Certain Activity or Transaction whether it is Supply of Goods or Services- Para 1 Schedule II Read with Section 7(1A) - GST Ready Reckoner - GST

Activity or Transaction - Schedule II whether it is Supply of Goods or Services Section 7(1A) , states that; Where certain activities or transactions constitute a supply in accordance with the provisions of section 7(1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II . [Note:- Before amendment it was clause (d) of section 7(1)(d) ] Read along with the definition of Goods services, Schedule II provide clarification regarding Which is the goods or services for taxability of GST Certain activity or transaction defined in Schedule II whether it is Supply of Goods or Services - As per para 1 of Schedule II of CGST Act (Transfer) (a) Transfer of title to goods - Supply of goods Which have been identified in the contract of sale, passes form the seller to the buyer in any manner and on any conditions agreed upon by the parties to the contract of sale. The basic Rule is that the title of goods passes, when the parties intend the same to pass. Example: - M/s ABC, a plastic dealer sells plastic material to Mr. B for INR 15000. It is a case of transfer of title in the goods. (b) Transfer of right in goods - Supply of Service Rights in goods may be of different types, such as, as owner, as lessor, as a bailer, as an agent, as the holder of goods, etc. This clause is applicable where right in goods is transferred without the transfer of title thereof. Example: - Ola/Uber give right to use of his car for self-drive. Transfer of right to use brand. Generator is given on lease for 6 months with operator. (c) Transfer of undivided share in goods - Supply of Service Even though the activity is categorized as a supply of service, the rate of tax applicable on the supply has been linked to the rate of tax as applicable to the supply of same goods involving transfer of title in goods. Notification No. 37 /2017 Central Tax (Rate), dated 13.10.2017 was issued to reduce the rate of tax on motor vehicle to 65 per cent of the tax rate as applicable with certain conditions. Considering the rate of tax for leasing of such motor vehicle to be same as that of the rate of tax applicable on the motor vehicle, even the rate of tax on leasing services stands reduced if the conditions specified in the notification are met. Important Notifications Clarifications 1. Whether activity of bus body building, is a supply of goods or services? [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply , as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case. 2. Whether retreading of tyres is a supply of goods or services? [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] In retreading of tyres, which is a composite supply , the pre-dominant element is the process of retreading which is a supply of service . In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Supply of retreaded tyres , where the old tyres belong to the supplier of retreaded tyres, is a supply of goods (retreaded tyres under heading 4012 of the Customs Tariff attracting GST @ 28%). 3. Whether Priority Sector Lending Certificates (PSLCs) are outside the purview of GST and therefore not taxable? In Reserve Bank of India FAQ on PSLC, it has been mentioned that PSLC may be construed to be in the nature of goods , dealing in which has been notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 vide Government of India notification dated 4th February, 2016. PSLC are not securities. PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT. In GST there is no exemption to trading in PSLCs . Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III of notification No. 1/2017-CT(Rate) . GST payable on the certificates would be available as ITC to the bank buying the certificates. [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] Applicable GST rate on Priority Sector Lending Certificates (PSLCs), Renewable Energy Certificates (RECs) and other similar scrips [ Circular No. 46/20/2018-GST Dated 6th June, 2018 ] Accordingly, in modification of S.No. 3 of Circular No. 34/8/2018- GST dated 01.03.2018 , it is hereby clarified that Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar documents are classifiable under heading 4907 and attract 12% GST. The duty credit scrips, however, attract Nil GST under S.No. 122A of Notification No. 2/2017-CT(Rate) dated 28.06.2017. Payment of GST on Priority Sector Lending Certificate As per Notification No. 11/2018-CT (Rate) Dated 28th May, 2018 on such supply of PSLC tax shall be said under reverse charge here person liable tp pay tax shall be the recipient. Nature of Supply of Priority Sector Lending Certificates (PSLC) ( whether IGST or CGST/ SGST is payable for trading of PSLC by the banks on e-Kuber portal of RBI. ) [ Circular No. 93/12/2019-GST Dated 8th March, 2019 ] it is stated that Circular No. 62/36/2018-GST dated 12.09.2018 was issued clarifying that GST on PSLCs for the period 1.7.2017 to 27.05.2018 will be paid by the seller bank on forward charge basis and GST rate of 12% will be applicable on the supply. Further, Notification No. 11/2018-CT (Rate) dated 28.05.2018 was issued levying GST on PSLC trading on reverse charge basis from 28.05.2018 onwards to be paid by the buyer bank. It is further clarified that nature of supply of PSLC between banks may be treated as a supply of goods in the course of inter-State trade or commerce. Accordingly, IGST shall be payable on the supply of PSLC traded over e-Kuber portal of RBI for both periods i.e 01.07.2017 to 27.05.2018 and from 28.05.2018 onwards. However, where the bank liable to pay GST has already paid CGST/SGST or CGST/UTGST as the case may be, such banks for payment already made, shall not be required to pay IGST towards such supply. 4. Clarifications regarding levy of GST on printing [ Circular No. 27/01/2018-GST Dated 04th January 2018 ] S. No. Questions/ Clarifications sought Clarifications 6 To clarify whether supply in the situations listed below shall be treated as a supply of goods or supply of service: - 1. The books are printed/ published/ sold on procuring copyright from the author or his legal heir. [e.g. White Tiger Procures copyright from Ruskin Bond] 2. The books are printed/ published/ sold against a specific brand name. [e.g. Manorama Year Book] 3. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian edition (same language) of foreign books. [e.g. Penguin (India) Ltd. pays fees to Routledge (London)] 4. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian language edition (translated). [e.g. Ananda Publishers Ltd. pays fees to Penguin (NY)] The supply of books shall be treated as supply of goods as long as the supplier owns the books and has the legal rights to sell those books on his own account.