GST in 14 Days - Day 2

Supply – Sec 7 of CGST ActDAY 2CH.SUDHEER C.A, C.M.A
2.1Queries contact: vjabranchofsircoficai@gmail.com
Chapter 2
SUPPLY – SEC 7 OF CGST ACT
ExcludesSupply include Govt by notification specify
transactions to be treated as
All forms of
sale, transfer
barter,
exchange
licence, rental
lease or
disposal
Made or
agreed to be
made
For
consideration
In the course
of business
or
furtherance
of business
Importation
of service
For
consideration
Activities
specified
in
schedule- I
Whether or not
In the course of
business or
furtherance of
business
Without
consideration
Activities to
be treated as
supply of
goods or
services as
referred to in
Schedule- II
Refer page
2.3
Activities or
transactions
undertaken
by CG/SG/LA
as may be
notified by
Govt
Supply of
goods & not
as a supply of
service
Supply of
service not
as a supply
of goods
Made or
agreed to
be made
Activities or
transactions
specified in
Schedule – III
Refer page
2.4

Chapter 2
Schedule-I (without Consideration)
Permanent
transfer/
disposal of
business assets
Eg:
 Transfer of assets
by H.Co to S.Co
 Donate old
laptop to Schools
 A cloth retailer
giving clothes
free to his friend
This provision will
apply only when ITC
has been availed by
Transferor
Supply b/w
distinct
persons
A person having
reg.est in one
state and
another reg.est
in other state
shall be distinct
persons
Stock transfers by
one unit to other
unit of other state
is a supply
Supply of
goods or
services by
employer to
employee
Outside the
course of
employment
Gifts not exceeding
50,000 in year are not
a supply
Employer gives dussera
gift of 55,000 - treated as
supply for levy of GST
Principal &
Agent
Any goods
supplied to
agent shall be
regarded as
supply
Supply
between
related
persons
Shall be
regarded as
supply
Import of
service
Only if made in the course
of Business
In these cases, even though consideration is not charged, it shall be regarded as supply
Refer page
2.10 (CASE 7)

Chapter 2
Transfer Land or Building Transfer of Business Assets
Supply of supply of Supply of service Supply of goods Supply of Service
goods service
Lease, tenancy,
easement, licence Goods forming part When the business is Goods held for
-Title in goods Right in goods without to occupy land of business assets ceased, then stock left business but put to
-Tiltle in goods under transfer of goods are disposed whether shall be deemed to be private use with or
agreement at future date or not for consideration supplied and liable to GST without consideration
Exception
Business transferred as Going concern A director using car
provided by co. for
personal travels
Treatment or process Certain specified service Composite supplies Supply of service by unincorporated
AOP/ BOI to its members for cash or
Supply of service 1.Renting of Immovable properties Supply of services deferred payment
2. Construction of civil structure, complex etc..,
Treatment of process 3.Temporary transfer or permitting use of IPR
applied to other person's 4.Development, design, upgradation etc., of IT s/w 1. Works contract services 1. Club membership fees-service
goods 5.Agreeing to obligation to refrain from an act or 2. Supply being food or drink 2. A local club supplies snacks
tolerance of an act or situation or to do an act or any article for human during monthly meeting for
Eg:- 6. Transfer of right to use any goods for any purpose consumption nominal payment.-service
Jobwork performed by
jobworker on goods
supplied by Principal Treated as supply of services
Manufacturer
Schedule – II: Activities to be treated as Supply of Goods or Services

Services by
Schedule – III: NEGATIVE LIST OF UNDER SERVICES
Services by
Employee to
employer in
the course of
employment
(i.e salary)
Services by
District
courts
Functions performed by
M.P’s, M.L.A & other
constitutional Duties
Services of
a) Funeral
b) Burial
c) Crematorium
d) Mortuary
e) Transportation
of deceased
a) Sale of land
b) Sale of Building
Where entire
consideration is received
after completion
certificate
However works contract
would come under GST
Actionable
claims
Supply of goods from outside
India to Outside India without
such goods entering into India
Supply of warehoused goods to
any person before clearance for
home consumption
Supply of goods by the consignee to any other
person by endorsement of documents of title to
the goods after the goods have been dispatched
from the port of origin located outside India but
before clearance for Home Consumption (i.e.,
High sea sales)
In case payment to directors
TDS u/s 192
No GST
TDS u/s 194J
GST chargeable (but under RCM)
NEGATIVE LIST OF UNDER GOODS

COMPOSITE AND MIXED SUPPLIES (SECTION 8)
Composite Supply Mixed Supply
Naturally bundled in the ordinary course of business Artificially bundled and not in the ordinary course of Business
Comprising two or more supplies one of which is principal
supply
Comprising of two or more supplies
Shall be treated as supply of that particular principal supply Treated as supply of such supply that attracts highest rate of tax
S Ltd. Manufacturers entered into a contract with XYZ Ltd. for supply
of readymade shirts packed in designer boxes at XYZ Ltd.’s outlet.
Further, S Ltd Manufacturers would also get them insured during
transit. So, supply of goods, packing materials, transport & insurance is
a composite supply wherein supply of goods is principal supply
When a consumer buys a television set and he also gets 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
Example
Supply of package consisting of food, sweets, chocolates,
cakes, dry fruits for a single price is mixed supply. Each
of these items can be supplied independently. Hence it is a
mixed supply.
A shopkeeper selling storage water bottles along with
refrigerator. It is a mixed supply
Example

Free samples and gifts If ITC is taken- then distribution of Free samples and gifts should be
treated as supply as per Sch-I
If ITC is not taken- transaction made without consideration shall not be
regarded as supply
Buy one get one free offer For example, buy one soap and get one soap free or
Get one tooth brush free along with the purchase of tooth paste.
In fact, it 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
It is also clarified that ITC shall be available to the supplier
Clarification (C.No.92/11/2019 dt.07/03/2019)

Principal & Agent- Deemed supply & Mandatory Registration-
Clarification (Circular No. 57/31/2018-GST)
Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various suppliers
who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods
and issue the invoice directly to Mr. A. In this scenario, Mr. B 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, Mr. B is not an agent of Mr. A for supply of goods in
terms of Schedule I.
Scenario 1
M/s XYZ, a banking company, appoints Mr. B (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 M/s XYZ. The invoice for the supply of the goods is issued
by M/s XYZ 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, Mr. B
is not an agent of M/s XYZ for the supply of goods in terms of Schedule I.
Scenario 2
Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B 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 M/s B on the behalf of
Mr. A but in his own name and the painting is delivered to the successful bidder. In this scenario,
M/s B is not merely providing auctioneering services, but is also supplying the painting on behalf
of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A.
This scenario is covered under Schedule. A similar situation can exist in case of supply of goods as
well where the C&F agent or commission agent takes possession of the goods from the principal
and issues the invoice in his own name. In such cases, the C&F/commission agent is an agent of
the principal for the supply of goods in terms of Schedule I. The disclosure or non-disclosure of the
name of the principal is immaterial in such situations.
Scenario 3
Note: In scenario 1 and scenario 2, Mr. B shall not be liable to obtain registration in
terms of clause (vii) of section 24 of the CGST Act. He , however, would be liable for
registration if his aggregate turnover of supply of taxable services exceeds the threshold
specified in sub-section (1) of section 22 of the CGST Act. In scenario 3, M/s B shall be liable
for compulsory registration in terms of the clause (vii) of section 24 of the CGST Act

GST in 14 Days - Day 2

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GST in 14 Days - Day 2