Concept of Supply
Section 7 - Meaning and scope of supply
Section 7(1)
Supply includes
a)Any supply
for consideration
in the course of or furtherance of business
b)Importation of services
for a consideration
whether or not in the course of business
c)Schedule I actitivities
without consideration
d)Schedule II activities
Section 7(2)
Supply excludes
a)Schedule III activities
b)Notified activities undertaken by Central or State Government or Local authority
Section 7(3)
Government may notify transactions to be treated as supply of goods/services
Provisions of scope of supply under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act
In detail
Section 7(1)(b)
Eg :
Ramaiyaa, a proprietor, has received the architect services for his house from an architect located in New York at an agreed consideration of $ 5,000. The import of services by Ramaiyaa is supply under section 7(1)(b) though it is not in course or furtherance of business.
Section 7(1)(c) - Schedule I activities - without consideration - in the course of business
I.Permanent Transfer/Disposal of Business Assets
Eg: transfer of business assets from holding to subsidiary company for nil consideration.
II.Supply between related person or distinct persons
1. Related persons
a) Such persons are officers/directors of one another’s business
b) Such persons are legally recognised partners
c) Such persons are employer & employee
d) A third person controls/ own/ holds (directly/ indirectly) ≥ 25% voting stock/shares of both of them
e) One of them controls (directly/indirectly) the other
f) A third person controls (directly/indirectly) both of them
g) Such persons together control (directly/indirectly) a third person
h) Such persons are members of the same family
i) One of them is the sole agent/sole distributor/sole concessionaire of the other
2. Distinct Persons specified under section 25
a) More than one registration in a State/ Union territory
b) Two establishments of a person in two different States/Union territories shall be treated as establishments of distinct persons.
3.Stock transfers or branch transfers
4. Supply of goods or services or both between an employer and employee
-Excluding services provided by an employee to the employer in the course of to his employment
Schedule I - Gifts not exceeding Rs. 50,000 in a financial year by an employer to an employee shall not be treated as supply of goods or services
III.Principal – Agent
Supply of goods by
a principal to his agent
an agent to principal
without consideration
IV. Import of services by a taxable person from a related person or from his establishments located outside India, without consideration
Section 7(1)(d) -Schedule II- Activities to be treated as supply of goods or services
a) Transfer of Title in goods
b)Transfer of Right in goods/ undivided share in goods without transfer of title in goods
c)Transfer of Title in goods under an agreement which stipulates that property shall pass at a future date.
d)Lease, tenancy, easement, licence to occupy land
e)Lease or letting out of building for business or commerce, wholly or partly
f)Treatment on other's goods/Job work
g)Business assets transferred/dispossed off, whether or not for consideration
h)Goods held/used for business are put to private use,whether or not for consideration
i)Goods forming part of assets of any business carried on by a person who ceases to be a taxable person
except
Business transferred as a going concern
Business is carried on by a personal representative who is deemed to be a taxable person
j)Renting of immovable property
k)Construction service except where consideration has been received after issuance of completion certificate
l)Temporary transfer of intellectual property right
m)Development, design, programming,customisation, adaptation, upgradation,enhancement, implementation of IT software
n)Refrainining or tolerating
o)Transfer of right to use any goods
p)Following Composite supplies:
i)Works contract services.
ii)Supply as part of any service, of goods, being food or any other article for human consumption or any drink
q)Supply of goods by an unincorporated association or body of persons to a member thereof for consideration
Negative list under GST - Schedule III
a) Service by employee to employer in employment
b) Services by any court or Tribunal
c) Functions by Members of Parliament, State legislature, local authority
d) Duties by a person in consitutional capacity
e) Duties of person in a body body established by the Central Government or a State Government or local authority
f) Services of funeral, burial, crematorium or mortuary including transportation of the deceased
g) Sale of land/building
h) Actionable claims, other than lottery, betting and gambling.
Section 7(2)(b)
Services notified by government are excluded from supply
Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution has been notified for this purpose.
Section 7 - Meaning and scope of supply
Section 7(1)
Supply includes
a)Any supply
for consideration
in the course of or furtherance of business
b)Importation of services
for a consideration
whether or not in the course of business
c)Schedule I actitivities
without consideration
d)Schedule II activities
Section 7(2)
Supply excludes
a)Schedule III activities
b)Notified activities undertaken by Central or State Government or Local authority
Section 7(3)
Government may notify transactions to be treated as supply of goods/services
Provisions of scope of supply under CGST Act have also been made applicable to IGST Act vide section 20 of the IGST Act
In detail
Section 7(1)(b)
Eg :
Ramaiyaa, a proprietor, has received the architect services for his house from an architect located in New York at an agreed consideration of $ 5,000. The import of services by Ramaiyaa is supply under section 7(1)(b) though it is not in course or furtherance of business.
Section 7(1)(c) - Schedule I activities - without consideration - in the course of business
I.Permanent Transfer/Disposal of Business Assets
Eg: transfer of business assets from holding to subsidiary company for nil consideration.
II.Supply between related person or distinct persons
1. Related persons
a) Such persons are officers/directors of one another’s business
b) Such persons are legally recognised partners
c) Such persons are employer & employee
d) A third person controls/ own/ holds (directly/ indirectly) ≥ 25% voting stock/shares of both of them
e) One of them controls (directly/indirectly) the other
f) A third person controls (directly/indirectly) both of them
g) Such persons together control (directly/indirectly) a third person
h) Such persons are members of the same family
i) One of them is the sole agent/sole distributor/sole concessionaire of the other
2. Distinct Persons specified under section 25
a) More than one registration in a State/ Union territory
b) Two establishments of a person in two different States/Union territories shall be treated as establishments of distinct persons.
3.Stock transfers or branch transfers
4. Supply of goods or services or both between an employer and employee
-Excluding services provided by an employee to the employer in the course of to his employment
Schedule I - Gifts not exceeding Rs. 50,000 in a financial year by an employer to an employee shall not be treated as supply of goods or services
III.Principal – Agent
Supply of goods by
a principal to his agent
an agent to principal
without consideration
IV. Import of services by a taxable person from a related person or from his establishments located outside India, without consideration
Section 7(1)(d) -Schedule II- Activities to be treated as supply of goods or services
a) Transfer of Title in goods
b)Transfer of Right in goods/ undivided share in goods without transfer of title in goods
c)Transfer of Title in goods under an agreement which stipulates that property shall pass at a future date.
d)Lease, tenancy, easement, licence to occupy land
e)Lease or letting out of building for business or commerce, wholly or partly
f)Treatment on other's goods/Job work
g)Business assets transferred/dispossed off, whether or not for consideration
h)Goods held/used for business are put to private use,whether or not for consideration
i)Goods forming part of assets of any business carried on by a person who ceases to be a taxable person
except
Business transferred as a going concern
Business is carried on by a personal representative who is deemed to be a taxable person
j)Renting of immovable property
k)Construction service except where consideration has been received after issuance of completion certificate
l)Temporary transfer of intellectual property right
m)Development, design, programming,customisation, adaptation, upgradation,enhancement, implementation of IT software
n)Refrainining or tolerating
o)Transfer of right to use any goods
p)Following Composite supplies:
i)Works contract services.
ii)Supply as part of any service, of goods, being food or any other article for human consumption or any drink
q)Supply of goods by an unincorporated association or body of persons to a member thereof for consideration
Negative list under GST - Schedule III
a) Service by employee to employer in employment
b) Services by any court or Tribunal
c) Functions by Members of Parliament, State legislature, local authority
d) Duties by a person in consitutional capacity
e) Duties of person in a body body established by the Central Government or a State Government or local authority
f) Services of funeral, burial, crematorium or mortuary including transportation of the deceased
g) Sale of land/building
h) Actionable claims, other than lottery, betting and gambling.
Section 7(2)(b)
Services notified by government are excluded from supply
Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the Constitution has been notified for this purpose.
