NAME – SATENDRA KUMAR MAURYA

COLLEGE – DR. RAM MANOHAR LOHIYA

NATIONAL LAW UNIVERSITY,
LUCKNOW.
YEAR - 2nd YEAR, 3rd SEMESTER
ARTICLE ON THE TOPIC – GST SECTION - 7
DEFINITON OF SUPPLY
.
The concept of ‘supply’ is the key stone of GST architecture. Section 7 of CGST Act read
with Schedule I & III covers the provisions relating to the term ‘Supply’. The concept of
supply along with related issues have been discussed in this article.

Section 7(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a consideration by a person in
the course or furtherance of business
(b) import of services for a consideration whether or not in the course or furtherance of
business;
The term Supply has not been defined in CGST ACT 2017. Section 7(1)(a) of the CGST Act
contemplates various forms of supply such as sale, transfer, barter, exchange, license, rental,
lease or disposal. These forms of supply are only illustrative and not exhaustive.

Parameters of Scope of Supply :-

The important Parameters of scope of supply are
consideration and furtherance of business. An activity made by a person for a consideration
and in the course or furtherance of business is a supply under section 7(1)(a) of CGST Act.
However, there are exceptions in the meaning of supply where certain activities are
considered as supplies even without consideration and furtherance of business.

Section 7(1)(c ) :
Statutory Provision :- For the purposes of this Act, the expression “supply” includes
the activities specified in Schedule I, made or agreed to be made without a consideration.
( Section 7(1)(c )
As per Schedule I to CGST Act 2017, Following activities to be treated as Supply even if
made without consideration :-
(1) Permanent transfer/disposal of business assets where input tax credit has been availed on
such assets.
(2) Supply of goods or services or both between related persons, or between distinct persons
as specified in section 25, when made in the course or furtherance of business.
(3) Supply of goods— (a) by a principal to his agent where the agent undertakes to supply
such goods on behalf of the principal, or (b) by an agent to his principal where the agent
undertakes to receive such goods on behalf of the principal
(4) Import of services by a person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
A supply comprising of two or more goods/services, which are necessarily supplied in
conjunction with each other as per frequent business practices followed in that area. In other
words, these items cannot be supplied individually. There is a principal supply and a
secondary supply in the whole transaction. In such cases, the tax rate on principal supply will
apply on the entire supply.

E.g. Buying a Dry Fruit Gift Box for Diwali. It includes dry fruits, a box and a wrapper. Box
and wrapper cannot be sold individually without the main content which is dry fruit. This is
composite supply.

A supply comprising of two or more goods/services, wherein the supplies are independent of
each other and are not necessarily required to be sold together is called a mixed supply. The
first condition to be met for mixed supply is that ‘it should not be a composite supply’. In
such cases, the tax rate that is higher of the two supplies will be applicable to the entire
supply.

E.g Buying a Christmas package consisting of cakes, aerated drinks, chocolates, Santa caps
and other gift items. Each of these items can be sold separately and are not dependent on each
other. This is mixed supply.

THANK YOU