THE MAHARAJA SAYAJIRAO UNIVERSITY OF BARODA

TYBBA SEM V
SUBJECT: INDIRECT TAXES
UNIT – I Part II

IMPORTANT DEFINITIONS UNDER GST:

 India:

- Territory of India & its territorial waters (TWI);

- Seabed & sub-soil underlying such waters,
- Continental shelf,
- Exclusive economic zone or any other maritime zone
- Air space above its territory & TWI.

 Taxable Territory [Section 2 (109)]:

“Taxable Territory” means the territory to which the provisions of this Act apply. The scope
oftaxable territory extend to the whole of India including Jammu and Kashmir.

"Import", means bringing into India from a place outside India.

"Export", means taking out of India to a place outside India.

 TAXABLE EVENT UNDER GST [It determines the point at which tax would be levied]

A taxable event is any transaction or occurrence that results in a tax consequence.

Taxable event under GST is “Supply of Goods or Services”. [No supply - No GST]

 Taxable supply [Section 2(108)]:

“Taxable supply” means a supply of goods or services or both which is leviable to tax under
thisAct.

 Business Sec 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);
(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;
(d) supply or acquisition of goods including capital assets & services in connection with

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 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 of persons to any premises for a consideration;
(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) activities of a race club including by way of a license to book maker or activities of a
licensed book maker in such club
(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.

 Goods [Section 2(52) of CGST Act]:

“Goods” means every kind of “Movable Property” other than ‘Money’ and ‘Securities’, but
Includes:
i. Actionable Claim
ii. Growing crops, grass and things attached to or forming part of the land which are
agreed tobe severed before supply or under a contract of supply.

It is to be noted that transactions of actionable claims, other than lottery, betting and
gambling shall not be treated neither as a supply of goods nor a supply of services as per
Schedule III of CGST Act, 2017.

 Services [Section 2(102) of CGST Act]:

“Services” means anything other than (i) Goods, (ii) Money and (iii) Securities, but it includes:

a) activities relating to use of money or conversion of money by cash or by any other

mode
b) conversion of money from one form/currency to another
form/currency/denomination for which a separate consideration is charged.

Explanation: ‘Services’ includes facilitating or arranging transactions in securities.

 Supplier [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 orservices or both supplied.

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  Recipient [Section 2 (93)]:

“Recipient” of supply of goods or services or both, means-

If consideration is payable for
the supply of goods or services The person who is liable to pay that consideration.
or both
If 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

If no consideration is payable
for the supply of a service The person to whom the service is rendered

and shall include an agent acting as such on behalf of the recipient in relation to the goods
orservices or both supplied.

 Consideration [Section 2(31)]:

Consideration in relation to the supply of goods or services or both includes:

- any payment made or to be made (in money or otherwise) for supply of goods or
services or both;
- ‘monetary value of any act or forbearance’ for supply of goods or services or both,
whetherby recipient or by any other person (3rd Party)

But shall not include any subsidy given by Central or State Government.

Note:
Deposit given for supply of goods or services or both shall not be considered as payment
made for such supply unless supplier applies such deposit as consideration for said supply.
[Refundable deposit is not subject to GST].

 Person [Section 2(84)]:

“Person” Include -
a) An Individual
b) A Hindu Undivided Family
c) A Company
d) A Firm
e) A limited liability partnership
f) An association of persons or a body of individuals, whether incorporated or not, in

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 India oroutside India.
g) Any Corporation established by or under any Central Act, State Act or Provincial Act
or aGovernment company as defined in Section-2(45) of the Companies Act, 2013
h) Anybody corporate incorporated by or under the laws of a country outside India.
i) A co-operative society registered under any law relating to co-operative societies.
j) A local authority
k) Central Government or a State Government.
l) Society as defined under the societies registration Act, 1860
m) Trust
n) Every artificial juridical person, not falling within any of the above.

 Taxable Person [Section 2(107)]:

Taxable person means a person who is registered or liable to be registered under section 22
orsection 24 of the CGST Act, 2017.

Notes:
- Thus, even an unregistered person who is liable to be registered is a taxable person.
- A person who is not liable to be registered, but has taken voluntary registration & got himself
registered is also a taxable person.
- Supply b/w two non-taxable persons does not constitute taxable supply.
- It is not necessary that supply should be made to another person. [Supplies made to self are
also taxable].

 Aggregate Turnover [Sec 2(6)] Aggregate value of ↓

- All Taxable Supplies (Excluding value of Inward supplies on which tax is payable by a
person on RCM basis) &
- Exempt supplies [Nil Rated + Wholly Exempt + Non-taxable Supply] &
- Exports of G/&S [Zero-rated Supply] &
- Inter-State supplies of Persons having Same PAN [Stock transfer or branch transfers]
- But Excludes CGST, SGST, UTGST, IGST and GST Cess. (TAXES).
Be computed on ALL INDIA basis

Note:
- Value of Inward supplies on which tax is payable under RCM basis by a person shall
not be included in his Aggregate Turnover.
- Value of supply of any exempt services including services by way of extending
deposits, loans or advances; consideration for which is represented by way of interest
or discount, shall not be taken into account for calculating Aggregate turnover.

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 SUPPLY: Meaning and Scope of ‘Supply’ as per GST Law [Section 7]

Section 7(1) of CGST Act, states that for the purpose of CGST Act, the expression ‘supply’
includes –

(a) All forms supply of goods or service or both such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed to the made for a consideration by a
person in the course or furtherance of business. --------------- 1
(b) Import of service for a consideration whether or not in the course or furtherance of
business. ------------------2
(c) The activities specified in schedule I, made or agreed to be made without a
consideration. ------------------3
(d) The activities to be treated as supply of goods or supply of services as referred to in
Schedule II. ---------------4

As per Section 7(2) of CGST Act, notwithstanding anything contained in section 7(1) of CGST
Act, following shall be treated neither as a supply of goods nor a supply of services.

(a) Activities or transactions specified in schedule III; --------------5

(b) Such activities or transactions under taken by the central government, a state
government or any local authority in which they are engaged as public authorities, as
may be, notified by the government on the recommendations of the council.

As per Section 7(3) of CGST Act, subject to the provision of section 7(1) and 7(2), the
government may, on the recommendations 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.

ANALYSIS OF SCOPE OF SUPPLY:

[1] SUPPLY OF GOODS OR SERVICES FOR CONSIDERATION IN COURSE OR FURTHERANCE OF

BUSINESS [SECTION 7(1) (a)]: --------------------------1

The scope of supply as defined in Section 7 of the CGST Act is inclusive. The modes of supply
mentioned in Section 7(1) (a) are only illustrative and not exhaustive.

The meaning and scope of supply taxable under GST can be understood in terms of following
parameters:
(a) Supply should be of goods or services. [Supply of anything other than goods or services
like money, securities etc. does not attract GST.]
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 (b) Supply includes all forms supply of goods or service or both such as sale, transfer,
barter, exchange, license, rental, lease or disposal.
(c) Supply should be made for a consideration. [Some exceptions are there]
(d) Supply should be made in the course or furtherance of business. [Some exceptions are
there]
(e) Supply should be made by a taxable person. [Recipient can be a non-taxable person]
(f) Supply should be in taxable territory.
(g) Supply should be a taxable supply.

The main parameters of SUPPLY are:

1. Supply should be of goods or services
2. Supply should be made for a consideration
3. Supply should be made in the course or furtherance of business.
Thus, the aforesaid parameters (subject to certain exceptions) are to be satisfied in a
transaction to treat it as supply.

[2] IMPORTATION OF SERVICES FOR CONSIDERATION WHETHER OR NOT IN COURSE OR

FURTHERANCE OF BUSNIESS - COVERED IN SCOPE OF SUPPLY [SECTION 7(1) (b)]:
(Exception to the parameters of supply) ----------------------------------2

Section 7(1) (b) has the following essential ingredients:

a) It is applicable only for services and not for goods.

b) Services should be provided for a consideration.
c) Services may be in the course of or furtherance of business or not. This implies that import
of services even for personal consumption would qualify as ‘supply’ and therefore would be
liable to tax.

Ex: Mr Shyam has received architect services for his residential house property from the
architect of USA for the consideration of $ 4000. Import of service is considered as supply
though it is not in the course or furtherance of business.

[3] SCHEDULE I ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE OR AGREED TO BE

MADE WITHOUT CONSIDERATION [SECTION 7(1) (C)]: [Activities without consideration –
Deemed Supply] -----------------------------3

The Law provides that in certain activities, even though there is no consideration, the same
would be treated as ‘supply’. Such activities are listed in Schedule I of CGST Act. These are as
under:

Para No. (1) Permanent transfer or disposal of business assets on which ITC is availed:

Permanent transfer or disposal of business assets where input tax credit has been availed on
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such assets - even without consideration will be treated as supply.

Note: Permanent transfer/disposal of following business assets will not be deemed as supply
if,
(i) Business assets on which ITC is blocked/not available under GST
(ii) Business assets though eligible for ITC, but ITC has not been availed.
(iii) Transfer of entire business as a going concern is not a ‘supply’ and it is not subject to GST.

Ex: Om gives old laptops being used in his business to his friend free of cost. This will qualify
as supply provided input tax credit has been availed by Om on such laptops.
Ex: A dealer of AC permanently transfers the motor vehicle free of cost. ITC on said motor
vehicle is blocked. This transaction will not constitute a supply as ITC has been blocked on
Cars

Para No. (2) Supply of goods and/or services between related or distinct persons: (if made
in course or furtherance of business)

Supply of Goods or Services b/w ‘Related persons’ or b/w ‘distinct persons’ as specified in
section 25, will qualify as supply if it is made in the course/furtherance of business.

(i) Related Person [Explanation to sec 15]

Persons are deemed to be related persons in the following cases:

 Such persons are officers/directors of one another’s business.
 Such persons are legally recognised partners.
 Such persons are Employer & Employee [Discussed Later in Detail]
 3rd person controls/holds (directly/indirectly) ≥ 25% voting shares of both of them
 One person controls (directly/indirectly) the other person.
 3rd person controls (directly/indirectly) both of them.
 Such person together control (directly/indirectly) a 3rd person.
 Such persons are members of the same family.
 One of them is the sole agent/sole distributor/sole concessionaire of other.

Ex: Ms. Pranshi holds 30% shares of ABC Ltd. & 35% shares of XYZ Ltd. ABC Ltd. & XYZ Ltd. are
related.
Ex: X Ltd. has a deciding role in corporate policy, operations management & quality control of
R Ltd. It can be said that X Ltd. controls R Ltd. Thus, X Ltd. & R Ltd. are related.

(ii) Distinct Person [Section 25]

As per section 25(4) of CGST Act, a person who has obtained or is required to obtain more
than one registration, whether in one state or more than one state or Union territory shall, in
respect of each such registration, be treated as distinct persons for the purpose of this Act.

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Ex: Mohit (CA), has a registered head office in Delhi. He has also obtained registration in West
Bengal irrespective of his newly opened branch office. Mohan shall be treated as distinct
persons irrespective of registrations in West Bengal & Delhi. Supply b/w Delhi office & West
Bengal office, in course or furtherance of business even without consideration will qualify as
supply.

Further, where a person who has obtained or is required to obtain registration in a State/UT
irrespective of an establishment, has an establishment in another State/UT, then such
establishments shall be treated as establishments of distinct persons.

(iii) Stock transfers or Branch transfers (with different GST registration) = Supply
 Transaction’s between different locations (with separate GST registrations) of same
legal entity. Thus, inter-state stock transfers or branch transfer will be subject to GST.
 Transfer between 2 units of a legal entity under single registration (apparently within
same State) will not be considered as supply.
 Even intra-state stock transfer or branch transfer will be subject to GST if there are
separate GST registrations.

(iv) Supply of goods or services b/w an Employer & Employee

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.

 Employer & employee are related persons as given in the definition of related person.
 However, Services provided by employee to employer in the course of employment
are not treated as supply of services [Specifically given in Schedule III of CGST Act]
 Gifts by an employer to an employee ≤ Rs. 50,000 in value in FY shall not be treated as
supply of G/&S. Thus Gifts > Rs. 50,000 = GST ☑.

Perquisites given by employer to employee: If perquisites (services) are given in the course
of Employment or provided in terms of the contract b/w the employer & employee & is part
& parcel of the cost-to company, it will not be subjected to GST.

Para No. (3) Supply of goods by principal to agent or vice versa:

Supply of goods and not supply of services -

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, even if made without consideration will be considered as supply.

Agent will be liable for GST on value of goods or services only if he undertakes to supply any

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goods or services on behalf of his principal (e.g. consignment agent). However, if the agent
does not supply goods or services, he is not liable for GST on value of goods or services (e.g.
commission agent)

Determining factor → whether a particular P-A relation falls within scope of Para 3 depends
on “whether invoice for further supply of goods on behalf of principal is being issued by the
agent or not”.

Invoice for further supply is issued by Provision of goods from principal to agent

Agent to customer in his own name Would fall within scope of Para 3 & thus
would be treated as supply.

Agent to customer in name of principal would not fall within scope of Para 3 & thus
would not be treated as supply

Ex1: Aman appoints Bhajan for sorting out the best quality of goods from the market. Bhajan
identifies various suppliers who can provide the best quality goods as desired by Aman and
asks the supplier to send the goods and to issue the invoice directly to Aman.
In this scenario, Bhajan is only acting as the procurement agent, and has in no way involved
himself in the supply or receipt of the goods. Hence, in accordance with the provisions of this
Act, Bhajan is not an agent of Aman for supply of goods in terms of Para 3 of Schedule I.

Ex2: Gautam, an artist, appoints Gambhir (auctioneer) to auction his painting. Gambhir
arranges for the auction and the highest bid is accepted for the painting and it is sold to the
highest bidder.The invoice for the supply of the painting is issued by Gambhir on the behalf
of Gautam, in his own name and the painting is delivered to the successful bidder.
In this scenario, Gambhir is not merely providing auctioneering services, but is also supplying
the painting on behalf of Gautam to the bidder, and has the authority to transfer the title of
the painting on behalf of Gautam. This scenario is covered under Para 3 of Schedule I.

Para No. (4) Import 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:

Import of services without consideration by a taxable person from a related person or from
any of his other establishments outside India, in the course or furtherance of business is liable
for GST. Thus, even if no amount is paid in such case, the value to be determined as per the
Valuation Rules and tax is required to be paid.

Ex: Jamvan Associates received legal consultancy services from its head office located in
Malaysia. The head office has rendered such consultancy services free of cost to its branch

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office.
Since Jamvan Associates and the head office are related persons, services received by Jamvan
Associates will qualify as supply even though the head office has not charged anything from
it.

Ex: Chakmak, a proprietor registered in Delhi, has sought architect services from his son
located in US, with respect to his newly constructed house in Delhi
Although services have been received by Chakmak without consideration from his son - a
related person, yet it will not qualify as supply since the same has not been received in course
or furtherance of business.

[4] ACTIVITIES TO BE TREATED AS ‘SUPPLY OF GOODS’ OR ‘SUPPLY OF SERVICES’ AS

SPECIFIED IN SCHEDULE II OF CGST ACT: -------------------------- 4

Section 7(1A) classifies certain activities/ transactions constituting supply, either as supply of
goods or supply of services. Schedule II to the CGST Act contains the list of activities or
transactions which have been classified either as supply of goods or supply of services.

The matters listed out in Schedule II are primarily those which had been entangled in litigation
in the earlier regime owing to their complex nature and susceptibility to double taxation.

These are as follow-

Para Activity/ Type Nature of Supply

No. Transaction
1 Transfer Any transfer of title in goods. Supply of Goods
Ex: Shivaji sellsready-madegarments to its customers.
Any transfer of right in goods/ undivided share in Supply of Services
goods without transfer of title thereof.
Ex: Genius Equipment Ltd. gives a machinery on rent
toSuhaasi Manufacturers
Any transfer of title in goods under an agreement Supply of Goods
which stipulates that propertyin goods shall pass at a
future date upon payment of full consideration as
agreed
Ex: Dhruva Capitals supplied goods on hire purchase
basis to customers.
2 Land and Any lease, tenancy, easement, license to occupy land. Supply of Services
Building Ex: Lease agreement for land
Any lease or letting out of building including a Supply of Services
commercial, industrial or residential complex for
business or commerce, wholly or partly.
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 Ex: A shop let out in a busy market area.
3 Treatment Any treatment or process which is applied to another Supply of Services
or Process person’s goods
Ex: Damani Dying House dyes the clothes given by
Shubham Textiles Ltd. on job work basis.
4 Transfer of Goods forming part of business assets are transferred Supply of Goods
Business or disposed off by or under directions of person
Assets carrying on the business so as no longer to form part
of those assets.
Goods held/used for business are put to private use or Supply of Services
are made available to any person for use for any
purpose other than business, by/ under directions of
person carrying on the business
Ex: A person manufacturing and selling wooden
furniture takes one chair manufactured by him for use
at his house.
Goods forming part of assets of any business carried Supply of Goods
on by a person who ceases to be a taxable person,
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.
Ex: Arun, a trader, is winding up his business. Any
goods left in stock shall be deemed to be supplied by
him
5(a) Renting of  Renting of a commercial complex. Supply of Services
immovable  Renting of precincts of a religious place.
property  Renting of property to an educational
Institution.
 Permitting use of immoveable property for
placing vending/dispensing machines.
5 (b) Construction Construction of a complex, building, civil structure or Supply of Services
of complex, a part thereof, including a complex or building
building, intended for sale to a buyer, wholly or partly, except
civil where the entire consideration has been received
structure, after issuance of completion certificate, where
etc. required, by the competent authority or after its first
occupation, whichever is earlier.
Ex: Rathi Builders has constructed individual
residential units for agreed consideration of 1.2 crore
per unit. 90 lakh per unit were received before
issuance of completion certificate by competent

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 authority and its first occupation, and balance after
completion.

5(c) Temporary transfer or permitting use or enjoyment Supply of Services

of any intellectual property right
Ex: Temporary transfer of patent
5(d) Development, design, programming, customization, Supply of Services
adaptation, upgradation, enhancement,
implementation of IT software
Ex: Suvidha Solutions develops an accounting
software for a business firm.
5(e) Agreeing to obligation to refrain from an act, or to Supply of Services
tolerate an act or situation, or to do an act.
Ex: Cable operator - Sakharam has enteredinto an
agreement with Cable operator - Aatmaram that
Sakharam will not provide cable connections in
the specified areas where Aatmaram is providing the
connections. Non-compete agreements constitute
supply of service.
5(f) Transfer of right to use any goods for any purpose Supply of Services
(whether or not for specified period) for cash,
deferred payment or other valuable consideration.
Ex: Machinery given on hire
6 composite  Works contract Supply of Services
supplies:- Works contract: means a contract for building,
construction, fabrication, completion, erection,
installation, fitting out, improvement,
modification, repair, maintenance, renovation,
alteration or commissioning of any immovable
property wherein transfer of property in goods
(whether as goods or in some other form) is
involved in the execution of such contract
[Section 2(119)].

 Supply, by way of or as part of any service or in

any other manner whatsoever, of goods, being
food or any other article for human
consumption or any drink (other than alcoholic
liquor for human consumption), where such

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 supply or service is for cash, deferred payment
or other valuable consideration.

[5] NON-SUPPLIES UNDER GST - ACTIVITIES/TRANSACTIONS SPECIFIED UNDER SCHEDULE III

TO BE TREATED NEITHER AS ‘SUPPLY OF GOODS’ NOR AS ‘SUPPLY OF SERVICES’. -----------5

Schedule III specifies transactions/ activities which shall be neither treated as supply of goods
nor as supply of services. Thus, the activities/transactions specified under this schedule can
be termed as Non-Supplies under the GST regime. In a way, it is a “Negative list” for the
purposes of taxation in GST.

It is important to note that apart from the activities specified in Schedule III, some activities
have been notified by the Government vide different notifications, which are also to be
considered as non-supplies. Further, some circulars have been issued clarifying that certain
transactions are to be considered as non-supplies.

A. NON-SUPPLIES LISTED IN SCHEDULE III

Para Activities or transactions which shall be treated neither as a supply of goods nor
No. a supply of services
1 Services by an employee to the employer in the course of or in relation to his
employment.
EX: Services provided by casual worker to employer who gives wages on daily
basis to the worker are services provided by the worker in the course of
employment.
EX: Casual workers employed by a construction contractor forexecution of a
building contract for him are services in the course of employment. Similarly,
casualworkers employed by a security services agency for provision of
security services to a client are also services in the course of employment.

Only services that are provided by the employee to the employer in the course
of employment are outside the realm of supply. However, services provided
outside the ambit of employment for a consideration would qualify as supply.

EX: Services provided on contract basis by a person to another i.e. principal-to-

principal basis are not servicesprovided in the course of employment.
EX: Any amount paid by employer to employee for not joining acompeting business P 18F P

is paid for providing the service of forbearance to act and cannot be considered for
providing services in the course of employment.

2 Services by any court or Tribunal established under any law for the time being in
force.
Explanation – The term "Court" includes District Court, High Court and Supreme
Court.
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 3 (a) Functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, Members of
Municipalities and Members of other local authorities.
(b) Duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity.

EX: Duties performed by President of India, Vice President of India, Prime

Minister of India, Chief Justice of India, Speaker of the Lok Sabha, Chief Election
Commissioner, Comptroller and Auditor General of India, Chairman of Union
Public Service Commission, Attorney General of India, in that capacity.

(c ) Duties performed by any person as a Chairperson or a Member or a Director in a

body established by the Central Government or a State Government or local authority
and who is not deemed as an employee before the commencement of this clause.
4 Services of funeral, burial, crematorium or mortuary including transportation of
the deceased.
5 Sale of land and, subject to paragraph 5(b) of Schedule II, sale of building. (i.e. in
case, where entire consideration for sale of building received after issuance of
completion certificate or after its first occupation, whichever is earlier)
6 Actionable claims, other than lottery, betting and gambling.
‘Actionable claims’ are specifically included in the definition of goods under
section 2(52) [Refer the definitions of ‘actionable claims’ and ‘goods’ given under
heading ‘Relevant Definitions’].
However, this para of Schedule III specifically excludes actionable claims, other
than lottery, betting and gambling from the ambit of definition of supply. Co-
joint reading of said provisions implies that only lottery, betting and gambling are
treated as supply. All other actionable claims are outside the ambit of definition
of supply.
EX: Some of the other examples of actionable claims are: Right to recover
insurance money, claim for arrears of rent, claims for future rents (if these can
be assigned), unsecured loans, unsecured debentures, bills of exchange,
promissory notes, bank guarantee, Fixed Deposit Receipt, right to the benefit of
a contract, etc.

B. NON-SUPPLIES NOTIFIED VIDE NOTIFICATION

Government is empowered to notify the activities/ transactions undertaken by the Central
Government, a State Government or any local authority in which they are engaged as public
authorities as the activities/transactions which shall be treated neither as supply of goods nor
as supply of services.

i. Activity in relation to Panchayat/Municipality functions treated neither as a supply of

goods nor as a supply of service.
ii. Grant of alcoholic liquor license: Services by way of grant of alcoholic liquor license
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 by the State Governments are treated neither as a supply of goods nor as a supply of
service.

C. NON-SUPPLIES CLARIFIED BY WAY OF CIRCULAR

i. Inter-State movement of various modes of conveyance, between distinct person
including Trains,Buses,Trucks,Tankers,Trailers,Vessels,Containers,Aircrafts for
(a) carrying goods or passengers or both; or
(b) for repairs and maintenance,
shall be treated ‘neither as a supply of goods or supply of service’ and therefore not
be leviable to IGST.

ii. Inter-State movement of rigs, tools and spares, and all goods on wheels [like cranes]
shall be treated neither as a supply of goods or supply of service and consequently no
IGST would be applicable on such movements.

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COMPOSITE & MIXED SUPPLIES [SECTION 8]

Composite Supply [Sec 2(30)]

 It comprises
- two or more taxable supplies of Goods, Services or both, or any combination thereof
- Which are naturally bundled & supplied in conjunction with each other in ordinary
course of business
- one of which is a principal supply.

 Tax Treatment - treated as a supply of such principal supply.

 GST Rate - Rate applicable to Principal supply will be levied on whole supply.
 Principal supply - Supply of G/&S which constitutes predominant element of a
composite supply & to which other supply forming part of that composite supply is
ancillary.

Ex: Television set and remote control & Mobile and charger

Ex: Bundle of services of catering on board and services of transport by air is a bundle offered
by a majority of airlines

Ex: Mobile phone is always sold with battery.

Mixed Supply [Sec 2(74)]

 It comprises
- two or more individual supplies of Goods, 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.
 Individual supplies are independent of each other & are not naturally bundled.
 Tax Treatment - treated as supply of that particular supply that attracts Highest Rate
of Tax.

Ex: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drink & fruit juices when supplied for a single price is a mixed supply. Each of these
items can be supplied separately & is not dependent on any other. It shall not be a mixed
supply if these items are supplied separately.

Ex: A shopkeeper selling stationery pouch along with school bag for a single price. Stationery
Pouch and the School bag can easily be priced and sold, independently, and are not naturally
bundled. So, such supplies are mixed supplies.

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