READING DOWN MODEL IGST ACT (PART-2)

[Dr. Sanjiv Agarwal]

This article is in continuation of Part-I wherein we discussed meaning of Integrated Goods and Service Tax (IGST). In this part, let's understand some other definitions of terms defined in Model IGST Act.

Appropriate State [Section 2(a)]

Appropriate State has been defined as follows –

“Appropriate State”, in relation to a taxable person, means that State where he is registered or liable to be registered under section 19 of the Central Goods and Services Tax Act, 2016.

Explanation: For the purpose of this Act, “State” includes Union Territory with Legislature.

It may be noted that the term 'appropriate state' shall be used only in reference to a taxable person as is done in the Central Sales Tax Act, 1956.  This is defined in section 2(a) of the Central Sales Tax Act, 1956. It identifies the state to the place of business(es) of the taxable person.  State shall also include Union Territory having legislature.

Section 19 of CGST Act provides for registration of persons whereby every person who is liable to be registered under Schedule III of this Act shall apply for registration in every such State in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed.

Thus, appropriate state shall be in relation to the taxable person and shall mean a state –

1. where taxable person is registered, or
2. where taxable person is liable to be registered u/s 19 of CGST Act, and
3. includes a Union Territory with legislature

Government [Section 2(b)]

'Government' means the Central Government.

Government would mean only the Central Government (and not any state or other Government).

However, in Model GST Act, section 2(49) defines 'government' differently where it includes Central Government departments, State Government & its departments, and Union Territory & its departments. Here, even the departments of Central Government are excluded.

Supply [Section 2(f)]

The term 'supply' has been defined to mean the same as defined in section 3 of the CGST Act which provides for meaning and scope of supply.

This section provides for the meaning and scope of supply of goods and services. There is no concept of supply of goods and services in the present law.  In the proposed law, supply of goods or services shall include the following:

• Sale
• Transfer
• Barter
• Exchange
• License
• Rental
• lease or disposal, and
•  Importation of services
• Supply as per Schedule-I (supply without consideration)

In relation to 'supply' for the purpose of GST, following points shall be noted -

1. supply shall be goods and / or services
2. supply should be made or agreed to be made
3. supply should be for a consideration
4. supply should be made by person
5. supply should be made in the course of or furtherance of business
6. supply shall include importation of service, irrespective of whether for consideration or not and whether in the course of or furtherance of business or not.
7. supply shall include supply as per Schedule-I made without a consideration

It also includes a supply which is made or agreed to be made without a consideration and specified in Schedule-I to the Act, i.e., matters to be treated as supply without consideration which are as follows:

• Permanent transfer/disposal of business assets.
• Temporary application of business assets to a private or non-business use.
• Services put to a private or non-business use.
• Self supply of goods and/or services.
• Assets retained after deregistration.
• Supply of goods / services by a taxable person to another taxable or non-taxable person in the course or furtherance of business.

It may however, be noted that supply of goods by a registered person to a job worker as per section 43A dealing with special procedure for removal of goods will not be treated as supply of goods.

Schedule II to Model GST law shall govern supply of goods or services in relation to transfer, land and building treatment or process, transfer of business assets, certain specified services etc.

The provision empowers the Central or State Governments to specify by notification, the treatment of transactions. On the recommendation of the GST Council, such notification may notify that the transaction be treated –

1. as supply of goods and not as a supply of services
2. as supply of services and not as supply of goods
3. neither as supply of goods nor as supply of services

(To be continued…..)