Daily Dose of GST Update By CA Pradeep Jain
Continuing the series of updates on the revised draft GST law, we had discussed on changes made in schedule I after amendments in the definition of Supply and the consequences of the same. Today we will discuss the changes in schedule II and implications of the same.
Schedule II prescribes such transactions which will be deemed to be supply of goods and services. There is not much change in this schedule. But it is worth noting that as per our previous discussion on supply and schedule I, the transactions without consideration have been removed from the list. But the schedule II in the revised draft states that transfer of any business asset, with or without consideration, shall be treated as supply only.
We had also discussed that temporary transfer of business asset without consideration has been removed from the ambit of supply in the revised draft. But it has been retained in the schedule II resulting in it be termed as supply and GST becoming payable on it too.
Similarly the use of business asset for private use with or without consideration has also been retained in the revised draft, though it has been removed from the main definition of supply. The result is that GST will still be payable on this transaction too.
Another example is that earlier law stated that on deregistration of business, the asset retained will also be termed as supply and GST was payable on the same. In the revised draft, this entry was removed from the schedule I due to which it seemed that no GST shall be payable on it. But again this entry has been retained in the schedule II resulting in taxability on this transaction. The entry 4(c) states that if a person ceases to be a taxable person, then retention of business assets will be termed as supply. This rule will be subject to the fact that the business is transferred as a going concern or a personal representative runs the business. In remaining all cases, such retention will be supply and GST will be payable on the same.
Another change made in the schedule II is that entry 4(3) of the previous draft has been deleted. This entry stated that if a third person sells any goods of a taxable person to recover his dues from such taxable person, then the transfer of goods by the taxable person shall be treated as supply in the course of furtherance of business and GST will be payable on the same. In the revised draft this entry is deleted and as a result this type of transaction shall not be liable to tax under GST.
We can conclude that the abovementioned transactions, though removed from the definition of supply or schedule I, will still attract GST in view of the entries in schedule II.
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