The determination of the taxable event is one of the most important matter in every tax law. It is that event which on its occurrence creates or attracts the liability to tax. The taxable event under GST shall be the supply of goods or services or both made for consideration in the course or furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as ‘supply.’
As per section 2(52) “goods” means
As per section 2(102) “services” means
Example: A foreign exchange dealer exchanging one currency for another in lieu of a commission.
In relation to the supply of goods or services or both includes—
(a) any payment made or to be made,
a. whether in money or otherwise,
b. in respect of, in response to, or for the inducement of,
c. the supply of goods or services or both,
d. whether by the recipient or
e. by any other person
f. but shall not include any subsidy given by the Central or state Government;
Consideration can be in monetary (Cash or Card, etc.) or non-monetary form (Barter, Doing or agreeing to do or not to do an act.
Supply includes sale, transfer, exchange, barter, license, rental, lease and disposal of all forms of Goods and/or Services. If a person undertakes either of these transactions during the course or furtherance of business for consideration, it will be covered under the meaning of Supply under GST.
Supply has an inclusive definition under the Act. Its most important elements:
If the aforementioned elements are not met with, it is not considered as a supply.
Import of services for a consideration whether or not in the course or furtherance of business will be included in the scope of supply. IGST on Imports would be in addition to the Custom Duty that is leviable on the Imports of Goods and/or Services.
Activities specified in Schedule I made or agreed to be made without a consideration would be considered as supply.
Exception: Gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply .
1. Transfer of title or rights
2. Land and Building
3. Any Treatment or process which is applied to another person’s goods is a supply of services (e.g –Jobwork)
4. Transfer of business assets
5. Supply of services
The following shall be treated as supply of services, namely:—
6. Composite Supply of-
7. Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration shall be considered as supply of Goods.
1. SCHEDULE III
a. Services by an employee to the employer in the course of or in relation to his employment.
b. Services by any court or Tribunal established under any law for the time being in force.
i. the functions performed by the MPs, MLAs, Members of Panchayat and Municipalities and of local authorities;
ii. the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
iii. 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.
d. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
e. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
f. Actionable claims, other than lottery, betting and gambling.
2. 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,
There are namely two types of Supplies:
1) Composite Supply
2) Mixed Supply
Defined Under Section 2(30) “Composite Supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply:
Composite supply is when two or more goods are sold in together with one of them being a principle Supply. It is similar to the bundled services.They are generally provided together in the normal course of business and cannot be separated.
(1) Booking of Air Tickets which involves the cost of a meal to be provided during travel will be composite supply and tax will be calculated on principal supply.
(2) Where goods are packed and transported by insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.
(3) A 5-star hotel provides 4-days and 3-night packages with breakfast. This is a composite supply as the package of accommodation facilities and breakfast is also provided. In this case, hotel accommodation is the principal supply and breakfast is secondary to the hotel accommodation.
(4) A Laptop bag is supplied with the laptop in the ordinary course of business, the principal supply of laptop and bag is ancillary. It is composite supply and rate of tax would be applicable on a laptop.
Composite supply shall be treated as a supply of the principal supply and the rate of GST shall be the rate as applicable to such principal supply.
Section 2(74) of CGST Act 2017, “Mixed Supply” means two or more individual supplies of goods or services, or any combination thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
It consists of two or more individual supplies of goods or services or both or any combination thereof. Mixed supply does not fulfil the parameters of a composite supply i.e. supply is not naturally bundled and not supplied in conjunction with each other in the ordinary course of business. The supply should be made for a single price.
(1) Diwali gift hamper which consists of different Items like sweets, chocolates, cakes, dry fruits packed in one pack is Mixed supply as these items can be sold separately and it shall be treated as a supply of that particular item which attracts the highest rate of
(2) Big Bazar offers a free bucket of detergent purchased. The Product which the highest rate will be applied to mixed supply.
(3)A house is given on rent one floor of which is to be used as residence and the other floor to be used as a printing press. Such renting for two different purposes is not naturally bundled in the ordinary course of business. Therefore, if a single rent deed is executed where only residential use of house is specified, it will be treated as a mixed supply as it is not naturally bundled and the renting of house for commercial use is a taxable supply. Thus, the said supply shall be considered as service comprising entirely of such service which attracts highest liability of GST.
A mixed supply comprising two or more supplies. It shall be treated as a supply of that particular supply which attracts the highest rate of tax.
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Contributors – Miss Anamika Khanna |CA Suraj Goyal | M/s Goyal Suraj & Co.