Page 34 - DTPA Journal Aug 18

DTPA - J | 2017-18 | Volume 3 | August 2018

TECHNICAL ANALYSIS OF THE GST ACT

CA Birendra Goyal

AN in-depth study of the provisions of the Central GST particular activity is a supply of goods or a supply of
and the rules made there under has been made and an service. The activities referred to in Schedule II are
analysis of the same has been made. The aim of this obviously included in clause (a) because clause (a)
article is to provide 'food for thought'. Relevant portions includes all forms of supply. Now the question is
of the Act have been given first followed by its analysis whether the activities referred to in Schedule II should
and then by an example (if required). fulfill the conditions relating to "consideration" and "in
the course or furtherance of business" to be treated as a
PROVISION:
supply. In my opinion, clause (a) and clause (d) are
Section 7(1): contradictory in nature.
For the purposes of this Act, the expression “supply” EXAMPLE:
includes––
I have let out my office to a friend free of rent. This
(a) all forms of supply of goods or services or both such activity is neither made in the course or furtherance of
as sale, transfer, barter, exchange, license, rental, business nor is made for a consideration. As such, it
lease or disposal made or agreed to be made for a cannot be treated as a supply. The letting out of
consideration by a person in the course or furtherance immovable property is also covered under Item 2(b) of
of business; Schedule referred to in clause (d) of 7(1) and this clause
(d) the activities to be treated as supply of goods or simply says that any activity referred to in Schedule is
supply of services as referred to in Schedule II. shall be treated as a supply and clause 7(1)(d) does not
speak about 'consideration' and 'in the course or
Schedule II
furtherance of business'. As such it is a supply as per
2. Land and Building this clause.
(a) any lease, tenancy, easement, licence to occupy REMARKS
land is a supply of services;
Now the Parliament has amended Section 7 of the
(b) any lease or letting out of the building including a CGST Act and removed clause (d) from Sub section (1)
commercial, industrial or residential complex for and inserted such provision as sub section (1A) of
business or commerce, either wholly or partly, is a section 7 which stipulates that if these activities or
supply of services. transactions constitute a supply under section 7(1),
ANALYSIS: Schedule II shall decide only whether such supply is a
supply of service or a supply of goods. The
Section 7(1) gives an inclusive definition of supply
contradiction between clause (a) and clause (d) of
which includes activities and transactions referred to in section 7(1) has been removed.
clause (a) to clause (d), out of which we shall discuss
only about activities or transactions referred to in clause PROVISION
(a) and (d). Clause (a) refers to all forms of supply made Entry 53 of List II-State list in the Seventh Schedule
for a consideration and the supply should be made in of the Constitution refers to taxes on sale and
the course or furtherance of business. When it includes consumption of electricity. The State Government has
all forms of supply then there is no need for any other exclusive powers to deal with or levy taxes on activities
inclusion. The fourth inclusion refers to activities referred to in the State list.
referred to in Schedule II of the Act but unlike clause (a)
Notification No. 2/2017-CT(R) dated 28.06.2018: In
it does not stipulate any conditions relating to
exercise of the powers conferred by section 11(1), the
'consideration' or 'in the course or furtherance of Central Government has exempted supply of certain
business'. Schedule II decides only whether a
goods vide this notification which includes Electrical

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