Concept of Supply

Presentation by
CA Srinath N G
Old Laws GST Laws
Manufacture of
Goods Supply of Goods
( Excise Duty) or
Sale of Goods Supply of Services
( VAT/CST) or
Rendering of Service Both
( Service Tax)
*Supply includes the following
All forms of supply of goods or services or both made
or agreed to be made for a consideration by a person
in the course or furtherance of business.
Ex: Sale, Exchange, Barter, Transfer, Rental, License,
disposal
Importation of services for consideration whether or
not in course or furtherance of business
Activities mentioned in Schedule I made or agreed to
be made without consideration
Activities to be treated as Supply of goods or
Services as mentioned in Schedule II
*Notwithstanding anything contained in Sub Section 1,
the following will neither be treated as Supply of
Goods nor Supply of Services: Sec7(2)
Activities or transactions specified in Schedule III
Such activities undertaken by Central or State
Government or Local Authorities in which they are
engaged as Public Authorities as may be notified by Govt
* Notwithstandinganything contained in Sub Section 1

& 2, the Government may on recommendations of
Council specify the transactions that are to be
treated as
Supply of goods but not services
Supply of Services but not goods
Supply
Supply for
without
Consideration
Consideration
Supply of
Importation
goods or
of Services
services
The following activities are treated as Supply even
if they are made without consideration whether
made by taxable person or non taxable person
 Permanent transfer or disposal of Business Assets
only if Input credit has been availed on such assets.
Ex: Transfer made by Holding to Subsidiary Company,
Donation of old Laptops to Charitable Institutions
Supply between Related or Distinct persons made

in the course or furtherance of business.
Supply of goods or services or both between
Employer & Employee above 50,000 shall be
treated as Supply.
Stock or Branch Transfers, treated as supply in GST
Related persons include:
An Employer and employee,
Director of a company,
Partner of a firm,
A person directly or indirectly owns, controls or holds
25% or more of voting shares of both of them,
A person directly or indirectly controls the other,
Both of them are directly or indirectly controlled by 3rd
party,
Both of them control a third person,
A person who is sole agent of others business.
Distinct Persons – Sec 25:
A person who has obtained or required to obtain more
than one registration
Whether in one state or territory or more than one
state or territory
Shall in respect of such registration be treated as
Distinct persons
Further a person who has obtained registration or is
required to obtain registration in a state or territory in
respect of an establishment, has an establishment in
another state or territory, then such establishments
shall be treated as Distinct persons.
Ex: Srinath has a CA office in Hyderabad and has
obtained a registration in Andhra Pradesh for his branch
office.
Supply of goods between Principal & Agent:
 Supply of goods by a Principal to Agent is treated as
supply
Supply of goods by a Agent to Principal is also treated
as supply
Points to be noted
The invoice must be issued by the agent in his own
name to the buyer else there is no Pr - Ag relationship.
This activity covers only supply of goods but not
services
Art works sent by artists to galleries for exhibition is
not a supply {Circular no 22/22/2017}
Import of Services
With Without
T
Consideration Consideration
a
x
In the course or a Related or Distinct
furtherance of b persons & in course
business or not l or furtherance of
e business
Activities to be treated as Supply of goods or
supply of services:
Transaction Nature of Supply
Transfer of Title in Goods Supply of Goods
Transfer of Right in goods Supply of Services
or undivided share in
goods without transfer of
goods
Transfer of title in goods Supply of Goods

under an Agreement to
Sell
Lease, Tenancy, Easement, Supply of Services

Licence to occupy Land
Lease, Letting out of Supply of Services
building wholly or partly
Job work services Supply of Services

Supply of goods by an Supply of goods
unincorporated association
or body of persons to a
member
Works Contract Services Supply of Services
Supply of food and drinks Supply of Services
Transfer of Business Assets Supply of Goods

by a person carrying on
business
Goods held for business Supply of Services

put to private use under
the directions of person
carrying on business
Goods forming part of Supply of Goods

assets of any business
carried on by a person
who ceases to be taxable
person except where such
business in transferred as
going concern or carried
on by a representative
Renting of Immovable Supply of Services
Property
Activities which are neither treated as supply of goods
nor supply of services:
 Services by an employee to employer in course of
employment
 Services by any court or tribunal
 Functions performed by MP’s, MLA’s, Member of
Panchayats, Member of Municipalities, duties
performed by any person who holds any post in the
provisions of Constitution
 Duties performed by Chairperson or a Member or a
Director in a body established by CG/SG/LA
 Funeral Services
 Sale of Land and Building
 Actionable Claims other than Lottery, Betting,
Gambling
 Interstate movement of various modes of conveyances
between distinct persons like Trucks, Buses, Trains,
Tankers, Trailers, Vessels, Containers, Aircrafts
carrying goods or passengers or both or
for repairs and maintenance

{ Circular no 1/1/2017}
 Interstate movement of rigs, tools and spares and all

goods on wheels like cranes
{ Circular no 21/21/2017}
Composite Supply means a supply made by a
taxable person to a recipient and
 Comprises of two or more taxable supplies of
goods or services or both
 Which are naturally bundled and supplied in
conjunction with each other in the ordinary
course of business. Sec 2(30)
Note: The elements in Composite Supply are
dependent on “Principal Supply”
Mixed Supply means
 Two or more individual supplies of goods or
services or any combination thereof, made in
conjunction with each other by a taxable
person
 For a single price were such supply doesnot
constitute a Composite Supply – Sec 2(74)
Note: The individual supplies are independent of
each other and are not naturally bundled unlike
in case of composite supply
Tax Liability of Composite Supply shall be
Supply of Principal Supply
Ex: Supply of food complimentarily along with
accomodation in a hotel
 Tax Liability of Mixed supply shall be Supply of
that particular supply which attracts highest
tax liability
Ex: Supply of Package consisting of Sweets,
Chocolates, Cakes, Dry Fruits in which every
element can be sold separately
Principal Supply means
 Supply of goods or services which constitutes
the predominant element of Composite
Supply and to which any other supply forming
part of composite supply is ancillary.
 Principal supply recognizes two or more
supplies and arranges them in a two step
hierarchy –
 a single predominant supply and
 ancillary supplies
Ex: Supply of Laptop with carry case
Supply of repair services of laptops

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* Notwithstandinganything contained in Sub Section 1

Supply between Related or Distinct persons made

Transfer of title in goods Supply of Goods

Lease, Tenancy, Easement, Supply of Services

Job work services Supply of Services

Works Contract Services Supply of Services

Supply of food and drinks Supply of Services

Transfer of Business Assets Supply of Goods

Goods held for business Supply of Services

Goods forming part of Supply of Goods

for repairs and maintenance

 Interstate movement of rigs, tools and spares and all

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