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Supply of Goods Vs. Supply of Services in GST Test of Constitutional Validity

Goods and Services Tax - GST - By: - Bimal jain - Dated:- 8-9-2016 Last Replied Date:- 9-9-2016 - Dear Professional Colleague, Owing to the federal structure of India, where there are two taxing authorities - the Central Government and the State Government(s), the Country has witnessed overlapping of powers of the State Government(s) and the Central Government. Even though the current indirect tax system treats goods and services differently, in certain cases where goods and services with other .....

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to avoid unnecessary litigation, Trade & Industry charges both the taxes, on such litigated transactions. To overcome these issues of double taxation that has plagued our present indirect taxation structure for long, GST is being expected to provide a resolution thereof. Though the Model GST Law placed on public domain on June 14, 2016, has made sensible efforts to put rest to some of the issues of double taxation, vide Schedule II to the Model CGST/SGST Act, 2016 but the same do not appear .....

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person to recover debt Goods forming part of business assets on ceasing to be a taxable person Supply of goods by an unincorporated association to its members Matters to be treated as supply of services: Transfer of right to use goods Lease, tenancy, easement, licence to occupy land Lease or letting out of building Job work on others' goods Personal use/making available for non-commercial use of business assets Renting of immovable property Construction of a complex, building, civil structur .....

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technology software Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; Works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration Supply, by way of or as part of any service or in any other manner whatsoever .....

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alyses of the same would reveal that the settlement of goods vs. services may not fade away so easily in GST when the Schedule II is tested on the scale of constitutional validity. Few of such important points are summarised as under: Is it constitutionally valid to treat intangibles as services? The Model GST Law has made it explicit that intangibles would be treated as supply of services (as per definition of services under Section 2(88) of the Model CGST/SGST Act, 2016), while the same has be .....

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Services Vs. State of Andhra Pradesh [ 2004 (11) TMI 11 - Supreme Court ], the Hon ble Apex Court held that: ….In our view, the term goods as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. (supra). A software programme may consist of v .....

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he basis of definition provided in Model GST Law, it would tantamount to defiance of sanctity of the Constitution, which is ultra-virus. Packaged software - whether goods or services? Even if the bifurcation of goods and services created in Model GST Law by virtue of Schedule II is accepted (leaving aside the contraction with the Constitutional provisions), still there are certain matters where litigation may continue such as likely issue of dispute in case of packaged software (i.e. software pr .....

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supply or service, is for cash, deferred payment or other valuable consideration and Works contract etc. are deemed to be sale of goods. Article 366(29A) of the Constitution is reproduced hereunder for ease of reference: (29A) tax on the sale or purchase of goods includes (a) a tax on the transfer, otherwise than in pursuance of a contact, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in so .....

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