Forms of Supply in Goods and Services Act (GST)

Forms of Supply in GST and its tax implications

Article 366(12A) of Constitution of India say that "Any tax on supply of goods or services or both, except taxes on Supply of the Alcoholic liquor for human consumption."

As per Section 2(52) of CGST Act, 2017 "Goods means every kind of movable property other than money and securities. It also includes actionable claims, growing crops, grass or anything attached to a part of the land which is agreed to detached from the land before supply or contract of supply"-

As per Section 2(75), CGST Act 2017 "Money means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as a consideration to settle an obligation to settle with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value."

Simple transactions of money do not come under the bracket of supply under GST. GST is attracted on the transaction when a consideration is charged for the transaction but only on the amount of consideration.

Securities are neither good nor services. In India, the term 'Securities' is defined in the Clause (h) of Section 2 of Securities Contracts (Regulation) Act, 1956 which states that the following can be considered a securities :

- Shares, scripts, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate.

- Derivatives which includes :

- A contract which derives its value from the prices, or index of prices, of underlying securities;

- A security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;

- Repos and Reverse Repos (being incorporated through the Finance Act, 2015)

- Commodity Derivatives (being incorporated through the Finance Act, 2015)

- Any instrument which is notified as a derivative by Central Government (being incorporated through the Finance Act, 2015)

- Government security - a security created and issued by the Central Government or a State Government.

- Units or any other instrument issued by any collective investment scheme to the investors in such schemes.

- Units or any other such instrument issued to the investors under any mutual fund scheme but does not include any unit linked insurance policy which is a hybrid instrument providing for life risk cover and investments.

- Security receipts issued under SARFAESI Act

- Securitized debt instruments (collateralized debt obligations etc.)

- Such other instruments as may be declared by the Central Government to be securities; and

- Rights or interest in securities

Services under GST ACT

The term 'services' has been defined in Section 2(102) of CGST Act 2017.

"Service means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged."

Negative List in GST Act

Schedule III specifies certain activities which are neither treated as goods nor treated as services. This list of activities is called Negative List.

1. Services by an employee to the employer in the course of or in relation to his employment.

2. Services by any court or Tribunal established under any law for the time being in force.

3. (a) Functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities.

(b) Duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity OR

(c) Duties performed by any person as Chairperson or a Member or a Director in a body established by the Central Government or a State Government or a local authority and who is not deemed as an employee before the commencement of this clause.

4. Services of funeral, burial, crematorium, mortuary including transportation of the deceased.

5. Sale of land and subject to paragraph 5(b) of Schedule II, sale of building.

6. Actionable claims other than lottery, betting and gambling.

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods, entering into taxable territory.

8. (a) Supply of warehoused goods to any person before clearance for home consumption.

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.

Activities that are notified by the government shall be in the negative list if all the following conditions are satisfied :

1. An activity/transaction is undertaken by the Central Government, a State Government or Union Territory or any local authority.

2. They are engaged as public servants.

3. Such activity is notified for the purpose of section 7(2) (b) by the Government on recommendation of GST Council.

So far, the following activities/transactions have been added to Negative List by the above method of notification y government:

Notification	Dated	Description
No. 14/2017 - Central Tax (rate)	June 28, 2017	Services by way of an activity in relation to a function entrusted to a Panchayat under article 234G OF THE Constitution or to a Municipality under article 243W of the Constitution for this purpose.
No. 25/2019 - Central Tax ( rate)	September 30, 2019	Service by way of grant of alcoholic liquor license, against consideration in the form of license fee or application fee or by whatever name it is called.

Author: Vaishak O

Forms of Supply in Goods and Services Act (GST)

Forms of Supply in GST and its tax implications

Services under GST ACT

Negative List in GST Act

Goods and Services Tax

GST Rates

GST Act