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TMI BlogConcept of Deemed Sales and GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... Concept of Deemed Sales and GST - By: - Shripada Hegde - Goods and Services Tax - GST - Dated:- 1-4-2017 - - Clause 29A of Article 366 of the Constitution of India , inserted by 46th amendment to the Constitution gains very much importance as the same lays down the concept of deemed sale and enables the states to tax certain transactions. This was important as taxes were levied either on S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of Goods or on Provision of Services . However in the GST Regime tax is levied on Supply of Goods and Services and the supply need not necessarily be sale. In the light of the above it is important to know how GST Regime takes care of the controversies or confusions which lead to the insertion of Clause 29A. This article tries to gather the information relating to the same. Issues Cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in Clause 29A Transfer of controlled commodities for consideration Transfer of property in goods involved in the execution of works contract Hire purchase system or instalment purchase system Transfer of right to use any goods for consideration Supply of goods by an unincorporated association or body of persons to its members Supply of food or any drink as part of any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice Treatment under GST Regime Transfer of controlled commodities for consideration Under the earlier tax regime in order to be taxable supply of goods should have been Sale . And controlled commodities cleared under statutory compulsion were claimed not to be sale as the consent of the seller was not free. However in the GST regime, which levies tax on Supply , only quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which merits consideration is Is there a Supply? . If a transaction is supply it is very much taxable. Supply is defined to include all form of supplies for consideration. Hence, if a person supplies commodities for a consideration, whether at his free consent or under statutory compulsion, it is taxable. Transfer of property in goods involved in the execution of works contract Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the GST regime works contract is a supply of service as per sub-clause (f) of clause 5 of Schedule II. The said entry reads as follows:- (f) works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; Hence, it is clear that the value of works contract including the value of property in goods is supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service. Hire purchase system or installment purchase system Transfer of Right to use It has been specifically provided in sub-clause (c) to clause 1 of Schedule II that transfer of title in goods under an agreement which states the property in goods will pass on to the buyer at a future date upon payment of full consideration is a supply of goods . Transfer of right to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any goods for consideration Sub-clause (b) to clause 1 of Schedule II is inserted to take care of these kinds of transactions. The said sub-clause reads as following: (b) Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services We should note that under Clause 29A transfer of right to use transactions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to be sale. However, under the GST Regime the same is specified as service. Supply of goods by an unincorporated association or body of persons to its members Again it is Schedule II which answers our question. Clause 6 to the said schedule specifies that the supply of goods by an unincorporated association or body of persons to its members for a consideration should be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as Supply of Goods . Further, we should also note that Supply, as per Section 3, need not be done by one person to another. Only condition is that it should be made in the course or furtherance of business. In the earlier law, in order to become sale there was requirement of two persons. Supply of food or any drink as part of any service Sub-clause (h) to clause 5 of Schedule II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as following : (h) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration Controversy in the case of supply of food in the course of provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of service was that, it is not a sale as there is neither the intention nor the agreement is to sell those goods. The affected transfer is just incidental. However, in the GST Regime with the insertion of the above clause it has been specified to be treated as Supply of Service . In the manner described above the GST Regime has addressed the issues connected with the said Clause 29A. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , only time can answer the question as to whether there will be confusions and complications in these areas in the GST Regime. This is my first attempt to write an article. Hence, any healthy feed backs are most welcome. You may provide your feed back to [email protected]. Thank You. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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