CHANGES IN DEFINITION OF SUPPLY AND SCHDEULE-I IN REVISED GST LAW

[Pradeep Jain]

As you are aware of the fact that revised draft GST law is published by the Government. Many changes have been made in the revised draft GST law in comparison to earlier draft GST law. If we compare the old draft GST law with the new revised draft GST law then we can study the changes which have been made and their impact on the trade and industry.

To start with we are discussing about the definition of “supply” given under revised GST draft law. The definition of “supply” given under section 3(a) of draft GST law. The first part of definition of revised GST law is inclusive as well as is similarly worded as given under earlier draft GST law.

Further import of service for furtherance of business is retained in the definition of supply. But when we compare the same with old entry in old draft GST law then the words “ whether or not for a consideration“ has been deleted. This implies that “supply” will include only those supplies which are for business only. But to reach the conclusion, we have to first study the complete definition of “supply”. Schedule I specifies those services which are without consideration. But there are many changes made in schedule I.

The first point in schedule I is same as in earlier law is “Permanent transfer/ disposal of business asset”. But the words “credit availed on such asset” has been added into it. It implies that only those asset on which credit is taken are transferred without consideration then only it will be covered under GST.

Second entry in schedule I is a new entry wherein supply of goods or services to related person without consideration will be termed as "supply". Also, if you have separate registration under section 10 then also supply without consideration will be termed as “supply”. GST provides that every person has to take separate registration in each state. Hence, this entry intends to cover those transaction between separate registration though they are same person. The supply will be “without consideration” as he is same legal person but since separate registration is taken, hence it will be termed as deemed supply and GST is payable.

Further supply between principal and agent and agent and principal without consideration is deemed supply. Also, import of service from related person or other establishment without consideration is also termed as supply. As we have seen in main definition, scope of import of service is limited to furtherance of business and “without consideration” was deleted. But here the import of service from relative or other establishment is deemed supply even though it is without consideration. Hence, though import of service without consideration is deleted but it is again added in the Schedule I but to a limited extent.

Now, importation of service without consideration is deemed supply only when it is from related party or other establishment. All other import of service without consideration will not be termed as “deemed supply”. It is major deviation from earlier definition.

If we compare the schedule I in old draft GST law and schedule I in new revised draft GST law then only of “temporary transfer of business asset for private or non business use” has been deleted. This is big relief for trade and industry as it was creating havoc for industry. Similarly, entry of “asset retained after deregistration” is also deleted. To have a complete picture we will study schedule II in our next GST update.

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