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services and supply under gst

MEANING OF SUPPLY

(Supply u/s 3)

Section 3: Meaning and Scope of supply

(1) Supply includes—

> Inclusive definition with wider meaning (like section 2(f) of Excise Act)

(a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,

Natural Meaning
Captive consumptions, Theft, Pilferage, Stock transfers, Free supplies are not covered in this part

(b) importation of services, for a consideration whether or not in the course or furtherance of business, and

Import for personal use is now also liable to GST – Recent Service Tax Amendments

(c) a supply specified in Schedule I, made or agreed to be made without a consideration.

(2) Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

- For transactions like works contract, lease etc.

(3) Notwithstanding anything contained in sub-section (1),

(a) activities or transactions specified in schedule III; or
(b) activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities as specified in Schedule IV,

shall be treated neither as a supply of goods nor a supply of services.

(4) Subject to sub-section (2) and sub-section (3), the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods; or
(c) neither a supply of goods nor a supply of services.

(5) The tax liability on a composite or a mixed supply shall be determined in the following manner —

(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
(b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

NATURAL MEANING

SECTION 3(1)(a)

Supply includes:

all forms of supply
of goods and/or services
such as (Sale, Transfer, Barter/Exchange, License/Rental, Lease, Disposal)
made or agreed to be made
for a consideration
by a person
in the course or furtherance of business

Sale:

Transfer of title or ownership in goods from seller to buyer for a price

Transfer

Legal movement of something (e.g. Property, shares etc.) from one owner to another.
Common use of word ‘transfer’, is to denote the passing of title in the property or an interest therein from one person to another with the intent of passing therights which he had in it to the latter.

Barter

Exchange of goods and services without intervention of money – Valuation might be an issue

Exchange

Meaning is wider than Barter and includes immovable property
When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is calledan "exchange". (Section 118 of Transfer of Property Act, 1882)
An exchange involves the transfer of property by one person to another and reciprocally the transfer of property by that other person to the first person. There must be a mutual transfer of ownership of one thing for the ownership of another. (I.T. Commissioner Bombay v. Rasiklal Moneklal, AIR 1989 SC 1333)

License

Only a permission or an authority to do a particular thing – cannot be equated with lease or transfer of right to use
Right to enjoy only

Lease

A transfer of a right to enjoy immovable property to the exclusion of all others on payment of consideration
Right to possess and enjoy but excludes title

Rental

Right to use movable or immovable property for particular period
Cover both license and lease

Disposal

Action or process of getting rid of something – discarding of waste
Very wide meaning and includes sale etc. as well

SUPPLY WITHOUT CONSIDERATION

SCHEDULE - I - SECTION 3(1)(C)

TREATMENT OF CERTAIN SUPPLIES

Section 3(2)

Section 3(2) – Treatment of certain Supplies - Transfer

Section 3(2) – Treatment of certain Supplies - Land & Buildings

Section 3(2) – Treatment of certain Supplies - Transfer of Business Assets

Section 3(2) – Treatment of certain Supplies - Transaction treated as Supply of Service

NON TAXABLE SUPPLIES

SCHEDULE III - SECTION 3(3)

SCHEDULE IV - SECTION 3(3)

Relates to services provided by

Government - u/s 2(50): Central Government, State Government, Union Territory or their departments – provides books of accounts are required to be kept in accordance with Article 150
Local Authority - u/s 2(62): Panchayat, Municipality, Municipal Committee, Cantonment Board, Regional Council or District Council, Development Board etc.
Governmental Authority (Explanation 1 in Sch. IV): A board or an authority or any other body established with 90% or more participation (equity or control) by Government and setup under an Act of the Parliament or State Legislature to carry out any functions entrusted under Article 243W (Municipality) or Article 243G (Panchayat)

Adv. Nikhil Gupta (CA)
Ph.: 9891950868
Email:
nikhil.gupta513@gmail.com
nikhil9.gupta@pdslegal.com

services and supply under gst

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