Section 7 of Model Law GST, The charging section provides that all intrastate supply would be liable to GST, Rate of Taxes, Manner and collection of Tax and the Person who are liable to pay such Tax.
CGST/ SGST is the Levy in Two Parts:
- Firstly in the hands of the Supplier
- Secondly in the hands of the recipient of the goods and services under reverse charge mechanism.
Levy of Tax:
Following Condition should be fulfilled to levy the Tax on the supply
- Supply of Goods and Services.
- Supply is of Intra-State Supply (Location of Supplier and Place of Supply shall be within the same states) or Inter-State Supply (Location of Supplier and Place of Supply shall be from different states)
Since it is the Dual Taxation, Every Supply will attract CGST (impose by the Parliament of India) as well as SGST (impose by the respective state).
Supply: Meaning of Supply
1. Supply includes all form of Supply of Goods and/or services or agreeing to supply for a consideration and in the course of or furtherance of business.
It includes:
- Sale
- Transfer
- Barter
- Exchange
- License
- Lease
- Rental
- Disposal
The word “Supply” means
- Involves transfer of good or services by one person to another
- Involves consideration received by the person supplying from the recipient.
2. Supply should be in course of or furtherance of business: Supply of goods and services by the Business Entity will be liable to GST if it is related to business. Supply of goods and services not related to business won’t be liable for GST.
Example: Sale of goods in an exhibition, Supply of Free Samples, Supply of goods in warranty, etc.
Read Also: What is Mixed and Composite Supply Under Goods and Services Tax?
3. Import of Services: As per section 2 of Model GST, Supply includes Import of Service, whether or not for a consideration and whether or not in the course of or furtherance of business. Such Services would be liable to tax under Reverse Charge Mechanism. Import of Services for Personal Consumption would also come under the purview of Supply, hence liable to GST
4. Transaction specified in Schedule I made or agreed to be made without consideration-
- Permanent transfer or Disposal of Business Asset.
- Temporary application of business asset to a private or non-business use.
- Services put to a private non-business use.
- Asset retained after deregistration.
- Supply of Goods or Services by One Taxable person to another taxable or non-taxable person. As per Section 43A, the commissioner may by special order allow the supply of goods by a registered taxable person to a Job Worker without payment of Tax.
5. The transaction between Agent and Principal: Supply of Goods or Services by the agent on behalf of the Principal for an agreed commission or brokerage would be treated as Supply.
6. Supply under the Brand Name: Services which are provided under the Brand name of another person known as an aggregator, deemed to have been provided by the said aggregator and the same will liable to tax.
Matters mentioned in Schedule II shall apply for determining what is or is to be treated as a supply of goods or services. Thus GST has covered almost all types of Services, manufacturing and trading activities in the definition of Supply.
