UNDERSTANDING ON Sec-7 CGST ACT

Last udpated: July 19, 2021, 12:19 p.m.

 

Sec-7-. (1) For the purposes of this Act, the expression “supply” includes––

(a) all forms of supply of goods or services or both such as sale, transfer, barter,
exchange, licence, rental, lease or disposal made or agreed to be made for a consideration
by a person in the course or furtherance of business;

     (b) import of services for a consideration whether or not in the course or
furtherance of business;


            (c) the activities specified in Schedule I, made or agreed to be made without a
consideration; and


           (d) the activities to be treated as supply of goods or supply of services as
referred to in Schedule II.

(2) Notwithstanding anything contained in sub-section (1),––

          (a) activities or transactions specified in Schedule III; or

          (b) such activities or transactions undertaken by the Central Government, a
State Government or any local authority in which they are engaged as public
authorities, as may be notified by the Government on the recommendations of the
Council,
shall be treated neither as a supply of goods nor a supply of services.

Sec -7 say -Scope of Supply What ever we read here in CGST act for supply definition, the same same definition is applied on SGST UTGST & IGST act.

Sec -7 says about the what supply includes like—Sale for consideration in furtherance of Business. When we discuss sec -7 , it may be the case there is supply without Consideration so if there is supply without consideration then it will cover under.. SCH I Specify the activities which is considered as Supply even without consideration… So those activities which are cover under Schedule -1 only those can be considered as supply in case of no consideration…otherwise the thumb rule is that to be a supply there must be consideration. Consideration may be in cash or kind.

SCHEDULE-1-Activities to be treated as supply even if made without consideration

SCH-1 Have specific -4 paras which talks about the supply without consideration. SCH-1 Para -1 Talks about Permanent transfer or disposal of business assets on which input credit has been availed. Sch-1 Para -2 talks about supply between related or Distinct Persons. Distinct person is that who had more than one registration under gst with same PAN. Stock transfer between distinct person is liable for gst. Para-3 Principal Agent transaction—This only talks about goods… Para -4 Import of Services-

SCHEDULE-2- After This legal provision the idea derived is that..,.. That the Sch-II is only to determine whether a transaction is a Supply of Goods Or Supply of Services..

So what i understood is that, first we look at sec7(1) to check that a particular transaction is supply or not, and if its a supply that we check as per schedule ii that its a supply of goods or Supply of services. SCHEDULE -2 has 7 Paras, 18 specific entries , 13 talks about goods 5 talks about Services. This schedule helps to determine what is treated as Supply of Goods and What is treated as Supply of Services.

Schedule-3 Activities or transactions which shall be treated neither as a supply of goods nor a supply of services.

Important- so if I want to sum up about the understanding drawn from Sec -7(Scope of supply) as a whole few points I under stood…i.e.  In Gst the most important factor is “”Supply””, so if something is supply than we need to check the chargeability of gst. Sec -7 say What is supply.

Important fact is that sec -7 say the supply is for some consideration , so for sec -7 Consideration is important to make a transaction as consideration is include to make a transaction as supply.

But Section -7 also says that if a transaction is made without consideration it can be treated as Supply Only and Only If it Falls under 4 specific Paras Of Schedule-1.  Section -7 also talks about what is Supply Of Goods and What Is Supply of Service , and for that Sec-7 says to check Schedule-2,

Section-7 at last talks about some transactions which are Neither Supply of Goods Nor Supply of Services , to know that we need to go through Schedule-3.

 

2 Comments


Comment by Tractors PK

Great content.


Comment by New Vehicles

Very interesting site.


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