Scope of Supply – Section 7 of CGST Act

Scope of Supply – Section 7 of CGST Act

Section 7 – Meaning and scope of supply
Section 7(1)(a)	Section 7(1)(b)	Section 7(1)(c)	Section 7(1)(d)
All forms of supply of goods and / or services, made or agreed to be made, – for a consideration – in the course or furtherance of business such as: – sale, – transfer, – barter, – exchange, – license, – rental, – lease or – disposal	Importation of service, – for a consideration – whether or not in the course or furtherance of business	Supplies specified* – To be treated as supplies *made* *or agreed* *to be made* *without* *a consideration* *Schedule I: 1. Permanent transfer / disposal of business assets for which ITC has been availed 2. Supplies between related persons/ distinct persons in the course or furtherance of business (gifts of less than Rs. 50,000 in value in a FY by employer to employee not to be treated as supply) 3. Supply of goods by / to principal to / by agent where agent undertakes to supply / receive such goods on behalf of principal 4. Importation of service from a related person or from any of his other establishments outside India, in the course or furtherance of business.	•Activities to be treated as supply of goods or supply of services – Sch II
			Section 7(2) •Activities not to be considered as supply (Sch-III) •Activities/ Transactions undertaken by CG/SG/ Local Authority as may be notified
			Section 7(3) By Notification on recommendation of GST Council treat activity as •Supply of goods and not service •Supply of service and not goods

Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II
Sl No	Matters	Supply of
1	Transfer
(a)	Any transfer of title in goods	Goods
(b)	Any transfer of right in goods or undivided share in goods without the transfer of title thereof	Services
(c)	Any transfer of title in goods wherein the property in goods will pass at a future date upon payment of full consideration as agreed	Goods
2	Land and Building
(a)	Any lease, tenancy, easement, licence to occupy land	Services
(b)	Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly,(*renting* *of residential dwelling for use as residence is exempt* vide Notification No.12/2017 – CT (Rate) dated 28.06.2017)	Services
3	Any treatment or process applied to another person’s goods	Services


4	Transfer of business assets
(a)	Transfer / Disposal of goods so as to no longer to form part of business assets, whether or not for a consideration	Goods
(b)	Goods are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration (*Transfer of a going concern, as a whole or an independent part thereof, is an exempted service* vide Notification 12/2017-CT (Rate) dated 28.06.2017 )	Services
(c)	Any person ceases to be a taxable person, any goods forming part of assets of any business carried on by him – shall be deemed to be supply in the course or furtherance of his business immediately before he ceases to be a taxable person, except – (a)Business is transferred as a going concern to another person; or (b)Business is carried on by a personal representative who is deemed to be a taxable person	Goods

5	Following to be treated as Supply of Services
(a)	Renting of immovable property (unless the supply is otherwise exempted (such as renting of residential dwelling for the purpose of residence)
(b)	Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. Construction includes additions, alterations, replacements or remodeling of any existing civil structure
(c)	Temporary transfer or permitting the use or enjoyment of any intellectual property right
(d)	Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software
(e)	Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act
(f)	Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration

6	Following Composite Supplies to be treated as Supply of Services
(a)	Works Contract as per Sec. 2(119) of CGST Act “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
(b)	supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. Illustration: Restaurant Services or Catering Services
7	Supply of goods by any unincorporated AOP or BOP to a member thereof for cash, deferred payment or other valuable consideration shall be treated as supply of goods

Section 7(2) – Activities not to be treated as supply

Section 7(2)(a)

Section 7(2)(b)

Activities or transactions specified*

* Schedule III

1.Services by employee to employer in course of or in relation to his employment

2.Services by court or Tribunal established under any law for the time being in force

3.(a) functions performed by the M.Ps, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities

(b) duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity

(c) The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause

4.Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

5.Sale of land and, subject to Construction Activity of Schedule II, sale of building

6.Actionable claims, other than lottery, betting and gambling

Activities or transactions undertaken by

-Central Govt, or

-State Govt, or

-Local authority

-in which they are engaged as public authorities

as may be notified by the Government on the recommendations of the GST Council

(Activity in relation to function entrusted to Panchayat under Article 243G of the Constitution notified vide Notification No. 14/2017- CT(Rate) dt. 28.06.2017)

Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II