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Concept of Deemed Sales and GST |
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Concept of Deemed Sales and GST |
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Clause 29A of Article 366 of the Constitution of India, inserted by 46th amendment to the Constitution gains very much importance as the same lays down the concept of deemed sale and enables the states to tax certain transactions. This was important as taxes were levied either on “Sale of Goods” or on “Provision of Services”. However in the GST Regime tax is levied on “Supply of Goods and Services” and the supply need not necessarily be sale. In the light of the above it is important to know how GST Regime takes care of the controversies or confusions which lead to the insertion of Clause 29A. This article tries to gather the information relating to the same. Issues Covered in Clause 29A
Treatment under GST Regime
Under the earlier tax regime in order to be taxable supply of goods should have been ‘Sale’. And controlled commodities cleared under statutory compulsion were claimed not to be sale as the consent of the seller was not free. However in the GST regime, which levies tax on ‘Supply’, only question which merits consideration is “Is there a Supply?”. If a transaction is supply it is very much taxable. Supply is defined to include all form of supplies for consideration. Hence, if a person supplies commodities for a consideration, whether at his free consent or under statutory compulsion, it is taxable.
Under the GST regime works contract is a supply of service as per sub-clause (f) of clause 5 of Schedule II. The said entry reads as follows:-
It has been specifically provided in sub-clause (c) to clause 1 of Schedule II that transfer of title in goods under an agreement which states the property in goods will pass on to the buyer at a future date upon payment of full consideration is a ‘supply of goods’.
Sub-clause (b) to clause 1 of Schedule II is inserted to take care of these kinds of transactions. The said sub-clause reads as following:
Again it is Schedule II which answers our question. Clause 6 to the said schedule specifies that the supply of goods by an unincorporated association or body of persons to its members for a consideration should be considered as ‘Supply of Goods’.
Sub-clause (h) to clause 5 of Schedule II reads as following : In the manner described above the GST Regime has addressed the issues connected with the said Clause 29A. However, only time can answer the question as to whether there will be confusions and complications in these areas in the GST Regime.
This is my first attempt to write an article. Hence, any healthy feed backs are most welcome. You may provide your feed back to [email protected]. Thank You.
By: Shripada Hegde - April 1, 2017
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