1. Meaning of the word “Goods” & “Services”
By: Pradeep K. Mittal
B.Com, LLB, FCS
Advocate, PKMG Law Chambers
Past Central Council Member,
The Institute of Company Secretaries of India, New Delhi
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2. Meaning of the Word “GOODS”
In the new Draft Model law on GST, goods are defined under Section 2(49) which means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

3. As per the earlier Act, goods are defined under Section 2(28) as “Goods mean every kind of movable property other than actionable claim and money subject to the following:
includes securities, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply.
the term “moveable property” shall not include any intangible property.
It implies while movable property will exclude any intangible property, it may include tangible property. Tangible property to mean anything which can be touched or felt.

4. The Supreme Court in the case of H Anraj Vs
The Supreme Court in the case of H Anraj Vs. Government of Tamil Nadu MANU/SC/0318/1985 has defined the “goods” in the following words:-
Section 2(7) of the Sale of Goods Act defines 'goods' as meaning "every kind of movable property other than actionable claims and money". Clearly, the expression 'movable property' is used in contradistinctions with 'immovable property'.

5. Section 3 of the Transfer of Property Act gives a negative definition of immovable property saying that it does not include standing timber,, growing crops or grass and is, therefore not of much assistance; but Section 3(26) of the General Clauses Act, 1897 defines 'immovable property' by stating that it "shall include land, benefit to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth", while 'movable property' is defined in Section 3(36) thus:
"Movable property" shall mean property of every description, except immovable property.

6. What is not immovable shall be movable
In nutshell, the Supreme Court, in the above case, has observed that what is not a “immoveable property” shall be “moveable property” and further observed that lottery ticket shall be “goods” and further observed that once it is held to be a “moveable property”, the same shall be, liable to tax.

7. Whether Replenishment Licenses can be considered as goods?
In the case of Vikas Sales Corporation v. Commissioner of Commercial Taxes and Anr. MANU/SC/0519/1996, the question was whether “Replenishment Licenses” were goods so that Sales tax could be levied on their transfer. The Replenishment Licenses gave permission to an exporter to take credit for the exports made. The Supreme Court considered the definition of “goods” as given in the Constitution of India, in the Sales of Goods Act, 1930 the Central Sales Tax Act, 1956 the Tamil Nadu General Sales Tax Act, 1959, the Karnataka Sales Tax Act, as well as Kerala General Sales Tax Act, 1963 and observed that all these definitions provided that goods mean, inter alia, all kinds of movable property.

8. Software as goods:
In TATA Consultancy Services Vs. State of Andhra Pradesh,MANU/SC/0950/2004 , it was held:
“that software which is incorporated on a media would be goods, and therefore, liable to sales tax. Following discussion in this behalf is required to be noted:-"In our view, the term "goods" as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible.”

9. Electricity as goods:
The Supreme Court in the case of CST, MP. Vs. MPEB MANU/SC/0156/1968:AIR 1970 SC 732, was required to consider whether "electricity" would be goods and after careful analysis, the Supreme Court has held that the "electricity" would be goods, held as under:
" The term "movable property" when considered with reference to "goods" as defined for the purposes of sales tax cannot be taken in a narrow sense and merely because electric entry is not tangible or cannot be moved or touched like, for instance, a piece of wood or a book, it cannot cease to be movable property when it has all the attributes of such property "

10. SECURITIES MEANS:
As per the definition given by Investopedia, “Security” to mean any financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship with governmental body or a corporation (bond), or rights to ownership as represented by an option. A security is a fungible, negotiable financial instrument that represents some type of financial value. The company or entity that issues the security is known as the issuer.

11. Section 2(90) of the proposed Draft Model GST Law defines the word "securities” which shall have the same meaning assigned to it in sub-section (h) of section 2 of Securities Contract (Regulation) Act, 1956
Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (SCRA) defines the term securities as under:
shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate

12. derivatives which includes
a contract which derives its value from the prices, or index of prices, of underlying securities;
a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or contract for differences or any other form of security;
Repos and Reverse Repos (being incorporated through the Finance Act, 2015)
Commodity Derivatives (being incorporated through the Finance Act, 2015)
any instrument which is notified as a derivative by Central Government (being incorporated through the Finance Act, 2015)

13. Government security - a security created and issued by the Central Government or a State Government
units or any other instrument issued by any collective investment scheme to the investors in such schemes
units or any other such instrument issued to the investors under any mutual fund scheme but does not include any unit linked insurance policy which is a hybrid instrument providing for life risk cover and investments
security receipts issued under SARFAESI Act
Securitized debt instruments (collateralized debt obligations etc.)
such other instruments as may be declared by the Central Government to be securities; and
Rights or interest in securities

14. ACTIONABLE CLAIM MEANS:
As per Section 2(1) of the proposed Draft Model GST Law, Actionable claim shall have the same meaning as assigned to it in Section 3 of the Transfer of the Property Act, 1882
Since the definition of “goods” as per the proposed law includes “actionable claim”, one has to understand the meaning of "actionable claim" which, in turn, has been defined in Section 3 of Transfer of Property Act, 1882 as meaning;
A Claim to any debt, other than a debt secured by mortgage of Immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.

15. Examples of Actionable Claims:
The definition of actionable claim can be explained elaborately with the help of concrete examples in this behalf:
The benefit of a contract giving an option to purchase the land
Claim for arrears of rent
Claim for the rent to fall due in future
The benefit of executory contract for the purchase of goods
An option to repurchase the properties sold
An endorsement on the back of the contract for the purchase of goods by the purchaser that he has sold all his rights and interests in the contract to a person named

16. Examples of claims that are not actionable
A claim which is decreed
The right to sue for accounts and to recover money which might be found due on taking accounts from an agent
A claim for main profits
Relinquishment of interest of a retiring member of Joint Hindu family business in favor of the continuing co- parcener/s
A mere right to sue

17. Following Instances of Actionable claim as per judicial pronouncements:
An actionable claim would include a right to recover insurance money or a partner’s right to sue for an account of a dissolved partnership or right to claim the benefit of a contract not coupled with any liability vide Union of India, MANU/SC/0140/1972
A claim for arrears of rent has also been held to be an actionable claim. State of Bihar, MANU/SC/0019/1952
A right to the credit in a provident fund account has also been held to be an actionable claim. Official Trustee Bengal v. MANU/WB/0116/1943

18. The Constitution Bench of the Hon’ble Supreme Court in the case of Sunrise Associates v. Govt. of NCT, Delhi, MANU/SC/8124/2006 has observed that distinct elements are deductible from the definition of “actionable claim” in Section 3 of the Transfer of the Property Act. An actionable is, of course, as its nomenclature suggests only a claim.

19. Meaning of the word “SERVICE”
As per New Draft Act 2016 “Service,” is defined under Section 2(92) as under to mean anything other than goods.
Explanation 1: Services include transactions in money but does not include money and securities
Explanation 2: Services does not include transaction in money other than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

20. As per the earlier proposition, Section 2(88) of the Act define “Service” to mean
anything other than the “goods”
Explanation to services provide that services include intangible property and actionable claim but does not include money.

21. In case of Avadh Infratech Ltd. Vs
In case of Avadh Infratech Ltd. Vs. Commissioner of Central Excise, MANU/AR/0030/2016 it was held as under:
The Applicant has raised following question before this Authority;
"Whether the money/contribution received by company against shares and deposit from the prospective members for raising funds which can be used for achieving the sole object of the company i.e. establishing a luxurious club, is taxable as service as per the provisions of the Finance Act, 1994?"

22. Applicant submits that as per the definition of Service under Section 65B (44) of the Finance Act 1994, following can be concluded:
"a) First and foremost, there has to be an activity;
b) Second, if there is an activity then it shall be carried out by a person for another person;
c) Third, if there is any activity and it is being carried out by a person for another person then there shall be a consideration;"

23. Applicant further submits that the word Securities fall under the definition of goods, as per Section 65B of the Finance Act, read with Section 2(h)  of the Securities Contract(Regulation) Act, 1956 ; that issuance of shares and getting money from the same cannot be service in any circumstance.
Therefore, “securities” cannot be a service in the context of Service Tax Act, 1994.

24. Conclusion:
To understand the scope of “service”, what will be more relevant is to understand ‘goods’ clearly because anything which is not a good would be deemed to be a service. If an object or subject is not falling within the frame of ‘goods’, it will be service.
Thus, from the combined reading of definition of goods and services as per the new proposed draft Model GST law, it can be concluded that other than money, every other thing is a subject matter of taxation under GST law either in shape of goods or services.
Really speaking, this definition does not define anything and, therefore, one needs to look to various shades, color and dimension of the word “Goods”.

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