Supply In Case of Schedule 1 Activities:- Supply Includes the Activities specified under Schedule 1 which are made or agreed to be made without a consideration Sec 7(1)(c). Permanent Transfer or Disposal of Business Assets where Input Tax Credit ITC has been availed on such assets For Example:- Mohan Ltd purchased machinery for the price of 10 Lakhs and used in their business and claimed input credit for GST Paid on the Machinery at the time of Purchase of asset. After 5 Years it became obsolete and useless. Mohan Ltd Disposed of the machinery by throwing it in waste material. The act of disposal of machinery will constitute supply even it Mohan Ltd did not get anything in return for disposing of the machine.
Supply of Goods or Services or both between related persons or between distinct persons as specified in section 25 When made in the course or furtherance of business, Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
Supply Under GST
Related Person Examples:– Employees or Employee, Family Members, …etc.
Distinct persons:- the Distinct person is a person who is part of the same firm. Different GST registration numbers are treated as Distinct Persons.
For Example:– Mohan Ltd Transferred goods from their factory in Telangana to Depot in Andhra Pradesh without any consideration. It will be considered as Supply as per Schedule 1.
Supply In Case of Schedule 1 Activities
Supply of Goods:-
a) By a principal to his agent where the agent undertakes to supply such goods on behalf of the principal or
b) By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
For Example- Mohan Ltd a principal sends the goods to an agent to sell in the Market and harish will sell goods on behalf of the Mohan ( Principal). This case although there is no consideration this transaction would be treated as Supply.
Important of Services by a taxable person from a related Person or From any of his other Establishments Outside India, In the course or furtherance of Business.
For Example- Mohan Ltd takes management assistant from its foreign holding company for which they do not charge anything. This transaction will still constitute a supply by virtue of schedule 1.
Deeming Fiction Supply of Goods or Supply of Services U/S 7(1)(d) and U/S 7(3)
Section 7(1)(d):- Provides For Schedule II Listing 5 Activities as the supply of Goods and 11 Activities as Supply of Services
Section 7(3):- Empowers the government to specify any activity either as the supply of goods or supply of service.
For Example:- When we consider the Old GST Regime The software is treated as Service for the Central Govt Tax and Goods For the State Government. So they need to pay both taxations. In order to remove the Barriers as it is related to a Single nation and Single Tax, the Deeming Fiction is wood up. Which provides a clear picture of the what should we treat as goods and services?
Activities Treated as Supply of Goods or Supply of Services Schedule 2
- Any Transfer of the Title in goods is a Supply of Goods
- Any Transfer of Right in Goods or of the undivided share in Goods without the transfer of title thereof is a supply of services.
- Transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed is a supply of goods.
- Land and Building
- Any Lease, Tenancy, Easement, Licence to occupy land is a supply of services.
- Any lease or letting out of the building including a commercial industrial or residential complex for business or commerce either wholly or partly is a supply of services.
Activities Treated as Supply of Goods or Supply of Services Under Schedule 2
Any Treatment or Process which is applied to another Person goods is a supply of Services.
Transfer of Business Assets:-
Where Goods Forming part of the assets of a business are transferred or disposed of by or under the directions of the persons carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of Goods by the Person.
Whereby or Under the direction of a person carrying on a business goods held or used for the purposes of the business are put to any private use or are used or made available to any person for use, For Any purpose other than a purpose of the business, whether or not for a consideration, The usage or making available of such goods is a supply of services.
Activities Treated as Supply of Goods or Supply of Services Schedule 2
Where any person ceases to be a taxable Person, Any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person Unless:-
- The business is transferred as a going concern to another person or
- The business is carried on by a personal representative who is deemed to be a taxable person.
Supply of Services Namely:-
- Renting of Immovable Property.
- Construction of a Complex, Building, Civil Structure or a Part thereof, Including a Complex or Building intended for sale to a buyer, Wholly or Partly, Except where the entire consideration has been received after issuance of the completion certificate, where required by the competent authority or after its first occupation whichever is earlier.
- Temporary transfer or permitting the use or enjoyment of any intellectual property right.
- Development, Design, Programming, Customisation, Adaptation, Upgradation, Enhancement, Implementation of Information technology software
- Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation or to do an act and
- Transfer of the right to use any goods for any purpose whether or not for the specified period For cash, Deferred payment or other valuable consideration.
Non-Supplies Schedule III
Activities Considered as Non-Supplies Section 7(2):-
Section 7(2)(a):- Provides For Schedule 3 listing 6 activities constituting neither as the supply of goods nor as to the supply of services.
Section 7(2)(b):- Empowers the government to specify any activity which will be considered as non-supply.
Activities Considered as Non-Supplies Schedule III
- Services by an Employee to Employer in the course of or in relation to his Employment.
- Services by any court or Tribunal established under any law for the time being in force.
- The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and other Local Authorities.
- The duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity.
- The duties performed by any person as a chairperson or a member or a director in a body established by the central government or state government or local authority and who has not deemed an employee before the commencement of this clause.
- Services of Funeral, Burial, Crematorium, or Mortuary including transportation of the deceased.
- Sale of Land and Subject to clause B of Paragraph 5 of Schedule 2 sale of Building.
- Actionable Claims, Other than Lottery, betting, and Gambling.
Composite Supply Section 2(30)
Composite Supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both or any combination thereof. Which are naturally bundled and supplied in conjunction with each other in the ordinary course of business one of which is a principal supply?
For Example:– Where goods are packaged and transported wit Insurance. The Supply of Goods packing materials, Transport and Insurance is a composite Supply and Supply of Goods is a principal Supply.
Mixed Supply Section 2(74):-
Mixed Supply means two or more individual supplies of goods or services or any combination thereof, Made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. For Example- Cadbury celebrations is a supply of goods is treated as Mixed Supply. Combination of the Various Goods for a single price which we cannot separate the price is basically treated as mixed supply. Mostly these type of things is seen at offers.