Analysis of Schedule III of CGST Act

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

IMPORTANT:

• Gift to employees upto 50,000 is exempt (Reversal of credit is required).
• There is contract of service between employer and employee. (here, under contract of service master can order regarding work but in case of contract for service there is no order from

2. Services by any court or Tribunal established under any law for the time being in force. (Court Includes District Court, High Court and Supreme Court)

3.

•  the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
• the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
• 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

4. Services of funeral, burial, crematorium or mortuary including transportation of the

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of

IMPORTANT:

• clause (b) of paragraph 5 of Schedule II: Supply of building before completion or occupancy treated as supply of
• Long lease of land is practically sale of land (Eg. Lease for 99 Years)
• Sale of plots after developments: in this case development charges are added in cost of plots hence composite supply where principal supply is sale of land hence not

6. Actionable claims, other than lottery, betting and

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

• 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.]147

IMPORTANT:

• SALARY TO PARTNERS: – Remuneration to partner is not taxable under
  • DEPARTMENTAL VIEW: Salary to partner is just only share of profit. This is just only money and money is not covered under GST hence not
  • OTHER VIEW: Partnership firm and partners deemed to be different persons hence employee employer relationship exist hence No
• ARTICLE 243G: Activities undertaken by CG, SG, Local Authority in which they engaged as Public Authority are not considered as supply of goods nor as supply of service. (Eg. Panchayat)
• Interstate Movement of passenger is neither supply of goods nor as supply of
• Interstate Movement of various modes of conveyance, Carrying goods for repair and maintenance is neither supply of goods nor as supply of
• Interstate movement for further supply then GST Provision shall be apply.(Eg. Movement of CAR for further supply is taxable under GST)

Interstate Movement of rigs, tools and Spares and all goods on wheels shall be treated as neither supply of goods nor supply of service. But on repair on these things then GST will be charged on Repair and maintenance and