service.

8. Temporary transfer or permitting the use or enjoyment of any intellectual property right will be treated as a supply of service.

9. Supply of services includes development, designing, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software

10. Works contract will be considered as supply of service.

11. Transfer of the right to use any goods for consideration, is included in definition of supply of service.

12. Supply of goods, as a part of service, being food or any other article for human consumption or drink where such supply or service is for consideration, will be considered as a supply of service.

Arjuna (Fictional Character): Krishna, what should one learn about supply of goods and services from dandiya?

Krishna (Fictional Character): Arjuna, as there are two sticks used for playing dandiya, one stick is of goods and other is of service and person playing dandiya is supply as per GST. Many-a-times, there is a debate as to whether a particular transaction was of service or goods. Similarly, dandiya is played with both sticks. In GST, the goods, services and supply are most important. The whole tax levy and evaluation of tax is based on them. So, it is very important to understand and bring it into implementation.

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