Supply under GST

Supply

• The term “supply” is defined as the TAXABLE EVENT in the

case of GST.

• Event must relate to the supply of goods or services or both

made for consideration in the course or furtherance of
business.
The expression “supply” includes-
• 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.

• Import of services for a consideration whether or not in the

course or furtherance of business.

• The activities specified in schedule I, made or agreed to be

made without a consideration.
The expression “supply” excludes-

• Activities or transactions specified in schedule III

• Such activities or transactions undertaken by the central

govt.,state govt. or any other local authority in which
they are engaged as public authorities, as may be
notified by the govt. on the recommendation of the
council.
Activities specified in schedule I , made or agreed to be
made without a consideration to be treated as supply.

(1) Permanent transfer or disposal of business assets where

input tax credit has been availed on such assets.

• The above provision shall not apply if the asset is not

permanently transferred. In the case of ‘transfer’ there should be
another person who would receive the business assets. Whereas
there is no requirement of another person in case of ‘disposal’.

• Where a business assets, on which ITC has been availed, is

completely destroyed by fire, it shall also be treated as supply
and liable to GST, similarly, if a business asset, on which ITC is
claimed has been discounted, the transaction shall be regarded
as supply and is liable to GST.
 (2) Supply between related and distinct persons. –

Person shall deemed to be a related person if such persons are-

i. officers or directors of one another’s business
ii. Legally recognized partners in business
iii. Employer and employee
iv. Directly or indirectly owns, controls or holds 25% or more of the
outstanding voting stock or shares or both of them
v. One of them directly or indirectly controls other
vi. Both of them are directly or indirectly controlled by the third
person
vii. The members of same family.
Supply when made in the course or furtherance of business even without
consideration shall be treated as supply.

However gifts not exceeding Rs.50,000 in value in a financial year made by

the employer to employee shall not be treated as supply.
 Meaning of the term “distinct persons” –

A person who has obtained or is required to obtain more than

oner registration , whether in one state or UT or more than one
state or UT shall, in respect of each registration be treated as
distinct person for the purpose of this Act.

Transactions with distinct persons are normally without consideration since they
are part of the same entity located in different places.
(3) Supply of Goods-

a) By a principal to his agent where the agent undertakes to

supply such goods on behalf of the principal,

b) By an agent to his principal where the agent undertakes to

receive such goods on behalf of the principal.

“Principal” means a person on whose behalf an agent carries on the

business of supply or receipt of gods or service or both

“Agent” means a person who carries on the business of supply or receipt of

goods or services or both on behalf of another.
(4) Import of services by a taxable person

Import of
services

With Without
considerati considerati
on on

In the Not In the Related

course or person / Other
furtheranc
course or distinct
e of furtheran person and cases
business ce of In the
business course or
furtherance
of business

TAXABLE TAXABLE NON-

TAXABLE
Activities or transactions which constitute a “supply” to be
treated as either supply of goods or services as referred to in
Schedule II
• Transfer of title in goods, right in goods or of undivided share in goods
without the title thereof.

• Any lease, tenancy, easement, license to occupy land or building, lease

or letting out of the building including a commercial, industrial or
residential complex for business or commerce either wholly or partially.

• Treatment or process applied to another person’s , job work carried out

by a job-worker, or another person’s goods shall be treated as supply of
services.

• Transfer of business assets

• Renting of Immovable property.

Necessary elements that constitutes
supply under CGST/SGST
In order to constitute supply the following elements are required
to be satisfied i.e-

• The activity involves supply of goods or service or both.

• The supply is for a consideration unless otherwise specifically
provided for .
• The supply is made in the course or furtherance of business
• The supply is made in the taxable territory
• The supply is a taxable supply
• The supply is made by a taxable person
Activities or transactions to be treated neither as supply of
goods nor as supply of services- Schedule III

• Services by an employee to the employer in the relation to his

employment

• Service by any court or tribunal established under any law for the time
being in force.

• The functions performed by the MPs, MLAs,members of Panchayats,

members of municipalities etc.

• The duites performed by any person who holds any post in pursuance of
the provisions of the constitutions in that capacity

• The duties performed by any person as a chairperson or a member or a

director in a body established by central govt or a state govt or a local
authority and who is not deemed as an employee before the
commencement of this clause.
 ???
• R is supplier of goods located in Mumbai. In april 2019 he has
Imported Consultancy services for development of IT software
from USA for a consideration of $80,000 .

Will the import of consultancy service be treated as supply

 Ans
• Yes,