2.

SUPPLY UNDER GST BY- CANOTESCOMMUNITY

SEC 7 TAXABLE EVENT UNDER GST - SUPPLY

Sec 7 (1) Supply includes

Supply = Business + Consideration

1. Sec 7(1)(a)- General Rule ✓ ✓

2. Sec 7(1)(b) - Importation of Service x ✓
3. Sec 7(1)(c) – Schedule- I ✓ x
a. Permanent Transfer or Disposal of Assets
b. Supply between related persons or distinct
persons
c. Principal-Agent
d. Importation of Services (IOS) from related person
I. PERMANENT TRANSFER / DISPOSAL OF BUSINESS ASSETS
1. Any kind of disposal or transfer of business assets made by an entity on permanent basis even
though without consideration qualifies as supply.
2. This provision applies only if ITC has been availed

II. SUPPLY BETWEEN RELATED PERSON OR DISTINCT PERSONS

Supply of goods or services or both between related persons or between distinct persons, will qualify as
supply provided it is made in the course or furtherance of business
Exception
Services of Employee to Employer in relation to his employment not a supply hence, No GST
Gift by employer to employee more than 50000 made without consideration are subjected to GST when
made in course or furtherance of business

III PRINCIPAL-AGENT
Only supply of goods is covered here.
Invoice is generated in the name of agent while receipt or supply of good without consideration is also
supply.

IV. IMPORTATION OF SERVICES from related person

Import of services by a taxable person from a related person or from his establishments located outside
India, without consideration, in the course or furtherance of business shall be treated as supply.
Forms of supply includes
supply sale- transfer of ownership for a price
transfer- pass possession or control
exchange- Goods/services+ money for Goods/services+ money
barter-goods/services for goods/services
license, rental, lease and disposal.
Activities to Transaction Type Nature of supply
be treated
as supply of Transfer 1. Of title of goods Goods
Goods or 2. Of possession of goods only Services
services 3. Of title of goods on a future date Goods
Section Land & building Lease, Tenancy, license to occupy land services
7(1A) read
with Treatment Applied on another person’s good services
schedule II Transfer of business Goods forming parts of business assets Good
assets
Renting of immovable property. services
Transfer of right to enjoy IPR
Composite supply Works contract service Hotel, restaurant services

JOIN US ON TELEGRAM FOR CA NOTES & UPDATES-CANOTESCOMMUNITY

1
 2. SUPPLY UNDER GST BY- CANOTESCOMMUNITY

Negative sec 7(2) (a)

list under 1. Services by employee-employer
GST read 2. Services by court/Tribunal
with • Duties performed by MP/MLAs
schedule III
• Duties by person holding constitutional post
• Chairperson, director or member in government body
3. Services of funeral, burial or mortuary including transportation of deceased.
4. Sale of land & building except sold before completion certificate
5. Actionable claims other than lottery, betting, gambling
6. Supply of goods from non-taxable territory to another non-taxable territory without entering the
goods in India.
7. Supply of warehoused goods to any person before clearance for home consumption.
sec 7(2) (b)
(b) such activities or transactions undertaken by the Central Government, a State Government or any local
authority in which they are engaged as public authorities, as may be notified by the Government on the
recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
Sec 7 (3) the Government may, on the recommendations of the Council, specify, by notification, the transactions
that are to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.

the Government may, on the recommendations of the Council, specify, by notification, the transactions
that are to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
Clarification & circulars
1. Donation received by charitable institution from individual donor & nothing is done by donee in return
GST is not leviable provided
1. Trust is registered under Section 12AA of Income Tax Act, 1961
2. payment has character of gift/donation
3. purpose is non-commercial
Note- mere display of name plate as gratitude does not attract GST
2. Art works sent by artists to galleries for exhibition NOT a supply as no consideration flows from gallery to artists
the Actual supply takes place when buyer selects art work at exhibition.
3. Sale Promotion:
Free samples & gifts-NO Consideration, no supply (Except Sch. I)
4. SEZ are always distinct person
5. Cost petroleum & profit petroleum are exempt under GST
6. Priority sector lending certificate – GOODS
Taxable @ 12% {IGST} & GST payable under RCM
7. Cheque dishonour fine- NO GST as no contract of dishonour
8. Penalty for violation of Laws - NO GST as no contract
9. Late payment fee charged by supplier is taxable at the rate of principal supply.
10. Inter-state movement of various modes of conveyance like trains, buses, trucks, tankers etc between 2 registered
branches of one company will not be treated as supply & hence no IGST. However, if the conveyance is sent to
another branch with intention to further supply (i.e., sell, lease, etc.) then it becomes taxable. Similarly,
Inter-state movement of rigs, tools, spares, cranes etc from branch to branch is not supply unless with intention to
further supply.
11. Supply liable to GST (supplier is Taxable person + making taxable supply)

JOIN US ON TELEGRAM FOR CA NOTES & UPDATES-CANOTESCOMMUNITY

2
 2. SUPPLY UNDER GST BY- CANOTESCOMMUNITY

COMPOSITE (a) [Composite Supplies] Some of the supplies are a combination of goods or services or both and each
AND MIXED individual component of such supplies may attract a different rate of tax. where goods are packed and
SUPPLIES transported with insurance. the supply of goods, packing materials, transport and insurance is a
[Section 8] composite supply and supply of goods is a principal supply. (E.g.: Charger supplied with mobile)
(b) [Mixed Supplies] A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry
fruits, aerated drink 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. (E.g., A gift pack comprising of chocolates & sweets)

[Independent Supplies] When the supply is of individual goods or services, which are clearly
identifiable and such goods or services are subject to a particular rate of tax, application of such rates
poses no problem.
Principal supply means the supply of goods or services which constitutes the predominant element of a
composite supply and to which any other supply forming part of that composite supply is ancillary.

Determination of bundled services in the ordinary course of business

1. The perception of the consumer or the service receiver
2. Majority of service providers in a particular area of business provide similar bundle of services.

Other illustrative indicators (not determinative but indicative)

1. There is a single price or the customer pays the same amount, no matter how much package
they actually receive or use.
2. The elements are normally advertised as a package.
3. The different elements are not available separately.
4. The different elements are integral to one overall supply. If one or more is removed, the nature
of the supply would be affected.

Note- Naturally bundled and Composite supply under Health care service will also be exempt.
clarification 1. Printing services
- Content is principal supply [supply of service]
- Logo/design is ancillary [supply of goods]
2. Retreading of tyres
- Tyre belongs to recipient [supply of service]
- Tyre belongs to supplier [supply of good]

⑉⑉⑉⑉⑉⑉⑉⑉༄༄༄⑉⑉⑉⑉⑉⑉⑉⑉⑉⑉
@CANOTESCOMMUNITY
⑉⑉⑉⑉⑉⑉⑉⑉༄༄༄⑉⑉⑉⑉⑉⑉⑉⑉⑉⑉

JOIN US ON TELEGRAM FOR CA NOTES & UPDATES-CANOTESCOMMUNITY

3