MEANING OF SUPPLY IN GST ACT, 2016:-

GST Update 23.01.2016

GST DAILY DOSE OF UPDATION:-

MEANING OF SUPPLY IN GST ACT, 2016:-

Section 3:- (1) Supply of goods and/or services includes all forms of supply such as sale, transfer, barter, exchange, license, rental, lease or disposal, and importation of services, made or agreed to be made for a consideration by a person in the course or furtherance of business and also includes a supply specified in Schedule I, made or agreed to be made without a consideration.

(2) Schedule-II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

(3) Subject to sub-section (2), the Central or a State Government may, upon recommendations of the Council, specify, by notification, the transactions to be treated as –
(i) a supply of goods and not as a supply of services; or
(ii) a supply of services and not as a supply of goods; or
(iii) neither a supply of goods nor a supply of services.

From the above defination, it is observed that the scope of ‘supply’ is wide enough to cover a number of activities including sale, lease, barter, transfer, license etc within its ambit. It is pertinent to note that supply of license is also covered but will it include the licenses granted by the government as a part of statutory obligations and administration also because presently, the sovereign functions of the government are exempt from the levy of service tax. Furthermore, there will be categories of supply that will be specified in Schedule I which will be treated as supply irrespective of the fact that whether any consideration is received or not which sounds very weird.

The law proposes that Schedule II will contain details of what will be treated as supply of goods and what will be treated as supply of services thereby again igniting the disputes as regards what are goods and what are services. When GST is a unified taxation reform, the need of demarcating what is goods and what is services is not understandable.

Finally, the remote control regarding what is to be treated as goods and what is to be treated as services also rests with the government and it has the power to notify what all are to be treated as supply of goods, supply of services or neither of them. This indicates that there might be certain supplies that will be leviable to service tax irrespective of their nature and certain supplies that will not be leviable to tax at all.

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GST Update 23.01.2016

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