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Activity or Transaction - Section 7(1A) read with Schedule II - whether it is Supply of Goods or Services - GST Ready Reckoner - GSTExtract Activity or Transaction - Schedule II whether it is Supply of Goods or Services Section 7(1A) , states that; Where certain activities or transactions constitute a supply in accordance with the provisions of section 7(1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II Note:- Before amendment it was clause (d) of section 7(1) Meaning of Goods and Services :- Goods as well as services have been defined in the GST Law. 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. 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. The Securities and Money are excluded from the definition of goods as well as that of services but Services includes facilitating or arranging transactions in securities or separate consideration is charged for conversion of money from one form to another form denomination. Read along with the definition of Goods services, Schedule II provide clarification regarding Which is the goods or services for taxability of GST Certain activity or transaction defined in Schedule II whether it is Supply of Goods or Services As per para 1 of Schedule II of CGST Act (a) Transfer of title to goods - Supply of goods: - As per para 1 of Schedule II of CGST Act Transfer of title to goods, which have been identified in the contract of sale, passes form the seller to the buyer in any manner and on any conditions agreed upon by the parties to the contract of sale. The basic Rule is that the title of goods passes, when the parties intend the same to pass. Example: - M/s ABC, a plastic dealer sells plastic material to Mr. B for INR 15000. It is a case of transfer of title in the goods. (b) Transfer of right in goods - Supply of Service : - Rights in goods may be of different types, such as, as owner, as lessor, as a bailer, as an agent, as the holder of goods, etc. This clause is applicable where right in goods is transferred without the transfer of title thereof. Example: - Ola/Uber give right to use of his car for self-drive. Transfer of right to use brand. Generator is given on lease for 6 months with operator. (c) Transfer of undivided share in goods - Supply of Service : - . Even though the activity is categorized as a supply of service, the rate of tax applicable on the supply has been linked to the rate of tax as applicable to the supply of same goods involving transfer of title in goods. Example: - Notification No. 37 /2017 Central Tax (Rate), dated 13.10.2017 was issued to reduce the rate of tax on motor vehicle to 65 per cent of the tax rate as applicable with certain conditions. Considering the rate of tax for leasing of such motor vehicle to be same as that of the rate of tax applicable on the motor vehicle, even the rate of tax on leasing services stands reduced if the conditions specified in the notification are met. As per para 2 of Schedule II of CGST Act (d) Transfer of property in goods at a future date - Here comes the transactions such as Hire Purchase, Operating Lease and Finance Lease where ownership is transferred at a future date upon payment of full consideration. Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration, shall be treated as supply of goods. Hire Purchase- In the hire purchase, hirer has an option or an obligation to purchase goods and after the stipulated period, upon payment of all the instalment ownership is transfer to the hirer. it will be treated as supply of goods. The hire purchase contract, consists of two constituents: A contract of bailment wherein hirer gets the physical possession of the goods but property in the goods is transferred to the hirer on some future date, and An element of sale wherein the hirer gets the option to purchase the goods but the option is to be exercised on some future date. Lease define under Accounting Standard (AS) 19 A finance lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. Risks include the possibilities of losses from idle capacity or technological obsolescence and of variations in return due to changing economic conditions. Rewards may be represented by the expectation of profitable operation over the economic life of the asset and of gain from appreciation in value or realisation of residual value. An operating lease is a lease other than a finance lease. This Standard should be applied in accounting for all leases other than: lease agreements to explore for or use natural resources, such as oil, gas, timber, metals and other mineral rights; and licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights; and lease agreements to use lands. A finance lease or an operating lease depends on the substance of the transaction rather than its form. Examples of situations which would normally lead to a lease being classified as a finance lease are: The lease transfers ownership of the asset to the lessee by the end of the lease term; The lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable such that, at the inception of the lease, it is reasonably certain that the option will be exercised; The lease term is for the major part of the economic life of the asset even if title is not transferred; At the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; and The leased asset is of a specialised nature such that only the lessee can use it without major modifications being made. Operating Lease: - Normally in an operating lease the lease is for a term shorter than property useful life and the lessor is typically responsible for taxes and other expenses on the property. The lessee does not have an option to purchase the property at the end of lease period. Such arrangement does not qualify as delivery of goods on hire purchase or any system of payment of instalment . Hirer has no option to buy the goods hired and risk and rewards incidental to ownership of goods remain with owner and it may have elements of transfer the goods right to use goods also . its will be treated as supply of services . Finance Lease - it is relatively for a longer period, and substantially all the risks and rewards incident to ownership of an asset.. Such arrangement resemble a hire purchase agreement. The essence of this deemed sale category is that the arrangement under which the goods are delivered should be in the nature of a financing arrangement wherein the lessee pays maintenances costs and taxes and has the option of purchasing the asset so delivered at lease end. If lease agreement stipulates transfer of goods unconditionally - it will be treated supply of goods. If lease agreement does not stipulates transfer of goods unconditionally - it will be treated supply of services. Example:- M/s XYZ sells refrigerator to Mr. A costing INR 50,000/- on hire purchase basis. Mr. A pay INR 10,000/- as down payment and he pays INR 2,000/- per month for the next 30 months. The ownership and title is transferred to Mr. A after full payment. (e) Any Lease, tenancy, easement, license to occupy Land - Supply of service: - The scope is confined to Land Only. It would cover the leasing of Land to a car showroom for the purpose of parking of car or for dumping of scrap or waste etc. Important Clarification Issue related to taxability of tenancy rights under GST [ Circular No. 44/18/2018-CGST Dated 2nd May, 2018 ] 1. The activity of transfer of tenancy right against consideration in the form of tenancy premium is a supply of service liable to GST . It is a form of lease or renting of property and such activity is specifically declared to be a service in para 2 of Schedule II i.e. any lease, tenancy, easement, licence to occupy land is a supply of services. 2. The contention that stamp duty and registration charges is levied on such transfers of tenancy rights, and such transaction thus should not be subjected to GST , is not relevant. Merely because a transaction or a supply involves execution of documents which may require registration and payment of registration fee and stamp duty, would not preclude them from the scope of supply of goods and services and from payment of GST. 3. Hence, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt . As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST. (f) Any lease or letting out of the building including a commercial, industrial or residual complex for business or commerce, either wholly or in part - supply of service: This clause covers the residential as well as commercial building. Leasing of residential building for use as residence, has been exempt by way of Notification No. 12 / 2017 - Central Tax (Rate) dated 28 June, 2017. As per para 3 of Schedule II of CGST Act (g) Any treatment or process which is being applied to another person's goods - Supply of service: Applicable when the treatment or process is applied to another person's movable property. That activity involving two or more taxable goods and/or services have been considered composite supply under GST. In general, no process or treatment can be completed without adding some incidental goods, Similarly, the job work uses his inputs in the printing contracts , fabrications of garments, and colouring of fabric etc.. However, the law say that process must be is applied to another person s goods. It is clarified in circular no. 38/12/2018 dated 26 March 2018 , where the job worker is expected to work on the goods send by the principal and whether the activity is covered within in the scope of job worker or not, would have to be determined on the facts and circumstances of each case. It is further clarified that job worker, in addition to goods received from principal, can use his own goods for providing the services of job work. As per para 4 of Schedule II of CGST Act (h) Permanent transfer of Business Assets - Supply of goods: Permanent transfer of business assets, which goods forming part of business assets, shall treated as supply of goods, if following condition are satisfied: There should be goods that form part of business assets. Transfer or disposed of assets will no longer form part of those assets. Transfer or disposal should be made by or under direction of the person carrying on the business. Where any goods forming part of the business assets of a taxable person are sold by any other person(other than taxable person), who has power to do so recover any debt owned by the taxable person, the goods shall be deemed to be supply of goods by the taxable person in the course of furtherance of business of his and would be covered in this clause. Like Banking company selling the goods /assets of the company to recover the debts from the taxable person Liquidator appointed either by the creditors or by the shareholder and selling the goods /business assets, to pay the debts of the company. (i) Transfer of usage of Business assets - Supply of service : This clause covers the transfer of Business goods for non-business purpose. This clause covers only the cases where the goods are temporarily transferred. It states that transfer of goods shall be treated as supply of service, if following condition are satisfied: There should be goods held or used for the purpose of the Business. These goods should be put to any private use or are used, or made available to any person. These goods are used for any purpose other than a purpose of Business. This clause cover only those cases where goods are temporarily transferred. If the goods are permanently transferred, it would be fall under clause 4(a) of schedule II and be considered as supply of goods (and not as services). Example: - XYZ enterprises, a sole proprietor, is engaged in the business of selling generator. its owner took a set of generators his house temporarily for 2 months. The personal use of the generator by the owner, is deemed as a supply of services by the company to him (j) Goods forming part of assets of any business, carried on by a person, where the person ceases to be taxable person - Supply of goods: 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, except in the following two case, there is no liability of GST which is as follows:- The business is transferred as a going concern to another person; or the business is carried on by a personal representative who is deemed to a taxable person. Example: - Mr. Ramesh is a GST registered sundry store owner. As his business has substantially reduced over the last year, he has decided to close the business and retire. At the time of de-registration, he has goods on hand valued at Stock RS 5,000. Mr. Ramesh file final GST return will show his supplies made during the last taxable period plus Stock in hand of RS 5,000 during the deregistration.it will be treated as supply. As per para 5 of Schedule II of CGST Act (k). Renting of immovable property - Supply of service: - Renting in relation to immovable property means allowing, permitting, or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property. Also plant and machinery permanently embedded in the Earth or attached to the building are termed as immovable property. Such assets shall also be covered under this entry. It must be noted that renting out of a religious place owned and managed by a registered charitable or religious Trust for the public shall be exempt from GST . However, such an exemption may not be applicable to cases where: The room rent is Rs. 1000 or more per day, Rent for premises, community hall, open area etc. is Rs. 10,000 or more per day, The rent for shops or commercial spaces is Rs. 10,000 or more per day Example: - Mr. GK gives a parking space on rent of INR 50,000/- per month to M/s ABC. (l). 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 - Supply of Service. 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 (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority. The expression Construction includes additions, alteration, replacements or remodeling of any existing civil structure. Example A : - Mr. A booked a flat during the under construction of building and give a token money of Rs. 10,000/- to builder for booking a flat, it is deemed to supply of services and liable to GST on entire value of flat even if part of consideration received after receipt of completion certificate. Example B : - Mr. A booked a flat during the under construction of building and does not give any money to builder for booking a flat and take handover of flat after when builder received completion certificate form competent authority, it is deemed to supply of services and not liable to GST. (m). Temporary transfer or permitting the use or enjoyment of any Intellectual Property Rights (IPR) - Supply of service The term Intellectual Property Right (IPR) has not been defined in GST Act. Intellectual Property includes the following: Copyright Patents Trademark Designs Any other similar rights to an intangible property As per the definition given under GST law of Goods and Services, Goods include everything which is movable and movable is not defined under GST law. Goods cover both tangible and intangible. Therefore, IPR would qualify to be goods. Now goods can be transferred by way of sale or licensing i.e. either permanent disposal or temporary disposal. As per schedule II entry no.5(C) of CGST Act temporary or permitting the use of enjoyment of any intellectual property right shall be treated as supply of service. Permanent transfer of IPR is Goods : Intellectual Property Right is a property of a creator and if the creator permanent transfers the right on property, it is considered as a supply of Goods. Temporary transfer of right to use IPR is Services : The creator of IPR temporary transfers the right to use of any Intellectual Property Right (IPR) is a supply of services. He may permit the use or enjoyment of IPR to others for consideration. There is no condition that the intellectual property must be registered in India. Temporary transfer of a patent registered outside India would also be covered under this Entry. However it will become taxable only if the place of provision of service of temporary transfer of intellectual property right is in taxable territory. Transfer of IPR is Taxable under GST: Both the permanent transfer of IPR and temporary transfer are subject to GST. Temporary transfer includes permitting use or enjoyment of IPR. (n). Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software - Supply of service - This entry mainly covers the customized software (i.e., uncanned software). However, the law is silent about the canned software, which is generally sold through a medium, such as DVD, pen drive etc. Meaning of the term information technology software as per explanation in clause no. 4 of N. No. 11/2017-CT-(R) dated 28 June 2017 and Education guide released by CBEC 2012 [Para 6.4] information technology software means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment Would sale of pre-packaged or canned software be included in this entry? No. It is a settled position of law that pre-packaged or canned software which is put on a media is in the nature of goods [Supreme Court judgment in case of Tata Consultancy Services vs State of Andhra Pradesh [2002(178) ELT 22(SC) refers]. Sale of pre-packaged or canned software is, therefore, in the nature of sale of goods and is not covered in this entry. Is on site development of software covered under this entry? Yes. On site development of software is covered under the category of development of information technology software Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software shall be treated as supply of services as listed in Sl. No. 5 (2)(d) of Schedule II of the GST law. In case contract is given for customized development of software and the customized software so developed is delivered to the client on media like a CD then would the transaction fall in this declared entry or would it be covered by the TCS Judgement? In such a case although the software is finally delivered in the form of goods, since the contract is essentially for design and development of software it would fall in the declared list entry. Such a transaction would be in the nature of composite transaction involving an element of provision of service, in as much as the contract is for design and development of software and also an element of transfer of title in goods, in as much as the property in CD containing the developed software is transferred to the client. However, the CD remains only a media to transmit or deliver the outcome of which is essentially and pre-dominantly a contract of service. Therefore, such a transaction would not be excluded from the ambit of the definition of service as the transaction does not involve only transfer of title in goods and dominant nature of the transaction is that of provision of service. (o). Agreeing to the obligation to refrain from an act or to tolerate an act or situation or to do an act - supply of service: The following activities, if carried out by a person for another for a consideration, would be treated as provision of services when a person agrees to obligation to refrain from an act when a person agrees to obligation to tolerate an act or a situation. when a person agrees to obligation to do an act. A supply of service is said to be made when a person does something, or agrees to do something for a consideration, would be treated as provision of services refrain from doing something or gives up a right for consideration which also includes grant, assignment or surrender of any rights. Under this scope, following activities are included: Demurrage charges for not clearing goods within prescribed period. Cancellation charges charged by Hotel and airlines. Liquidated damages recovered by Builders and Contractors. Non-Compete fees payable for agreeing not to compete for particular period. Forfeiture of deposit or advance as penalty (Like quality, late delivery, violation of any terms of contract) Penalty for breach of contract. Refundable security deposit is not taxable, however if deposit is forfeited then it would be taxable Applicability of GST on payments in the nature of liquidated damage, compensation, penalty, cancellation charges, late payment surcharge etc. arising out of breach of contract or otherwise and scope of the entry at para 5 (e) of Schedule II of CGST Act, 2017 [ Circular No. 178/10/2022-GST dated 03.08.2022 ] (p). Transfer of rights to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration - Supply of service: Transfer of right of goods involves transfer of possession and effective control over such goods. But every transfer of goods on lease, license or hiring does not result in transfer of right to use goods As per Education guide of CBEC 2012 (Services tax regime) 6.6.1 What is the meaning and scope of the phrase transfer of right to use such goods . Transfer of right to use goods is a well-recognized constitutional and legal concept. Every transfer of goods on lease, license or hiring basis does not result in transfer of right to use goods. Transfer of right of goods involves transfer of possession and effective control over such goods in terms of the judgment of the Supreme Court in the case of State of Andhra Pradesh vs RashtriyaIspat Nigam Ltd [Judgment dated 6/2/2002 in Civil Appeal no. 31 of 1991]. Transfer of custody along with permission to use or enjoy such goods, per se, does not lead to transfer of possession and effective control. The test laid down by the Supreme Court in the case of Bharat Sanchar Nigam Limited vs Union of India [ 2006 (3) TMI 1 - SUPREME COURT ] to determine whether a transaction involves transfer of right to use goods, which has been followed by the Supreme Court and various High Courts, is as follows: There must be goods available for delivery, There must be a consensus ad idem as to the identity of the goods, The transferee should have legal right to use the goods consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee, For the period during which the transferee has such legal right, it has to be the exclusion to the transferor this is the necessary concomitant of the plain language of the statute, viz., a transfer of the right to use and not merely a license to use the goods, Having transferred, the owner cannot again transfer the same right to others. As per para 6 of Schedule II of CGST Act (q). Composite supply - Works Contract - Supply of service: works contract as defined in clause (119) of section 2 , 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. The Works contract in relation to movable property under the post-GST regime shall be evaluated under the concepts of 'mixed supplies' and 'composite supplies'. As per section 17(5) (c) of the CGST Act, 2017 , input tax credit shall not be available in respect of the works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of work contract services. (r). Composite Supply of foods and beverage - Supply of service: Composite supply - 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 for cash, deferred payment of other valuable consideration. Rate of CGST tax on Accommodation, food and beverage services mentioned in the entry no. 7 Heading 9963 w.e.f. 01/10/2019 [ Refer Notification No. 20/2019-CT(R) dated 30.September 2019 ] Description of Service Rate (%) Condition (i) Supply of hotel accommodation having value of supply of a unit of accommodation less than or equal to 7,500/- Rupees per unit per day or equivalent. 6 - (ii) Supply of restaurant service other than at specified premises 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken. [ In other words NO ITC available [Please refer to Explanation no. (iv)] (iii) Supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms . 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] (iv) Supply of outdoor catering , at premises other than specified premises provided by any person other than- (a) suppliers providing hotel accommodation at specified premises , or (b) suppliers located in specified premises . 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (v) Composite supply of outdoor catering together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) at premises other than specified premises provided by any person other than- (a) suppliers providing hotel accommodation at specified premises , or (b) suppliers located in specified premises . 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation (iv)] (vi) Accommodation, food and beverage services other than (i) to (v) above Explanation: (a) For the removal of doubt, it is hereby clarified that, supplies covered by items (ii), (iii), (iv) and (v) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5), which is a mandatory rate and shall not be levied at the rate as specified under this entry. (b) This entry covers supply of restaurant service at specified premises (c) This entry covers supply of hotel accommodation having value of supply of a unit of accommodation above 7,500/- Rupees per unit per day or equivalent. (d) This entry covers supply of outdoor catering , provided by suppliers providing hotel accommodation at specified premises , or suppliers located in specified premises . (e) This entry covers composite supply of outdoor catering together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) provided by suppliers providing hotel accommodation at specified premises , or suppliers located in specified premises . 9 - Definition of various terms used in the Entry no. 7 vide clause no. 4 of Notification No. 11/2017-Central Tax (Rate) , dated 28 th June, 2017 , as amended from time to time. (xxxii) Restaurant service means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied. (xxxiii) Outdoor catering means supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, at Exhibition Halls, Events, Conferences, Marriage Halls and other outdoor or indoor functions that are event based and occasional in nature. (xxxiv) Hotel accommodation means supply, by way of accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes including the supply of time share usage rights by way of accommodation. (xxxv) Declared tariff means charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. (xxxvi) Specified premises means premises providing hotel accommodation services having declared tariff of any unit of accommodation above 7,500/- rupees per unit per day or equivalent. Food supplied to patients [ Circular No. 32/06/2018-GST Dated 12th February 2018 ] S. No. Issue Clarification Is GST leviable in following case: (3) Food supplied to the patients: Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then no ITC will be available on inputs including capital goods and in turn if they supply food to the doctors and their staff; such supplies, even when not charged, may be subjected to GST. (3) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. GST rate applicable on supply of food and beverage services by educational institution [ Circular No. 85/04/2019- GST Dated 1st January, 2019 ] Supply of all services by an educational institution t o its students, faculty and staff is exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, Sl. No. 66. Such services include supply of food and beverages by an educational institution to its students, faculty and staff. As stated in explanation 3 (ii) to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 Chapter, Section, Heading, Group or Service Codes mentioned in column (2) of the table in Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 are only indicative. A supply is eligible for exemption under an entry of the said notification where the description given in column (3) of the table leaves no room for any doubt. Accordingly, it is clarified that supply of food and beverages by an educational institution to its students, faculty and staff, where such supply is made by the educational institution itself, is exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 , vide Sl. No. 66 w.e.f. 01-07-2017 itself. However, such supply of food and beverages by any person other than the educational institutions based on a contractual arrangement with such institution is leviable to GST@ 5%. As per para 7 of Schedule II of CGST Act (s). Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration - Supply of goods. [ Omitted paragraph 7 shall be omitted and shall be deemed to have been omitted with effect from the 1st day of July, 2017 . ] Important Clarification 1. Whether activity of bus body building, is a supply of goods or services? [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply , as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case. 2. Whether retreading of tyres is a supply of goods or services? [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] In retreading of tyres, which is a composite supply , the pre-dominant element is the process of retreading which is a supply of service . In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Supply of retreaded tyres , where the old tyres belong to the supplier of retreaded tyres, is a supply of goods (retreaded tyres under heading 4012 of the Customs Tariff attracting GST @ 28%). 3. Whether Priority Sector Lending Certificates (PSLCs) are outside the purview of GST and therefore not taxable? In Reserve Bank of India FAQ on PSLC, it has been mentioned that PSLC may be construed to be in the nature of goods , dealing in which has been notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 vide Government of India notification dated 4th February, 2016. PSLC are not securities. PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT. In GST there is no exemption to trading in PSLCs . Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III of notification No. 1/2017-Central Tax(Rate) . GST payable on the certificates would be available as ITC to the bank buying the certificates. [ Circular No. 34/8/2018-GST Dated 1 st March 2018 ] Applicable GST rate on Priority Sector Lending Certificates (PSLCs), Renewable Energy Certificates (RECs) and other similar scrips [ Circular No. 46/20/2018-GST Dated 6th June, 2018 ] Accordingly, in modification of S.No. 3 of Circular No. 34/8/2018- GST dated 01.03.2018 , it is hereby clarified that Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar documents are classifiable under heading 4907 and attract 12% GST. The duty credit scrips, however, attract Nil GST under S.No. 122A of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017. Payment of GST on Priority Sector Lending Certificate As per Notification No. 11/2018-Central Tax (Rate) Dated 28th May, 2018 on such supply of PSLC tax shall be said under reverse charge here person liable tp pay tax shall be the recipient. Nature of Supply of Priority Sector Lending Certificates (PSLC) ( whether IGST or CGST/ SGST is payable for trading of PSLC by the banks on e-Kuber portal of RBI. ) [ Circular No. 93/12/2019-GST Dated 8th March, 2019 ] it is stated that Circular No. 62/36/2018-GST dated 12.09.2018 was issued clarifying that GST on PSLCs for the period 1.7.2017 to 27.05.2018 will be paid by the seller bank on forward charge basis and GST rate of 12% will be applicable on the supply. Further, Notification No. 11/2018-Central Tax (Rate) dated 28.05.2018 was issued levying GST on PSLC trading on reverse charge basis from 28.05.2018 onwards to be paid by the buyer bank. It is further clarified that nature of supply of PSLC between banks may be treated as a supply of goods in the course of inter-State trade or commerce. Accordingly, IGST shall be payable on the supply of PSLC traded over e-Kuber portal of RBI for both periods i.e 01.07.2017 to 27.05.2018 and from 28.05.2018 onwards. However, where the bank liable to pay GST has already paid CGST/SGST or CGST/UTGST as the case may be, such banks for payment already made, shall not be required to pay IGST towards such supply. 4. Clarifications regarding levy of GST on printing [ Circular No. 27/01/2018-GST Dated 04th January 2018 ] S. No. Questions/ Clarifications sought Clarifications 6 To clarify whether supply in the situations listed below shall be treated as a supply of goods or supply of service: - 1. The books are printed/ published/ sold on procuring copyright from the author or his legal heir. [e.g. White Tiger Procures copyright from Ruskin Bond] 2. The books are printed/ published/ sold against a specific brand name. [e.g. Manorama Year Book] 3. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian edition (same language) of foreign books. [e.g. Penguin (India) Ltd. pays fees to Routledge (London)] 4. The books are printed/ published/ sold on paying copyright fees to a foreign publisher for publishing Indian language edition (translated). [e.g. Ananda Publishers Ltd. pays fees to Penguin (NY)] The supply of books shall be treated as supply of goods as long as the supplier owns the books and has the legal rights to sell those books on his own account.
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