DEFINITION OF TERM SUPPLY :
For the purposes of this Act, the expression “supply” includes–
- 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; (NOTE: in Barter no money is used while in exchange money component is also used for getting something.)
- import of services for a consideration whether or not in the course or furtherance of business.
- the activities specified in Schedule I, made or agreed to be made without a consideration
- 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.
- Activities or Transactions mentioned in Schedule III will be Treated as neither supply of goods nor supply of services.
- Government has power to prescribe a particular transaction as supply of Goods or Supply of services.
Analysis of Schedule I of CGST Act :
- Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
- Exception :
- Transfer as Going Concern
- Transfer of Single Individual Unit
- Transfer on Slum Sale Basis
- Exception :
- Transfer between distinct and Related Person
- Transfer between Principal and Agent
- Import of Services
Analysis of Schedule II of CGST Act :
The above mentioned schedule is dealing with the bifurcation of Supply. The bifurcation will be based on following parameters :
- In case of transfer of title it will be treated as Supply of Goods
- In case of transfer of right to use the same will be treated as Supply of Services
Analysis of Schedule III of CGST Act :
The Above mentioned schedule is dealing with the special transaction which will be treated as neither supply of goods nor supply of services :
- Transaction between employer and Employee (Gift is also exempt upto 50,000 per year.)
- Services by Central Government, State Government and Local Authority
- Services Provided by Municipal Corporation, Panchayat Samiti
- Services provided by any person who is holding the post in constitution of india
- Services of funeral, burial, crematorium or mortuary including transportation of the deceased
- Sale of Land
- High sea sales
- Transfer before clearance for home consumption
Difference between Financial Lease and Operating Leases :
- Financial Lease : In this type of lease property will transferred approx. for whole economic life and that will will be treated as supply of goods.
- Operating Lease : In this type of lease property will be transferred for a limited amount of time i.e. not for whole economic life hence the same will be treated as supply of service.
BY: CA. SACHIN JAIN {B.COM(H),LLB,ACA,CS,DISA}
