Certain Activity or Transaction whether it is Supply of Goods or Services- Para 4 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 4 of Schedule II of CGST Act - Transfer of business assets (i) Permanent transfer of Business Assets - Supply of goods Permanent transfer of business assets, which goods forming part of business assets, shall treated as supply of goods, if following condition are satisfied: There should be goods that form part of business assets. Transfer or disposed of assets will no longer form part of those assets. Transfer or disposal should be made by or under direction of the person carrying on the business. Where any goods forming part of the business assets of a taxable person are sold by any other person(other than taxable person), who has power to do so recover any debt owned by the taxable person, the goods shall be deemed to be supply of goods by the taxable person in the course of furtherance of business of his and would be covered in this clause. Like Banking company selling the goods /assets of the company to recover the debts from the taxable person Liquidator appointed either by the creditors or by the shareholder and selling the goods /business assets, to pay the debts of the company. (ii) Transfer of usage of Business assets - Supply of service This clause covers the transfer of Business goods for non-business purpose. This clause covers only the cases where the goods are temporarily transferred. It states that transfer of goods shall be treated as supply of service, if following condition are satisfied: There should be goods held or used for the purpose of the Business. These goods should be put to any private use or are used, or made available to any person. These goods are used for any purpose other than a purpose of Business. This clause cover only those cases where goods are temporarily transferred. If the goods are permanently transferred, it would be fall under clause 4(a) of schedule II and be considered as supply of goods (and not as services). Example: - XYZ enterprises, a sole proprietor, is engaged in the business of selling generator. its owner took a set of generators his house temporarily for 2 months. The personal use of the generator by the owner, is deemed as a supply of services by the company to him (iii) Goods forming part of assets of any business, carried on by a person, where the person ceases to be taxable person - Supply of goods Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, except in the following two case, there is no liability of GST which is as follows:- The business is transferred as a going concern to another person; or the business is carried on by a personal representative who is deemed to a taxable person. Example: - Mr. Ramesh is a GST registered sundry store owner. As his business has substantially reduced over the last year, he has decided to close the business and retire. At the time of de-registration, he has goods on hand valued at Stock RS 5,000. Mr. Ramesh file final GST return will show his supplies made during the last taxable period plus Stock in hand of RS 5,000 during the deregistration.it will be treated as supply.