Meaning and Concept of Goods and Services.pdf

MEANING AND CONCEPT
OF
GOODS AND SERVICES
SUHRID BHATNAGAR, ADVOCATE
B.Sc., MBA, EPGDM (IIM-I), LL.B., LL.M.
ACUMEN TAX CONSULTANTS,
JAIPUR
1

GOODS AND SERVICES
What are goods and services?
Conceptually-
• Goods and services are the output of an
economic system
• Goods are tangible items sold to customers
• Services are tasks performed for the benefit of
the recipients
2

MEANING OF GOODS AND SERVICES
KINDS OF MEANING-
• Literal meaning- Dictionary
• Legal meaning- Definitions given in the Act
• Created meaning- Deeming fiction- Schedule
• Legal meaning and Deeming fiction are
concepts or conceptual meanings of Goods
and Services in SGST/CGST Act
3

WHAT IS IN STORE FOR YOU
• Meaning and Concept of Goods
• What are capital goods
• Meaning and Concept of Services (With
Background on taxation on services)
• Services as per Section 7 of the Act
• Explanation of some terms used
• A Quiz
4

Meaning and Concept of Goods
Literal Meaning of Goods
5
dictionary.cambridge.org items for sale, or
possessions that can
be moved;
things for sale, or the
things that you own
collinsdictionary.com Goods are things that are
made to be sold
oxfordlearnersdictionaries.c
om
things that are produced to
be sold

• Goods are items that can be seen, touched, moved, sold
and owned.
• Goods can be produced and are capable of being
brought to the market and sold.
• Goods are physical products with form and substances,
and bought and used by consumers for their
satisfaction.
6

• Tangible • Can be readily displayed
• Standardized • Pricing is easy
• Production separate from
consumption
• Mass production is easy
• Perishable / non-perishable • Can be transferred from one
place to another
• Can be inventoried • Goods can be returned or
resold
• Can be patented • It is easy to synchronize
supply and demand
7

LEGAL MEANING
• The Rajasthan Sales Tax Act, 1994
• Rajasthan VAT Act, 2003
• Central Excise Act, 1944
• CENVAT Credit Rules, 2004
• CGST Act, 2017
8

LEGAL MEANING
The Rajasthan Sales Tax Act, 1994
Section 2(20) "goods" means all kinds of movable
property other than newspapers, money, actionable
claims, stocks, shares and securities, and includes
goods in some other form involved to the execution
of works contracts;
9

LEGAL MEANING
Rajasthan VAT Act 2003
Section 2(15) “goods” means all kinds of movable property,
whether tangible or intangible, other than newspapers, money,
actionable claims, stocks, shares and securities, and includes
materials, articles and commodities used in any form in the
execution of works contract, livestock and all other things
attached to or forming part of the land which is agreed to be
severed before sale or under the contract of sale;
10

LEGAL MEANING
Central Excise Act, 1944
Section 2(d) “excisable goods” means goods specified in the First
Schedule and the Second Schedule to the Central Excise Tariff Act,
1985 (5 of 1986) as being subject to a duty of excise and includes salt;
Explanation. – For the purpose of this clause, “goods” includes any
article, material or substance which is capable of being bought and
sold for a consideration and such goods shall be deemed to be
marketable.
11

LEGAL MEANING
CGST Act, 2017
Section 2(52) ‘goods’ means every kind of
movable property other than money and
securities but includes actionable claim, growing
crops, grass and things attached to or forming
part of the land which are agreed to be severed
before supply or under a contract of supply;
12

Capital Goods
The Rajasthan Sales Tax Act, 1994
S.O. 68. – Exempted sale of capital goods for new industries in state-
Explanation. -For the purpose of this notification capital goods shall mean-
(i) all kinds of plants machinery, equipments or apparatus;
(ii) components, spares and accessories of the goods specified a (i) above;
(iii) moulds and dies;
(iv) refractors and refractory materials;
(v) tubes and pipes and fittings thereof, used in the factory;
(vi) pollution control equipments and
(vii) storage tanks, only if all these are integrally connected for manufacture of goods for sale,
unless otherwise notified by the State Government.
[Notification No. F. 4(67) FD/Tax/2004-29, dated 12.7.2004 Rajasthan Gazette Extraordinary Part IV-
C(II), dated 12.7.2004, page 173.]
13

Capital Goods
Rajasthan VAT Act 2003
Section 2(7) “capital goods” means plant and
machinery including parts and accessories
thereof, meant for use in manufacture unless
otherwise notified by the State Govt. from
time to time in the Official Gazette;
14

Capital Goods
CENVAT Credit Rules, 2004
Rule 2. Definitions. -
In these rules, unless the context otherwise requires,-
(a) "capital goods" means:-
(A) the following goods, namely:-
i. all goods falling under Chapter 82, Chapter 84, Chapter 85,
Chapter 90, heading No. 68.05 grinding wheels and the like, and
parts thereof falling under heading 6804 and wagons of sub-
heading 860692 of the First Schedule to the Excise Tariff Act;
ii. pollution control equipment;
iii. components, spares and accessories of the goods specified at (i) and
(ii);
15

Capital Goods
iv. moulds and dies, jigs and fixtures;
v. refractories and refractory materials;
vi. tubes and pipes and fittings thereof;
vii. storage tank, and
viii. Motor vehicles other than those falling under tariff headings
8702, 8703, 8704, 8711 and their chassis but including
dumpers and tippers, used-
16

Capital Goods
(1) in the factory of the manufacturer of the final products, or
(1A) outside the factory of the manufacturer of the final products for generation
of electricity or for pumping of water for captive use within the factory
(2) for providing output service;
(B) motor vehicle designed for transportation of goods including their chassis
registered in the name of the service provider, when used for –
• (i) providing an output service of renting of such motor vehicle; or
(ii) transportation of inputs and capital goods used for providing an output
service; or
• (iii) providing an output service of courier agency;]
17

Capital Goods
[(C) motor vehicle designed to carry passengers including their chassis,
registered in the name of the provider of service, when used for
providing output service of –
(i) transportation of passengers; or
(ii) renting of such motor vehicle; or
(iii) imparting motor driving skills;]
[(D) components, spares and accessories of motor vehicles which are
capital goods for the assessee;]
18

Capital Goods
CGST Act, 2017
Section 2(19) ‘capital goods’ means goods, the value of which is
capitalised in the books of account of the person claiming the input tax
credit and which are used or intended to be used in the course or
furtherance of business;
‘Capitalized’ means the capital goods are treated as capital expenditure
and not as revenue expenditure. The cost of these goods is spread over
years by claiming depreciation as against the total cost claimed as
expenditure in case of revenue expenditure.
19

Meaning and Concept of Services
• Literal Meaning of Services
20
dictionary.cambri
dge.org
the particular skills that someone has and
can offer to others
collinsdictionary.
com
(in Economics) commodities, such
as banking, that are mainly intangible and
usually consumed concurrently with
their production.
(In Accounting) Services are activities such
as tourism, banking, and accountancy that
are part of a country's economy, but are not
concerned with producing
or manufacturing goods.
oxfordlearnersdic
tionaries.com
a business whose work involves doing
something for customers but not producing
goods; the work that such a business does.

Literal Meaning of Services
Services are provided by persons or
organizations such as construction
contractors, lawyers, law firms, doctors,
hospitals, teachers, educational institutions,
motivational speakers, performers like singers
and dancers etc.
Services are non-physical products which
generally involve some kind of performance. It
is an activity performed for the benefit of
someone else.
21

Literal Meaning of Services
22
Intangible Cannot be readily displayed
heterogeneity Pricing is difficult
Simultaneous production and
consumption
Mass production is difficult
Perishability is not in
question
Services cannot be returned
or resold
Services cannot be
inventoried
It is difficult to synchronize
supply and demand
(In general) cannot be
patented

Background on taxation on services
Dr. Manmohan Singh the then Finance Minister in his
budget speech for the financial year 1994-95, emphasized the need for
service tax.
23

The provisions relating to Service Tax were brought into force with
effect from July 1, 1994 vide chapter V of the Finance Act, 1994. It
extended to the whole of India except the State of Jammu and
Kashmir. Entry 97 of List-I of Schedule VII of the Constitution of
India extended the constitutional rights to the Central Government
to levy service tax. The Government of India, through the
Department of Revenue administered the levy and collection of
service tax in India. The service tax being an indirect tax, its
administrative control was vested with the Central Board of Excise
& Customs (CBEC).
24

From 3 services in 1994 to a negative list regime
The service tax regime started with 3 services under the tax net
in 1994 and progressively increased to 119 different services in
2011-12. From 1 July 2012, the concept of taxation on services
was changed from a Positive List of services approach to a
'Negative List regime'. This changed the taxation system of
services from tax on the specified services to tax being levied on
all services, other than those mentioned in the Negative List or
which were exempted by a notification.
25

LEGAL MEANING
• Finance Act, 1994 (Service Tax ‘Act’) till
June 2012
• Finance Act, 1994 (Service Tax ‘Act’) from
July 2012
• CGST Act, 2017
26

LEGAL MEANING- till June 2012
Section 65 of the Finance Act, 1994 provided the very detailed
and almost exhaustive definition of ‘services’ and ‘taxable
services’:
Section 65. Definitions] –
In this Chapter, unless the context otherwise requires, --
(1) "actuary" has the meaning assigned to it in clause (1) of section 2 of
the Insurance Act, 1938 (4 of 1938);
(2) "advertisement" includes any notice, circular, label, wrapper,
document, hoarding or any other audio or visual representation made
by means of light, sound, smoke or gas;
…………..
27

(6) "architect" means any person whose name is, for the
time being, entered in the register of architects maintained
under section 23 of the Architect Act,1972 (20 of 1972)
and also includes any commercial concern engaged in any
manner, whether directly or indirectly, in rendering
services in the field of architecture;
*
*
28

(105) "taxable service" means any 7[service provided or to be provided
],-
(a) [to any person], by a stock-broker in connection with the sale or
purchase of securities listed on a recognized stock exchange;
[(b) (Omitted)
(c ) (Omitted)]
(d) to a [policy holder or any person], by an [insurer, including re-
insurer] carrying on general insurance business in relation to general
insurance businesses;
*
29

(105) "taxable service" means any 7[service provided or to be provided ],-
(z) 12[to any person], by an underwriter in relation to underwriting, in any
manner;
(za) 13[to any person], by a scientist or technocrat or any science or
technology institution or organization, in relation to scientific or technical
consultancy;
(zb) 14[to any person], by a photography studio or agency in relation to
photography, in any manner;
*
*
30

(105) "taxable service" means any 7[service provided or to be provided ],-
(zzzzv) to any person, by a restaurant, by whatever name called,
having the facility of air-conditioning in any part the establishment,
at any time during the financial year, which has licence to serve
alcoholic beverages, in relation to serving of food or beverage,
including alcoholic beverages or both, in its premises;
(zzzzw) to any person, by a hotel, inn, guest house, club or
campsite, by whatever name called, for providing of accommodation
for a continuous period of less than three months;]
*
31

Section 65(120) “video-tape production” means the
process of any recording of any programme, event or
function on a magnetic tape or on any other media or
device and includes services relating thereto such as
editing, cutting, colouring, dubbing, title printing,
imparting special effects, processing, adding, modifying or
deleting sound, transferring from one media or device to
another, or undertaking any video post-production
activity, in any manner;]
32

LEGAL MEANING- from July 2012 (Negative List Regime)
• Section 65B- Interpretations
• Section 66D- Negative List
• Section 66E- Declared Services
• Mega Exemption Notification No. 25/2012
33

Section 65B- Interpretations
(44) “service” means any activity carried out by a person for another for
consideration, and includes a declared service, but shall not include—
(a) an activity which constitutes merely,—
(i) a transfer of title in goods or immovable property, by way of sale,
gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is deemed to
be a sale within the meaning of clause (29A) of article 366 of the
Constitution; or
(iii) a transaction in money or actionable claim;
34

Section 65B- Interpretations (44)
(b) a provision of service by an employee to the employer in the course of
or in relation to his employment;
(c) fees taken in any Court or tribunal established under any law for the
time being in force.
Explanation 1 . — For the removal of doubts, it is hereby declared that
nothing contained in this clause shall apply to,—
(A) the functions performed by the Members of Parliament, Members of
State Legislative, Members of Panchayats, Members of Municipalities and
Members of other local authorities who receive any consideration in
performing the functions of that office as such member; or
35

(B) the duties performed by any person who holds any post in
pursuance of the provisions of the Constitution in that capacity;
or
(C) the duties performed by any person as a Chairperson or a
Member or a Director in a body established by the Central
Government or State Governments or local authority and who is
not deemed as an employee before the commencement of this
section.
36

‘Explanation 2. - For the purposes of this clause, the expression
“transaction in money or actionable claim” shall not include—
(i) any activity relating to use of money or its conversion by cash or by
any other mode, from one form, currency or denomination, to another
form, currency or denomination for which a separate consideration is
charged;
(ii) any activity carried out, for a consideration, in relation to, or for
facilitation of, a transaction in money or actionable claim, including the
activity carried out—
37

(a) by a lottery distributor or selling agent on behalf of the State
Government, in relation to promotion, marketing, organising, selling of
lottery or facilitating in organising lottery of any kind, in any other
manner, in accordance with the provisions of the Lotteries (Regulation)
Act, 1998;. (Finance Act 2016)
(b) by a foreman of chit fund for conducting or organising a chit in any
manner.;
38

Explanation 3. — For the purposes of this Chapter,—
(a) an unincorporated association or a body of persons, as the case may
be, and a member thereof shall be treated as distinct persons;
(b) an establishment of a person in the taxable territory and any of his
other establishment in a non-taxable territory shall be treated as
establishments of distinct persons.
Explanation 4. — A person carrying on a business through a branch
or agency or representational office in any territory shall be treated as
having an establishment in that territory;
39

SECTION 66E. Declared services. — The following shall constitute
declared services, namely:—
(a) renting of immovable property
(b) 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 is received after issuance of completion-certificate by the
competent authority.
Explanation.—For the purposes of this clause,—
(I) the expression “competent authority” means the Government or any authority
authorised to issue completion certificate under any law for the time being in force
and in case of non-requirement of such certificate from such authority, from any of
the following, namely :—
40

SECTION 66E. Declared services. —
(A) architect registered with the Council of Architecture constituted under
the Architects Act, 1972 (20 of 1972); or
(B) chartered engineer registered with the Institution of Engineers (India);
or
(C) licensed surveyor of the respective local body of the city or town or
village or development or planning authority;
(II) the expression “construction” Includes additions, alterations,
replacements or remodelling of any existing civil structure;
(c) temporary transfer or permitting the use or enjoyment of any intellectual
property right;
41

(d) development, design, programming, customization, adaptation,
upgradation, enhancement, implementation of information technology
software;
(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a
situation, or to do an act;
(f) transfer of goods by way of hiring, leasing, licensing or in any such
manner without transfer of right to use such goods;
(g) activities in relation to delivery of goods on hire purchase or any system
of payment by instalments;
42

(h) service portion in the execution of a works contract;
(i) service portion in an activity wherein goods, being food
or any other article of human consumption or any drink
(whether or not intoxicating) is supplied in any manner as
a part of the activity.
(j) assignment by the Government of the right to use the
radio-frequency spectrum and subsequent transfers
thereof.
43

SECTION 66D. Negative list of services.—
The negative list shall comprise of the following services, namely :—
(a) services by Government or a local authority excluding the following
services to the extent they are not covered elsewhere—
(i) services by the Department of Posts by way of speed post, express
parcel post, life insurance and agency services provided to a person other
than Government;
(ii) services in relation to an aircraft or a vessel, inside or outside the
precincts of a port or an airport;
(iii) transport of goods or passengers; or
(iv) Any service, other than services covered under clauses (i) to (iii) above,
provided to business entities;
44

(b) services by the Reserve Bank of India;
(c) services by a foreign diplomatic mission located in India;
(d) services relating to agriculture or agricultural produce by way of—
(i) agricultural operations directly related to production of any agricultural produce
including cultivation, harvesting, threshing, plant protection or [ * * * ] testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm including tending, pruning, cutting,
harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting,
grading, cooling or bulk packaging and such like operations which do not alter the
essential characteristics of agricultural produce but make it only marketable for the
primary market;
45

(iv) renting or leasing of agro machinery or vacant land with or without
a structure incidental to its use;
(v) loading, unloading, packing, storage or warehousing of agricultural
produce;
(vi) agricultural extension services;
(vii) services by any Agricultural Produce Marketing Committee or
Board or services provided by a commission agent for sale or purchase
of agricultural produce;
(e) trading of goods;
46

(f) [****].; any process amounting to manufacture or production of goods;
(g) selling of space for advertisements in print media;
(h) service by way of access to a road or a bridge on payment of toll charges;
(i) betting, gambling or lottery;
Explanation. - For the purposes of this clause, the expression “betting,
gambling or lottery” shall not include the activity specified in Explanation2
to clause (44) of section 65B;
(j) [ * * * *] admission to entertainment events or access to amusement
facilities;
(k) transmission or distribution of electricity by an electricity transmission
or distribution utility;
47

(l) [ * * * * ] services by way of—
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by
any law for the time being in force;
(iii) education as a part of an approved vocational education course;
(m) services by way of renting of residential dwelling for use as residence;
(n) services by way of—
(i) extending deposits, loans or advances in so far as the consideration is represented
by way of interest or discount;
(ii) inter se sale or purchase of foreign currency amongst banks or authorized dealers
of foreign exchange or amongst banks and such dealers;
48

(o) service of transportation of passengers, with or without accompanied
belongings, by—
(i) [ * * * * ] a stage carriage;
(ii) railways in a class other than—
(A) first class; or
(B) an air-conditioned coach;
(iii) metro, monorail or tramway,
(iv) inland waterways;
(v) public transport, other than predominantly for tourism purpose, in a
vessel between places located in India; and
(vi) metered cabs or auto rickshaws
49

(p) services by way of transportation of goods—
(i) by road except the services of—
(A) a goods transportation agency;or
(B) a courier agency;
(ii) [ * * * ] by an aircraft or a vessel from a place outside India to the
first customs station of landing in India; or
(iii) by inland waterways;
(q) funeral, burial, crematorium or mortuary services including
transportation of the deceased.
50

Besides the negative list of services, a mega
exemption Notification No. 25/2012-ST
dated 20.06.2012 also provided a detailed
list of services which were exempted from
service tax.
51

LEGAL MEANING- In SGST / CGST Act, 2017
(102) ―services means anything other than goods, money
and securities but includes activities relating to the use of
money or its conversion by cash or by any other mode,
from one form, currency or denomination, to another
form, currency or denomination for which a separate
consideration is charged;
[Explanation.–– For the removal of doubts, it is hereby
clarified that the expression ―services includes facilitating
or arranging transactions in securities;]
52

ENLARGING THE SCOPE OF THE TERMS ‘GOODS’ AND ‘SERVICES’:
7. Scope of supply.— (1) For the purposes of this Act, the
expression ―supply includes––
(a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, rental, lease or disposal
made or agreed to be made for a consideration by a person in
the course or furtherance of business;
[(aa) the activities or transactions, by a person, other than an
individual, to its members or constituents or vice-versa, for
cash, deferred payment or other valuable consideration.
53

Explanation.––For the purposes of this clause, it is hereby
clarified that, notwithstanding anything contained in any other
law for the time being in force or any judgment, decree or order
of any Court, tribunal or authority, the person and its members
or constituents shall be deemed to be two separate persons and
the supply of activities or transactions inter se shall be deemed
to take place from one such person to another;]12
(b) import of services for a consideration whether or not in the
course or furtherance of business;[and]13
54

ENLARGING THE SCOPE OF THE TERMS ‘GOODS’ AND
‘SERVICES’:
(c) the activities specified in Schedule I, made or agreed to be made
without a consideration;[****]14
(d) [*****]15.
[(1A) where certain activities or transactions constitute a supply in
accordance with the provisions of sub-section (1), they shall be treated
either as supply of goods or supply of services as referred to in
Schedule II.]
55

(2) Notwithstanding anything contained in sub-
section (1),––
(a) activities or transactions specified in Schedule III;
or
(b) such activities or transactions undertaken by the
Central Government, a State Government or any local
authority in which they are engaged as public
authorities, as may be notified by the Government on
the recommendations of the Council,
shall be treated neither as a supply of goods nor a
supply of services.
56

ENLARGING THE SCOPE OF THE TERMS ‘GOODS’ AND
‘SERVICES’:
(3) Subject to the provisions of [sub-sections (1), (1A) and
(2)], the Government may, on the recommendations of the
Council, specify, by notification, the transactions that are
to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
57

8. Tax liability on composite and mixed
supplies.— The tax liability on a composite or a
mixed supply shall be determined in the following
manner, namely:—
(a) a composite supply comprising two or more
supplies, one of which is a principal supply, shall be
treated as a supply of such principal supply; and
(b) a mixed supply comprising two or more supplies
shall be treated as a supply of that particular supply
which attracts the highest rate of tax.
58

SCHEDULE I
[See section 7]
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF
MADE WITHOUT CONSIDERATION
1. Permanent transfer or disposal of business assets
where input tax credit has been availed on such assets.
2. 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:
Provided that gifts not exceeding fifty thousand rupees in
value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
59

LEGAL MEANING- In SGST / CGST Act, 2017- SCHEDULE I
3. Supply of goods—
(a) by a principal to his agent where the agent
undertakes to supply such goods on behalf of the
principal; or
(b) by an agent to his principal where the agent
undertakes to receive such goods on behalf of the
principal.
4. Import of services by a [person] from a related
person or from any of his other establishments
outside India, in the course or furtherance of
business.
60

LEGAL MEANING- In SGST / CGST Act, 2017-
SCHEDULE II [See section 7]
ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF
GOODS OR SUPPLY OF SERVICES
1. Transfer
(a) any transfer of the title in goods is a supply of goods;
(b) any transfer of right in goods or of undivided share in
goods without the transfer of title thereof, is a supply of
services;
(c) 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, is a
supply of goods.
61

LEGAL MEANING- In SGST / CGST Act, 2017- SCHEDULE II
2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land is
a supply of services;
(b) any lease or letting out of the building including a
commercial, industrial or residential complex for business
or commerce, either wholly or partly, is a supply of
services.
3. Treatment or process
Any treatment or process which is applied to another
person's goods is a supply of services.
62

4. Transfer of business assets
(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;
(b) 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;
63

4. Transfer of business assets
(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.
64

5. Supply of services
The following shall be treated as supply of services,
namely:—
(a) renting of immovable property;
(b) 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.
65

Explanation.—For the purposes of this clause—
(1) the expression "competent authority" means the Government
or any authority authorised to issue completion certificate under
any law for the time being in force and in case of non-
requirement of such certificate from such authority, from any of
the following, namely:—
(i) an architect registered with the Council of Architecture
constituted under the Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of
Engineers (India); or
66

(iii) a licensed surveyor of the respective local body of
the city or town or village or development or planning
authority;
(2) the expression "construction" includes additions,
alterations, replacements or remodelling of any
existing civil structure;
(c) temporary transfer or permitting the use or
enjoyment of any intellectual property right;
67

(d) development, design, programming, customisation,
adaptation, upgradation, enhancement, implementation of
information technology software;
(e) agreeing to the obligation to refrain from an act, or to
tolerate an act or a situation, or to do an act; and
(f) transfer of the right to use any goods for any purpose
(whether or not for a specified period) for cash, deferred
payment or other valuable consideration.
68

6. Composite supply The following composite supplies
shall be treated as a supply of services, namely:—
(a) works contract as defined in clause (119) of section 2;
and
(b) 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.
7. [*********]146
69

LEGAL MEANING- In SGST / CGST Act, 2017-
SCHEDULE III [See section 7]
ACTIVITIES OR TRANSACTIONS WHICH
SHALL BE TREATED NEITHER AS A SUPPLY
OF GOODS NOR A SUPPLY OF SERVICES
1. Services by an employee to the employer in the
course of or in relation to his employment.
2. Services by any court or Tribunal established
under any law for the time being in force.
70

LEGAL MEANING- In SGST / CGST Act, 2017- SCHEDULE III
3. (a) the functions performed by the Members of
Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of
other local authorities;
(b) the duties performed by any person who holds any post
in pursuance of the provisions of the Constitution in that
capacity; or
(c) the 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.
71

4. Services of funeral, burial, crematorium or
mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph
5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and
gambling.
7. [Supply of goods from a place in the non-taxable
territory to another place in the non-taxable territory
without such goods entering into India.
72

8. (a) Supply of warehoused goods to any person before
clearance for home consumption;
(b) 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.]147
Explanation [1] 148 .—For the purposes of paragraph 2, the
term "court" includes District Court, High Court and Supreme
Court.
[Explanation 2.––For the purposes of paragraph 8, the
expression ―warehoused goods shall have the same meaning as
assigned to it in the Customs Act, 1962.]
73

MORE TO NEITHER SUPPLY OF GOODS NOR OF SERVICES
Section 7(2):
Notification No. 14/2017-CT(Rate) dated 28.06.2017
as amended
The following activities or transactions undertaken by the
Central Government or State Government or Union
territory or any local authority in which they are engaged
as public authority, shall be treated neither as a supply of
goods nor a supply of service, namely:-
“Services by way of any activity in relation to a function
entrusted to a Panchayat under article 243G of the
Constitution or to a Municipality under article 243W of
the Constitution.”
74

TWELFTH SCHEDULE (ARTICLE 243W)
1. Urban planning including town planning.
2. Regulation of land-use and construction of
buildings.
3. Planning for economic and social development.
4. Roads and bridges.
5. Water supply for domestic, industrial and
commercial purposes.
6. Public health, sanitation conservancy and solid
waste management.
7. Fire services.
75

8. Urban forestry, protection of the environment and
promotion of ecological aspects.
9. Safeguarding the interests of weaker sections of
society, including the handicapped and mentally
retarded.
10. Slum improvement and upgradation.
11. Urban poverty alleviation.
12. Provision of urban amenities and facilities such
as parks, gardens, playgrounds.
76

13. Promotion of cultural, educational and aesthetic
aspects.
14. Burials and burial grounds; cremations,
cremation grounds; and electric crematoriums.
15. Cattle pounds; prevention of cruelty to animals.
16. Vital statistics including registration of births and
deaths.
17. Public amenities including street lighting, parking
lots, bus stops and public conveniences.
18. Regulation of slaughter houses and tanneries.
77

Explanation of some terms used
ACTIONABLE CLAIMS [Section 3 of The Transfer of Property Act,
1882]
“actionable claim” means a claim to any debt, other than a debt
secured by mortgage of immoveable property or by hypothecation or
pledge of moveable property, or to any beneficial interest in moveable
property not in the possession, either actual or constructive, of the
claimant, which the Civil Courts recognize as affording grounds for
relief, whether such debt or beneficial interest be existent, accruing,
conditional or contingent.
Actionable claim means a claim for any debt which is related to any
benefit arising out from any movable property which is not in
possession and for which relief can be claimed in civil court.
78

Transfer of actionable claim takes effect only after
execution and signing of the instrument. After execution,
all the rights and remedies of the transferor vest in the
assignee. The Assignee (transferee) becomes entitled to
recover the claims and sue in his own name.
Examples:
• Insurance Policy which is not secured by way of
mortgage or hypothecation or pledge
• Claim for arrear of rent is actionable claim since it is
not secured on anything.
• Right to claim provident fund
• Claim for unsecured debt
• Claim in profit by partner in firm
79

MONEY
Section 2(75) ―money means the Indian legal tender
or any foreign currency, cheque, promissory note, bill
of exchange, letter of credit, draft, pay order, traveller
cheque, money order, postal or electronic remittance
or any other instrument recognised by the Reserve
Bank of India when used as a consideration to settle
an obligation or exchange with Indian legal tender of
another denomination but shall not include any
currency that is held for its numismatic value;
80

'Stocks' represents the holder's part-ownership in one or
several companies. Meanwhile, 'share' refers to a single
unit of ownership in a company. For example, if X has
invested in stocks, it could mean that X has a portfolio of
shares across different companies.
Stocks are a type of security that gives stockholders a
share of ownership in a company. Stocks also are called
“equities.”
Like stocks, mutual funds are considered equity
securities because investors purchase shares that
correlate to an ownership stake in the fund as a whole.
81

Securities Contracts (Regulation) Act, 1956
Section 2(h) “securities” include—
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities
of a like nature in or of any incorporated company or other body corporate;
(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the
investors in such schemes;]
(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;]
(id) units or any other such instrument issued to the investors under any mutual fund
scheme;]
(ii) Government securities;
(iia) such other instruments as may be declared by the Central Government to be securities;
and
(iii) rights or interest in securities;
82

Securities are fungible and tradable financial
instruments used to raise capital in public and
private markets. There are primarily three types of
securities: equity—which provides ownership rights
to holders; debt—essentially loans repaid with
periodic payments; and hybrids—which combine
aspects of debt and equity.
A debenture is a marketable security (a type of
investment) issued by a business or other
organization to raise money for long-term activities
and growth. It is a form of debt capital
83

WORKS CONTRACT:
Rajasthan Sales Tax Act, 1944
Section 2(45) "works contract" means a contract for works and
labour or services involving transfer of property in goods
(whether as goods or in some other form) in its execution;
Rajasthan VAT Act, 2003
Section 2(44) works contract” means a contract for carrying out
any work which includes assembling, construction, building,
altering, manufacturing, processing, fabricating, erection,
installation, fitting out, improvement, repair or commissioning
of any movable or immovable property;]
84

WORKS CONTRACT:
Finance Act, 1994 (Service Tax)
Section 65B(54) “works contract” means a contract
wherein transfer of property in goods involved in the
execution of such contract is leviable to tax as sale of
goods and such contract is for the purpose of carrying out
construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance, renovation,
alteration of any movable or immovable property or for
carrying out any other similar activity or a part thereof in
relation to such property;
85

WORKS CONTRACT:
SGST / CGST ACT, 2017
Section 2(119) ―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;
(Works Contract is a composite supply (supply of goods and service both) as per
Schedule II to the Act.)
86

INTELLECTURAL PROPERTY RIGHT
Intellectual property rights (IPR) refer to the legal
rights given to the inventor or creator to protect his
invention or creation for a certain period of time.
• Copyright
• Patent
• Trademarks
• Designs
• Geographical Indications
87

RELATED PERSON
Explanation to Section 15 of the Act:
Explanation.—For the purposes of this Act,––
(a) persons shall be deemed to be ―related persons‖ if––
(i) such persons are officers or directors of one another’s
businesses;
(ii) such persons are legally recognised partners in
business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or
holds twenty-five per cent. or more of the outstanding
voting stock or shares of both of them;
88

RELATED PERSON
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a
third person;
(vii) together they directly or indirectly control a third
person; or
(viii) they are members of the same family;
(b) the term ―person also includes legal persons;
(c) persons who are associated in the business of one
another in that one is the sole agent or sole distributor or
sole concessionaire, howsoever described, of the other,
shall be deemed to be related.
89

DISTINCT PERSON
Section 25
(4) A person who has obtained or is required to obtain more
than one registration, whether in one State or Union territory or
more than one State or Union territory shall, in respect of each
such registration, be treated as distinct persons for the
purposes of this Act.
(5) Where a person who has obtained or is required to obtain
registration in a State or Union territory in respect of an
establishment, has an establishment in another State or Union
territory, then such establishments shall be treated as
establishments of distinct persons for the purposes of this Act.
90

TAXATION OF GOODS AND SERVICES
GST RATE ON SUPPLY OF GOODS AND SERVICES OR BOTH
GOODS
Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 as amended
The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975
(51 of 1975), including the Section and Chapter Notes and the General Explanatory
Notes of the First Schedule shall, so far as may be, apply to the interpretation of this
notification.
SERVICES
Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended
The Scheme of Classification of Services adopted for the purposes of GST is a modified
version of the United Nations Central Product Classification.
91

REFERENCES
1. The Rajasthan Sales Tax Act, 1994
2. Rajasthan VAT Act, 2003
3. Central Excise Act, 1944
4. CENVAT Credit Rules, 2004
5. Finance Act, 1994 (Chapter V) [Service Tax]
6. Notification No. 25/2012-ST
7. SGST / CGST Act, 2017
8. Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017
9. The Customs Act, 1962
10.Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
11.Explanatory notes on classification of Services based on United
Nations Central Product Classification
92

QUIZ
Please answer the 10 questions in the distributed
Quiz Sheet in 15 minutes.
You can take help of whatever resource is in reach
and even discuss with friends.
93

You may reach me at:
WhatsApp: 9413114560
E-mail:
acumentaxconsultants@rediffmail.com
95

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