,Youshall following: deration. under CGST activities, i.e. manufacture or sale of goods and the provision of services. In the GST regime, the entire value of these two is taxed in an integrated manner by laying down one comprehensive taxable event ice. “supply” - supply of goods or both, It means, the term “supply” refers to a rad term which merges all taxable activities of the earlier laws into a si y. For Example: If Mr. A has sold goods to B, then it is supply of goods. In this case, if A has manufactured the goods and then has sold to B, even then it is supply of good , if Mr. Mohan took services of engineer for construction of his house, then it is also supply of services to Mr, Mohan. Under GST, the scenario has been shifted from sales, service, manufacturing, etc. to one activity ie. supply. Therefore, it can be said that now, there of supply which may attract GST and these Is and services. 4.2 SUPPLY: THE TAXABLE EVENT IN GST"), le event in a law is an event, the occurrence or hap- pening of which triggers the imposition of tax. It means the incidence of tax ari after the occurrence of the able event. Before GST: Under the earlier indirect tax laws, Central excise was levied on “manufacture of goods”, VAT/CS vas levied on “Sale of Goods”, Service tax was charged services provided or agreed to be provide _ Under GST: According to Article 366(12A) of the Cor of India, Goods and Services Tax (GS1) is “Any taxon Su of goods or services or both except ‘axes on Si f Alcoholic liquor for human consumprion." Therel GST, the taxable event is “Supply of Goods or Services or b tiUnder earlier indirect tax laws, there were activities, ie. manufacture or sale of goods and of services. In the GST regime, the entire value two is taxed in an integrated manner by laying comprehensive taxable event ie. “supply” - supply 0 or services or both. It means, the term “supply” refers to a broad term which merges all taxable activities of the laws into a single activity. For Example: If Mr. A has goods to B, then it is supply of goocs. In this manufactured the goods and then has sold to B, even it is supply of goods. Similarly, if Mr. Mohan took of engineer for construction of his house, then it is also supply of services to Mr. Mohan. Under GST, the scenario has been shifted from sales, service, manufacturing, ete. to one activity ie. supply. Therefore, it can be said that there are two modes of supply which may attract these are goods and services. eggs? the incidence of tax arises aa after the o taxable event. Before GST: Under the earlier indirect excise was levied on “manufacture of g‘TAXMANN® ‘SUPPLY UNDER GST shifted from multiple taxable event namely manufacture, sales, “The GST is applicable if there is Supply 0 1e sole taxable activity ie. Supply. een discussed in detail in ne Supply have bs ‘Services or both. These two forms of i th. The concept of supply _ Under GST, supply includes all forms of supply of goods or See bot The concept of supply is the key stone of the GST architecture because the supply o} ane ee eae rast does not attract GST. There are two forms of supply under G' i servi 4.3.1 Goods As per section 2(52) of CGST Act, 2017, “Goods” means every kind of movable Pe aaeal he money and securities but includes actionable claim, growing crops, grass an nie cue forming part of the land which are agreed to be severed before supply or under a co! .pply. [et | eeeenre aaa Tt includes It excludes Actionable Claims Growing Crops, Grass, etc. Actionable claim: The section 2 have the same meaning as ass Money & Securities (1) of CGST Act provides that the definition of actionable claims shall signed to iin section 3 of the Transfer of Property Act, 1882. As per section 3 of the Transfer of Property Act, 1882, ‘actionable claim means a claim to any debt, olfer than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable Property, or to any beneficial interest in movable property not in the possession, either aetwal or constructive,oftheclaimant, which thecivil courts recognise asaffording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingeme® Gmay be noted that there are certain activities listed in Schedule I which are treated neither as Supply of goods nor as Supply of services (Refer Para. 411). Actionable clare (other than lottery, betting & gambling) have been included in this Schedule. Thus, only lottery, betting & gambling shall be treated as Supply under GST. All he other actionable claims shat wie Supplies, Money: As per section 2(75) of CGST Act, ‘Money means the Indian legal tender or any forei currency cheque, promissory nove billof exchange, letter oferediy dng en en travelle, ria money order, postalor electronic remittance orany other instrumen nee the Resegaeti of India when used as a consideration 10 setlean obligation oy on with Indian legal tandoe of another denomination but shall not include any currenes that is held for its ruimiomea value.” the definition of goods/services, When wi is withdrawn, then it is simply a transaction in thus are not chargeable to GST. same me; Meaning as ass sal lation) Act, 1956.As per this Agr ateoats 4— units or any other instrument issued » such schemes ~ units or any other such instrument issued to the investors under any muti but does not include any unit linked insurance policy which is a hybrid in for life risk cover and investments. by any collective investment sch — security receipts issued under SARFAESI Act (Securitization and Recons Assets and Enforcement of Security Interest Act, 2002) = Securitized debt instruments (collateralized debt obligations etc.) = such other instruments as may be declared by the Central Government to be s — Rights or interest in securities 4.3.2 Service The term ‘Service’ has been defined under section 2(102) of CGST Act, 2017. As per this section, ‘service means anything other than goods, money and securities but includes activities relating 10 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 which a separate consideration is charged” Ttmeans the Service refers to anything other than goods, money and securities butincludes activities relating to use of money or conversion of money for which separate consideration is charged. Y pe It includes It Activities relating to use of money 1. Goods or conversion of money for which 2) Maney separate consideration is charged. 4) (Sctarttes Explanation to section 2(102)* Statutory Provision: ‘For removal of doubts, it is hereby clarified that the exp' cludes facilitating or arranging transactions in securities.” [AS per the definition of goods and services, the securities oth ‘goods’ and ‘services’ in the CGST Act and they are ae scilitating or arranging transactions in securities is liable to GsT. explanation has been inserted to section 2(102 : cia aes ohPence supply of goods wy . Pes term s : stated in previous Para, the ‘ed on various basis- ly of services. This supply may be classifi a On the basis of movement/flow (@) Inward supply (b) Outward supply (b) On the basis of Continuity (a) One time supply (b) Continuous supply (c) On the basis of taxability (a) Taxable supply (b) Non-taxable supply (©) Exempt supply (@) Zero-rated supply (d) On the basis of Geographical location (a) Intra-state supply () Inter-state supply (6) Supplies in territorial waters ‘{(@) On the basis of Goods supplied in conjunction (Explained in Para 4.5) (2) Composite supply (b) Mixed supply of Supplies on the basis of movement/flow necessarily involves two parties nai s/services from the point of vie mely supplier and recipient. Whel key 'w of either of the party, it may t In i “i Beebe @ Person, “inward supply” means receipt © __._/scduisition or any other means with or wi Person, “outward supply” m¢ f rter, exchange, lice!ee _ TYPES OF SUPPLIES any other mode, made or agreed to be made by such person in the ‘of business. ‘ a : Ravish Computers Lid. a registered dealer has sold desktop computer t rice of ® 26,000 plus GST. This single transaction of supply of computer constitutes forrecipient (ic. for ABC Ltd.) and “Outward Supply” for the Supplier (ie. for Ravish: 4.4.2 Types of Supplies on the basis of Continuity , The recurrence of a Supply is the basis for this classification: (a) One-time Supply: It simply refers to Supply of goods or Services which is provided or agreed to be provided on non-recurrent basis as a Standalone Supply. For Example: when Mahesh purchases a machine from M/s ABC, then it is one-time Supply. This category is required just to recognise the other type of Supply, which is continuous Supply. ; (6) Continuous Supply: The continuous supply may be as regards goods as well as for services. Continuous Supply of Goods: As per section 2(32) of CGST Act, 2017, “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. Continuous Supply of Services: As per section 2(33) of CGST Act, 2017, “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations. Example: Kanika uses LPG stove and is a registered customer with Shivani Enterprises, a dealer of LPG Cylinders. She acquires two cylinders every month on regular basis. It is the example of one-time supply where every supply of cylinder is a separate transaction. On the other hand, Ms. Tania has taken PNG connection at her kitchen from Indraprastha Gas Limited. The billing is done monthly on the basis of meter reading. It is the case of continuous supply of goods. 4.4.3 Types of Supplies on the basis of taxability: The scope of supply has been given in section 7 of CGST Act, 2017. Evenif an activity is a supply, it is not necessary that the same is subject to GST. On this basis, there can be following types of supplies: (@) Taxable Supply: As per section 2(108) of CGST Act, “Taxable Supply refers to a Supply of Goods and/or Services which is leviable to tax under CGST Act’. (b) Non-Taxable Supply: As per section 2(78) of CGST Act, ‘Non-Taxable Supply means a Supply of Goods or Services or both which is not leviable to tax under CGST Act or under the IGST Act”. (0) Exempt Supply: As per section 2(47) of CGST Act, “Exempt Supply means a Supply of any Goods or Services or both which attracts Nil rate of tax or which may be wholly exempt from tax under Section 11, or under section 6 of IGST Act, and includes non-taxable Supply”. (d) Zero Rated Supply: It is Supply of any Goods and /or Services on which no tax is payable but input tax credit pertaining to that Supply is admissible. As per Section 16(1) of IGST Act, 2017, “zero rated supply” means any of the following supplies of goods or services or both, namely:— __ @ export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone d _ Economic Zone unit. ‘@NNVIVXYLa "SUPPLY UNDER GST sis of Geographical location: ’ : re cent ena a , Intra-State Supply and Supplies in the : ’ as Supply: As per Section 7(1) of IGST Act, Subject to ce a y of goods, where the location of the supplier and the place of supply (@ two different States; (® two different Union territories; or sete (¢ a State and a Union territory, "shall be treated as a supply of goods in the course of inter-State trade or commerce. Similarly, as per section 7(3), Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in— (@) two different States; (® two different Union territories; or (© a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce. @) Intra-State Supply: As per Section 8(1) of IGST Act, Subject to the provisions of section 10, Supply of goods where the location of the supplier and the place of supply of goods are in the same State 0: same Union territory shall be treated as intra-State supply: e Provided thatthe following supply of goods shall not be treated as intra-State supply, namely:— i (9 supply of goods to or by a Special Economic Zone developer or a Special Economic : Zone unit; (@) goods imported into the territory of India till they cross the customs frontiers of India; or (ii) supplies made to a tourist referred to in section 15. b (G) Supplies in the territorial waters: As per Section 9 of IGST Act, Notwit i i contained in this Act, — * Notwithstanding anything where the location of th ier i itori: ‘ (@ pie a 1c ion of the supplier is in the territorial waters, the location of such sup- (0) here the place of supply isin the tervtorial waters, the p Purposes of this Act, be deemed to be in the coastal Sime es ot SUPPYY, Shall, for the nearest point of the # tate or Union terri appropriate baseline is located, ritory where theAs per section 2(30) of CGST Act, 2017, ‘Composite Supply” means a supply person to a recipient consisting of two or more taxable supplies of goods or servic combination thereof, which are naturally bundled and supplied in conjunction with the ordinary course of business, one of which is a principal supply. 3 The following are the basic features of a composite supply: (@ Itshould be the supply made by taxable person to a recipient. : (D Itshould consist of two or more taxable supplies of Goods or/services or both, (0) The combination should be naturally bundled and supplied in conjunction with each other in the ordinary course of business. aaa ‘ The Supplied in conjunction means that they should be occurring in the same: Ponsa space. (@ Out of two naturally bundled supplies, one should be a principal supply. ao ‘@ Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. ‘@ Principal Supply means supply which forms the predominant element of the composite Supply and other parts of the supply are only ancillary or supportive to that predominant part. | 1 Examples on Composite Suppl; Supply: Prakash buys LCD and also gets warranty and a maintenance contract with the LCD. Comment: This supply is a composite supply. The supply of LCD is the principal supply and warranty/ maintenance services are ancillary. Supply: Samrat Hotel in Shimla, provides 4 days -3 nights package at ® 8,000 wherein the facility of breakfast and dinner is provided along with the room accommodation. Comment: It is composite supply since the supply of breakfast and dinner with the accommodation in the. hotel are naturally bundled. Supply: The Xiaomi Communication Co. Ltd. has recently launched a mobile phone with the brand nam “Redmi Note 4”. The company supplies the accessories, earphone and charger along with the handset, _ ‘The supply of earphone and charger with the mobile phone handset are naturally as ‘composite Supply.” The Supply of mobile phone is the principal supply.SUPPLY UNDER GST n with each other. In fact, in case of mixed supplies, the goods/ 1e recipient at one price can be supplied individually. In other independent of each other and are not naturally bundled. cll, a supply of more than one goods and/or services as a bundle will be re i if the following conditions are fulfilled: “(9 Such goods/or services are supplied for a single price. (ii) They are not naturally bundled together and i. (ii) It does not qualify as composite supply. Examples on Mixed Supply: ‘Supply: A gift pack comprising of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices supplied for a single price. Comment: It is an example of mixed supply as all these goods can be sold independently. Supply: Rent deed executed for renting of the different floors of a building, one for residence and another for commercial purpose to the same person. Comment: It will be treated as mixed supply as the two floors could have been rented independently. of shirt, trouser, tie and belt for a single price, ipply. The reason being each of these items can be supplied separately and is not Supply: A supply of a package Comprising Comment: It is a mixed su dependent on any other. Note: The provisions relatin; 5.11 of Chapter 5. T ig to determination of tax liability on mixed supplies have been discussed in Para 1. As per section 2(119) of CGST Act, 2017, “Works contract means a contract for building, construction, fabrication, completion erection installation, iting out, improvement, modification repute i renovation, alteration or commissioning of any immovable property wherein wegen goods (whether as goods or in some other form) is involved in the 2 otis contract and restaurant services are the classic example of composite supph GST aw identifies both as supply of services [as per Schedule If} "© SUPPlies. However, the ‘Composite and Mixed Supply (Comprising two or more supplies of goods or combination thereof) services or any Comprising two or more indivi supplies, made for a Which is not Comp.ce But it is not the reality. In fact, this type of offer is not goods, but a case of two or more individual supplies where a single price i ie entire supply. It can at best be treated as supplying two goods for the price of on Thus, this transaction shall be treated as “supply” under section 7(1)(a) of the CGST Act. Vide Cir- cular 92/1 1/2019 GST dated 7-3-2019, the Government has clarified that the Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply and the rate of tax shall be determined as per the provisions of section 8 of the CGST Act. [Refer Para 5.12 of Chapter 5] 1 as There are certain terms which are necessary to be understood in order to analyse the provisions of section 7. These include the following: 1, Business 2. In the course of business or in the furtherance of Business 3. Consideration 4, Taxable Person 4.6.1 Business: As per section 2(17) of CGST Act, 2017, the term business includes: fa) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; () 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; @) Supply or acquisition of goods including capital goods and services in connection with com- mencement 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; (Hi) activities of a race club including by way of totalisator or a license to book maker or activities of allicensed book maker in such club; and* eon sill i) Any activity or transaction undertaken by the Central Government, a State Governm ‘any local authority in which they are engaged as public authorities. = en after endment made in clause (h) scope of term