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Concept of Supply in GST & Issues

Goods and Services Tax - GST - By: - Ranjan Mehta - Dated:- 21-9-2016 Last Replied Date:- 26-9-2016 - The biggest change due to GST regime is the point when GST will be applicable i.e. Supply. First thing to understand before going forward to understand is that GST is a Destination based or consumption based regime of tax against the current Origin based regime. In present VAT regime the goods are first taxed in the state of manufacture and after that at every point from where the sale is initia .....

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ition following is supply as per clause (a) to section 3(1) of Model GST Law:- It should have following ingredients to constitute supply:- It should be made or agreed to be made for consideration. It should be made in the course or furtherance of business. It may be in any form of supply - Sale, transfer, barter, exchange, license, rental, lease or disposal. To understand the term supply we need to understand a few terms of which definition are as follows:- Consideration:- Section 2(28) of Model .....

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r by the said person or by any other person: Provided that a deposit, whether refundable or not, given in respect of the supply of goods and/or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply; The above definition signifies that any consideration be it cash or kind; be it by recipient or any other person shall constitute valid consideration. It will create a few issues which we will discuss in the final secti .....

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or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital assets 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, as the case may be; (f) admission, for a consideration, of persons to any premises; and (g) services supplied by a person as the ho .....

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iness. Now there is Clause (b) to section 3(1) which applies in case of import of service transactions. Its application is as follows:- It applies to import of services With or without consideration Whether or not for Business That means import of service transactions will be treated as supplies even if they are for personal use and without consideration. Clause (c) of section 3(1) deals with cases which will be deemed supply even without consideration. These cases are enumerated in schedule I. .....

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t of VAT, Now that immunity is not available to the agents. Now there will be complete set of taxations for Principal and Agent relationships. Aggregator of Branded services : In case of aggregators of branded services, aggregators shall be deemed to be supplying such service. These provision was already applicable in current Service tax under Reverse Charge Mechanism. However this will break the chain of Input tax credit. (eg, OLA, UBER, PRACTO etc.) Issues related to definition of supply, cons .....

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resent is to make all advances to be brought into the ambit of supply. Import of personal services : All imports of services are included in supply including personal imports. The monetary consideration is also not required. An example:- If we register at freelancer.com and it provides 1st 5 bids everymonth free of cost then such free bids are import of services without consideration. This free of cost importation of service is deemed supply under clause (b) to sec 3(1). Principal to agent trans .....

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