Section- 2(52)-for Goods and 2(102)-for Services Under GST Act
The taxable event under GST is supply of “Goods” and “Services”. Hence it is important to understand the meaning of both these terms.
2. Need for distinction between Goods and Services
Prior to GST regime the distinction was important because taxes on goods were different from the taxes on services. The tax on Goods were ie.. Excise Duty, VAT, CST and for Services i.e.. Service Tax. But now it is often argued that when both the taxes are subsumed why there is a need for distinction between the two. The distinction is necessary because of the following reason:
- Place of provision
- Point of taxation
- Different rate of taxes for supply of goods and supply of services.
3. Definition of Goods – Section 2(52) of GST Act
“Goods’’ means every kind of movable property other than money and securities but includes actionable claims ,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 above is summarized as under:
- Every kind of movable property
- Actionable claims
- 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.
A goods does not include:
- Money and
Whether actionable claims liable to GST?
As per section 2(52) of the CGST/SGST Act actionable claims are to be considered as goods. Schedule III read with Section 7 of the CGST/SGST Act lists the activities or transactions which shall be treated neither as supply of goods nor supply of services. The Schedule lists actionable claims other than lottery, betting and gambling as one of such transactions. Thus only lottery, betting and gambling shall be treated as supplies under the GST regime. All the other actionable claims shall not be supplies and therefore GST is not applicable on it.
Whether transaction in securities be taxable in GST?
Securities have been specifically excluded from the definition of goods as well as services. Thus, the transaction in securities shall not be liable to GST.
|Meaning of some of the Terms used with reference to Goods |
Meaning of term “Money” as defined in Section 2(75) “money means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller 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”Meaning of term “Securities” as defined in 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)”Goods must be moveable To be classified as Goods under GST Act, it shall also satisfy the test of Movability.
The term “Movability of property is defined in the section 3(36) of the General Clause Act, 1897 to mean “Property of every description, except immovable property”.
Meaning of Grass and Things attached to earth
The crops, grass, wood etc. grow on the land and therefore they are attached to the earth and it should be considered as immovable property. Sometimes a contract is entered into for sale of crops, grass, wood etc. by the owner to buyer. Unless these items are not severed from the earth, it can’t be a movable property and therefore it can’t be classified as goods.
Meaning of actionable claims
Section 2(1) of GST Act states that actionable claims shall have the meaning assigned to it in section 3 of Transfer of Property Act, 1882.
As per section 3 of above act, actionable claims means a claims to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or by any beneficial interest in movable property, either actual or constructive, of claimant, which the civil courts recognise as affording ground for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.
Judicial cases with respect to Actionable Claims
1. Claims for arrear of rent – State of Bihar v. Mahatajadhiraja Sr Kameshwar Singh (1952) SCR 889
2. Right to claim PF – official Trustee v. I Chippendale AIR 1944 Cal 335
3. Lottery Ticket is actionable claims – Sunrise associates v. Govt of NCT of Delhi (2006) 5 SCC 603
Recharge coupon which is advance receipt of money for providing service in future.-Bharti airtel v. AC St (2010)
4. Definition of Service – Section 2(102) of GST Act
“Services’’ : means anything other than goods, money and securities but includes activities 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;
Explanation 1 Services include transactions in money but does not include money and securities. Meaning thereby that if transaction is done without any seprate charge /consideratopn no service ;
Explanation 2 But transaction in money 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 then it is service .
Meaning of Transaction in Money:
Example-1: A demand draft (DD) is issued by the bank on deposit of cash. This is transaction in money. This cannot be subject to GST. But if any commission is charged for making of such DD then it will be considered as “conversion charge” and such charges will be liable to GST as per explanation 2 above.
Example-2: A person goes to the bank for exchange of note of Rs. 2000 into 20 nos. of notes of Rs. 100. Bank does not charged anything for change of denomination of Rs. 2000 note into Rs. 100 notes. This can’t be considered as transaction in money because nothing is charge for transaction in money or for its conversion and therefore not a service.
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