1. Supply under Goods and services Tax Keshav R Garg (B.Com, FCA, CS, ISA(ICAI)) Faculty on GST – Indirect Tax Committee of ICAI Author – GST Ready Reckoner by Bharat Publications Co- Author - A Handbook on GST Member – Indirect Tax Committee of PHDCCI, CII, MyGst.MyTax Foundation Address - #3328, Sector 27 D, Chandigarh, India 160 019 Mail - keshavgarg@kdai.in Ph - +91-988-809-0008, +91-172-461-3328

2. Charging sections – 7 of CGST Act & Section 4 of IGST Act Section 7: Levy and Collection of Central/State Goods and Services Tax. —(1) There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in the Schedule... to this Act and collected in such manner as may be prescribed. Section 4 of IGST Act 2016: Levy and collection of Integrated Goods and Services Tax.—(1) There shall be levied a tax called the Integrated Goods and Services Tax on all supplies of goods and/or services made in the course of inter-State trade or commerce at the rate specified in the Schedule to this Act and collected in such manner as may be prescribed.

3. Meaning of Supply – Section 3 of Model GST Law Supply 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. importation of service, whether or not for a consideration and whether or not in the course or furtherance of business. supply specified in Schedule I which comprises of the matters which are treated as supply without consideration.

4. Concept of Deemed Supply person acting as an agent for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal. supply of any branded service by an aggregator under a brand name or trade name owned by him by the said aggregator. Deemed Supply

5. Parameters to judge whether an activity is supply? 1. There must be an act of transfer of goods/services either through sale, exchange, barter, disposal etc. 2. Such transfer should be for consideration as defined by section 2(28) of Goods and Services Tax Act 2016 3. Such transfer should be done by the taxable person in furtherance of Business as defined by section 2(17) of Goods and Services Tax Act, 2016. 4. Import of services whether for consideration or not shall be a supply under the purview of section. For meaning of Import of Service, refer section 2(52) of this act. 5. If any activity does not satisfy any of the four conditions above but such activity has been specifically mentioned in Schedule I, the same would be classified as supply under this Act subject to fulfillment of other conditions.

6. Supplies without Consideration Sch - 1 1.Permanent Transfer or disposal of business Assets. Example: Permanent Transfer of Car to Directors 2. Temporary Application of business assets to a private or non- business use. Example: Business Car used personally by Directors 3.Services put to a private or non-business use. Example: CA providing free consultancy to a friend 4.Assets retained after deregistration. Example: After the liquidation, assets retained by business 5.Supply of goods and/or services by a taxable person to another taxable or non-taxable person in course of furtherance of business. Example: Samples/Schemes would be covered.

7. Schedule II for Supply of goods/services Transfer of title/rights in the goods. Lease, tenancy, easement, license etc. is supply of service. Any treatment or process – Job Work – Deemed Supply of Service Transfer of Business Assets Renting of Immovable Property Construction of Complex Temporary transfer of IPR Services related to Information Technology Software agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act Works contract including transfer of goods in execution of works contract Transfer of right to use any goods for any purpose for consideration Services in supply of food or any article for human consumption. Goods supplied to members by unincorporated association/BOP/club shall deemed to be supply of goods – mutuality concept extinguished.

8. Understanding Time of Supply of Goods (Forward Charge) Earliest Of : Date of Removal where required / Goods made available when not removed Date of Payment Date of Invoice Date of Receipt shown in Books of Accounts Advances will be taxable under GST

9. Illustration to understand Time of Supply of Goods Date of RemovalDate of InvoiceDate of PaymentDate of entry in books Time of Supply 30.06.201615.07.201625.06.201607.07.201625.06.2016 20.06.201615.07.201625.06.201607.07.201620.06.2016 30.06.201628.06.201601.07.201607.07.201628.06.2016 30.06.201615.07.201625.06.201620.06.2016

10. Continuous Supply of Goods and its time of supply “Continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. Successive Statements of Accounts/ Payment Date of expiry of period to which successive statements/ payment relates No Successive Statements of Accounts Date of issue of Invoice OR Date of receipt of Payment (w. e. is earlier)

11. Understanding Time of Supply of Goods (Reverse Charge) Earliest Of : Date of Receipt of Goods Date of Payment Date of Invoice Date of Debit in Books of Accounts Advances will be taxable under GST

12. Understanding Place of Supply of Goods- Section 5 of IGST Act Place of Supply Where Movement of Goods Where Such Movement Terminates On Instruction of Third Party Location of Third Party Where Movement of Goods not required Location of delivery of Goods Goods Assembled/Installed at Site Place of Such Installation/Assembly Where Goods are supplied on board a conveyance Place of boarding such Goods

13. Few Illustration to Understand Place of Supply Illustration 1: M/s ABC Limited of Delhi supplies goods to M/s XYZ Limited in Mumbai. The Goods move from Delhi-Jaipur- Ahemdabad and then finally to Mumbai. Determine the place of supply and which taxes would be levied under GST. The movement Terminates at Mumbai – Place of Supply- Mumbai- Maharashtra Since it is inter-state supply – IGST Would be levied

14. Illustration 2: M/s ABC Limited of CP Delhi supplies goods to M/s XYZ Limited in South Delhi. The Goods move from Delhi-Gurgaon and then finally to South Delhi. Determine the place of supply and which taxes would be levied under GST. The movement Terminates at Delhi – Place of Supply- Delhi Since it is Intra-State supply – CGST & SGST Would be levied

15. Illustration 3: M/s ABC Limited of Delhi supplies goods to M/s XYZ Limited in Mumbai on the instruction of M/s PQR Limited of Delhi. The Goods move from Delhi-Jaipur-Ahmedabad and then finally to Mumbai. Determine the place of supply and which taxes would be levied under GST. Goods Supplied on Instruction of Third Party – Location of Third Party i.e. PQR Limited- Place of Supply- Delhi Since it is Intra-State supply – CGST & SGST Would be levied

16. Illustration 4: M/s ABC Limited of Delhi supplies goods to M/s XYZ Limited in Mumbai on the instruction of M/s PQR Limited of Jaipur. The Goods move from Delhi-Jaipur-Ahmedabad and then finally to Mumbai. Determine the place of supply and which taxes would be levied under GST. Goods Supplied on Instruction of Third Party – Location of Third Party i.e. PQR Limited- Place of Supply- Jaipur Since it is inter-state supply – IGST Would be levied

17. Illustration 5: M/s ABC Limited of Delhi supplies goods to M/s SpiceAir Limited for consumption on board air flight going from Delhi to Kolkata. The crew served the goods when the flight was above Patna. Determine the place of supply and which taxes would be levied under GST. Goods Supplied on Board at Delhi – Location of boarding - Place of Supply- Delhi Since it is Intra-State supply – CGST & SGST Would be levied

18. Understanding Time of Supply of Services (Forward Charge) In cases where Invoice is issued in prescribed time Earliest of: (a) the date of issue of invoice; or (b) the date of receipt of payment; or In cases where Invoice is not issued in prescribed time Earliest of: (a) the date of completion of the provision of service; or (b) the date of receipt of payment, ; or the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (i) or (ii) do not apply.

19. Illustration to understand Time of Supply of Service S. NoDescriptionDate of Invoice Date of Completion of service Date of Payment Date of entry in books Time of Supply 1.Invoice issued in prescribed time. 25.06.201620.06.201628.06.201627.06.201625.06.2016 20.06.201624.06.201627.06.201624.06.2016 2.Invoice issued later than prescribed time. 25.06.201620.06.201628.06.201627.06.201620.06.2016 25.06.201620.06.201618.06.201627.06.201618.06.2016 3.Invoice not issued at all ---20.06.201628.06.201627.06.2016

20. Understanding Place of Supply of Services- Section 6 of IGST Act S. No.DescriptionSupplied to/NaturePlace of Supply 1.General RuleRegistered PersonLocation of recipient Other than Registered Person (i)Location of recipient where address is on record; (ii)Location of the supplier in any other case. 2.Service in relation to immovable property --Location of such immovable property. 3.Restaurant and Catering services --Place where such service is provided 4.Performance Based Services --Place where such service is provided 5.Admission to entertainment event, amusement park etc. --Where the event is held or where the park is located.

21. Comparison with Place of Provision Rules in present Regime General Rule B2B i.e. where address is on record : Location of Recipient B2C where address is not on record: Location of provider Specific Rule Performance based Services Services relating to immovable property Banking, Online & Intermediary Services Goods Transportation Agency Passenger Transportation Services Provided on-Board Other Aspects Services provided from more than one location Service Provided in non- taxable territory and service provider and recipient located in taxable territory. Services falling under more than one rule.

22. Understanding Time of Supply of Services in case of Continuous supply “Continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such service as the Central or a State Government may, whether or not subject to any condition, by notification, specify. Due date of payment ascertainable from Contract Date of payment Due date of payment is not ascertainable from Contract Date of issue of invoice Date of receipt of payment. Payment linked to completion of an event Time of completion of that event Similar Provision exists in Service Tax

23. Keshav R Garg (B.Com, FCA, CS, ISA(ICAI)) Faculty – IDTC of ICAI Author – GST Ready Reckoner A Handbook on GST Member of: Indirect tax committee of CII, PHDCCI, MyGst.MyTax 3328, Sector 27 D, Chandigarh 160019 +91-9888-090-008 keshavgarg@kdai.in