Meaning of important terms as definined under CGST ACT,2017
When you read an act, the first step should be to understand different words used in Act. You cannot consider dictionary meaning of words which are explicitly defined in the act.
Meaning of address of delivery as per CGST Act
(2) “address of delivery” means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both;
Address of delivery is defined as the address of buyer of goods or services or both mentioned in the tax invoice. For example, if buyer of your goods is located at Mumbai but you are delivering goods to his Bangalore address, in this case the address of delivery will be Bangalore.
You should mention the address of delivery on tax invoice along with address of buyer.
Meaning of agent as per CGST Act
(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;
Agent is defined as a person who carries on business on behalf of others. Commission agents, brokers etc. are covered under this definition.
Meaning of aggregate turnover
(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
Aggregate turnover includes aggregate value of all taxable supplies, exempted supplies, exports, interstate supplies. It is to be noted that aggregate turnover does not include taxes charged under GST acts.
Example, If you have raised total invoices whether they are of local supplies, exports or interstate supplies amounting to Rs. 1 crore and tax charged on invoices amounts to 18 lakhs, in this case Aggregate turnover will be Rs. 1 crore.
Meaning of agriculturist
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land— (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;
A very important definition as agriculturist are exempted from tax on supplies made out of products from cultivation land. Agriculturist is deinged as any Individual or a HUF who undertakes cultivation of land by own labour or labour of family or other means.
Meaning of assessment
(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment;
Assessment is defined as determining or in simple terms calculating the tax liability under CGST Act whether by self-assessment, re-assessment, provisional assessment, summary assessment or best judgment assessment.
Meaning of associated enterprises
(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961;
Meaning of audit
(13) “audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder;
Meaning of business
(17) “business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
Meaning of business vertical
(18) “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
Explanation.––For the purposes of this clause, factors that should be considered in determining whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance, or public utilities;
Meaning of capital goods
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;
Capital goods is defined to include only goods which are capitalised in books of accounts and on which input tax credit is availed.
Meaning of casual taxable person
(20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business;
Casual tax person includes a person who occasionally do business in states where is not registered. Thought should be given whether a person registered in one state and transacts in another state falls under this definition.
Meaning of composite supply
(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration.— Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply;
The definition is given with example and a very good drafting to resolve possible doubts.
Meaning of consideration
(31) “consideration” in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
Meaning of continuous supply of goods
(32) “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 and includes supply of such goods as the Government may, subject to such conditions,as it may, by notification, specify;
Meaning of continuous supply of services
(33) “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 services as the Government may, subject to such conditions, as it may, by notification, specify;
Meaning of electronic cash ledger
(43) “electronic cash ledger” means the electronic cash ledger referred to in subsection (1) of section 49;
Meaning of electronic commerce (E-Commerce)
(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network;
Meaning of electronic commerce operator
(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;
Meaning of electronic credit ledger
(46) “electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;
Meaning of exempt supply
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
Meaning of fixed establishment
(50) “fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;
Meaning of goods
(52) “goods” 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;
Meaning of input
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;
Meaning of input service
(60) “input service” means any service used or intended to be used by a supplier in the course or furtherance of business;
Meaning of Input Service Distributor
(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;
Meaning of input tax
(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy;
Meaning of input tax credit
(63) “input tax credit” means the credit of input tax;
Meaning of job work
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;
Meaning of location of the recipient of services
(70) “location of the recipient of services” means,—
- where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;
- where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
- where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and
- in absence of such places, the location of the usual place of residence of the recipient;
Meaning of location of the supplier of services
(71) “location of the supplier of services” means,—
- where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
- where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
- where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and
- in absence of such places, the location of the usual place of residence of the supplier;
Meaning of manufacture
(72) “manufacture” means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly;
Meaning of market value
(73) “market value” shall mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related;
Meaning of output tax
(82) “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
Meaning of person
- (84) “person” includes—
- an individual;
- a Hindu Undivided Family;
- a company;
- a firm;
- a Limited Liability Partnership;
- an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
- any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of
the Companies Act, 2013;
- any body corporate incorporated by or under the laws of a country outside India;
- a co-operative society registered under any law relating to co-operative societies;
- a local authority;
- Central Government or a State Government;
- society as defined under the Societies Registration Act, 1860;
- trust; and
- every artificial juridical person, not falling within any of the above;
Meaning of place of business
(85) “place of business” includes––
- a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
- a place where a taxable person maintains his books of account; or
- a place where a taxable person is engaged in business through an agent, by whatever name called;
Meaning of place of supply
(86) “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act;
Meaning of removal of goods
(96) “removal’’ in relation to goods, means—
- despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier; or
- collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient;
(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
Meaning of supplier
(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied;
Meaning of works contract
(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
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