Modes of Supply
"Where certain activities or transactions, constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II"- Section 7(1)(a) of CGST Act, 2017.
The following modes of supply have been mentioned in Section 7(1)(a) of CGST Act, 2017.
The act of selling something.
The act of moving stock.
Exchange of goods or services or both for goods or services or both without the use of money.
The act of giving one thing and receiving another in return.
5. License, lease, rental etc
The licenses, leases and rentals of goods with or without transfer of right to use are covered under the supply of service in GST because there is no transfer of title in such supplies. Such transactions are specifically treated as supply of services as per Schedule II of CGST Act.
The act of getting rid of something.
Parameters of Supply
Section 7(1) (a) explains the following parameters to characterize a transaction as supply:
1. It should be supply of goods or services only.
2. The supply should be made for a consideration.
3. The supply should be made in the course or furtherance of business.
4. It should be made by a taxable person.
5. It should be a taxable supply.
Exceptions to the above parameters are as follows:
1. 'Consideration' parameter
Cases specified in Schedule I of CGST Act 2017, where the supply is considered even if the same is without consideration.
2. 'Course or furtherance of business' parameter
In the case of import of service for a consideration, the same is treated as supply whether or not it is in the course or furtherance of business.
3. 'All' parameters
There are few exceptional cases where the transaction is not treated as supply despite of existence of all the parameters. A list of activities is given in Schedule III (may be called as negative list of services). These transactions/ activities shall be neither treated as supply goods nor a supply of services. It means these are kept outside the scope of GST.
Import of services for consideration
According to Section 7(1)(b) of CGST Act, Importation of services for a consideration, whether or not in the course or furtherance of business shall be supply. This includes import of services for personal use as well.
Free samples and schemes under GST
Except when under the ambit of schedule I, government has clarified Vide Circular 92/11/2019 GST dated 07/03/2019 that samples supplied as free samples does not qualify as supply and hence CGST Act cannot be applied in these cases.
Author: Vaishak O