SCOPE OF SUPPLY
SCOPE OF SUPPLY
ABSTRACT
Frequency of tax decides where the tax is to be collected i.e., taxable event. For the motivations
behind GST, the taxable event is "supply" of goods and services. GST law withdraws from the
prior understanding of "taxable event" under the State VAT Laws, Excise Laws and Service Tax
Laws for example deal, assembling and administration separately. The idea of 'Supply' is the
foundation of GST design. The provisions identifying with significance and extent of supply are
contained in Chapter III of the Act read with different Schedules given under the said Act. Also
it is discussed under section 7 and 8 of the Act. The taxable event under GST will be the supply
of goods and/or services made for thought in the course or facilitation of business. The taxable
events under the current roundabout tax laws, for example, manufacture, deal, or provision of
services will stand subsumed in the taxable event known as supply. The model GST law likewise
accommodates including certain transactions made without consideration inside the extent of
supply.
Keywords- supply, GST, CGST, goods and services
SCOPE OF SUPPLY
Introduction
Under the recent indirect tax system, there was no concept of Supply. The stage at which indirect
taxes were required fluctuated under various tax laws. The ‘excise duty’ was charged on goods
manufactured when they were removed from the factory. ‘Service Tax’ was collected dependent
on specific standards known as the ‘purpose of taxation’ rules, for services delivered. A VAT
would emerge on the estimation of the offer of goods or provision of services. The current
framework has consolidated all taxes to keep up a single taxable event .The year 2017 will be
known as the year in which the most important economic reform was introduced in the country –
the Goods and Services Tax. The purpose for GST was to address issues which existed in the old
tax system by expanding the tax base, dispensing with cascading of taxes, expanding consistence
and decreasing monetary bends brought about by interstate varieties in taxes.
Clause 12A was embedded in Article 366 of the Constitution. It characterizes goods and services
tax as "tax on supply of goods, or services or both aside from taxes on the supply of the alcoholic
alcohol for human utilization. Supply incorporates sale, transfer, trade, barter, license, rental,
lease and disposal. On the off chance that an individual embraces either of these transactions
during the course or furtherance of business for consideration, it will be covered under the
significance of Supply under GST. Taxable supply has been extensively characterized and
implies any supply of goods or services or both which, is leviable to tax under the Act.
Exemptions might be provided to the specified goods or services or to a predefined class of
people/substances making supply.
Significance of study
Section 7 of the Act talks about the scope of supply. It is a comprehensive definition. Supply
ought to be:
• Of goods and services
• For consideration
• Made in the course or furtherance of business
• By a taxable individual
• Supply should be made within the taxable territory
• A taxable supply
Section 7 (1) (a) The clause of sub-section 1 that is 7(1)(a) incorporates all types of supply of
goods and services or both, for example, sale, transfer, barter, exchange, license, rental, lease or
disposal made or consented to be made for consideration in the course or furtherance of business.
Consideration is one of the most basic conditions for the supply of goods and/or services. It
doesn't generally mean cash. It has been characterized under Section 2(31) of the Act.
SCOPE OF SUPPLY
So as to understand the term 'in the course or furtherance of business,' we have to understand the
term business which is characterized under Section 2(17) of the Act. It incorporates any
exchange, business, manufacture, employment, experience, bet or whatever other comparable
activity, regardless of whether it is for a financial advantage. It likewise remembers any activity
or transaction for association with or coincidental or subordinate to the previously mentioned
recorded activities. Moreover, any activity or transaction is embraced by the Central
Government, a State Government or any nearby expert in which they are locked in as the public
authority will likewise be understood as business.
Section 7 (1)(b) This clause expands the meaning of supply. It brings inside the ambit of 'supply',
the importation of services for a consideration whether in the course or furtherance of business.
For example, A, an owner, has gotten the planner services for his home from a designer situated
in New York at a concurred consideration of $ 5,000. The import of services by an is supply
under Section 7(1)(b) however it isn't in the course or furtherance of business.
Section 7(1)(c) read with Schedule I
This incorporates all provisions of supply made by a taxable individual to a taxable/non-taxable
individual, regardless of whether the equivalent is without consideration. These are referenced in
Schedule 1 annexed to the Act like permanent transfer or disposal o business assets where on
such assets input tax has been availed, branch transfer, principal agent transaction, import of
service.
Section 7(1)(d) read with Schedule II
Section 7(1)(d) of the Act alludes to Schedule II for deciding if a specific transaction is a supply
of goods or supply of services. It simply means that Schedule II to the CGST Act, 2017 records a
couple of activities which are to be treated as supply of goods or supply of services. For case,
any transfer of title in goods would be a supply of goods, though any transfer of right in goods
without transfer of title would be considered as services.
Section 7(2) read with Schedule III Activities determined under Schedule III can be named as
"Negative List "under the GST system. This schedule determines transactions/activities which
will be neither treated as supply of goods nor a supply of services. This incorporates: Services
by a employee to the employer in the course of or comparable to his employment, sale of land
and sale of building where the entire consideration has been gotten after completion certificate is
given or after its first occupation and many more are there but in actionable cases are
remembered for the meaning of goods, however, Schedule III gives that actionable cases other
than lottery, wagering and betting will be neither good nor services.
SCOPE OF SUPPLY
Discussion and classification of supply
In this particular topic number of discussion point is here like what if in any transaction one or
more of the criteria is not fulfilled even than will it be considered as a supply under GST or what
if an individual is doing self supply will it be taxable under GST and what is the concept of
interstate and intra state and many more.
If in a certain case any one or more criteria is not fulfilled than also it be treated as supply under
GST. inter- state self-supplies, for example, stock exchanges will be taxable as a taxable
individual need to take state wise registration regarding Schedule 1(5). Such transactions have
been made taxable regardless of whether there is no consideration. Be that as it may, intra-state
self-supplies are not taxable. The area of the supplier and the spot of supply decides if a supply
is treated as an Intra State supply or an Inter State supply. Assurance of the idea of supply is
basic to learn whether integrated tax is to be paid or Central in addition to State tax are to be
paid. Inter-State supply of goods implies a supply of goods where the location of the supplier and
spot of supply are in various States or Union regions. Intra State supply of goods implies supply
of goods where the area of the supplier and the spot of supply are in a similar State or Union
region. Imports, Supplies from and are treated as regarded Inter-State supplies. For a supply to
attract GST, the spot of supply ought to be in India aside from the State of Jammu and Kashmir.
The place of supply of any goods or services is resolved based on Sections 10, 11, 12 and 13 of
IGST Act 2017.
A supply to attract GST ought to be made by a taxable person. Hence, a supply between two
non-taxable people doesn't comprise supply under GST. A "taxable individual" is an individual
who is enlisted or at risk to be enrolled under section 22 or section 24. Henceforth, even an
unregistered individual who is subject to be enrolled is a taxable individual. Likewise, an
individual not obligated to be enlisted but rather has taken wilful registration and got himself
enlisted is additionally a taxable individual. It should be noticed that GST in India is State-
driven. Subsequently, an individual creation supplies from various States needs to take separate
enlistment in each State. Further, the individual may take more than one registration inside a
State if the individual has numerous business verticals. An individual who has acquired or is
needed to get more than one registration, regardless of whether in one State or Union domain or
more than one State or Union region will, in regard of each such enlistment, be treated as
unmistakable people for the reasons for GST. Subsequently, a supply between these substances
comprises supply under GST. Consideration has explicitly been characterized in the CGST
Act,2017. It very well may be in cash or in kind. Any endowment given by the Central
Government or a State Government isn't considered as consideration. It is insignificant whether
the instalment is made by the beneficiary or by some other individual.
SCOPE OF SUPPLY
A store given in regard of the supply of goods or services or both will not be considered as
instalment made for such supply except if the supplier applies such store as consideration for the
said supply. For example, when there is barter of goods of services, a similar activity establishes
supply just as a consideration. At the point when a stylist trims hair in return for a canvas, hair
style is a supply of services by the barber. It is a consideration for the canvas got.
Section 8 The utilization of GST rates represents no issue if the supply is of individual goods or
services. In any case, in specific cases, supplies are not all that straightforward or plainly
recognizable. A portion of the provisions are a blend of goods or a mix of services or a mix of
goods and services and every segment of such supplies may attract an alternate pace of tax. So as
to decide if supplies are composite supplies or blended supplies, one requirements to decide if
the provisions are naturally bundled or not naturally bundled in the customary course of
business.
Composite Supply has been characterized under Section 2(30) of the Act. In a composite supply,
goods or services or both are bundled attributable to natural necessities. The components in a
composite supply are subject to the 'principal supply'. Principal supply implies the supply of
goods or services which comprises the dominating component of a composite supply and to
which some other supply framing a piece of that composite supply is auxiliary. It has been
characterized under Section 2(90) of the Act. For an example, when a customer purchases a T.V.
and he likewise gets a guarantee and an upkeep contract with the T.V., this supply is a composite
supply. In this model, the supply of T.V. is the principal supply, guarantee and support services
are auxiliary. Works contract and restaurant service instances of composite supplies. No equation
can be set down to decide if an assistance is naturally bundled in the conventional course of
business. Each case must be taken a gander at separately.
Mixed Supply has been characterized under Section 2(74) of the Act. On account of mixed
supply, singular supplies are autonomous of one another and are not naturally bundled. A supply
can be a mixed supply just on the off chance that it's anything but a composite supply. As a
result, it very well may be said if the transaction comprises of provisions not naturally bundled in
the customary course of business, at that point it would be a mixed supply. A mixed supply of at
least two supplies will be treated as supply of that specific supply that attracts the most elevated
pace of tax. For instance, a businessperson selling storage water bottles alongside a refrigerator.
bottles and the refrigerator can undoubtedly be evaluated and sold freely and are not naturally
bundled. Along these lines, such supplies are mixed supplies.
SCOPE OF SUPPLY
CONCLUSION
One can't accept that Schedule II just groups activities as Supply of goods and Supply of
Services and first the activity must be covered under "Supply" according to provisions of Section
7(1)(a) to Section 7(1)(c) and then Schedule II would become an integral factor. It was the
circumstance in Revised model GST Law, yet under the CGST Act, 2017, conditions provided in
Section 7(1)(d) stand on same balance as conditions recommended under 7(1)(a) to Section
7(1)(c). None of the conditions abrogate one another and neither the law has recommended any
particular request amongst them. Hence there is an ambiguity as for schedule II as it doesn't
unmistakably determine whether "in the course or furtherance of business" is required or not for
activity being treated as Supply. The schedule ought to have obviously spelt out whether
"throughout furtherance of business" is required or not for activities referenced in that to be
delegated "Supply".
REFRENCES:
SCOPE OF SUPPLY
1) https://www.taxmann.com/bookstore/bookshop/bookfiles/GST%20(%20CA
-Intermediate%20)chapter2.pdf
2) https://economictimes.indiatimes.com/meaning-and-scope-of-
supply/articleshow/58576311.cms
3) Taxman’s GST Ready Reckoner-Ready Reference for All-Important
Provisions of the GST Law by V.S. Datey
4) Goods and Services Tax GST (4th Edition) by H.C. Mehrotra (Author), V.P.
Agarwal (Author)
5) https://gst-online.com/googly-government-scope-supply-part-ii/
6) Goods & Services Tax | EXPERTS OPINION [2020] 117 taxmann.com 263
(Article) - AYUSH GUPTA Whether Exempt Supply is Covered within the
Scope of Taxable Supply?
7) Indirect Tax | EXPERTS OPINION [2017] 78 taxmann.com 358 (Article) -
VENKATA PRASAD P. Model Gst Law: Meaning & Scope of ‘Supply’
under GST
