Supply - meaning, time and valuation
Introduction:
(1) Levy of GST is based upon the term "supply". Taxability under the GST depends upon supply of goods and services.
(2) The terms sale, purchase, service provider and service receiver are irrelevant for the purposes of GST Act.
(3) The term "supply" has not been defined in the Constitution of India. However, it has been defined under the Model GST Act.
(4) Therefore, the first step is to know whether a person, who is engaged in the business has made any supply of goods and/or services; and whether these supplies are taxable under GST.
Meaning of supply:
Meaning of the term "supply" (Section 3)
(I) Supply includes all forms of supply (goods and/or services) and includes agreeing to supply when they are
(a) for a consideration; and
(b) in the course or furtherance of business.
(ii) The term "supply" includes-
(a) Sale.
(b) Transfer.
(c) Barter:
(d) Exchange.
(e) License.
(f) Rental.
(g) Transaction between principal and agent.
(h) Supply of any branded service by an aggregator, For example: Ola, Uber etc.
(iii) " Supply" includes importation of service
The term 'supply' also includes importation of a service, whether or not for a consideration and whether or not in the course or furtherance of business.
This implies that import of services even for personal consumption would qualify as 'supply' and therefore, such importer of service would be liable to tax, subject to the threshold limit.
Imposition of this tax is of the nature of basic customs duty, which is levied on importation of goods, irrespective of nature of use of these goods, whether for personal consumption or commercial use. now importation of service for personal purposes would be subject to GST.
Such services would be liable to tax under reverse charge mechanism.
For example, a father pays fees for on - line coaching obtained from a teacher located in USA for coaching of JMAT course for his son. Even if receipt of the service is not for furtherance of business, he would be liable to pay GST under reverse charge mechanism if the amount exceeds the threshold limit.
(iv) The term "supply" also includes matters listed in Schedule II
Schedule II of the Model Law comprise various circumstances and situations when the activity shall be considered as supply of as service. These matters, in brief, are under.
(v) The Central/State Government may, upon recommendation of the GST Council, by notification, specify the transactions that 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; or
(c) neither a supply of goods nor a supply of services.
Whether the term "supply" includes stock transfer within the entity.
Yes. Transfer of goods/services by one unit to another of the same entity is covered within the term "supply". Generally, supply includes all transfers from one GSTIN to another.
Whether consideration is necessary for levying GST
No. Certain supplies which are even without consideration have also been included in the definition of "Supply". These are listed in Schedule I ---
(a) Permanent transfer of business assets.
For example, transfer of mobile/computer by an employer to his employee after its use for a certain period.
(b) Disposal of Business assets.
For example, sale of vehicle by a garment trader. This clause would also include those cases where business asset is transferred by the partnership firm to its retiring partner in settlement of this dues.
(c) Temporary application of business assets to private use.
For example, vehicle, capitalized in the books of a proprietorship firm, is used by the proprietor for personal use.
Another Example: The cable owner uses his taxis during the marriage of his son. As per this clause, he is liable to pay GST on the said use as if the same has been hired.
(d) Services put to a personal or non-business use.
For example, preparing and filling of income tax return of a friend of relative by one of the partners of CA firm.
(e) Assets retained after deregistration.
For example, at the time deregistration, it is assumed that business activities are discontinued, and assets are sold. Where assets are not sold, but retained by the entity at the time deregistration, it would be deemed as supply.
(f) Supply of goods and/or services by one taxable person to another taxable person or non-taxable person in the course or furtherance of business,
For example, free supplies, gifts, diaries and calendar distributed to clients at the time of festival
