Sunday, March 12, 2017

gst business definition

Business u/s 2(17)

“Business” includes –

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
  • - Under VAT laws – activity should be with a motive to made gain or profit
  • - Pecuniary benefit means –a benefit in the form of money, property, commercial interest or anything else the primary significance of which is economic gain.
(b) any activity or transaction in connection with or incidental or ancillary to (a) above;

(c) any activity or transaction in the nature of (a) above, whether or not there is volume, frequency, continuity or regularity of such transaction;
Will not include sale of personal assets

(d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;

  • - To allow ITC for setting up of business
  • - For payment of ITC on closure of business
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, as the case may be;
  • - Principle of Mutuality?

(f) admission, for a consideration, of persons to any premises; and

(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;

- like independent directors etc.

(h) services provided by a race club by way of totalisator or a licence to book maker in such club;

Explanation.- Any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities shall be deemed to be business.

Supply made in the course or furtherance of business 


No definition or test as to whether the activity is in the course or furtherance of business has been specified under the MGL. However, the following business tests are normally applied to arrive at a conclusion whether a supply has been made in the course or furtherance of business:
  • 1. Is the activity, a serious undertaking earnestly pursued?
  • 2. Is the activity is pursued with reasonable or recognisable continuity?
  • 3. Is the activity conducted in a regular manner based on sound and recognised business principles?
  • 4. Is the activity predominantly concerned with the making of taxable supply for consideration/ profit motive?

The test may ensure that occasional supplies, even if made for consideration, will not be subjected to GST


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