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DEMYSTIFYING SUPPLY AS PER REVISED MODEL GST LAW

Goods and Services Tax - GST - By: - CA. Chitresh Gupta - Dated:- 13-2-2017 - Article 366(12A) of the Constitutional (101st Amendment) Act, 2016 defines the Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of alcoholic liquor for human consumption . The term supply is, however, not defined in the Constitution. The concept of supply is the key stone of the proposed GST architecture. In other words, supply is life blood of GST regime. GST is a multi-stage .....

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lains the meaning and scope of term Supply . CONSTITUENTS OF SUPPLY IN GST In general, the definition of supply for GST purposes covers all forms of supply where goods and services are supplied in return for a consideration. Any supply of goods and services without consideration is not a supply unless it is deemed to be a supply. Examples of supply include sale, barter, exchange, license, rental, lease and right to use. Consideration received can be in monetary form or in kind or both. All Forms .....

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o transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. It may be absolute or conditional. Transfer Merriam- Webster to give over the legal possession or ownership of to cause (something) to pass from one to another to cause to go or be taken from one place to another to shift possession of (something) from one person to another Barter Merriam- Webster to trade by exchanging one commodity for another Exchange Transfer Of Prop .....

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patent short of an assignment of all rights Rental Free Dictionary.com the amount paid by a user for the use of property Lease Merriam- Webster a contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent Disposal Oxford Dictionary The action or process of getting rid of something: It may be noted that the term supply has been defined in an inclusive manner. The term includes is generally used to expand the meaning of the former word. Thus t .....

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g part of the land which are agreed to be severed before supply or under a contract of supply; Section 2(92) : services means anything other than goods; Explanation 1 -Services include transactions in money but does not include money and securities; Explanation 2 - Services does not include transaction in money other than an activity 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 .....

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ledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent. For Example: Claim to unsecured debt Right to recover insurance money Examples of Actionable Claim [Taxation of Services - An Education Guide dated 20-06-2012] 2.8.11 Would vouchers that entitle .....

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vouchers do not create a 'beneficial interest' in a moveable property but only enable a person to enjoy a particular service. Section 2(90) : Securities shall have meaning assigned to it in sub-section (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). Thus, activities that are in the nature of only transfer of title by way of sale, redemption, purchase or acquisition of securities on principal-to principal basis would not be liable to GST since excluded fr .....

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goods nor service , the same would be a transaction in securities. Entry and exit load charged by mutual fund: Entry or exit loads are in the nature of consideration for documentation, covering initial expenses, asset management etc. Hence GST would be leviable on such entry and exit loads. Investment Advisory Fee: GST would also be leviable on fund management activity undertaken by an asset management company (AMC) for which an AMC charges the mutual fund an 'investment and advisory fee .....

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ce since to the extent of face value of the instrument it is only a transaction in money. Debt collection services or credit control services would not be considered as transaction in money since provided for a consideration and would be liable to GST. made or agreed to be made for a consideration One of the essential conditions for the supply of goods and/or services to fall within the ambit of GST is that a supply is made for a consideration. For GST purposes, consideration does not refer only .....

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t made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but sh .....

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goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply; Example: Donations to a charitable organization are not consideration unless charity is obligated to provide something in return e.g. display or advertise the name of the donor in a specified manner or such that it gives a desired advantage to the donor. Examples of Non-monetary Consideration [para 2.2.4 of Taxation of Services -An Education Guide date .....

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click A s photograph A agrees not to open dry clean shop in B s neighborhood B agrees not to open photography shop in A s neighborhood A agrees to design B s house B agrees not to object to construction of A s house in his neighborhood A agrees to construct 3 flats for B on land owned by B B agrees to provide one flat to A without any monetary consideration Then for the services provided by A to B, the acts of B specified in 2nd column are non monetary consideration provided by B to A. Conversel .....

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r GST. The term in the course or furtherance of has not been defined under the Model GST Law. The term in the course means in the process or progress of. The term furtherance as understood in common parlance means the advancement of a scheme or interest, promotion, furthering, advancement, forwarding, improvement, development, betterment, stimulation. There is no exhaustive definition or test for determining whether an activity is in the course or furtherance of business. Internationally, the bu .....

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arrying on that business, especially if the supplies are of a kind which are made commercially by those who seek to profit from them. However, there is no presumption that activities carried on by a taxable person cannot be business if the profit motive is absent. GST is not a tax on profit or income but on taxable supplies by taxable persons. IMPORTATION OF SERVICE [Section 3(1)(b)] Supply includes importation of service, for a consideration whether or not in the course or furtherance of busine .....

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2(30) of IGST Act has adopted the meaning of supply from CGST Act. It may be noted that Importation of services for personal use still continues to be considered as a supply thus if a person takes a career counseling from a foreign university for his daughter and pays the consideration for the same in foreign currency to such university, it will amount to importation of service and will be within the ambit of supply and GST will be charged on the same. Importation of service without considerati .....

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sactions as mentioned in Schduele I will be deemed as supply even if they are without consideration. Permanent transfer/disposal of business assets where input tax credit has been availed on such assets Example: A company donating its old laptops in charity to an NGO on which input tax credit was availed earlier. Such permanent transfer of business assets would constitute supply to attract GST. Goods sent for job work or goods sent for testing would not qualify as supply under this clause since .....

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sa Example: Principal supplying goods to the agent for onwards sale in various parts of the country Agent procuring input for supplying to the factory of the Principal TAXABILITY OF COMPOSITE OR MIXED SUPPLY [SECTION 3(5)] The tax liability on a composite or a mixed supply shall be determined in the following manner - Composite Supply : A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. The term word comp .....

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