CH.SUDHEER C.A, C.M.

A DAY 2 Supply – Sec 7 of CGST Act

SUPPLY – SEC 7 OF CGST ACT

Chapter 2

Supply include Excludes Govt by notification specify

transactions to be treated as

All forms of Activities Activities to Activities or

sale, transfer specified be treated as Activities or Supply of Supply of
transactions
barter, in supply of transactions service not goods & not
Importation undertaken
exchange schedule- I goods or specified in as a supply as a supply of
of service by CG/SG/LA
licence, rental services as Schedule – III of goods service
as may be
lease or referred to in notified by
disposal Schedule- II Govt

Made or Made or Refer page Refer page

agreed to be agreed to 2.3 2.4
made be made

For For Without

consideration consideration consideration

In the course Whether or not

of business In the course of
or business or
furtherance furtherance of
of business business

Queries contact: vjabranchofsircoficai@gmail.com 2.1

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

Chapter 2

Schedule-I (without Consideration)

In these cases, even though consideration is not charged, it shall be regarded as supply

Permanent Supply b/w Supply of Supply

transfer/ distinct goods or Principal & between
disposal of persons services by Agent related
business assets employer to persons
employee

Eg: A person having Any goods

Outside the
reg.est in one supplied to
 Transfer of assets course of Shall be
state and agent shall be Import of
by H.Co to S.Co employment regarded as
another reg.est regarded as service
 Donate old supply
in other state supply
laptop to Schools shall be distinct
 A cloth retailer persons
giving clothes Gifts not exceeding
free to his friend 50,000 in year are not
Stock transfers by a supply Refer page Only if made in the course
one unit to other 2.10 (CASE 7) of Business
This provision will
unit of other state
apply only when ITC Employer gives dussera
is a supply
has been availed by gift of 55,000 - treated as
Transferor supply for levy of GST

Queries contact: vjabranchofsircoficai@gmail.com 2.2

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

Chapter 2
Schedule – II: Activities to be treated as Supply of Goods or Services

Transfer Land or Building Transfer of Business Assets

Supply of supply of Supply of service Supply of goods Supply of Service

goods service
Lease, tenancy,
easement, licence Goods forming part When the business is Goods held for
-Title in goods Right in goods without to occupy land of business assets ceased, then stock left business but put to
-Tiltle in goods under transfer of goods are disposed whether shall be deemed to be private use with or
agreement at future date or not for consideration supplied and liable to GST without consideration
Exception
Business transferred as Going concern A director using car
provided by co. for
personal travels

Treatment or process
Supply of service
Treatment of process
applied to other person's
goods
Eg:-
Jobwork performed by
jobworker on goods
supplied by Principal
Manufacturer
Certain specified service Composite supplies Supply of service by unincorporated
AOP/ BOI to its members for cash or
1.Renting of Immovable properties Supply of services deferred payment
2. Construction of civil structure, complex etc..,
3.Temporary transfer or permitting use of IPR
4.Development, design, upgradation etc., of IT s/w 1. Works contract services 1. Club membership fees-service
5.Agreeing to obligation to refrain from an act or 2. Supply being food or drink 2. A local club supplies snacks
tolerance of an act or situation or to do an act or any article for human during monthly meeting for
6. Transfer of right to use any goods for any purpose consumption nominal payment.-service
Treated as supply of services

Queries contact: vjabranchofsircoficai@gmail.com 2.3

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

Schedule – III: NEGATIVE LIST OF UNDER SERVICES

Services by Services by Services of Actionable Functions performed by

District a) Sale of land claims
Employee to a) Funeral M.P’s, M.L.A & other
courts b) Sale of Building
employer in b) Burial constitutional Duties
c) Crematorium Where entire
the course of
Services by d) Mortuary consideration is received
employment after completion
e) Transportation
(i.e salary) certificate
of deceased

However works contract

would come under GST
In case payment to directors

TDS u/s 192 TDS u/s 194J

No GST GST chargeable (but under RCM)

NEGATIVE LIST OF UNDER GOODS

Supply of goods from outside
India to Outside India without
such goods entering into India
Supply of goods by the consignee to any other Supply of warehoused goods to
person by endorsement of documents of title to any person before clearance for
the goods after the goods have been dispatched home consumption
from the port of origin located outside India but
before clearance for Home Consumption (i.e.,
High sea sales)

Queries contact: vjabranchofsircoficai@gmail.com 2.4

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

COMPOSITE AND MIXED SUPPLIES (SECTION 8)

Composite Supply Mixed Supply

Naturally bundled in the ordinary course of business Artificially bundled and not in the ordinary course of Business

Comprising two or more supplies one of which is principal Comprising of two or more supplies
supply

Shall be treated as supply of that particular principal supply Treated as supply of such supply that attracts highest rate of tax

Example
Example

S Ltd. Manufacturers entered into a contract with XYZ Ltd. for supply
of readymade shirts packed in designer boxes at XYZ Ltd.’s outlet. Supply of package consisting of food, sweets, chocolates,
Further, S Ltd Manufacturers would also get them insured during cakes, dry fruits for a single price is mixed supply. Each
transit. So, supply of goods, packing materials, transport & insurance is of these items can be supplied independently. Hence it is a
a composite supply wherein supply of goods is principal supply mixed supply.
A shopkeeper selling storage water bottles along with
When a consumer buys a television set and he also gets warranty and refrigerator. It is a mixed supply
a maintenance contract with the TV, this supply is a composite supply.
In this example, supply of TV is the principal supply, warranty and
maintenance services are ancillary

Queries contact: vjabranchofsircoficai@gmail.com 2.5

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

Clarification (C.No.92/11/2019 dt.07/03/2019)

Free samples and gifts
Buy one get one free offer
If ITC is taken- then distribution of Free samples and gifts should be
treated as supply as per Sch-I
If ITC is not taken- transaction made without consideration shall not be
regarded as supply
For example, buy one soap and get one soap free or
Get one tooth brush free along with the purchase of tooth paste.
In fact, it is not an individual supply of free goods but a case of
two or more individual supplies where a single price is being
charged for the entire supply. It can at best be treated as
supplying two goods for the price of one
It is also clarified that ITC shall be available to the supplier

Queries contact: vjabranchofsircoficai@gmail.com 2.7

 CH.SUDHEER C.A, C.M.A DAY 2 Supply – Sec 7 of CGST Act

Principal & Agent- Deemed supply & Mandatory Registration-

Clarification (Circular No. 57/31/2018-GST)

Scenario 1

Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various suppliers
who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods
and issue the invoice directly to Mr. A. In this scenario, Mr. B is only acting as the procurement
agent, and has in no way involved himself in the supply or receipt of the goods. Hence, in
accordance with the provisions of this Act, Mr. B is not an agent of Mr. A for supply of goods in
terms of Schedule I.

Scenario 2

M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The auctioneer
arranges for the auction and identifies the potential bidders. The highest bid is accepted and the
goods are sold to the highest bidder by M/s XYZ. The invoice for the supply of the goods is issued
by M/s XYZ to the successful bidder. In this scenario, the auctioneer is merely providing the
auctioneering services with no role played in the supply of the goods. Even in this scenario, Mr. B
is not an agent of M/s XYZ for the supply of goods in terms of Schedule I.

Scenario 3

Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges for the
auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to
the highest bidder. The invoice for the supply of the painting is issued by M/s B on the behalf of
Mr. A but in his own name and the painting is delivered to the successful bidder. In this scenario,
M/s B is not merely providing auctioneering services, but is also supplying the painting on behalf
of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A.
This scenario is covered under Schedule. A similar situation can exist in case of supply of goods as
well where the C&F agent or commission agent takes possession of the goods from the principal
and issues the invoice in his own name. In such cases, the C&F/commission agent is an agent of
the principal for the supply of goods in terms of Schedule I. The disclosure or non-disclosure of the
name of the principal is immaterial in such situations.

Note: In scenario 1 and scenario 2, Mr. B shall not be liable to obtain registration in
terms of clause (vii) of section 24 of the CGST Act. He , however, would be liable for
registration if his aggregate turnover of supply of taxable services exceeds the threshold
specified in sub-section (1) of section 22 of the CGST Act. In scenario 3, M/s B shall be liable
for compulsory registration in terms of the clause (vii) of section 24 of the CGST Act

Queries contact: vjabranchofsircoficai@gmail.com 2.8