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Supply - Redefined in Revised GST Act, 2016-Part - II

January 11, 2017[2017] 77 taxmann.com 132 (Article)

Anandaday Misshra

Founder Advocate, AMLEGALS

Supply has various limbs and all such limbs are independent to each other. We shall be analyzing each limb of Section 3 under separate write ups under the series on supply.

If we talk about supply and on conjoint reading of Section 3, a broader picture of supply comes to a person's mind. Hence, we will try to analyze a broader outlook of supply first before we take up a precise meaning of each limb of Section 3.

We are firstly going to deal with the first limb of Section 3 so as to understand the perspective of supply in terms of GST.

First limb of Supply

A broader purview of supply can be drawn from first limb of Section 3 as below:

3. Meaning and scope of supply

(1)   Supply includes
(a)   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,

On perusal of the same, the first limb of supply can be broadly understood in the following manner:

1.   Supplies by a person,
2.   Supplies either made already in the past or agreed to be made in future,
3.   Supplies ultimately for consideration and
4.   Supplies made in the course or furtherance of business.

The aforesaid parameters are valid for almost every supply except the exceptions made out for certain specified services under schedules to Section 3 of the draft GST Act, 2016.

The definition of supply itself will result in a moot question as to what will be the fate of a transaction when any of the aforesaid factors are missing. Will it still be called as a supply?

It should be also noted that the definition in first limb is continuous and it does not have "or" or "any option" in between such elements. Rather, it defines supply in a continuous manner with all elements to be satisfied mandatorily to call a transaction as a supply.

Wider Purview of Supply

The term supply will connote various types of supply. Hence, the expression "all forms of supply of goods and/or services" has been deployed in the body of first limb of Section 3.

In other words, the supply of goods and/or services can be in any form.

Forms of Supply

The forms or types of supply existing in trade parlance and made to fall under the purview of supply can be understood as below:

i.   sale,
ii.   transfer,
iii.   barter,
iv.   exchange,
v.   license,
vi.   rental,
vii.   lease or
viii.   disposal

However, for the purpose of first limb, all such supplies be called as supply only when these are made for consideration.

Sine qua none of Supply in GST

The following are MUST to call a transaction to be a supply:

a.   taxable supply
b.   supply to be effected
c.   consideration must be there
d.   supply should be made when business is running or is in continuation.

It is pertinent to note that the exceptions are specified under other limbs of Section 3 but still the majority of supply will be affected by the aforementioned factors only.

Conclusion

All the factors and sine qua none have been analyzed for the purpose of and limited to the first limb of supply under Section 3 of draft GST Act, 2016 only.

The concept of supply and more particularly the first limb of Section 3 will be the deciding factor for various aspects related to the levy and discharge of GST .

In GST era, the concept of supply will replace the existing concept of excise duty on manufacture, service tax on rendering of service, sale of goods, etc .

The copyright vests with the author solely. Any attempt to copy, paste, alteration, amendment, etc., to this subject write up shall be considered as infringement of copyright.

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