TAXABLE EVENT UNDER GST – TECHNICAL ANALYSIS

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.
1. Exception :
  1. Transfer as Going Concern
  2. Transfer of Single Individual Unit
  3. Transfer on Slum Sale Basis

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}

GST