Today we will summarize the scope of supply under GST. So, let’s follow the section 7 of CGST Act, 2017, limb by limb.
Section 7(1) Inclusions in supply
| Sec 7(1) Supply Includes | Sec 7(1)(a) | Sec 7(1)(b) | Sec 7(1)(c ) |
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♦ All forms of supply of goods &/or services such as -Sale, -Transfer, -Barter, -Exchange, -Licence, -Rental, -Lease, -Disposal made /agreed to be made ♦ for a consideration by a person ♦ in the course of business |
Import of services for a consideration whether or not in the course or furtherance of business |
Activities specified in Schedule I (Refer below) made /agreed to be made Without a consideration |
Schedule I to the CGST Act,2017
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
| No. | ACTIVITIES |
| 1. |
Permanent transfer or disposal of business assets
|
| 2. |
Supply of goods &/ or services
Provided that gifts not more than Rs.50000/- in a financial year by an employer to an employee shall not be treated as supply of goods &/ or service |
| 3. |
Supply of goods (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal or (b) by an agent to his principal where the agent undertakes to receive such |
| 4. |
Import of services by a [person] from a related person or from any of his other establishments outside India, in the course or furtherance of business. |
Section 7(1A) Schedule II
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Section 7(1A) Schedule II |
Where certain activities /transactions constitute a supply in accordance with the provisions of Sec 7(1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II (Refer Below) |
Schedule II to the CGST Act,2017
ACTIVITIES /TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES
| No. | Head | Activity / Transaction | Supply of Goods / Service |
| 1. | Transfer |
(a) any transfer of the title in goods |
Supply of goods |
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(b) any transfer of right in goods /undivided share in goods without the transfer of title thereof |
Supply of services | ||
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(c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed |
Supply of goods | ||
| 2. | Land and Building |
(a) any lease, tenancy, easement, licence to occupy land |
Supply of services |
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(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly |
Supply of services | ||
| 3. | Treatment or process |
Any treatment or process which is applied to another person’s goods |
Supply of services |
| 4. | Transfer of business assets |
(a) where goods forming part of the assets of a business are transferred /disposed of and no longer to form part of those assets |
Supply of goods |
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(b) where goods held /used for the purposes of the business are Put to any private use or are used, Or Made available to any person for use, for any purpose other than a purpose of the business, |
Supply of services | ||
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(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 a taxable person |
Supply of goods | ||
| 5. | Immovable Property |
a) Renting of immovable property |
Supply of services |
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b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly (except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.) For explanations refer below |
Supply of services | ||
| 6. | Composite Supply |
(a) works contract as defined in clause (119) of section 2; and |
Supply of services |
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(b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. |
Supply of services | ||
| 7. | Supply of goods |
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. |
Supply of goods |
Section 7(2) Exclusions in Supply
| Section 7(2) Supply Excludes |
Notwithstanding anything contained in Sec 7(1), the following shall be treated neither as a supply of goods nor a supply of services |
|
| Sec 7(2)(a) | Sec 7(2)(b) | |
| Activities or transactions specified in Schedule III (Refer Below) |
Activities /transactions undertaken by
Notification No. 14/2017-CTR, dated 28.06.17
Notification No. 16/2018-CTR, dated 27.07.18
|
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Schedule III to the CGST Act,2017
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
| No. | ACTIVITIES /TRANSACTIONS |
| 1. |
Services by an employee to the employer in the course of or in relation to his employment. |
| 2. |
Services by any court or Tribunal established under any law for the time being in force. |
| 3. |
(a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause. |
| 4. |
Services of funeral, burial, crematorium or mortuary including transportation of the deceased. |
| 5. |
Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. |
| 6. |
Actionable claims, other than lottery, betting and gambling. |
| 7. |
Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India, aka Merchant Trading |
| 8. |
(a) Supply of warehoused goods to any person before clearance for home consumption, i.e., High Sea Sales (b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption, i.e., Bond to Bond Transfer |
Section 7(3)
| Section 7(3) |
Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as— (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods |
Relevant definitions under CGST Act,2017
Section 2(17) Business:
Business includes
- any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is or a pecuniary benefit;
- any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
- any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
- supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
- 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;
- admission, for a consideration, of persons to any premises;
- 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;
- activities of a race club including by way of totalizator or a license to book maker or activities of a licensed book maker in such club; and
- any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
Section 2(31) Consideration:
Consideration in relation to the supply of goods or services or both includes–
- any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
- the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
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