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Meaning & Scope of Supply under GST

Goods and Services Tax - GST - By: - Venkata prasad Pasupuleti - Dated:- 14-9-2016 Last Replied Date:- 15-9-2016 - Meaning & Scope of Supply under GST CA Venkata Prasad GST is said to be levied on supply in legal words taxable event is supply thereby dispensing with the existing different taxable events for different levies of duties/taxes like Manufacture for levy of excise duty, sale for levy of VAT/sales tax etc., Therefore understanding of the expression supply is highly important. The S .....

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uoted: (1) Supply includes (a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; Unquoted: It covers all the regular transactions of sale or services. There are 8 forms of transaction specified as supply however these are only illustrative and not exhaustive owing to use of the wordings such as . The expressions of all 8 forms .....

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deration are deemed as supply. The concept of one person to another (two persons) is no more relevant now. The main effect is that transactions between two units of same company may liable to tax. The same should be in the course or furtherance of business. Business is widely defined u/s. 2(17) (here again only inclusive manner). In the course of business implies a period of time during which business is in progress and also the connected relation with it. Furtherance of business can be commonly .....

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inct person. On Conjoint construction of Explanation I & II to that section shows that branch/agency or representational office in any other territory will be treated as establishment of distinct person. The benefit (may be unintentional) of this clause is that payments made by Indian head office to its foreign branch/agency are not subjected to GST (expenses incurred for running of branch there). The very similar condition is there presently in service tax law and specifically disallows the .....

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ts/reimbursements made to foreign branch. Same was view further elaborated in case of Tech Mahindra Ltd. v CCE 2016 (9) TMI 191 - CESTAT MUMBAI ). Consideration is not mandatory to attract GST i.e. free services received from outside India liable. The main effect can be seen in case of free transactions between foreign parent and Indian subsidiary company or vice versa. In the course or furtherance of business also not mandatory thereby personal services were also liable however it was provided .....

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for GST irrespective of consideration. However the problem arises with the heading of schedule I which reads matters to be treated as supply without consideration . The literal meaning of this heading is that specified transactions are treated as made without consideration. The consequence follows that even though said transactions are made with consideration then same would be deemed as without consideration and valuation rules may have to be applied (since transaction value fails). However th .....

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hould in the course or furtherance of business. If this condition fails then same is not supply since transaction does not fall under clause (c) for the reason that there is consideration and simultaneously does not fall under clause (a) for the reason that it is not in the course or furtherance of business. Application of business assets to private/non-business use is deemed as supply in schedule I similar services for private/non business use. The tracing out these transactions has many practi .....

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nd GST can be levied? Therefore issue of taxing stock transfers is not clear and allows ambiguity. All cases of free samples, 1+1 offers cases etc., are subjected to GST. Activities undertaken as part of statutory requirement like CSR activities are also subjected to GST. Quoted: (2) Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services. Unquoted: The each clause of schedule II has history of di .....

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pply of goods or supply of services etc., Quoted: (2A) Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply. Unquoted: This subsection deems transaction between principal and agent as supply. This deeming fiction only for the transactions between principal and his agent and not in case of transactions with the t .....

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being paid by principal and agent, which anyways liable even without this deeming fiction. Quoted: (4) Notwithstanding anything contained in sub-section (1), the supply of any branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator. Unquoted This subsection intends to specify that transaction involving aggregator as supply in the hands of aggregator . While providing so, i .....

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