Jul 032019
 

Supply under GST in light of latest amendment

Introduction:

Goods and service tax as defined under Article 366(12A) of constitution is any tax on supply of goods or services or both except taxes on the supply of the alcoholic liquor for human consumption. The terms “Supply” supply being critical for levy of GST is defined under section of CGST act and made applicable to IGST, SGST and UTGST also. This section 7 is amended by CGST amendment act 2018 retrospectively from 01.07.2017.

Amendment 1:

Prior to amendment After amendment Effect
“Section 7. (1) For the purposes of this Act, the expression “supply” includes––

…….

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. ”

New sub-section (1A) is inserted under Section 7 of the CGST Act, which provides that,

 

Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule-II.

Activities/ transactions listed in Schedule II  shall be taxed only when they constitute ‘supply’ in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act

Amendment 2:

Prior to amendment After amendment Effect
Para 4 of Schedule I to the CGST Act covered import of services –

 

By a taxable person from a related person or from any other establishment outside India in the course or furtherance of business,

to be treated as supply for applicability of GST even if no consideration is involved.

The words ‘taxable person’ in Para 4 of Schedule I is replaced by ‘person’ vide the CGST Amendment Act, 2018, effective from February 1, 2019 Import of services  by entities

ü  which are not registered under GST (say, they are only making exempted supplies)

ü  but are otherwise engaged  in business activities

shall be liable to tax when received from a related person or from any of their establishments outside India

Amendment 3:

Prior to amendment After amendment Effect
NIL Inclusion of following three types of transactions in Schedule III to the CGST Act (i.e. activities or transactions which shall be treated neither as a supply of goods nor a supply of services):

ü  Merchant trading i.e. supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into the taxable territory.

ü  High seas sales i.e. sale carried out by the actual consignee shown in the Bill of Lading to another buyer while the goods are yet on high seas or after their dispatch from the port of loading and before entering the customs frontier of India.

ü  In-bond sale i.e. sale of imported goods from customs bonded warehouses.

 

The above-mentioned transactions viz. merchant trading, high seas sales, in-bond sales shall not be regarded as exempt supply for reversal of input tax credit.