Chapter 2 Supply of GST

Concept 1 :- Introduction
Taxable event determine the point at which tax would be levied.
Under GST regime, Taxable event is supply of goods or service or both.

Concept 2 Section 7 Supply

Section 7(1)

Section 7(1)(a) Section 7(1)(b) Section 7(1)(c)

supply includes

Supply Includes Supply Includes

• All Forms of supply of Importation The Activities

goods, service, Both service specified in
• Such as schedule 1
S/T/B/E/L/R/L/D
• Made or agree to made
For a
• For a Consideration by a
consideration Made/agree to
person
be made
• In the course of
furtherance of business

Whether or not Without a

in course or consideration
furtherance of
business
Business + ITC

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 Sec 7(1A)

Activity Which shall be treated

either as
1. Supply of goods
Or
2. Supply of service

Schedule II

Sec 7(2)

Notwithstanding anything Contain in Sec 7(1)

Activates which shall be treated neither as

➢ Supply of goods
Nor
➢ Supply of service

Sec 7(2)(a) Sec 7(2)(b)

Activities undertaken by CG/SG/LA as

Schedule III
Public authorities

Notified by Govt

Recommendation of Council

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Note 1

Goods

Sec 2(52) of CGST Act 2017

Means Includes Excludes

Every Kind of Movable

Property 1. Actionable Claim 1. Money
OR and
2. Growing Groups, 2. Securities
Grass and things
attached /Forming
part of which are
agreed to secured
before supply or
under Contract of
supply

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Note 2

Service

Sec 2(102) of CGST Act 2017

Means Includes Excludes

Any thing
other than 1. Use of money
(Discount/int) 1. Money
goods
2. Conversation of and
Money 2. Securities
• From one Form to
another (Cash DD)
• From one Currency
to another(Rs –
USD)
• From denomination
to another (Rs 500
– Rs 10 x 50 )
3. Facilating or
arranging
transaction in
securities

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Note 3
Consideration

Section 2(32)

Monetary value of any act Excluding Subsidy

Payment of money or
of forbearance given by central /
otherwise for the supply
For the supply State Government

Deposit to be consider By Recipient or any

as payment other person

Only

When the suppliers applies such deposit

as consideration for the said supply

Note 4
Taxable Person :- Register or liable to be registered under section 22 or 24

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Concept 3
Sec(1)(c) r.w schedule I

Activities deemed to be supply

Even if made without Consideration

In Course / Furtherance of business

[ITC availed]

PARA 1 :- Permanent transfer or disposal of business Assets where ITC has been availed.

PARA 2 :- Supply of goods / Service / Both between

1. Related Person
Or
2. Distinct person u/s 25

Exception :- Gift by employer to employee not exceeding Rs 50,000 (not a supply)

PARA 3:- Supply of goods

1. By a principle to Agent
OR
2. By an Agent to Principle

PARA 4:- Import of Service

By a Person

From a Related person

Or

From any of his other establishment outside India

In the course / Furtherance of Business

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Example 1
Unrated Import of Service UR
+ Consideration + Business = Supply u/s 7(1)(b)
[Reverse Charge Mechanism = IGST]

Example 2
UR Import of Service UR
Consideration = Supply u/s 7(1)(b)
(Not in Course of Business) [Reverse Charge Mechanism = IGST]

Example 3
Related Import of Service R
Consideration = Supply u/s 7(1)(b)
(Not in Course of Business) [Reverse Charge Mechanism = IGST]

Example 4
Related Import of Service R
Without Consideration = Supply u/s 7(1)(c)
(in Course of Business) [Reverse Charge Mechanism = IGST]

Example 5
Unrelated Import of Service UR
Without Consideration = Not a Supply u/s 7(1)(c)
(in the Course of Business) Schedule - I

Example 6
Related Import of Service R
Without Consideration = Not a Supply u/s 7(1)(c)
(Not in the Course of Business) Schedule - I

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Summary

Sec 7 (1)(b) = Consideration + Business

Import of Service
Sec 7 (1)(c) = Without + related + Business Consideration Party

Para 3 of Schedule I [Sec 7(1)(c)]

Situation 1

Goods A Invoice issued by Agent on his name

GST Supply of goods
Without consideration ITC

Deemed supply u/s 7(1)(c)

R.w Para 3 of schedule I

Situation 1

Goods A Invoice issued by Agent on Principle

GST Supply of goods name
Without consideration

Not Deemed supply u/s 7(1)(c)

R.w Para 3 of schedule I

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Circular No 73/47/2018 : Clarification of DCA
Situation 3

1
Independent
2

P DCA Buyer

Deemed
Supply Invoice Issued by
DCA
GST
ITC

supply u/s
7(1)(c) R.w
4
Para 3 of Loan
schedule I
Default
Payment of buyer to
DCA

Loan + Interest

GST

Includes in Value
of supply
[Sec 15(2)(d)]

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Situation 4

Invoice issued by Principle

Not A Deemed Supply

P(5) DCA Buyer
u/s 7(1)(c) R.w Para 3 of (R)

schedule I Loan Default

#
Loan + Int
Shall Not be added to
value of Supply for (P)
# Int is exempted under notification

Concept 4
Activities to be treated either as supply of goods or supply of service

Sec 7 (1A)r.w schedule II

Supply of goods Supply of service

• Any transfer title of goods • Any transfer of right in goods / undivided
goods without transfer of title goods
• Any transfer title of goods under an
Agreement which stipulate that property • Any lease, tenancy easement licence to
Shall pass at future date upon payment of Occupy land
Full consideration.
• Goods forming part of business • Any lease out of Building including a
Assets are transferred or disposed off. Commercial, industrial ,residential complex
For a business or commerce, wholly or partly.

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 • Goods Forming Part of assets of any • Any treatment or process which is
Business carried on by a person who Ceases Applied to another persons Goods.
To be taxable person Exception ;-Going (Job work)
Concern.

• Supply of goods by an • Goods held/used for business are put

Unincorporated association or body of To Private use.
Persons to a member.
• Work contract Service
• Renting of immovable property.

• Construction of complex, building,

Civil structure, etc. consideration has been
received after issuance of after it’s first
Occupation Whichever is earlier.

• Temporary transfer or permitting use

Or enjoyment of any intellectual property
Right.

• D/D/P/C/A/U/E/I
OF IT Software.

• A greeting to obligation to refrain from

An act , or to tolerate an act or situation or
To do an act.

• Transfer of Right to use any goods

Goods for any purpose.

• Restaurant service.

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 Concept -5

* Negative list under GST :- Neither supply of service

Nor supply of service

1) E Service by an employee to the employer in the course of or in relation to his employment.

2) C Any services by any court or Tribunal .

3) C Constitutional Functions :-
(a) Functions Performed by MP,MLA/MOP/MOM
(b) Duties performed by any person who hold any post in pursuance of the provisions
Of the constitution in that capacity.
(c) Duties performed by any chair person or Member or director in a body established
By ( G,SG ,local authority.

4) F Service of funeral ,burial, crematorium or mortuary including transportation of the

Deceased.

5) L Sale of land or building subject to para 5 (b) of schedule II ( After completion certificate).

6) A Actionable claim other than lottery, betting ,gambling .

Concept -6
Sec 7 (2) (b)

Activities notified by government which shall be treated not supply of goods nor supply
Of service.

i. Services by way of any activity in relation to a function entrusted to a

Panchayat under Article 243 G of the constitution or to a Municipality under article 243 W
Of the constitution for the said purpose.

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ii. Service by way of grant of alcoholic liquor license.

Sec 8 :- Composite and Mixed supply

Composite supply Mixed supply

• Consist of two or more supply. → Consist of two or more supplies for a
Single price.
• Naturally handled → Not naturally handled

• In conjunction with each other → Through can be supplied independently ,

Still supplied together.
• One of which principal supply → Both supply are equally important .

• Taxable liability Rate of → Tax liability shall be the rate applicable to

Principal supply. The supply that attracts highest rate of
Tax.

E. g E. g
1) Goods with packing material. 1) A gift pack comprising of
2) TV with warranty chocolate ,candies, sweets
3) Passengers along with food. Balloons.
4) Accommodation with complementary 2) Cold drink along with
Breakfast. Refrigerator.

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