SECTION-7 MEANING AND SCOPE OF SUPPLY UNDER GST

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SECTION-7 MEANING AND SCOPE OF SUPPLY UNDER GST

As per Section 7 (1) of CGST Act 2017,“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 orfurtherance of business; 

 

(b) import of services for a consideration whether or not in the course or furtherance of business;

(c) the activities specified in Schedule I,(Refer below) made or agreed to be made without a consideration; and

(d) the activities to be treated as supply of goods or supply of services

as referred to in Schedule II (Refer below).

(2) Notwithstanding anything contained in sub-section (1),–

(a) activities or transactions specified in Schedule III (Refer below); or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

 

SCHEDULE I Activities To Be Treated As Supply Even If Made Without Consideration

 

  1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.

 

  1. 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:

 

Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 

  1. 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.

 

  1. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business

 

SCHEDULE II

 Activities To Be Treated As Supply Of Goods Or Supply Of Services

  1. Transfer

(a) any transfer of the title in goods is a supply of goods;

(b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services;

(c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods.

  1. Land and Building

(a) any lease, tenancy, easement, licence to occupy land is a supply of services;

(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

 

  1. Treatment or process: 

Any treatment or process which is applied to another person’s goods is a supply of services.

 

  1. TRANSFER OF BUSINESS ASSETS

 

(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;

 

(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply

of services;

 

(c) where any person ceases to be a taxable person, then any goods

forming part of the assets of any business 7 on by him shall be deemed

to be supplied by him in the course or furtherance of his business

immediately before he ceases to be a taxable person, unless-

 

(i) the business is transferred as a going concern to another person; or

 

(ii) the business is carried on by a personal representative who is

deemed to be a taxable person.

 

  1. SUPPLY OF SERVICES

 

The following shall be treated as supply of services, namely:-

 

(a) renting of immovable property;

 

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

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