GST : 10 POINT SERIES ON SUPPLY

[Puneet Agrawal]

1.  In the GST Regime, tax whether CGST, SGST or IGST is chargeable only when there is a supply of goods and/ or services. Thus it is imperative to understand the meaning of the term “supply”.
2. Meaning and scope of “supply” is defined in Section 3 of the Central Goods and Services Tax Act/ State Goods and Services Tax Act.
3. Meaning of Supply is defined in an inclusive manner that means the transaction which are covers within the definition are only illustrative.
4. As per the definition, “supply” includes all forms of supply of goods and/ or services such as: Sale, transfer, barter, exchange, license, rental, lease, disposal Made or agreed to be made for a consideration by a person in the course of furtherance of business.
5. Supply even includes importation of services and it is immaterial that the importation is without any consideration or it is not for furtherance of business. Thus “importation of service” even for personal use or without a consideration would be covered within the ambit of supply.
6. In terms of the above inclusion, whole lot of services, which are not taxable in the current regime, would be covered within the definition of Supply.

• viewing of video uploaded by a person situated outside India by a person situated in India may be a covered within the definition of supply;
• free surfing service by google may become “supply”

7. Vide Section 3(1)(c) read with Schedule 1, following transactions even without consideration are covered within the four corners of “supply”:

• Permanent transfer/ disposal of business asset;
• Temporary application of business asset to a private or non-business use: Example Use of Car owned by Business for personal travel.
•  Services put to private or non-business use – Example where a CA prepares his own tax return
•  Supply of goods and/ or services by a taxable person to another person in the course of furtherance of business – this is a very dangerous inclusion as this implies below.

All transactions that are made by a taxable person to another person in the course of furtherance of business even when made without consideration are covered within the definition of supply.

• This inclusion dilutes sub clause (a) of subsection (1) Section 3 which requires the presence of “consideration” for making any transaction a “supply”. Per this inclusion distribution of free sample would become “supply”.

8. Legislature by way of Schedule II has tried to segregate the composite contracts into either supply of goods or supply of services. This segregation would help in avoiding disputes that are present in the current Indirect Tax regime.
9. Transaction between a principal and an agent shall be deemed to be a supply where such agent either supplies or receives any goods and/or services on behalf of any principal. This inclusion would not cover intermediaries such as house agents because they just help two people meet but they generally don’t receive/ supply any goods or services on behalf of principal.
10. Supply of any branded service by an aggregator (Example Ola, Uber), under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator.