Scope of Supply

levy of SGST &CGST (Section 7);

Section 7 of the CGST/SGST Act, 2017; read with 20(i) of the IGST Act, provide-

Meaning and scope of supply

Section 7 (1)- For the purposes of this Act, the expression “supply” includes— .

(a) all forms of supply of goods or services or both 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;

The CGST/SGST Act, 2017;do not define, any of the aforesaid integrated terms separately, such as of:- “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.

Therefore, in absence of any such definitions under the CGST/SGST Act, it is very difficult to arrive at a situation, to analyse/ evaluate the statutory meaning and scope of all such aforesaid integrated/ common statutory terms.

Therefore, we are required to analyses the aforesaid integrated statutory terms, which are in different modes of supply and they are, in the following manner:-

SCOPE OF, “SUPPLY” Vrs. SCOPE OF, “SALE”

Supply other than SALE- “barter”, “exchange”, “license”, “rental”, “lease” or “disposal

“Sale” Vrs. “Transfer”

ANALYSIS OF OTHER important terms; as used in Section 7(1) of the CGST/SGST Act, 2017

”Supplier”, ”Reverse Charge”, ”recipient”,” business”, “Goods”, “Services”, “Consideration”, “In the course of business”, and “In the course of Furtherance of Business”, “money”, ”removal”, ”Market value”, “taxable territory” and various types of supplies.

Section 2(105) - “supplier’’- in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied;

Section 2(98) - “reverse charge’’ means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act;

Section 2(93) of the CGST/SGST Act,2017; defines- “recipient” of supply of goods or services or both, means—

(a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration;

(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and

(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied;

Section 2(17) of the CGST/SGST Acts,2017; defines- “business” --

“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;

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);

(c) any activity or transaction in the nature of subclause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;

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

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

(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;

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

(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;

The phrase: “in the course or furtherance of business”

For use in the course of furtherance of business or commerce’ is a very broad term and again required to be interpreted liberally.

A meeting with a perspective/existing client or customer in the residence can be considered as use of the residence in the course of furtherance of business or commerce.

Nevertheless, manufacture of merchandise or storage thereof in the residence or use of residence as office-cum-residence is definitely a use of residence in the course of furtherance of business or commerce.

Therefore, in view of the definition given above, such residence shall be considered as immovable property used in the course of furtherance of business or commerce.

Meaning and Scope of ‘Consideration’

Section 2(31) of the CGST/SGST Act,2017; defines- “consideration” in relation to the supply of goods or services includes in relation to the supply of goods or services or both includes— (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;

Section 2(52) - “goods’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;

Section 2(1) - “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882 ( 4 of 1882);

Section 2(101) - “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956 ) ;

Section 2(19) - “capital goods” means goods, the value of which is capitalised in the books of accounts of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;

Section 2(102) - “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;

Section 2(75) - “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;

Section 2(109) - “taxable territory’’ means the territory to which the provisions of this Act apply;

Whereas, Section 1(2) of the SGST Acts, 2017, provides the taxable territories shall be within the respective states’ territories; and similarly Section 1(2) of the CGST/IGST Acts, 2017, provide the taxable territory shall be the whole of India, excluding the state of J & K.

Whereas, Section 1(2) of the Cess Act, 2017, provide the taxable territory shall be the whole of India.

types of supplies

Section 2(108) - “taxable supply’’ means a supply of goods or services or both which is leviable to tax under this Act;

Section 2(78) - “non-taxable supply’’ means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act or under the Union Territory Goods and Services Tax Act;

Section 2(47) - “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non- taxable supply;

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