Date: 8th August 2025

LIVE VIRTUAL CLASSES

PAPER 3B – GOODS AND SERVICES TAX

SUPPLY UNDER GST

CA. SHEFALI JAIN, FACULTY BOS

Board of Studies (Academic), ICAI

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 SUPPLY
UNDER GST

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 Definition of Person

Individual
Hindu Undivided
Juridical Person Family
Trust Company

Society Firm

Government LLP

Local Authority Association of

Persons
Co-operative Corporation
Society

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 Definition of Business
Any trade/commerce, manufacture, Any activity incidental/ ancillary to it
profession etc. even if there is no
pecuniary benefit Any activity of same nature even if no
frequency/volume/continuity
Supply/acquisition of goods including
capital goods & services in connection with commencement /
closure of business
Business includes

Provision of facilities by club/ association etc. to its members for consideration

Admission for consideration to any premises

Services as holder of office accepted in course/ furtherance of trade, profession

Activities of a race by way of totalisator or a license to book maker or activities of a

club including licensed book maker in such club

Any activity by Government /local authority as public authorities

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 Trade/Commerce Similar Activity
Incidental
Any trade, Activity Any activity of the
commerce, same nature, even
manufacture, or Any activity without frequency,
profession, vocation, incidental or volume or
adventure, wager ancillary to trade, continuity.
without pecuniary commerce,
benefit. manufacture or
profession.

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 Supply/Acquisition
Club Facilities
Supply or acquisition of
goods, including capital Provision of facilities
goods and services by a club or
in connection with association to its
commencement or members for
closure of business. consideration

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 Holder of office
Admission
Services supplied by a
Admission for person as the holder of an
consideration to any office which has been
premises accepted by him in the
course or furtherance of his
trade, profession or vocation

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 Race Club Government
Activity
Activities of a race club,
including totalisator, Any activity by
book maker license, or Government or local
activities of a authority as public
licensed book maker. authorities.

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 Example

Rishabh buys a car for

his personal use and
after a year sells it to a
car dealer.

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 Example

Manikarnika sold her old

gold bangles and
earrings to ‘Aabhushan
Jewellers’.

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 Example

Sundaram Acharya, a
famous actor, paints
some paintings and sells
them. The consideration
from such sale is to be
donated to a Charitable
Trust – ‘Kind Human’.

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 Example

A Resident Welfare
Association provides
the service of
depositing the
electricity bills of the
residents in lieu of
some nominal charges.

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 Example

Services by way of admission

to circus, cinema halls,
amusement parks including
theme parks, water parks, etc.
are considered as supply as
these are services by way of
admission of persons to any
premises for a consideration.

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 Example

Royal Turf Race Club is engaged in

facilitating the wagering (betting)
transactions on horses placed through
totalisator. For providing the service of
facilitating wagering transactions, Royal
Turf Race Club gets commission which
is deducted and retained by the club
from the total bet value. Said services
amount to supply as the activities of a
race club are included in business.

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If an activity or transaction satisfies
all the above parameters, said activity
or transaction qualifies as ‘Supply
under GST’.

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Importation of services for consideration whether or not in
course or furtherance of business [Section 7(1)(b)]
Import of services

Business Context
Consideration
whether or not in course Payment or value
or furtherance of exchanged for
business services.

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 Example

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Activities/ transactions between a person, other than an individual and its members
[Section 7(1)(aa)]

1
Club/RWA

For consideration
Activities
or
Transactions
2
Members

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Activities/ transactions between a person, other than an
individual and its members [Section 7(1)(aa)]

Notwithstanding anything contained in

any other law for the time being in
Activities or transactions, by a force or any judgment, decree or order
person, other than an individual, to of any Court, tribunal or authority, the
its members or constituents person and its members or
or vice versa, for cash, deferred constituents shall be deemed to
payment or other valuable
be two separate persons and
consideration
the supply of activities or transactions
inter se shall be deemed to take place
from one such person to another.

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 Schedule –I
Activities without consideration - Deemed Supply
Permanent Transfer of business assets
Permanent transfer or disposal of business assets where
input tax credit has been availed on such assets.
Related Party Transactions
Supply of goods or services or both between related persons
or between distinct persons.
Principal-Agent Supply
Supply of goods by a principal to his agent or by an agent to
his principal, on behalf of the principal.
Import of Services
Import of services by a person from a related person/ any
establishments outside India.
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 PARA – 1
Permanent transfer/disposal of business assets

Permanent transfer or disposal of business assets where

input tax credit has been availed on such assets.

There must be a disposal or transfer of business assets.

Transfer/disposal must be permanent.

ITC must have been availed on such business assets.

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 Example

A company facing
shortage of storage
space disposes off
a redundant
machinery on which
ITC was taken at the
time of purchase.

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 Example

Dhruv 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
Dhruv on such laptops.

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 Example

A dealer of air-conditioners
permanently transfers the
motor vehicle free of cost.
ITC on said motor vehicle
is blocked. The transaction
will not constitute a supply
as the condition of
availment of ITC on the
business asset transferred
is not fulfilled.

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 Para – 2
Supply between related persons or distinct persons

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.

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 Related Persons
Persons including legal person are deemed as related persons if
Such persons are officers/directors of one another’s business
Such persons are legally recognised partners
Such persons are employer & employee
A third person controls/ owns/ holds (directly/ indirectly) ≥ 25% voting
stock/shares of both of them
One of them controls (directly/indirectly) the other
A third person controls (directly/indirectly) both of them
Such persons together control (directly/indirectly) a third person
Such persons are members of the same FAMILY

One of them is the sole agent/sole distributor/sole concessionaire of the

other

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 Related Persons

Spouse and
children of the
person

Parents, grand- Provided they are

parents, brothers wholly or mainly
and sisters of the dependent on the
person said person

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 Example for understanding family
Tukaram Godbole is a businessman who lives with his family in Nagpur,
Maharashtra. His family comprises of his father – Bajirao (retired) and
mother – Kashibai (housewife), an elder brother – Champak and a
younger sister - Madhvi, his wife – Sanyukta (housewife) and two children
– Aatmaram and Sarojini.
Tukaram is a manufacturer and supplier of toys in Mumbai.
Champak is a well settled interior decorator residing in California, USA
since last 5 years.
Madhvi is financially wholly dependent on Tukaram.
Sarojini, registered under GST in Maharashtra, is an independent director
in a multi-national company – Unicorn Technologies Ltd., Delhi.
Aatmaram is a student of Class X in Shiksha Senior Secondary School,
Nagpur.
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 Distinct persons specified under section 25
Example

Distinct persons

Registered head Registered branch

office in Delhi office in West
Bengal

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Establishments of distinct persons specified under section 25
Example

Establishments of
distinct persons

Registered Unregistered liquor

restaurant in shop in Uttarakhand
Maharashtra

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Establishments of distinct persons specified under section 25
Example

Establishments of
distinct persons

Registered
business in Office in USA
Maharashtra

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 Stock transfers or branch transfers qualify as supply
example

Stock Transfer -
Deemed Supply

Registered Lucknow
factory Registered Delhi
showroom

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 Stock transfers or branch transfers-not a supply
example

Stock Transfer – Not a

Supply

Lucknow Factory Kanpur showroom

Single registration in UP

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 Stock transfers or branch transfers

Whether separate Whether transfer

Whether the
registrations have between them will be
establishments have
been obtained for two considered as supply
same PAN?
places of business under GST?
within same State?

YES NO NO

YES YES YES

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 Para – 3
Principal – Agent

Only supply of goods and not supply of

services is covered here.

Supply of goods between principal and

agent without consideration is also supply.

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 Para – 3
Principal – Agent

Where the invoice for further supply to customer

is being issued by the agent in his name then,
any provision of goods from the principal to the
agent would fall within the fold of Para 3 above.

However, where the invoice is issued by the agent

to the customer in the name of the principal, such
agent shall not fall within the ambit of Para 3
above.

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Principal Agent Buyer

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 Agent Buyer

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 Principal Agent

NO Supply

Normal Supply

Customer
SINGLE SUPPLY

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 Agent Buyer

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Principal Agent Customer

Deemed Supply Normal Supply

TWO SUPPLIES

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 Para – 3
Principal – Agent

Where the goods being procured by the

agent on behalf of the principal are
invoiced in the name of the agent then
further provision of the said goods by the
agent to the principal would be covered by
Para 3 above.

However, where the invoice is issued by the

customer to the agent in the name of the
principal, such agent shall not fall within the
ambit of Para 3 above.
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Principal Agent Supplier

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 Agent Supplier

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 Principal Agent

NO Supply

Normal Supply

Supplier
SINGLE SUPPLY

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 Agent Supplier

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Principal Agent Supplier

Deemed Supply Normal Supply

TWO SUPPLIES

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 Example

Anmol appoints Bholu to procure certain

goods from the market. Bholu identifies
various suppliers who can provide the
goods as desired by Anmol and asks the
supplier (Golu) to send the goods and to
issue the invoice directly to Anmol.
In this scenario, Bholu 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, Bholu is not an
agent of Anmol for supply of goods in
terms of Para 3 of Schedule I.
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 Example

Manimani Bank, a banking company, appoints

Mandaar (auctioneer) to auction certain goods.
The auctioneer arranges for the auction and
identifies the potential bidders. The highest bid
is accepted and the goods are sold to the
highest bidder by Manimani Bank. The invoice
for the supply of the goods is issued by
Manimani Bank to the successful bidder.
In this scenario, the auctioneer is merely
providing the auctioneering services with no role
played in the supply of the goods. Even in this
scenario, Mandaar is not an agent of Manimani
Bank for the supply of goods in terms of Para 3
of Schedule I.

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 Example
Gautam, an artist, appoints Gambhir
(auctioneer) to auction his painting.
Gambhir arranges for the auction and
identifies the potential bidders. The highest
bid is accepted and the painting is sold to
the highest bidder. The invoice for the
supply of the painting is issued by Gambhir
on the behalf of Gautam but 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.
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 Example

A C&F agent or commission agent

takes possession of the goods
from the principal and issues the
invoice in his own name to Chetan-
the buyer.
In such cases, the C&F
commission agent is an agent of
the principal for the supply of
goods in terms of Para 3 of
Schedule I. The disclosure or non-
disclosure of the name of the
principal is immaterial in such
situations.

Board of Studies (Academic), ICAI 60

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 Clarification of
issues pertaining
to Del-credere
Agent (DCA)

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Clarification of issues pertaining to Del-credere Agent (DCA)

Whether a DCA falls under the

ambit of agent under Para 3
of Schedule I?

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 Del-credere agent (DCA) is NOT agent as per para 3

Whether the temporary

1. Supply of goods from supplier
short-term transaction
based loan extended by (principal) to recipient;
the DCA to the recipient 2. Supply of agency services
(buyer), for which interest from DCA to the supplier or
is charged by the DCA, is the recipient or both
to be included in the value
of goods being supplied by 3. Supply of extension of loan
the supplier (principal) services by the DCA to the
where DCA is not an agent recipient.
under Para 3 of Schedule I?

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Del-credere agent (DCA) is NOT an agent as per para 3

Supply of goods from supplier (principal) to recipient

Agency
services Extension
of loan
Principal DCA services Recipient

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 Del-credere agent (DCA) is agent as per para 3

Where DCA is an agent

under Para 3 of Schedule I Supply of goods by the supplier
1.

and makes payment to the (principal) to the DCA;

principal on behalf of the 2.Further supply of goods by the
buyer and charges interest DCA to the recipient;
to the buyer for delayed 3.Supply of agency services by
payment along with the the DCA to the supplier or the
value of goods being recipient or both;
supplied, whether the
interest will form a part of 4.Extension of credit by the DCA
the value of supply of to the recipient.
goods also or not?

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 Del-credere agent (DCA) is agent as per para 3
Supply of goods from supplier (principal) to recipient

Supply of Supply of
goods goods

Agency
services Extension
of loan
Principal DCA services Recipient

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Importation of services
Para 4

Import of services by a
person from a related
person or from his
establishments
located outside India,
without consideration,
in the course or
furtherance of
business.

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 Example

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

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.
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 In the course of furtherance
with consideration of business or not Supply

Import of
Services Related /distinct person in
the course of furtherance of Supply
without business
consideration
Not a
Other Cases supply

21 August 2025 © THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 70

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 Clarification on sales promotion
schemes
Buy one get one free is not an individual
supply of free goods, but a case of two
or more individual supplies where a
single price is being charged for the
entire supply. It can at best be
treated as supplying two goods for
the price of one.
Taxability of such supply will be
dependent upon as to whether the
supply is a composite supply or a mixed
supply and the rate of tax shall be
determined accordingly

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 Clarification on sales promotion schemes

Samples which are supplied

free of cost, without any
Free consideration, do not qualify
Samples as “supply” under GST,
except where the activity
falls within the ambit of
Schedule I.

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 Definition of supply [Section 7(1A) of the CGST Act, 2017]
Schedule II – Activities/transactions to be treated either as
supply of goods or supply of services
Type Goods/
Activity
services
(i) Title in goods
Goods
(ii) Title in goods where property shall pass at a future
Transfer Goods
date.
(iii) Right/undivided share in goods without transfer of Services
title in them
Lease, tenancy, easement, licence to occupy land Services
Land and Lease/letting out of building including a commercial/
Building industrial/ residential complex for business/ commerce, Services
wholly/ partly.

Transfer Job work Services

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 Definition of supply [Section 7(1A) of the CGST Act, 2017]
Schedule II - Activities/transactions to be treated either as supply of
goods or supply of services
Activity Type
Renting of immovable property
Construction of complex, building, civil structure, etc.
Temporary transfer/permitting use or enjoyment of any intellectual property right
Development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of IT software
Agreeing to obligation to refrain from an act, or to tolerate an act or situation, or
Services to do an act.
Transfer of right to use any goods for any purpose
Composite supplies-
Works contract
Supply of goods, being food or any other article for human consumption or any
drink.
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 Schedule –II
Para-1(a) Goods

Any transfer of the title in goods

Transfers the ownership of his car

Car owner Recipient

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 Schedule –II Services
Para-1(b)

Any transfer of right in GOODS or of undivided share

in goods without the transfer of title thereof.
Rented the car for use for 2 days

Car to be returned after 2 days

Car Owner Recipient

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 Schedule –II
Para-1(c) Goods

Any 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.

• Car given to recipient under an agreement

• Payment of car to be received in 20 instalments
• As per contract, ownership to be transferred after
receipt of all instalments
Recipient
Car Owner

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 Schedule –II
Services
Para-2(a)

• Any lease, tenancy, easement, licence to occupy LAND

Lease Tenancy

Easement Licence
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 Easement

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 Easement

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 Easement

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 Schedule –II Services
Para-2(b)
Any LEASE OR LETTING OUT of the BUILDING including a commercial, industrial
or residential complex for business or commerce, either wholly or partly.

Lease or letting out

for business or
commerce.

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 Schedule –II Services
Para-3
Any treatment or process which is applied to another
person's goods.

Job work

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 Schedule –II Goods
Para-4(a)

Where goods forming part of the assets of a business

are transferred or disposed of by or under the
directions of the person carrying on the business so as
no longer to form part of those assets, such
transfer or disposal is a supply of GOODS by the
person.

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 Selling old Selling old
machinery car

Selling
expired Selling old
medicines goods

Transferring Writing off

assets to damaged
partner stock
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 Schedule –II
Para-4(b) Services

Where, by 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, the usage or
making available of such goods is a supply of services.

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 Example

A person
manufacturing and
selling wooden
furniture takes one
chair
manufactured by
him for use at his
house.

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 Schedule –II
Goods
Para-4(c)
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 —
(I) the business is transferred as a going concern to another person; or
(Ii) the business is carried on by a personal representative who is
deemed to be a taxable person.

Arun, a trader, is winding up his business. Any goods left in

stock shall be deemed to be supplied by him.
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 A firm is sold as-is to another business
(all assets, liabilities, name, etc as a going
concern.
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 A businessman dies, and his wife
continues running the business and
becomes a taxpayer.
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 Schedule –II Services
Para-5(a)

Renting of immovable property

• Renting of a commercial complex.

• Renting of precincts of a religious
place.
• Renting of property to an educational
institution.

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 Schedule –II
Para-5(b) Services

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 completion certificate, where required,
by the competent authority or after its first occupation,
whichever is earlier.
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 Schedule –II
Para-5(b)

Construction
includes additions,
alterations,
replacements or
remodelling of any
existing civil
structure
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 Schedule –II
Services
Para-5(c)

Temporary transfer or permitting use or enjoyment of

any intellectual property right

Industrial
Copyright Patents Trademarks
Designs

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A singer allows a company to use
her song in an ad for 1 year.
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 Schedule –II Services
Para-5(d)
Development, design, programming, customisation,
adaptation, upgradation, enhancement, implementation
of IT software
Suvidha Solutions develops an
accounting software for a
business firm.

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 Schedule –II Services
Para-5(e)
Agreeing to obligation to refrain from an act, or to
tolerate an act or situation, or to do an act.
Cable operator - Sakharam has entered into 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.
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Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to
do an act
Tolerate an Act/ Situation
Do an Act
Refrain from an Act Agreeing to the
obligation to tolerate Agreeing to the
Agreeing to the
an act or a situation obligation to do an
obligation to refrain
act
from an act

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 Conditions

Expressed Implied Agreement

Agreement

Consideration

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A builder refraining
from constructing
more than a certain
number of floors, even
though permitted to do
so by the municipal
authorities, against a
compensation paid by
the neighbouring
housing project, which
wants to protect its
sunlight
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A shopkeeper allowing a
hawker to operate from the
common pavement in front of
his shop against a monthly
payment by the hawker.

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An industrial unit agrees to install
equipment for zero emission/
discharge at the behest of the RWA
of a neighbouring residential
complex against a consideration
paid by such RWA, even though the
emission/discharge from the
industrial unit was within
permissible limits and there was no
legal obligation upon the individual
unit to do so.

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 Schedule –II Renting a crane for a construction site
Para-5(f)
Transfer of right to use
any goods for any
purpose (whether or not
for specified period) for
cash, deferred payment or
other valuable
consideration.
Services

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 Schedule –II Services
Para-6(a)

Works contract
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.
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 Para 5(b) vs. Para-6(a)

You book a flat in a new housing project. You hire a contractor to construct your
The builder promises to deliver it in 2 factory. The contractor brings all material
years. You start paying in installments.- and labour. - Works contract services
Construction services under Para 5(b). under Para 6(a).
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 Schedule –II
Para-6(b) Services
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 supply or service is
for cash, deferred payment or
other valuable consideration.
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@ The Institute of Chartered Accountants of India
Taxability Of ‘Tenancy Rights’ Against ‘Tenancy
Premium’ Under GST

Transfer of Surrendering Renting to

Tenancy Rights Tenancy Rights Unregistered
Transfer of tenancy Person
Service provided here Renting of residential
rights by an outgoing
is service by way of dwelling for use as a
tenant to a new
surrendering the residence to an
tenant against
tenancy rights unregistered person
consideration in the
form of tenancy is exempt.
premium is taxable.

1 2 3

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 Pagdi Exempt
system
New Tenant

Portion of tenancy

tenancy rights
Surrender of
Tenancy premium + Periodic Rent Taxable

premium
Exempt

Landlord Grant of tenancy rights Outgoing

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Tenant115
 Non-supplies under GST

Notification
Schedule III Non-supplies are
Non-supplies are notified vide
explicitly listed in notification Circular
Schedule III of the . Non-supplies are
CGST Act. clarified through
circulars.

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 Schedule –III
Neither supply of goods nor supply of services
Services by employee to employer in course of employment.

Services by Court/Tribunal
Functions performed by Members of Parliament/State Legislature/Panchayats/Municipalities and other
local authorities
Funeral/burial/crematorium/mortuary including transportation of the deceased.

Sale of land and, subject to para 5(b) of Schedule II, sale of building.

Actionable claims, other than specified actionable claims.

Supply of goods from non-taxable territory to non-taxable territory without entering into India.

Supply of warehoused goods before clearance for home consumption

Supply of goods by the consignee by endorsement of documents of title to goods, after dispatch of
goods from the port outside India but before clearance for home consumption.
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Schedule –III
Para-1

Services by an
employee to the
employer in the
course of or in
relation to his
employment

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@ The Institute of Chartered Accountants of India
 Casual workers employed by a
construction contractor for
execution of a building contract
for him are services in the course
of employment
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 Casual workers employed by a
security services agency for
provision of security services to a
client are also services in the
course of employment
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Annapurna is a director in Nilgiri Ltd. receiving
remuneration which is declared as salaries in the
books of the company & subject to TDS under
section 192 of the Income-tax Act, 1961. In this
case, services provided by Annapurna to Nilgiri
Ltd. are in course of her employment with
company.

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@ The Institute of Chartered Accountants of India
@ The Institute of Chartered Accountants of India
 Schedule –III
Para-1

Services provided on contract basis by a

person to another i.e. principal-to-principal
basis.

NOT IN COURSE OF EMPLOYMENT

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 Schedule –III
Para-1

Any amount paid by employer to employee for not

joining a competing business is paid for providing the
service of forbearance to act.

NOT IN COURSE OF EMPLOYMENT

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 Perquisites by employer to employee

Any perquisites provided by the employer to its

employees in terms of contractual agreement entered
into between the employer and the employee are in
lieu of the services provided by employee to the
employer in relation to his employment.

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@ The Institute of Chartered Accountants of India
@ The Institute of Chartered Accountants of India
@ The Institute of Chartered Accountants of India
@ The Institute of Chartered Accountants of India
@ The Institute of Chartered Accountants of India
Supply of goods or services or both between an employer
and employee

Employer and employee are related persons

Services provided by an employee to the employer in the course

of or in relation to his employment are outside the scope of GST

Gifts upto Rs. 50,000 in value in a financial year by an

employer to an employee shall not be treated as supply

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@ The Institute of Chartered Accountants of India
 Schedule –III
Para-2
Services by any court or tribunal established under any law for the time being
in force.

District High Supreme

Court Court Court

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Schedule –III
Para-3(a)

Functions performed by:

• Members of
Parliament
• Members of State
Legislature
• Members of
Panchayats
• Members of
Municipalities and
Members of other local
authorities.
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 Schedule –III
Para-3(b)
Duties performed by any person who holds any post in pursuance of
the provisions of the Constitution in that capacity.

• President of India
• Vice President of India
• Prime Minister of India
• Governors
• 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
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 Schedule –III
Para-3(A)

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.

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 Schedule –III
Para-4

Services of funeral, burial,

crematorium or mortuary
including transportation of the
deceased.

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 Schedule –III
Para-5

Sale of land and,

subject to paragraph
5(b) of Schedule II,
sale of building

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 Schedule –III
Para-6
Actionable claims, other than specified actionable claims.
Horse Racing

Online Money
Specified

Gaming
Lottery

Actionable
Claims

Gambling
Casinos

Supply
Betting

141
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 Schedule –III
Para-6
Actionable claims, other than specified actionable claims.

NOT
Insurance Claims for
Arrears of rent Specified
Claim future rents Actionable
Claims

Unsecured Bills of Promissory

loans exchange Note
NOT a
Supply
142
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 Schedule –III
Para-9
Activity of apportionment of co-insurance premium by the
lead insurer to the co-insurer for the insurance services
jointly supplied by the lead insurer and the co-insurer to the
insured in co-insurance agreements, subject to the
condition that the lead insurer pays the central tax, the
State tax, the Union territory tax and the integrated tax on
the entire amount of premium paid by the insured.

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 Example
ADC Insurance Ltd. enters into a co-insurance agreement
with XYZ Insurance Ltd. where ADC Insurance Ltd. is the lead
insurer. The insured – Gyaati Industries- pays a total
premium of Rs. 50,00,000 which is apportioned by the lead
insurer - ADC Insurance Ltd. between itself and XYZ
Insurance Ltd. in the ratio of 60:40 for the insurance services
jointly supplied by them to Gyaati Industries. ADC Insurance
Ltd. agrees to discharge the entire GST liability on the full
amount of premium received from Gyaati Industries.
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@ The Institute of Chartered Accountants of India
 Schedule –III
Para-10
Services by insurer to the reinsurer for which ceding
commission or the reinsurance commission is deducted
from reinsurance premium paid by the insurer to the
reinsurer, subject to the condition that the central tax, the
State tax, the Union territory tax and the integrated tax is
paid by the reinsurer on the gross reinsurance premium
payable by the insurer to the reinsurer, inclusive of the said
ceding commission or the reinsurance commission.
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 Example
A large industrial plant needs an insurance worth Rs. 500 crore. It approaches
ABC Insurance Ltd. for the same. However, since ABC Insurance Ltd. is unable to

underwrite the entire risk alone, it enters into a reinsurance agreement with a
reinsurer - PQR Insurance Ltd. The total premium charged is Rs. 50 lakh. The
insurer - ABC Insurance Ltd. pays a reinsurance premium of Rs. 20 lakh to PQR

Insurance Ltd. This allows ABC Insurance Ltd. to manage its risk and financial
exposure. While paying this amount to PQR Insurance Ltd., ABC Insurance Ltd.
deducts a ceding commission of Rs. 1,00,000 which it has charged for the

services it provides to PQR Insurance Ltd. PQR Insurance Ltd. pays GST on the
gross reinsurance premium including the ceding commission.
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Panchayat or
Municipality
Functions –Not a
supply

Activity in relation
to Panchayat/
Municipality
functions
entrusted in
Constitution

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Grant of alcoholic liquor license- Not a supply

Applicable to grant of alcoholic liquor license

by the State Governments

Not applicable to services provided by

Government to business entities including
grant of privileges, licences, mining rights,
natural resources such as spectrum etc.
against payment of consideration in the form
of fee, royalty etc.

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Sarvanna & Sons wishes to start
supplying alcoholic liquor for human
consumption in the State of Tamil
Nadu. Therefore, it applies for
license to the Tamil Nadu
Government for selling liquor for
which the State Government has
charged specified fee from it.
Examine whether the grant of
alcoholic liquor license by the Tamil
Nadu Government to Sarvanna &
Sons qualifies as supply.
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Non-supplies notified vide circular

Inter-State movement of
• various modes of conveyance
• including rigs, tools and spares, and all
goods on wheels [like cranes]
• between distinct persons
• carrying goods/passengers
• for repairs and maintenance
• such movement should not be for further
supply of conveyance

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 Gagan Engineering Pvt. Ltd., registered in
Haryana, is engaged in providing maintenance
and repair services for heavy steel machinery.
For carrying out the repair work, Gagan
Engineering Pvt. Ltd. sends its container trucks
equipped with items like repair equipments,
consumables, tools, parts etc. from Haryana
workshop to its own repairing centres (registered
under GST law) located in other States across
India where the clients’ machinery are being
brought and are being repaired.
Discuss the leviability of GST on the inter-State
movement of trucks from the workshop of Gagan
Engineering Pvt. Ltd. in Haryana to its own
repairing centres located in other States across
India.

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 No
Is the activity a supply of goods/services such as sale,
transfer, barter, exchange, licence, rental, lease or disposal?
Yes

Is it for a No No
Is it an activity specified
consideration? under Schedule I?

Yes Yes

Is it in course No
or furtherance
Is it in course Is it No of business?
or furtherance import of
No service?
of business?
Yes

Yes Yes

Is it an activity specified in No
Schedule III or section Activity is
Activity is
7(2)(b)? Supply NOT Supply
Yes
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 Supply leviable to GST

Supply must
be made by a
taxable person
Supply
Leviable to
Supply must GST
be a taxable
supply
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 Composite supplies
Composite supply means a supply made by a taxable
person to a recipient and:
 comprises 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

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 Principal supply

Principal supply means the

supply of goods or services
which constitutes the Predominant
predominant element of a element
composite supply and to which
any other supply forming part of
that composite supply is
ancillary.
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 How to determine whether the services are bundled in
the ordinary course of business?

The perception of the consumer or the service recipient

• Mobile phone is always sold with battery

Majority of service providers in a particular area of business provide similar bundle

of services.

• Bundle of services of catering on board and services of transport by air is a

bundle offered by a majority of airlines.

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@ The Institute of Chartered Accountants of India
 How to determine whether the services are bundled in
the ordinary course of business?

Nature of the various services in a bundle of services

• If the nature of services is such that one of the services is the MAIN
SERVICE and the other services combined with such service are in
the nature of INCIDENTAL OR ANCILLARY SERVICES which help in
better enjoyment of the main service, then it would be treated as
services bundled in the ordinary course of business.

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Service of stay in a hotel is often
combined with provision of
breakfast and dinner provided
free of cost during the stay. Such
service is an ancillary service to
the provision of hotel
accommodation and the
resultant package would be
treated as services naturally
bundled in the ordinary course of
business.

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 Other illustrative indicators

The elements are normally advertised as a package.

The different elements are not available separately.

The different elements are integral to one overall supply. If one or more is removed,
the nature of the supply would be affected.

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 No straight jacket formula can be laid
down to determine whether a service
is naturally bundled in the ordinary
course of business. Each case has to
be individually examined in the
backdrop of several factors some of
which are outlined earlier.

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 Example

Poshaak Manufacturers
entered into a contract with
Cheeku Ltd. for supply of
readymade shirts packed in
designer boxes at Cheeku Ltd.’s
outlet. Further, Poshaak
Manufacturers would also get
them insured during transit. In
this case, supply of goods,
packing materials, transport &
insurance is a composite
supply wherein supply of goods
is principal supply.

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 Example

WARRANTY

When a consumer buys a

television set and he also gets
mandatory warranty and a
maintenance contract with the
TV, this supply is a composite
supply. In this example, supply
of TV is the principal supply,
warranty and maintenance
services are ancillary.

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 Example

Rati Computers supplies laptop (worth Rs.

52,000) alongwith laptop bag (worth Rs.
4,000) to all its customers for Rs. 55,000.
Being naturally bundled, supply of laptop
bag along with the laptop is composite
supply which is treated as the supply of
the principal supply [viz. laptop].
Assuming that the rate of tax applicable
on laptop is 18% and on laptop bag is 28%,
in the given case, rate of principal supply,
i.e. laptop @ 18% will be charged on the
entire value of Rs. 55,000.

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 Clarification regarding printing industry
In case of printing of books, pamphlets,
brochures, annual reports, and the like,
where only content is supplied by the
publisher or the person who owns the
usage rights to the intangible inputs while
the physical inputs including paper used
for printing belong to the printer, supply of
PRINTING [of the content supplied by the
recipient of supply] is the principal supply
and therefore such supplies would
constitute SUPPLY OF SERVICE.

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 Clarification regarding printing industry
In case of supply of printed envelopes,
letter cards, printed boxes, tissues,
napkins, wall paper etc. by the printer
using its physical inputs including paper
to print the design, logo etc. supplied by
the recipient of goods, predominant
supply is supply of goods and the supply
of printing of the content [supplied by the
recipient of supply] is ancillary to the
principal supply of goods and therefore
such supplies would constitute SUPPLY
OF GOODS.
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Food supplied to the
patients

Food supplied to
the in-patients as
advised by the
doctor/nutritionist
s is a part of
composite supply
of health care and
not separately
taxable.
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 Retreading of tyres
In retreading of tyres, which is a
composite supply, the pre-dominant
element is process of retreading which is
a supply of service.
Rubber used for retreading is an ancillary
supply.

Supply of retreaded tyres, where the old

tyres belong to the supplier of retreaded
tyres, is a SUPPLY OF GOODS.
21 August 2025 © THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
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 Mixed supplies
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
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 How to determine if a particular supply is a mixed
supply?
Rule out that the supply is a composite supply.

If the transaction consists of supplies not naturally bundled in

the ordinary course of business, then the possibility of it being
a mixed supply needs to be checked.

Whether a single consideration is charged for the entire

supply of different components.
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 Example
A house is given on rent
through a single rent
deed - one floor of which
is to be used as
residence and the other
for housing a printing
press, at a lump sum rent
amount. Such renting for
two different purposes is
not naturally bundled in
the ordinary course of
business. Said supplies
are mixed supply.
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 Example
A supply of a package
consisting of canned foods,
sweets, chocolates, cakes, dry
fruits, aerated drink and fruit
juices when supplied for a
single price is a mixed supply.
Each of these items can be
supplied separately and is not
dependent on any other. It
shall not be a mixed supply if
these items are supplied
separately or separate prices
are charged.
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 Example
Sringaar Enterprises supplies 10,000 kits
(at Rs. 50 each) amounting to Rs.
5,00,000 to Raghav General Store. Each
kit consists of 1 shampoo, 1 face wash
and 1 kajal pencil. It is a mixed supply
and is treated as supply of that particular
supply which attracts highest tax rate.
Assuming that the rate of tax applicable
on shampoo is 18%, on face wash is 28%
and on kajal pencil is 12%, in the given
case, highest tax rate [viz. face wash] @
28% will be charged on the entire value
of Rs. 5,00,000.
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 More than one supply made together and taxed at the
individual rates

There can also be a case where an activity/transaction involves more

than one supply of goods or services or both, but neither they are
composite supplies nor can be categorised as mixed supplies, that is,
all supplies carry independent significance.

In such a case, if separate consideration is indicated against each

supply, each such supply shall be charged at the respective rate
applicable to that particular supply.

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 Example

In case of servicing of cars

involving supply of both goods
(spare parts) and services (labour)
where the value of goods and
services are shown separately, the
goods and services would be liable
to tax at the rates as applicable to
such goods and services
separately.

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Dumdum Electronics has sold the
following electronic items to Akbar
Retail Store.
(i) Refrigerator (500 litres)
taxable @ 18%
(ii) Stabilizer for refrigerator
taxable @ 12%
(iii) LED television (42 inches)
taxable @ 12%
(iv) Split air conditioner (2 Tons)
taxable @ 28%
(v) Stabilizer for air conditioner
taxable @12%
Dumdum Electronics has issued a
single invoice, indicating price of
each of the above items separately in
the same.
177
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 THANK YOU

21 August 2025 © THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 178

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