Business – Sec 2(17) of CGST Act,2017
“Business” includes –
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to (a) above;
(c) any activity or transaction in the nature of(a) above, whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, as the case may be;
(f) admission, for a consideration, of persons to any premises; and
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalizator or a license to book maker in such club;
(i)Any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.
Inclusive Vs. Exhaustive Definition
The Supreme court in west Bengal state warehousing corporation Vs. Indrapuri studio Pvt. Ltd. has examined the meaning of inclusive and exhaustive definition as appearing in various statues. The word “include” when used, enlarge the meaning of expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declared that they shall includes.
History behind the clause (a)(b) and (c)
The clause (a) (b) and (c) is the main part of definition which is borrowed from sales tax act.
In the state of Gujarat V. Raipur Mfg. Co. Ltd. AIR 1967 SC 1066.It was held that normally, to constitute a business there should be volume, frequency, continuity and regularity in transaction of sale. Transaction must be enter with profit motive, though profit need not be in fact earned. In this case it was held that when a person carry on business is required to sale of fixed assets and discarded goods then he is not constitute business because he does not carry on business of selling of fixed assets.
To override this decision and cover more transaction in tax net definition of business is expended.
a. Profit motive is immaterial.
b. even a single transaction may get covered under the ambit of ‘business’.
c. ancillary and incidental activity also cover in ambit of business.
Taxation of NGOs under GST
The supreme court of India in case of State of Tamil Nadu and Another Vs Board of the port has held the following ratio
FAQ on GST Bill on charitable activity
Q 4. Will giving away essential commodities by a charitable institution be taxable activity?
In order to be a supply which is taxable under GST, the transaction should be in the course or furtherance of business. As there is no quid pro quo involved in supply for charitable activities, it is not a supply under GST.
(d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;
Overruling the judgments of courts in case of Coromandal Fertilizers Vs. State ofAP (1999)112 STC held that sale of business as going concern it is not in the course of or in connection with or incidental or ancillary to business.
Clause (d) read with Schedule II para 4.
Transfer of business assets
(c)where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be taxable person.
(e) Provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, as the case may be;
Overruling the Judgment of Ranchi High Court on deeming provision and “concept of mutuality”.
Read with Schedule II para no.7.
- Supply of goods by unincorporated associations (AOP) or body of person (B OI) to a member thereoffor cash deferred payment or other valuable consideration shall be treated as supply of goods.
- Interestingly, there is no parallel provision in respect of service provide by club or association to its members. However, it should come under “supply” which is wide definition.
Q 12. Whether provision of service or goods by a club or association or society to its members will be treated as supply or not?
Ans. Yes. Provision of facilities by a club, association, society or any such body to its members shall be treated as supply. This is included in the definition of ‘business’ in section 2(17) of CGST/SGST Act.
(f) admission, for a consideration, of persons to any premises;
Constitutional validity;
- Entry no 62 of state list as amended by amendment no 101 of constitution: “Taxes on entertainment and amusement to the extent levied and collected by a panchayat or a municipality or a regional council or a district council”.
- Entry no 62 is amended by constitution amendment no. 101, to take the benefit of aspect theory given by supreme court in case of Tata sky Ltd Vs. State of MP and Ors. 9 (2013) 4 SCC 656.
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
Read clause (g) above with Schedule III;
- Services by an employee to the employer in the course of or in relation to his employment shall be treated nether as a supply of goods nor a supply of service.
Example: Service provide by non executive director to company.
(h) services provided by a race club by way of totalizator or a license to book maker in such club;
- Overruling the judgment in case of Madras Race Club Versus Commissioner of Service Tax, Chennai over commission charged by club from book maker or by way of totalizator.
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities shall be deemed to be business.
- Overruling the judgments of courts on service provide by CISF, Police, election commission and various Government department and local authority.
Read with section 7
(2) Notwithstanding anything contained in sub-section (1),––
(a) …………………………….or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
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