Supply in the Course or Furtherance of Business - GST Ready Reckoner - GST

Supply in the Course or - Furtherance of Business The term of business is defined u/s 2(17) of CGST Act 2017 but phrase in the course or furtherance is not defined under GST. As per section 2(17) business includes - (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; Why is it important to understand in the course or furtherance of business under GST? In the course Or furtherance Of business activities are covered only when the main activity is business. Here are some Case laws for reference: sale of old newspaper and wastepaper - In Indian Express P ltd V/s State of Tamil nadu [ 1986 (4) TMI 321 - SC ] , it was held that the sale of old and unsold copies of newspaper by newspaper publisher is incidental to the main business . Sale of pledged goods by banks - Sale of pledged Goods by bank in course of banking business - federal bank ltd Vs State of kerala [ 2007 (3) TMI 364 - SC ] But In case of Institute of Chartered Accountants of India Vs DGIT [2013 (7) TMI 205 - Delhi High Court] , It was held that Dominant objective of ICAI is to regulate Chartered accountancy profession in India. conducting extensive educational programs, conducting coaching classes and campus placements through fees cannot be held to be business. it cannot be said that the assessee is involved in carrying any business, trade or commerce. Claim of Input Tax Credits in respect of course or Furtherance of business It is specified that every registered person subject to such conditions and restrictions be entitled to claim the credit of input tax charged which are used or intended to be used in the course or furtherance of its business. Further, ITC can be claimed on input, input services capital goods subject to such restrictions specified under the law. Inputs, input services and capital goods are defined under the GST Act, 2017 Input services is defined under section 2(60) of the CGST Act, 2017 which means any service used or intended to be used by a supplier in the course or furtherance of business. However, there is one exception to this in the Course or Furtherance of Business rule i.e., Import of services by a person from a related person (wholly or mainly dependent on him) or from any of his other establishments outside India, in the course or furtherance of business. GST is essentially tax only on commercial transactions. Hence only those supplies that are in the course or furtherance of business qualify as Supply under GST. However, considering the definition of Business, the sale of goods or service even as a vocation is a supply under GST. Therefore, even if a famous politician paints paintings for charity and sells the paintings even as a one-time occurrence, the sale would constitute Supply. Supplies in the course or furtherance of business qualify as Supply under GST. Hence any supplies made by an individual in his personal capacity do not come under the ambit of GST unless they fall within the definition of business as defined in the Act. Any activity carried out by the entity in the course or furtherance of business is included in the ambit of business definition and hence will be considered as supply under GST. Further one must check for the taxability of supply and exemptions. Before we pay heed to the words in the course or furtherance it is important to analyze the definition of business. Business define u/ s 2(17) of CGST Act . Similar to the definition of Supply, the term business also is an inclusive definition again making the definition broad-based and including in its ambit several activities. No GST on Supply not in the Course or Furtherance of Business CBIC vide press release dated 13.07.2017 has clarified that sale of old gold jewellery by an individual to a jeweller will not constitute supply as the same cannot be said to be in the course or furtherance of business of the individual. Sale of goods or service even as a vocation is a supply under GST. It already has been clarified that sale of old gold jewellery by an individual to a jeweler will not constitute supply as the same cannot be said to be in the course of furtherance of business of the individual. Sale of car for personal use by individual not a supply in course of furtherance of business. Prasadam supplied by religious place like temple, gurdwara, etc. not a supply in course of furtherance of business. Examples to understand Supplies made in the course and furtherance of business Supply of goods to an orphanage by any manufacturing company for free distribution to meet its CSR obligations will not get covered as a taxable as it is without consideration. Such distribution would be in the course of business for the company as meeting CSR obligations is ancillary or incidental to its main business. A Banking company selling hypothecated assets due to default in debt payment by its borrowers is in the course and furtherance of business. A turbine manufacturing company running a staff canteen is in the course and furtherance of business. A non resident person Mr.X visits India as a tourist and sells his camera for Rs.10,000/-. This doesn t amount to supply as it is not in the course and furtherance of business. A practicing CA who is registered under GST sells his personal Rado watch. It doesn t amount to supply as it is not in the course and furtherance of business.