In this fifth part of the FAQ series, we enlist 10 questions on meaning and scope of term ‘Supply’ under GST.
Q 1. What is the taxable event under GST?
Ans. The taxable event under GST shall be the supply of goods and / or services made for consideration in the course or furtherance of business. The taxable events under the existing indirect tax laws such as manufacture, sale, or provision of services shall stand subsumed in the taxable event known as ‘supply’.
Q 2. What is the meaning of ‘Supply’?
Ans. The term ‘supply’ is wide in its import and includes all forms of supply of goods and / or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It also includes import of service. The model GST law also provides for including certain transactions made without consideration within the scope of supply.
Q 3. What is a taxable supply?
Ans. A ‘taxable supply’ means a supply of goods and /cor services which is chargeable to good and services tax under the GST Act.
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Q 4. What are the necessary elements that constitute supply under MGL?
Ans. In order to constitute a ‘supply’, the following elements are required to be satisfied, i.e.-
(i) supply of goods and / or services;
(ii) supply is for a consideration;
(iii) supply is made in the course or furtherance of business;
(iv) supply is made in the taxable territory;
(v) supply is a taxable supply; and
(vi) Supply is made by a taxable person.
Q 5. Can a transaction in which any one or more of the above criteria is not fulfilled, be still considered as supply under GST?
Ans. Yes. Under certain circumstances such as importation of service (Section 3(1) (b)) or supplies made without consideration, specified under Schedule-I of MGL, where one or more ingredients specified in answer to question no. 4 are not satisfied, it shall still be treated as supply under GST Law.
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Q 6. Importation of Goods is conspicuous by its absence in Section 3. Why?
Ans. Importation of goods is dealt separately under the Customs Act, 1962, wherein IGST shall be levied as additional duty of customs in addition to basic customs duty.
Q 7. Are self-supplies taxable under GST?
Ans. Inter-state self-supplies such as stock transfers will be taxable as a taxable person has to take state wise registration in terms of Schedule 1(5). Such transactions have been made taxable even if there is no consideration. However, intra-state self-supplies are not taxable.
Q 8. Whether transfer of title and/or possession is necessary for a transaction to constitute supply of goods?
Ans. Title as well as possession both have to be transferred for a transaction to be considered as a supply of goods. In case title is not transferred, the transaction would be treated as supply of service in terms of Schedule II (1). In some cases, possession may be transferred immediately but titled may be transferred at a future date like in case of sale on approval basis or hire purchase arrangement. Such transactions will also be termed as supply of goods.
Q 9. An individual buys a car for personal use and after a year sells it to a car dealer. Will the transaction be a supply in terms of MGL? Give reasons for the answer.
Ans. No, because supply is not made by the individual in the course or furtherance of business. Further, no input tax credit was admissible on such car at the time of its acquisition as it was meant for non-business use.
Q 10. A dealer of air-conditioners transfers an air conditioner from his stock in trade, for personal use at his residence. Will the transaction constitute a supply?
Ans. Yes. As per Schedule-I (1) business assets put to a private or non-business use without consideration will be treated as supply.