Concept of

Supply and Levy

and Collection in
GST

CA Arpit Haldia
Taxes Taxable Event Taxable Levy of Tax in
Event in GST
GST
State Vat Sale of Goods within the
State One Tax in the
Excise Duty Manufacturing of Goods name of GST
Central Sales Tax Sale of Goods between two would be levied
States Supply on supply of
Additional Customs Import of Goods goods or
Duty Services
Special Additional Import of Goods
Duty
Entry Tax Entry of Goods in to Local
Area
Service Tax Provision of Service
Entertainment Tax Provision of Entertainment
Luxury Tax Provision of Luxury
Scope of Supply
Section 7 of CGST Act, 2017-Scope of Supply
• For the purposes of this Act, the expression "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 or
furtherance of business;

• (b) import of services for a consideration whether or not in the

course or furtherance of business; and

• (c) the activities specified in Schedule I, made or agreed to be

made without a consideration.
Key Definitions of CGST Act, 2017 for
understanding the term Supply

➢ Consideration-Section 2(31)
➢ Goods-Section2(52)
➢ Services–Section 2(102)
➢ Business-Section 2(17)
 Definition
of
Consideration
 Section 2(31)-Consideration
“consideration” in relation to the supply of goods or services or both
includes––
(a) any payment made or to be made, whether in money or otherwise, in
respect of, in response to, or for the inducement of, the supply of goods
or services or both, whether by the recipient or by any other person but
shall not include any subsidy given by the Central Government or a State
Government;
(b) the monetary value of any act or forbearance, in respect of, in
response to, or for the inducement of, the supply of goods or services or
both, whether by the recipient or by any other person but shall not
include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services
or both shall not be considered as payment made for such supply unless
the supplier applies such deposit as consideration for the said supply;

7
 Education Guide 2012-Some Examples of
“Consideration”-Vis-à-vis-Donation
• Donations to a charitable organization are not
consideration unless charity is obligated to provide
something in return e.g. display or advertise the name
of the donor in a specified manner or such that it gives
a desired advantage to the donor.
• Conditions in a grant stipulating merely proper usage
of funds and furnishing of account also will not result
in making it a provision of service.
• Activity carried out without any consideration like
donations, gifts or free charities are therefore outside
the ambit of service.
Some Examples of Non-Monetary Considerations

• Educational Guide issued in June 2012 by CBEC details out examples of non-
monetary consideration as follows:

If And in Return
A agrees to dry clean B’s clothes B agrees to click A’s photograph
A agrees to construct 3 flats for B on land B agrees to provide one flat to A without
owned by B any monetary consideration

• Then
• For the services provided by A to B, the acts of B specified in 2nd column are
non- monetary consideration provided by B to A. Conversely, for services
provided by B to A, similar reasoning will be adopted.
Definition of
Goods
Why there is a need for Classification of an activity or
transaction as Supply of Goods or Services or Both

• Any activity or transaction would be falling under the

scope of Supply only if it falls either in the definition
of goods or definition of Service

• There are different Tax Rates for Good and Services

• Separate Place of Supply Rules for Goods and

Services

• Separate Time of Supply Rules for Goods and Services

 Section 2(52)-Goods

“goods’’ means every kind of movable

property other than money and
securities but includes actionable
claim, growing crops, grass and things
attached to or forming part of the land
which are agreed to be severed before
supply or under a contract of supply

12
Goods means every kind of movable property

'General Clauses Act, 1897 defines "movable property' to;

mean "property of every description except immovable.
properly".

Vikas Sales Corporation And Anr. ... vs Commissioner Of

Commercial Taxes ... on 1 May, 1996- In its largest sense
property signifies; things and right considered as having a
money Value, especially with reference to transfer or
succession, and to their capacity of being injured. Property
includes not only ownership estates and interest in
corporeal things, but also rights such as trade marks,
copyrights, patents, and rights in personam capable of
transfer or transmission such as debts.
 IMMOVABLE PROPERTY

Under the General Clauses Act 1897 the term immovable

property has been defined under Section 3(26) as
“immovable property” shall include
a) land,
b) benefits to arise out of land, and
c) things attached to the earth, or permanently fastened
to anything attached to the earth
 Definition-What is meant by Attached to Earth

Section 3 of Transfer of property act -"attached

to the earth" means-
a) rooted in the earth, as in the case of trees and
shrubs;
b) imbedded in the earth, as in the case of walls or
buildings; or
c) attached to what is so embedded for the permanent
beneficial enjoyment of that to which it is attached;
Actionable Claims-Section 3 of Transfer
of Property Act
a) A claim to any debt, other than a debt secured by mortgage of
immovable property or by hypothecation or pledge of movable property:
The definition provides that any debt other than the debt secured by
mortgage of immovable property or by hypothecation or pledge of
movable property, would be an actionable claim.

b) A claim to any beneficial interest in movable property not in the

possession, either actual or constructive, of the claimant, which the civil
courts recognise as affording grounds for relief:
• The claim should be to beneficial interest should be in movable property.
• The movable property in which there is beneficial interest should not be in
the possession either actual or constructive of the claimant.
Thus, there should be an underlying movable asset in which the claimant
has a beneficial interest and which is neither in active or constructive
possession of the claimant.
Definition
of
Services
 Section 2(102)-Services
(102) "services" 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.
[Explanation.—For the removal of doubts, it is hereby
clarified that the expression "services" includes facilitating
or arranging transactions in securities;] (Inserted by the
Central Goods and Services Tax (Amendment) Act, 2018,
w.e.f. 1-2-2019.)

18
Para 2.8 of the Educational Guide released in June 2012
details about certain examples about money as follows:

2.8.1 What kind of activities would come under

‘transaction only in money’?
• The principal amount of deposits in or withdrawals
from a bank account.
• Advancing or repayment of principal sum on loan to
someone.
• Conversion of Rs 1,000 currency note into one rupee
coins to the extent amount is received in money
form.
Para 2.8 of the Educational Guide released in June 2012
details about certain examples about money as follows:

2.8.3 Would the making of a draft or a pay order by a bank

be a transaction only in money?

No. Since the bank charges a commission for preparation of a

bank draft or a pay order it is not a transaction only in
money. However, for a draft or a pay order made by bank the
service provided would be only to the extent of commission
charged for the bank draft or pay order. The money received
for the face value of such instrument would not be
consideration for a service since to the extent of face value of
the instrument it is only a transaction in money.
Definition
of
Business
 Definition of Business-2(17) of CGST Act, 2017
(17) "business" includes—

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or activities of a
licensed book maker in such club; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities;
 Meaning of Wager
M/S.Rajshree Sugars & Chemicals ... vs M/S.Axis Bank Limited on 14
October, 2008 Madras HC)
The essential features of a Wagering Contract as formulated by the English
Courts are as follows:-
(1) There must be 2 persons or 2 sets of or 2 groups of persons holding
opposite views touching a future uncertain event. It may even concern
a past or present fact or event.
(2) In a Wagering Contract, one party is to win and the other to lose upon
the determination of the event. Each party must stand either to win or
lose under the terms of the contract. It will not be a Wagering Contract if
one party may win but cannot lose or if he may lose but cannot win or
if he can neither win or lose.
(3) The parties have no actual interest in the occurrence or non
occurrence of the event, but have an interest only on the stake.
 Meaning of Adventure
Smith Barry v. Cordy (1946) 28 T.C. 250, at page 258,
where Scott L.J. said:
“The Oxford Dictionary gives several meanings, but the
most appropriate is that numbered 7: ‘A pecuniary risk,
a venture, a speculation, a commercial enterprise.’”
Then he refers to the two most apt quotations: one, “‘He
that puts all vpon Adventures, doth often times brake, and
come to Pouerty’”; and the other, “‘Whilst interest is at 6
per cent. no man will run an adventure to sea for the
gain of 8 or 9 per cent.’”
 Supply
Section Meaning & scope
Section 7(1)(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 or furtherance of business

Section 7(1)(b) Import of services for a consideration whether or not in the course or furtherance of business

Section 7(1)(c) Activities specified in Schedule I, made or agreed to be made without a consideration

Section 7(1)(d) Activities to be treated as supply of goods or supply of services as referred to in Schedule II-
(sub-section deleted w.e.f. 01-07-2017)
Section 7(1A) “(1A) where certain activities or transactions, constitute a supply in accordance with the
(New sub-section provisions of sub-section (1), they shall be treated either as supply of goods or supply of
w.e.f. 01-07-2017) services as referred to in Schedule II.”;

Section 7(2) Activities not supply of goods/service (Schedule III)

Section 7(3) By Notification on recommendation of GST Council to treat activity as Supply of goods and not
supply of service OR Supply of service and not supply of goods 25
What Activity amounts to supply

Deleted Vide CGST

Import of Service Amendment Act, 2018
Specified in Schedule II

ACTIVITY

Activity for consideration

Specified in Schedule I in the course or
furtherance of business
 SCHEDULE -1
ACTIVITIES TO BE TREATED AS SUPPLY

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

2. 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: Supply of goods or services between
related person or distinct persons
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.

3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or Supply of goods by a principal to agent
and vice versa
(b) by an agent to his principal where the agent undertakes to receive such goods on
behalf of the principal.

4. Import of services by a person from a related person or from any of his other Import of Services by a person from a
establishments outside India, in the course or furtherance of business. related person
 SCHEDULE -1-Relevant Circulars
Scope of Principal-agent relationship in the context of Schedule I of the CGST Act-
Circular NO.57/31/2018- dated 4-9-2018 [Corrigendum to Circular No. 57/31/2018-
GST dated 4th September, 2018 issued vide F. No. CBEC/20/16/4/2018-GST dated 5th
November-2018]
(5) “agent” means a person, including a factor, broker, commission agent, arhatia,
del credere agent, an auctioneer or any other mercantile agent, by whatever
name called, who carries on the business of supply or receipt of goods or services
or both on behalf of another;
Scenario 4 Mr A sells agricultural produce by utilizing the services of Mr B who is a
commission agent as per the Agricultural Produce Marketing Committee Act
(APMC Act) of the State. Mr B identifies the buyers and sells the agricultural
produce on behalf of Mr. A for which he charges a commission from Mr. A. As per
the APMC Act, the commission agent is a person who buys or sells the agricultural
produce on behalf of his principal, or facilitates buying and selling of agricultural
produce on behalf of his principal and receives, by way of remuneration, a
commission or percentage upon the amount involved in such transaction.

In cases where the invoice is issued by Mr. B to the buyer, the former is an agent
covered under Schedule I. However, in cases where the invoice is issued directly
by Mr. A to the buyer, the commission agent (Mr. B) doesn‟t fall under the
category of agent covered under Schedule I.
 Import of Service

In the Course or
furtherance of business
Supply
Import of Service

With Consideration
Not in the Course or
furtherance of Business
Supply

Covered under
Instances specified in Supply
Schedule I
Without Consideration
Not covered under the
Instance specified in Not Supply
Schedule I
 Specified in Schedule III
Activities Notified by Govt.

Notified by Govt. on
Specified in Schedule
recommendation of
III
council

• Not treated as • No Treated as

Supply Supply
Other Activities not covered above

Others

With Without
Consideration Consideration

Not covered
Not in the Covered under
In the Course or under the
Course or Instances
furtherance of Instance
furtherance of specified in
business specified in
Business Schedule I
Schedule I

Not Treated Not Treated

Supply Supply
as Supply Supply
 SCHEDULE -II

Any transfer of the title in goods is a supply of goods;

Any transfer of right in goods or of undivided share in goods without the

Transfer transfer of title thereof, is a supply of services;
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.
Any lease, tenancy, easement, licence to occupy land is a supply of services;
Land
and Any lease or letting out of the building including a commercial, industrial or
Building residential complex for business or commerce, either wholly or partly, is a
supply of services.
Treatment Any treatment or process which is applied to another person's goods is a supply
or process of services.
 SCHEDULE -II

Where, by or under the direction of a person carrying on a

business, goods held or used for the purposes of the business are
Transfer of
put to any private use or are used, or made available to any person
Business
for use, for any purpose other than a purpose of the business,
Assets
whether or not for a consideration, the usage or making available
of such goods is a supply of services;
 SCHEDULE –II (Contd…..)

Where any person ceases to be a taxable person, any goods

forming part of the assets of any business carried on by him
shall be deemed to be supplied by him in the course or
furtherance of his business immediately before he ceases to
Transfer be a taxable person, unless—
of (i) the business is transferred as a going concern to another
Business person; or
Assets (ii) the business is carried on by a personal representative
who is deemed to be a taxable person.
 SCHEDULE –II (Contd…..)

Renting of immovable property;

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
Supply
authority or after its first occupation, whichever is earlier.
of
Services
Explanation.—For the purposes of this clause—
(1) the expression "competent authority" means the Government or any
authority authorized to issue completion certificate under any law for the
time being in force and in case of non-requirement of such certificate
from such authority, from any of the following, namely:—
 SCHEDULE –II (Contd…..)

(i) an architect registered with the Council of Architecture constituted under the
Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or
development or planning authority;
(2) the expression "construction" includes additions, alterations, replacements or
Supply remodeling of any existing civil structure;
of
Temporary transfer or permitting the use or enjoyment of any intellectual property
Services
right;
Development, design, programming, customisation, adaptation, upgradation,
enhancement, implementation of information technology software;
Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation,
or to do an act;
Transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration.
 SCHEDULE –II (Contd…..)

Works contract as defined in clause (119) of section 2

Composite
Supply to be Supply, by way of or as part of any service or in any other manner
treated as whatsoever, of goods, being food or any other article for human
supply of consumption or any drink (other than alcoholic liquor for human
service consumption), where such supply or service is for cash, deferred
payment or other valuable consideration.

Supply of Supply of goods by any unincorporated association or body of

Goods persons to a member thereof for cash, deferred payment or other
valuable consideration.
 SCHEDULE –III (For the period between 01-07-17 to 31-03-18)

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) the functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, Members of Municipalities and Members of other
local authorities;

(b) the duties performed by any person who holds any post in pursuance of the provisions
of the Constitution in that capacity; or

(c) the duties performed by any person as a Chairperson or a Member or a Director in a

body established by the Central Government or a State Government or local authority and
who is not deemed as an employee before the commencement of this clause.
 SCHEDULE –III (For the period between 01-07-17 to 31-03-18)

4 Services of funeral, burial, crematorium or mortuary including transportation of the

deceased.
5 Sale of land and, subject to clause (b) of paragraph 5 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 India.

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.
CASE LAW
 National Aluminium Company Ltd., [2018] 98 taxmann.com
245 (AAR-ODISHA)
• Undeniably the applicant is providing services to its employees by way of
residential accommodation in the colony, temporary accommodation in the
guest houses and is dispensing health services to its employees and others. In a
press release issued on 10th of July, 2017 by the CBIC, it was clarified that
perquisites provided to employees in terms of employment contract are not
chargeable to GST. In the said press release it was also clarified that gifts of
value exceeding Rs. 50,000 by the employer to an employee will constitute a
supply chargeable to GST. Conversely, in Para 1 of Schedule III of the Act,
it has been made clear that service by an employee to the employer in the
course of or in relation to his employment is neither a supply of goods nor a
supply of service. There is no converse provision i.e. services provided by an
employer to the employees in Schedule III implying thereby services
provided by an employer to its employees are supply of services. Possibly,
for this confusion, the clarification dated 10-7-2017 was warranted to
clarify that perquisite provided by an employer to an employee in terms of
the employment contracts are not chargeable to GST.
41
 National Aluminium Company Ltd., [2018] 98 taxmann.com
245 (AAR-ODISHA)
On the other hand, as per the provisions in Schedule I Para 2, read with
the Explanation to section 15 of the CGST/OGST Act supply of services
by an employer to the employees is a supply between related persons. On
the other hand service by way of residential accommodation in the
colonies or otherwise is a perquisite which has been clarified as not
chargeable to GST implying thereby any perquisite including
residential accommodation is an exempt supply. In the result, the
inward supplies received by way of management, repair, renovation,
alteration or maintenance service or goods received for furnishing the
residential colony shall not qualify for input tax credit in terms of
section 17 (2) of the OGST/CGST Act. The services which are being
availed clearly in relation to the residential colony shall not qualify
for input tax credit.
 Caltech Polymers (P.) Ltd [2018] 98 taxmann.com 355
(AAAR-KERALA)

The crucial aspects to be considered in this case are the elements

of "supply" and "consideration". The appellant company has
admitted that they are serving food to the employees for cash,
though there is no profit involved in the transaction. In spite of
the absence of any profit, the activity of supplying food and
charging price for the same from the employees would surely come
within the definition of "supply" as provided in Section 7(l)(a) of
the GST Act, 2017. Consequently, the appellant would definitely come
under the definition of "supplier" as provided in subsection (105) of
Section 2 of the GST Act, 2017. Moreover, since the appellant
recovers the cost of food items from their employees, there is
"consideration" as defined in Section 2(31) of the GST Act, 2017.
 SCHEDULE -1-Relevant Circulars
Gifts upto a value of Rs 50,000/- per year by an employer to his employee are
outside the ambit of GST-Press Release, 10th July 2017
Gift has not been defined in the GST law. In common parlance, gift is made
without consideration, is voluntary in nature and is made occasionally. It cannot
be demanded as a matter of right by the employee and the employee cannot
move a court of law for obtaining a gift.
It is pertinent to point out here that the services by an employee to the employer in
the course of or in relation to his employment is outside the scope of GST (neither
supply of goods or supply of services). It follows therefrom that supply by the
employer to the employee in terms of contractual agreement entered into
between the employer and the employee, will not be subjected to GST.
Further, the Input Tax Credit (ITC) Scheme under GST does not allow ITC of
membership of a club, health and fitness centre [section 17 (5) (b) (ii)]. It follows,
therefore, that if such services are provided free of charge to all the employees by
the employer then the same will not be subjected to GST, provided appropriate
GST was paid when procured by the employer. The same would hold true for free
housing to the employees, when the same is provided in terms of the contract
between the employer and employee and is part and parcel of the cost-to-
company (C2C).
 Columbia Asia Hospitals (P.) Ltd., In re [2018] 100
taxmann.com 501 (AAAR-KARNATAKA)

Activities performed by employees at corporate office for

units located in other States shall be treated as supply-
Corporate office and units are distinct persons under CGST
Act, hence, activities performed by employees at corporate
office in course of employment such as accounting, other
administrative and IT system maintenance for units located in
other States as well, shall be treated as supply as per Entry 2
of Schedule I read with section 7 of CGST Act, 2017
Builders Association of Navi Mumbai v. Union of India [2018]
92 taxmann.com 134 (Bombay)

One-time lease premium to acquire a leasehold land

is supply of goods/services-Payment of one-time lease
premium to acquire a leasehold land from City
Industrial and Development Corporation of
Maharashtra Limited (CIDCO) attracts liability to pay
tax in terms of GST Act as lease/letting out of a
building for business is supply of goods/services
 CMS Info Systems Ltd., In re. [2018] 93 taxmann.com 95
(AAR - MAHARASHTRA)

✓Supply of motor vehicles as scrap would attract

GST-Transaction of supply of motor vehicles as
scrap after its usage is an activity of supply in
course or furtherance of business and would attract
Gst.
Rajashri Foods (P.) Ltd., In re [2018] 93 taxmann.com 417 (AAR
- KARNATAKA)

✓ Transfer of business as a going concern is

exempt-Transaction of transfer of business as
a going concern amounts to supply of service
and it would be exempt from tax under GST
 Relevant Circulars/Press Release for Section 7 of CGST Act

• Clarification on Inter-state movement of various modes of conveyance, carrying goods or

passengers or for repairs and maintenance-Circular No .1/1/2017-IGST, Dated 7th July 2017

• Gifts upto a value of Rs 50,000/- per year by an employer to his employee are outside the
ambit of GST-Press Release, 10th July 2017

• GST on Free Food Supplied by Religious Places- Press Release Dated 11th July 2017

• Legal Services by Advocates including Senior advocates-- Press Release Dated 15th July 2017

• Clarification on issues wherein the goods are moved within the State or from the State of
registration to another State for supply on approval basis –Reg.- Circular No. 10/10/2017-GST-
CBEC - 20/16/03/2017-GST-Dated 18th October 2017

• Leviability of GST on inter-state transfer of aircraft engines, parts and accessories for use by
their own airlines-Circular No. 16/16/2017-GST [F.NO.354/173/2017-TRU], Dated 15th November
2017
 Relevant Circulars/Press Release for Section 7 of CGST Act

• Clarification on Inter-state movement of rigs, tools and spares, and all goods on wheels [like
cranes]- - Circular No. 21/21/2017-GST [F.NO.354/320/2017-TRU (PT.)], dated 22nd November
2017

• Clarification on issues regarding treatment of supply by an artist in various States and supply
of goods by artists from galleries–Reg.- Circular No. 22/22/2017-GST- F. No. 349/58/2017-GST -
Dated 21st December 2017

• Classification on Activity of Bus Body Building and Retreading Of Tyres-Circular No. 34/8/2018-
GST Dated 1st March 2018

• Joint Venture ---taxable services provided by the members of the Joint Venture (JV) to the JV
and vice versa and inter se between the members of the JV-Circular No. 35/9/2018-GST-F.
No. B-1/20/2016-TRU-Dated 5th March 2018

• Issue related to taxability of ‘tenancy rights’ under GST-Circular No.44/18/2018-CGST

[F.NO.341/28/2017-TRU], Dated 2nd May 2018
 Relevant Circulars/Press Release for Section 7 of CGST Act

• Nature of Supply for Servicing of Car-Circular No.47/21/2018-GST [F.NO. CBEC-20/16/03/2017-GST], Dated 8th
June 2018

• Scope of Principal-agent relationship in the context of Schedule I of the CGST Act- Circular NO.57/31/2018-
dated 4-9-2018 [Corrigendum to Circular No. 57/31/2018-GST dated 4th September, 2018 issued vide F. No.
CBEC/20/16/4/2018-GST dated 5th November-2018]

• Applicability of GST on supply of cranes, rigs, tools & Spares and other machinery when moved from one state to
another by a person on his account for there use for supply of service--Circular No. 80/54/2018-GST - Central
Tax, Dated 31st December 2018

• Clarification in respect of goods sent/taken out of India for exhibition or on consignment basis for export
promotion- Circular No. 108/27/2019-GST- CBEC-20/06/03/2019-GST-Dated 18th July 2019

• Levy of GST on the service of display of name or placing of name plates of the donor in the premises of
charitable organisations receiving donation or gifts by individual donors-Circular No. 116/35/2019-GST [F.NO.
354/136/2019-TRU], Dated 11th October 2019

• Clarification related to supply of grant of alcoholic liquor license- Circular No. 121/40/2019-GST-[F. No.
354/136/2019-TRU]-Dated 11th October 2019
 Composite
and
Mixed Supply
 Key Definitions
• (6)"aggregate turnover" means the aggregate value of all
taxable supplies (excluding the value of inward supplies on
which tax is payable by a person on reverse charge basis),
exempt supplies, exports of goods or services or both and inter-
State supplies of persons having the same Permanent Account
Number, to be computed on all India basis but excludes central
tax, State tax, Union territory tax, integrated tax and cess;

• (47)"exempt supply" means supply of any goods or services or

both which attracts nil rate of tax or which may be wholly
exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and includes non-
taxable supply;
 Key Definitions
• (79) “non-taxable supply” means a supply of
goods or services or both which is not leviable
to tax under this Act or under the Integrated
Goods and Services Tax Act;

• (108)"taxable supply" means a supply of goods

or services or both which is leviable to tax
under this Act;
 Columbia Asia Hospitals (P.) Ltd[2018] 100
taxmann.com 212 (AAR - KARNATAKA)
• Since the healthcare services are exempt from tax under section 11, the same
are exempt supplies. But the definition of taxable supplies includes those
supplies of goods which are leviable to tax and chosen to be exempted
under section 11 and hence the exempt supplies also fall under the
category of taxable supplies and hence the supply of goods and services
supplied by the applicant company in conjunction with the healthcare
services fall under the definition of "composite supply" as the services of
supply of food and medicines to the patients are as advised by the doctor
or nutritionists.

• The two or more supplies of goods or services or both which are naturally
bundled in which the principal supply is exempt and others are taxable can be
treated as a composite supply of the principal supply if such principal supply is
not a non-taxable supply as per sub-section (78) of section 2 of the Central
Goods and Service Tax Act, 2017 and such composite supply with the principal
supply being exempt supply would be treated as an exempt composite supply
 Key Definitions
• (30) “composite supply” means a supply made by a
taxable person to a recipient consisting of two or more
taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and
supplied in conjunction with each other in the ordinary
course of business, one of which is a principal supply;

• Illustration.— Where goods are packed and transported

with insurance, the supply of goods, packing materials,
transport and insurance is a composite supply and supply
of goods is a principal supply
 Key Definitions
• (74) “mixed supply” means two or more individual
supplies of goods or services, or any combination thereof,
made in conjunction with each other by a taxable person
for a single price where such supply does not constitute a
composite supply.

• Illustration.— A supply of a package consisting of canned

foods, sweets, chocolates, cakes, dry fruits, aerated drinks
and fruit juices when supplied for a single price is a mixed
supply. Each of these items can be supplied separately and
is not dependent on any other. It shall not be a mixed
supply if these items are supplied separately;
• The criteria laid down by CBEC in para 9.2.4. of Educational Guide
issued in June 2012 for identifying whether the services are
naturally bundled or not is as follows:-

• Whether services are bundled in the ordinary course of business would

depend upon the normal or frequent practices followed in the area of
business to which services relate. Such normal and frequent practices
adopted in a business can be ascertained from several indicators some of
which are listed below –

• The perception of the consumer or the service receiver. If large number

of service receivers of such bundle of services reasonably expect such
services to be provided as a package then such a package could be
treated as naturally bundled in the ordinary course of business.

• Majority of service providers in a particular area of business provide

similar bundle of services. For example, bundle of catering on board and
transport by air is a bundle offered by a majority of airlines.
• The nature of the various services in a bundle of services
will also help in determining whether the services are
bundled in the ordinary course of business. If the nature
of services is such that one of the services is the main
service and the other services combined with such
service are in the nature of incidental or ancillary
services which help in better enjoyment of a main
service. For example service of stay in a hotel is often
combined with a service or laundering of 3-4 items of
clothing free of cost per day. Such service is an ancillary
service to the provision of hotel accommodation and the
resultant package would be treated as services naturally
bundled in the ordinary course of business.

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• Other illustrative indicators, not determinative but indicative of bundling
of services in ordinary course of business are –

➢ There is a single price or the customer pays the same amount, no

matter how much of the package they actually receive or use.
➢ The elements are normally advertised as a package.
➢ The different elements are not available separately.
➢ The different elements are integral to one overall supply – if one or
more is removed, the nature of the supply would be affected.

• No straight jacket formula can be laid down to determine whether a

service is naturally bundled in the ordinary course of business. Each case
has to be individually examined in the backdrop of several factors some of
which are outlined above.
 Section 8

The tax liability on a composite or a mixed supply shall be

determined in the following manner, namely:—

(a) a composite supply comprising two or more supplies,

one of which is a principal supply, shall be treated as
a supply of such principal supply; and

(b) a mixed supply comprising two or more supplies shall

be treated as a supply of that particular supply which
attracts the highest rate of tax.
CASE LAW
 KIMS Health Care Management Ltd. [2018] 99
taxmann.com 37 (AAR – KERALA)
• Query: Whether medicines, consumables and implants used in the course
of providing health care services to in-patients for diagnosis or treatment
would be considered as “Composite Supply” and eligible for exemption
under the category ‘health care services’?
• Held: Supply of medicines, consumables and implants used in the course
of providing health care services to in-patients for diagnosis or treatment
are naturally bundled and are provided in conjunction with each other,
would be considered as “Composite Supply” and eligible for exemption
under the category ‘health care services’.
• Circular No.27/01/2018-GST Dt.04-01-2018 clarified that room rent in
hospital and Circular No. 32/02/2018 Dt. 12-02-2018, clarified that food
supplied to the inpatients as advised by the doctor/nutritionist is a part
of composite supply of health care and not separately taxable.
 Kailash Chandra [2018] 100 taxmann.com 11 (AAR-
RAJASTHAN)
• The applicant intended to bid for tender floated by the PHED, a unit of
Government of Rajasthan for designing, providing, installation, commissioning,
operation and maintenance of solar energy based bore well water pumping
systems, Reverse osmosis plant and operation and maintenance of Fluoride
Control project on ESCO and O&M contract.

• One of the issues before AAR was whether activity of operation and
maintenance would be considered as separate supply or would be considered
as a single indivisible supply along with the installation and commissioning.
AAR considering the facts that both activities were closely linked, single
tender was floated for both of them, preamble of scope combines ESCO model
and Operation & Maintenance work, Operation and maintenance activity helps
in better operation of main activity under ESCO model and makes the model
successful held Installation and Commissioning alongwith Operation and
Maintenance as a single indivisible supply of works contract service.
 Pew Engineering (P.) Ltd [2018] 100 taxmann.com
450 (AAR-WEST BENGAL)
• Whether activity for retro-fitment of Twin Pipe Air Brake Systems on wagons awarded
by Indian Railways would be treated as composite contract or works contract.
• Query 1: The term retro-fitment indicates the wagons that have otherwise been in
operation are being upgraded by fitment of the twin pipe air brake system. Supply of
twin pipe air brake systems is not an immovable supply, so it should not be covered
in Works Contract Category under Section 2(119) of CGST Act, 2017.
• Query 2: The provision for on account payment based on progress of work indicated
that supply of goods was inseparably linked with supply of service and mere delivery
of the Twin Pipe Air Brake Systems was not sufficient discharge of contractual
obligation. Therefore two supplies, were naturally bundled in the ordinary course of
business.
• Supply of service of fitting Twin Pipe Air Brake Systems to the wagon cannot be
made unless the goods have already been supplied. The supply of services of the
fitting is, therefore, dependent upon and ancillary to supply of the Twin Pipe Air
Brake Systems. Predominant supply is, therefore, of the Twin Pipe Air Brake
Systems, which constitutes essence of the contract.
 Sarj Educational Centre [2019] 102 taxmann.com
448 (AAR-WEST BENGAL)
• Query-1: Whether combination of services provided by the applicant to students with
lodging facility is a composite supply within the meaning of section 2(30) of the GST Act
• Observation-1: Consideration charged by applicant is not for lodging and food only.
This is one of the key observations by AAR in the matter.
• Observation-2: A flat amount is charged for maintenance, electricity and laundry
instead of reimbursement of the actual cost. The consideration is, therefore, a
consolidated charge for a combination of all these services. Different Packages are being
offered including different facilities from which recipient can chose one of the packages.
• Applicant is offering several individual services in two different combinations to the
recipients, depending upon their need for lodging facility. None of the combinations of
services being offered is a composite supply, as defined under section 2(30) of the GST
Act.
• Circular No. 32/06/2018 dated 12/02/2018 of CBIC wherein it has been clarified that
accommodation service to students in a hostel having declared tariff below one thousand
rupee per day is exempt under Sl. No. 14 of the Exemption Notification.
66
 Levy and
Collection of
Tax in GST
ESSENTIAL CHARACTERISTICS FOR A LEVY OF TAX TO BE VALID-
para 15 of Govind Saran Ganga Saran vs Commissioner Of Sales Tax
And Ors Equivalent citations: 1985 AIR 1041

a) The first is the character of the imposition known by its nature which
prescribes the taxable event attracting the levy,
b) The second is a clear indication of the person on whom the levy is
imposed and who is obliged to pay the tax,
c) The third is the rate at which the tax is imposed, and
d) The fourth is the measure or value to which the rate will be applied
for computing the tax liability.

If those components are not clearly and definitely ascertainable, it is

difficult to say that the levy exists in point of law. Any uncertainty or
vagueness ill the legislative scheme defining any of those components of
the levy will be fatal to its validity.”
68
 Section 9(1) of CGST ACT, 2017

Subject to the provisions of sub-section (2), there

shall be levied a tax called the central goods and
services tax on all intra-State supplies of goods or
services or both, except on the supply of alcoholic
liquor for human consumption, on the value
determined under section 15 and at such rates, not
exceeding twenty per cent., as may be notified by
the Government on the recommendations of the
Council and collected in such manner as may be
prescribed and shall be paid by the taxable person.

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 Section 9(2) of CGST ACT, 2017

(2) The central tax on the supply of

petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural
gas and aviation turbine fuel shall be levied
with effect from such date as may be notified
by the Government on the recommendations
of the Council.

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 Section 9(3) of CGST ACT, 2017

(3) The Government may, on the

recommendations of the Council, by notification,
specify categories of supply of goods or services
or both, the tax on which shall be paid on
reverse charge basis by the recipient of such
goods or services or both and all the provisions of
this Act shall apply to such recipient as if he is
the person liable for paying the tax in relation to
the supply of such goods or services or both.

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 Section 9(4) of CGST ACT, 2017

4) The Government may, on the recommendations

of the Council, by notification, specify a class of
registered persons who shall, in respect of supply
of specified categories of goods or services or
both received from an unregistered supplier, pay
the tax on reverse charge basis as the recipient
of such supply of goods or services or both, and
all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying
the tax in relation to such supply of goods or
services or both.
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 Section 9(5) of CGST ACT, 2017
(5) The Government may, on the recommendations of the Council, by notification,
specify categories of services the tax on intra-State supplies of which shall be paid
by the electronic commerce operator if such services are supplied through it, and
all the provisions of this Act shall apply to such electronic commerce operator as if
he is the supplier liable for paying the tax in relation to the supply of such
services:
Provided that where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic
commerce operator for any purpose in the taxable territory shall be liable to pay
tax:
Provided further that where an electronic commerce operator does not have a
physical presence in the taxable territory and also he does not have a
representative in the said territory, such electronic commerce operator shall
appoint a person in the taxable territory for the purpose of paying tax and such
person shall be liable to pay tax.

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 Relevant Circulars/Press Release on Section 9 of CGST Act

• Clarification on Tax in Reverse Charge on Gold Ornaments- Press Release, Dated 13th
July 2017
• Clarification on Legal Services by Advocates including Senior advocates- Press Release,
Dated 15th July 2017
• Clarification on Levy Of GST on Legal Services- Circular No.32/06/2018-GST, Dated 12th
February 2018
• Joint Venture ---taxable services provided by the members of the Joint Venture (JV) to
the JV and vice versa and inter se between the members of the JV-Circular No.
35/9/2018-GST-F. No. B-1/20/2016-TRU-Dated 5th March 2018
• Supply of used vehicles, seized and confiscated goods, old and used goods, waste and
scrap by Government Departments-Circular No. 76/50/2018-GST- Central Tax, Dated 31-
12-2018
• Circular clarifying issues regarding exercise of option to pay tax under Notification No.
2/2019- Circular No. 97/16/2019-GST [F.NO.CBEC-20/16/04/2018-GST(PT.I)], Dated 5th
April 2019 as corrected by Corrigendum NO. F. NO. CBEC/20/16/4/2018-GST (PT.I),
Dated 1st July 2019
• Clarification related to supply of grant of alcoholic liquor license- Circular No.
121/40/2019-GST-[F. No. 354/136/2019-TRU]-Dated 11th October 2019

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CA DR ARPIT HALDIA
TREY
research
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