Meaning of course or furtherance of business, Goods and Services Tax - GST

[deepak gulati]

Dear All,

As per sec. 7 of CGST Act, supply includes all forms of supply of goods or services, etc. made for consideration by a person in the course or furtherance of business.

I was wondering what all will be included in these words "course or furtherance of business".

For example:-

1) A salaried employee selling his old car amounting to ₹ 30 lakhs

2) Does transfer of development rights (for collaboration) by a person into job (not in construction profession) amounting to ₹ 40 Lakhs leads to business transaction under GST or not?

Posts / Replies

[KASTURI SETHI]

Extracts of FAQ dated 31.3.17

Q9. What do you mean by “supply made in the course or furtherance of business”?

Ans. “Business” is defined under Section 2(17) include any trade, commerce, manufacture, profession, vocation etc. whether or not undertaken for a pecuniary benefit. Business also includes any activity or transaction which is incidental or ancillary to the aforementioned listed activities. In addition, any activity undertaken by the Central Govt. or a State Govt. or any local authority in which they are engaged as public authority shall also be construed as business. From the above, it may be noted that any activity undertaken included in the definition for furtherance or promoting of a business could constitute a supply under GST law.

Q10. An individual buys a car for personal use and after a year sells it to a car dealer. Will the transaction be a supply in terms of CGST/SGST Act? Give reasons for the answer.

Ans. No, because supply is not made by the individual in the course or furtherance of business. Further, no input tax credit was admissible on such car at the time of its acquisition as it was meant for non-business use.

If sale of used car is chargeable to tax, it must be covered under Section 7(l)(a). As seen above only sale made in the course or furtherance of business is covered. The definition of 'business' is given above. As selling used car is not the business of the supplier, the said transaction is not covered under clause (a) of above definition. Hence to be covered within the ambit of Section 7 sale of used car must be covered under clause (b)

What kind of facilities provided by employer to emplaoyee would be liable to GST? For instance, whether club membership provided will be considered as “service”?

The compensation to employees in the form of money is not a supply. However, fringe benefits are supply of goods or services and are liable to tax if not exempted. These are transactions in furtherance of business and even if supplied without consideration, the same are deemed supply.

[Ganeshan Kalyani]

In query 1, sale of car of an individual is not a supply as it is not a business activity for that individual.

[DR.MARIAPPAN GOVINDARAJAN]

First any activity is to be identified whether it amounts to business. Then the supply is to be made in the course of business and it should be helpful for furtherance (development) of business.