The term supply has been discussed in detail considering the definition given in GST Model Law.

1. 1
MEANING AND SCOPE OF SUPPLY
UNDER MODEL GST LAW, INDIA
Presented by CA. Deepak Vachher
Date 25th Sep 2016

2. DISCLAIMER
The views expressed in this presentation are of the Member.
The content of this presentation has not been specifically discussed by the IDT
committee and the views expressed herein may not be taken to necessarily represent the
views of the committee
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3. AGENDA
Overview
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Meaning and scope of supply as per section 3
of IGST

4. The Goods and Services Tax (GST) is one of the biggest tax reform in indirect taxation system which will integrate Excise duty, Service Tax,
Value Added Tax, Central Sales Tax and lot of other indirect taxes which are existing at state level. GST is a broad based and a single
comprehensive tax levied on goods and services consumed in an economy. This is levied at every stage of production – distribution chain
till retail level with applicable setoffs in respect of tax remitted at previous stage.
It is a distinction based tax and levied at single point at the time of final consumption by ultimate consumer.
The entire indirect tax system will get transformed with the rollout of GST and will significantly impact to the various sectors of the industry.
Result would be change in pricing strategies, working capital requirement and supply chain management.
It could be a challenge for the industry to migrate from existing indirect tax system to proposed GST system without hampering their
business.
Although the GST model and its mechanics are relatively simple (Output tax less input tax) but it will impact significantly to industries in
terms of change in their IT system to ensure the requirements of GST.
In this presentation, we will cover section 3 of the said Act, which has the Meaning & Scope of Supply
About GST
OVERVIEW

5. Section 3
Meaning & Scope of Supply

6. SUPPLY INCLUDES:
SECTION 3(1)(A) : NORMAL SUPPLY OF GOODS AND/OR SERVICES
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All forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made
or agreed to be made for a consideration by a person in the course or furtherance of business
Section 3(1)(a)
Interpretation
The list is only illustrative
and not exhaustive owing to
use of the wordings “such as”
These 8 expressions are not defined
in the GST and expressions like lease
and rental are closely related and used
interchangeable
Covers all the regular
transactions of sale or
services
For Consideration and in
the course or furtherance
of business
In the course of business implies a
period of time during which business is
in progress, promoting, advancement,
or progress etc., of business
Furtherance of business can be
commonly understood as helping,
forwarding, promoting, advancement,
or progress etc., of business.
‘for consideration’ is
subject to other part
of section 3 where in
certain transactions
even without
consideration are
deemed as supply.

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Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, and
Section 3(1)(b)
SUPPLY INCLUDES:
SECTION 3(1)(B) : IMPORT OF SERVICES
Interpretation
Contrary to Section 3(1)(a)
when there is no
consideration then there
is no supply
So if these specified
transactions are made with
considerations then it will
fall under section 3(1)(a)
Free Services received from outside
India will also attract GST.
Personal Services will also be liable to
GST though some threshold limit will
be there
The benefit factor.
Payment(expenses incurred for
running of branch there) made by
Indian Head office to its branch
/agency is not liable to GST
Similarly export benefits will also
not be available. For transactions
between them.

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A supply specified in Schedule I, made or agreed to be made without a consideration.
Section 3(1)(c)
SUPPLY INCLUDES:
SECTION 3(1)(C) : SUPPLY WITHOUT CONSIDERATION
Interpretation
Services imported are
liable for IGST
The service receiver will be
liable to pay GST under
reverse charge whether
bused for business or not
Free samples and 1+1 offers are liable
to GST
Statutory requirement like CSR
activities are also liable to GST
Benefit of doubt
If there is consideration but there
is no furtherance of business
then this will not be supply as
per 3(1)(a) and 3(1)(c).
Schedule 1
Permanent
transfer/disposal of
business assets.
Temporary application of
business assets to a
private or non-business
use
Services put to a private
or non-business use
Assets retained after
deregistration
Supply of goods and / or
services by a taxable
person to another taxable
or nontaxable
person in the course or
furtherance of business.
Supply of goods by a registered
taxable person to a job-worker in
terms of section 43A shall not be
treated as supply of goods.

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Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of
goods or a supply of services
Section 3(2)
Matters to be treated as supply of
goods
SECTION 3(2) : A SUPPLY OF GOODS OR A SUPPLY OF SERVICES
Interpretation
Transfer of
title in
goods
Sale of business
assets by any
other person to
recover debt
Transfer of future
goods(the property
therein will pass at
future date)
Goods forming part
of business assets on
ceasing to be taxable
person
Transfer/disposal of
business assets with
or without
consideration
Supply of goods by
an unincorporated
association to its
members

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Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of
goods or a supply of services
Section 3(2)
Matters to be treated as supply of
services
SECTION 3(2) : A SUPPLY OF GOODS OR A SUPPLY OF SERVICES….
CONTINUED
Interpretation
Transfer
of right to
use goods
Lease, tenancy,
easement, license to
occupy land, letting
out of property
Job work on
others
goods
Personal use/making
available for non-
commercial use of
business assets
Temporary transfer or
permitting the use or
enjoyment of any
intellectual property
Development, design, programming,
customization, adaptation, up
gradation, enhancement,
implementation of IT Software
Agreeing to the obligation to
refrain from an act, or to
tolerate an act or a situation,
or to do an act
Construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partially, except where the
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or before its first occupation.
Works contract including transfer of
property in goods (whether as goods
or some other form) involved in the
execution of a works contract
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), where such supply or service is for cash, deferred
payment or other valuable consideration.

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Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods
and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a
supply
Section 3(2A)
Interpretation
Transaction between
Principal and Agent deems
to be Supply
Transaction between Agent and
third party will continue to be
supply
This deemed supply is to tax movement of
goods between principal and agent and not
for commission or brokerage that being
paid by principal and agent, which anyways
liable even without this section
SECTION 3(2A) : PRINCIPAL – AGENT TRANSACTIONS

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Understand Subject to sub-section (2), the Central or a State Government may, upon recommendation of the Council, specify,
by notification, the transactions that are to be treated as—
(i) a supply of goods and not as a supply of services; or
(ii) a supply of services and not as a supply of goods; or
(iii) neither a supply of goods nor a supply of services.
Section 3(3)
SECTION 3(3) : POWER(S) OF CENTRAL AND STATE GOVERNMENT
Interpretation
This is additional power given to Central and State
Government to notify as supply of goods or supply
of services

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Notwithstanding anything contained in sub-section (1), the supply of any branded service by an aggregator, as defined in
section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said
aggregator
Section 3 (4)
SECTION 3(4) : BRANDED SERVICE BY AN AGGREGATOR UNDER TRADE
OR BRAND NAME
Interpretation
Branded Services
Transactions involving
aggregator as supply in the
hands of aggregator
Meaning -‘aggregator’ means a person, who owns and manages
an electronic platform, and by means of the application and a
communication device, enables a potential customer to connect
with the persons providing service of a particular kind under the
brand name or trade name of the said aggregator;
Provision Required The actual
supplier of such branded service
should get tax immunity as the
total supply is already taxed in
the hands of aggregator else will
lead double taxation.

14. Thank you!