Compilation to All Relevant Rule, Notifications and Circular-Section 7 of CGST Act, 2017-Scope of Supply
CA Arpit Haldia
Corresponding Rule-Not Applicable
|S. No.||Notification No.||Particulars|
|1.||Notification No. 14/2017-Central Tax (rate) Dated 28th June 2017 as amended by 16/2018-Central Tax (Rate) dated 26th July 2018||To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the CGST Act|
|2.||Notification No. 25/2019-Central Tax (Rate) dated 30th September 2019||Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 7(2) of CGST Act, 2017|
|S. No.||Notification No.||Particulars|
|1.||Notification no. 11/2017-Integrated Tax (Rate), Dated 28th June 2017 as amended by Notification No. 17/2018-integrated tax (Rate), dated 26th July 2018||To notify the supplies which shall be treated neither as a supply of goods nor a supply of service under the IGST Act|
|2.||Notification No. 24/2019-Integrated Tax (Rate) dated 30th September 2019||Seeks to notify the grant of alcoholic liquor licence neither a supply of goods nor a supply of service as per Section 20(i) of IGST Act read with Section 7(2) of CGST Act.|
- Relevant Circular-
- 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
GST Council in its meeting held on 11th June, 2017 recommended that inter-state movement of goods like movement of various modes of conveyance, between distinct persons as specified in section 25(4) of the said Act, not involving further supply of such conveyance, including—
(a) carrying goods or passengers or both; or (b) for repairs and maintenance, [except in cases where such movement is for further supply of the same conveyance] shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be leviable to IGST.
- 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).
- GST on Free Food Supplied by Religious Places- Press Release Dated 11th July 2017
No GST is applicable on such food supplied free by religious institution. Prasadam supplied by religious places like temples, mosques, churches, gurudwaras, dargahs, etc. attracts Nil CGST and SGST or IGST, as the case may be.
- Legal Services by Advocates including Senior advocates– Press Release Dated 15th July 2017
Legal service has been defined to mean any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority. Legal services, which includes representational services, provided by advocates are under reverse charge VIDE Notification No. Notification No. 13/2017-Central Tax (Rate) dated 28.6.2017 (Serial No. 2).
- 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
Various communications have been received particularly from the suppliers of jewellery etc. who are registered in one State but may have to visit other States (other than their State of registration) and need to carry the goods (such as jewellery) along for approval. In such cases if jewellery etc. is approved by the buyer, then the supplier issues a tax invoice only at the time of supply. Since the suppliers are not able to ascertain their actual supplies beforehand and while ascertainment of tax liability in advance is a mandatory requirement for registration as a casual taxable person, the supplier is not able to register as a casual taxable person. It has also been represented that such goods are also carried within the same State for the purposes of supply.
A combined reading of clause (c) of sub-rule (1) of rule 55, sub-rule (3) of the rule 55 and sub-rule (4) of rule 55 of CGST Rules, 2017 indicates that goods which are taken for supply on approval basis can be moved from place of business of registered supplier to another place within the same State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice may be issued at the time of delivery of goods. For this purpose, the person carrying the goods for such supply can carry the invoice book with him so that he can issue the invoice once the supply is fructified. All such supplies, where the supplier carries goods from one State to another and supplies them in a different State, will be inter-state supplies and attract integrated tax in terms of Section 5 of the Integrated Goods and Services Tax Act, 2017. This clarification would be applicable to all goods supplied under similar situations.
- 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
Under Schedule I of the CGST Act, 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, even if, without consideration, attracts GST. Credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter–state supply of such aircraft engines, parts & accessories by way of inter-state stock transfers between distinct persons as specified in section 25 of the CGST Act, notwithstanding that credit of input tax charged on consumption of such goods is not allowed for supply of service of transport of passengers by air in economy class at GST rate of 5%.
- 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
The issue pertaining to inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes] was discussed in GST Council’s meeting held on 10th November, 2017 and the Council recommended that the circular 1/1/2017-IGST shall mutatis mutandis apply to inter-state movement of such goods, and except in cases where movement of such goods is for further supply of the same goods, such inter-state movement shall be treated ‘neither as a supply of goods or supply of service,’ and consequently no IGST would be applicable on such movements. In this context, it is also reiterated that applicable CGST/SGST/IGST, as the case maybe, is leviable on repairs and maintenance done for such goods.
- 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- No. 349/58/2017-GST -Dated 21st December 2017
Various representations have been received regarding taxation of the supply of art works by artists in different States other than the State in which they are registered as a taxable person. In such cases, if the art work is selected by the buyer, then the supplier issues a tax invoice only at the time of supply. It has been represented that the artists give their work of art to galleries where it is exhibited for supply. There seems to be confusion regarding the treatment of this activity whether it is taxable in the hands of the artist when the same is given to the art gallery or at the time of actual supply by the gallery.
A combined reading of clause (c) of sub-rule (1) of rule 55, sub-rule (3) of the rule 55 and sub-rule (4) of rule 55 of CGST Rules, 2017 indicates that art work for supply on approval basis can be moved from place of business of registered person (artist) to another place within the same State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice may be issued at the time of actual supply of art work. Supplies of art work from one State to another State will be inter-State supplies and attract integrated tax in terms of section 5 of the Integrated Goods and Services Tax Act, 2017. In case of supply by artists through galleries, there is no consideration flowing from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same is not a supply. It is only when the buyer selects a particular art work displayed at the gallery, that the actual supply takes place and applicable GST would be payable at the time of such supply.
- Classification on Activity of Bus Body Building and Retreading Of Tyres-Circular No. 34/8/2018-GST Dated 1st March 2018
Question-1- Whether activity of bus body building, is a supply of goods or services?
Answer: In the case of bus body building there is supply of goods and services. Thus, classification of this composite supply, as goods or service would depend on which supply is the principal supply which may be determined on the basis of facts and circumstances of each case.
Question-2- Whether retreading of tyres is a supply of goods or services?
Answer- In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading which is a supply of service. Rubber used for retreading is an ancillary supply. Which part of a composite supply is the principal supply, must be determined keeping in view the nature of the supply involved. Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply.
- 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
Activity of transfer of ‘tenancy rights’ is squarely covered under the scope of supply and taxable per-se. Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable. However, renting of residential dwelling for use as a residence is exempt[Sl. No. 12 of Notification No. 12/2017-Central Tax(Rate)]. Hence, grant of tenancy rights in a residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt. As regards services provided by outgoing tenant by way of surrendering the tenancy rights against consideration in the form of a portion of tenancy premium is liable to GST.
- 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
Question-How is servicing of cars involving both supply of goods (spare parts) and services (labour), where the value of goods and services are shown separately, to be treated under GST?
Answer: The taxability of supply would have to be determined on a case to case basis looking at the facts and circumstances of each case. Where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately.
- 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
13.1 As per Circular No. 21/21/2017-GST dated 22.11.2017, it was clarified that no IGST would be applicable on such interstate movements of rigs, tools & spares and all goods on wheels. Doubts have been raised regarding applicability of GST on inter-state movement of machinery like tower cranes, rigs, batching plants, concrete pumps and mixers which are not mounted on wheels, but require regular means of conveyance (used by companies in Infrastructure business).
13.2 Any inter-state movement of goods for provision of service on own account by a service provider, where no transfer of title in such goods or transfer of goods to the distinct person by way of stock transfer is not involved, does not constitute a supply of such goods. Hence, it is clarified that any such movement on own account (not involving distinct person in terms of section 25), where such movement is not intended for further supply of such goods does not constitute a supply and would not be liable to GST.
- 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