There will be series of articles on GST for your information which can be shared within your organisation.

1. VIJAY SARDANA
PGDM (IIM-A), M.Sc. (Food Tech.) (CFTRI), B.Sc. (Dairy Tech.), Justice (Harvard),
PG Dipl. in Int'l Trade Laws & Alternate Dispute Resolution (ADR) (ILI), LL. B (in Progress)
Specialized in Food & Consumers Laws, IPR & Contract Laws
Agribusinesses Value Chains, Commodity Markets & Innovation Management
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2. The GST would replace the following taxes:
Centre taxes
1. Central Excise duty
2. Duties of Excise (Medicinal and Toilet Preparations)
3. Additional Duties of Excise (Goods of Special
Importance)
4. Additional Duties of Excise (Textiles and Textile
Products)
5. Additional Duties of Customs (commonly known as
CVD)
6. Special Additional Duty of Customs (SAD)
7. Service Tax
8. Central Surcharges and Cesses so far as they relate
to supply of goods and services
State taxes
1. State VAT
2. Central Sales Tax
3. Luxury Tax
4. Entry Tax (all forms)
5. Entertainment and Amusement Tax (except
when levied by the local bodies)
6. Taxes on advertisements
7. Purchase Tax
8. Taxes on lotteries, betting and gambling
9. State Surcharges and Cesses so far as they
relate to supply of goods and services
The GST Council shall make recommendations to the Union and States on the taxes, cesses and surcharges levied
by the Centre, the States and the local bodies which may be subsumed in the GST
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3. Principles adopted for subsuming taxes under GST
1. Taxes or levies to be subsumed should be primarily in the nature of indirect taxes,
either on the supply of goods or on the supply of services.
2. Taxes or levies to be subsumed should be part of the transaction chain which
commences with import/ manufacture/ production of goods or provision of
services at one end and the consumption of goods and services at the other.
3. The subsumation should result in free flow of tax credit in intra and inter-State
levels. The taxes, levies and fees that are not specifically related to supply of
goods & services should not be subsumed under GST.
4. Revenue fairness for both the Union and the States individually would need to be
attempted.
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4. Commodities proposed to be kept outside the purview of GST?
• Alcohol for human consumption,
• Petroleum Products viz. petroleum crude, motor spirit (petrol), high
speed diesel, natural gas and aviation turbine fuel
• Electricity
The existing taxation system (VAT & Central Excise) will continue in
respect of the above commodities.
Important:
Tobacco and tobacco products would be subject to GST. In addition, the
Centre would have the power to levy Central Excise duty on these
products.
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5. What type of GST is proposed to be implemented?
• It would be a dual GST with the Centre and States simultaneously levying it on a
common tax base.
• Integrated GST (IGST) will be levied and administered by Centre on every inter-state
supply of goods and services.
• The CGST to be levied by the Centre on intra-State supply of goods and / or services
would be called the Central GST (CGST) and
• GST to be levied by the States would be called the State GST (SGST).
Important:
• Centre will levy and administer CGST & IGST while respective states will levy and
administer SGST.
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6. Meaning and Scope of Supply
The taxable event under GST:
• The taxable event under GST shall be the supply of goods and / or services made for
consideration in the course or furtherance of business. The taxable events under the existing
indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in
the taxable event known as ‘supply’.
The meaning of ‘Supply’:
• The term ‘supply’ is wide in its import and includes 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. It
also includes import of service. The GST law also provides for including certain transactions
made without consideration within the scope of supply.
Taxable supply:
• A ‘taxable supply’ means a supply of goods and / or services which is chargeable to good and
services tax under the GST Act.
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7. Meaning and Scope of Supply
Necessary elements that constitute supply under GST Law:
In order to constitute a ‘supply’, the following elements are required to be satisfied:
(i) Supply of goods and / or services;
(ii) Supply is for a consideration;
(iii) Supply is made in the course or furtherance of business;
(iv) Supply is made in the taxable territory;
(v) Supply is a taxable supply; and
(vi) Supply is made by a taxable person.
Any transaction in which any one or more of the above criteria is not fulfilled, still be
considered as supply under GST.
Under certain circumstances such as importation of service or supplies made without
consideration, specified under GST Law, where one or more ingredients above are not
satisfied, it shall still be treated as supply under GST Law
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8. Meaning and Scope of Supply
Meaning of ‘supply made in the course or furtherance of business’:
No definition or test as to whether the activity is in the course or furtherance of business has
been specified under the GST Law. However, the following business test is normally applied to
arrive at a conclusion whether a supply has been made in the course or furtherance of business:
• 1. Is the activity, a serious undertaking earnestly pursued?
• 2. Is the activity is pursued with reasonable or recognisable continuity?
• 3. Is the activity conducted in a regular manner based on sound and recognised business
principles?
• 4. Is the activity predominantly concerned with the making of taxable supply for consideration/
profit motive?
The test may ensure that occasional supplies, even if made for consideration, will not be
subjected to GST. Example selling used car or white goods or furniture by the family.
Justification: An individual buys a car for personal use and after a year sells it to a car dealer,
because supply is not made by the individual in the course or furtherance of business. Further,
no input tax credit was admissible on such car at the time of its acquisition as it was meant for
non-business use.
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9. Important Clarifications
Important:
• As per Section 7, Schedule-I (1) business assets put to a private or non-business use without
consideration will be treated as supply.
• Provision of facilities by a club, association, society or any such body to its members shall be
treated as supply and taxable. This is included in the definition of ‘business’ in GST law.
• Inter-state and intra-state supplies have specifically been defined in Section 3 & 3A of IGST
Act respectively. Broadly, where the location of the supplier and the place of supply are in
same state it will be intra-state and where it is in different states it will be inter-state supplies.
• Transfer of right to use goods shall be treated as supply of service because there is no
transfer of title in such supplies. Such transactions are specifically treated as supply of
service in GST Law.
• Works contract and catering services shall be treated as supply of service as specified inGST
Law.
• Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of
title, albeit at a future date.
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10. GST and Importation of Goods
Importation of Goods:
• Importation of goods is dealt separately under the Customs Act, 1962, wherein IGST shall be
levied as additional duty of customs in addition to basic customs duty.
Self-supplies are taxable under GST:
• Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take
state wise registration.
• Such transactions have been made taxable even if there is no consideration.
• However, intra-state self-supplies are not taxable.
Transfer of title and/or possession is necessary for a transaction to constitute supply of goods:
• Title as well as possession both have to be transferred for a transaction to be considered as a
supply of goods.
• In case title is not transferred, the transaction would be treated as supply of service in terms
of Schedule II (1).
• In some cases, possession may be transferred immediately but titled may be transferred at a
future date like in case of sale on approval basis or hire purchase arrangement. Such
transactions will also be termed as supply of goods.
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11. Discuss with all the team members in your company.
All managers should be aware of this new development.
Feel free to share the presentation and
also your Observations and Clarifications
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