ICAI Notes: Supply under GST | Taxation for CA Intermediate PDF Download

 Page 1


 
 
1.1 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
2 
 
 
 
SUPPLY UNDER GST  
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? comprehend the taxable event under GST 
? analyse the taxable event – Supply – its meaning and scope. 
? identify the transactions that will amount to supply even 
without any consideration.  
? identify the transactions which will be neither the supply of 
goods nor the supply of services. 
? classify the specified transactions either as supply of goods 
or as supply of services. 
? explain the composite and mixed supplies and their taxability 
under GST. 
 
 
© The Institute of Chartered Accountants of India
Page 2


 
 
1.1 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
2 
 
 
 
SUPPLY UNDER GST  
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? comprehend the taxable event under GST 
? analyse the taxable event – Supply – its meaning and scope. 
? identify the transactions that will amount to supply even 
without any consideration.  
? identify the transactions which will be neither the supply of 
goods nor the supply of services. 
? classify the specified transactions either as supply of goods 
or as supply of services. 
? explain the composite and mixed supplies and their taxability 
under GST. 
 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.2 
 
 
 
1. INTRODUCTION 
A taxable event is any transaction or occurrence 
that results in a tax consequence.  Before levying 
any tax, taxable event needs to be ascertained.  
It is the foundation stone of any taxation system; 
it determines the point at which tax would be 
levied.   
Under the earlier indirect tax regime, the 
framework of taxable event in various statutes 
was prone to catena of interpretations resulting in litigation since 
decades.  The controversies largely related to issues like whether 
a particular process amounted to manufacture or not, whether the 
sale was pre-determined sale, whether a particular transaction was 
a sale of goods or rendering of services etc.  
Taxable Event (Supply)
Meaning of supply - Supply for a consideration in course/ 
furtherance of business furtherance of business
Activities/transactions between a person, other than an 
individual, and its members/ constituents for 
consideration
Import of services for a consideration whether or not in 
course/ furtherance of business treated as supply course/ furtherance of business treated as supply
Activities treated as supply even made without 
consideration consideration
Activities classified as either Supply of goods or Supply of 
services
Activities treated as neither supply of goods nor supply of 
services
Concept of Composite and Mixed Supplies
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
Page 3


 
 
1.1 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
2 
 
 
 
SUPPLY UNDER GST  
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? comprehend the taxable event under GST 
? analyse the taxable event – Supply – its meaning and scope. 
? identify the transactions that will amount to supply even 
without any consideration.  
? identify the transactions which will be neither the supply of 
goods nor the supply of services. 
? classify the specified transactions either as supply of goods 
or as supply of services. 
? explain the composite and mixed supplies and their taxability 
under GST. 
 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.2 
 
 
 
1. INTRODUCTION 
A taxable event is any transaction or occurrence 
that results in a tax consequence.  Before levying 
any tax, taxable event needs to be ascertained.  
It is the foundation stone of any taxation system; 
it determines the point at which tax would be 
levied.   
Under the earlier indirect tax regime, the 
framework of taxable event in various statutes 
was prone to catena of interpretations resulting in litigation since 
decades.  The controversies largely related to issues like whether 
a particular process amounted to manufacture or not, whether the 
sale was pre-determined sale, whether a particular transaction was 
a sale of goods or rendering of services etc.  
Taxable Event (Supply)
Meaning of supply - Supply for a consideration in course/ 
furtherance of business furtherance of business
Activities/transactions between a person, other than an 
individual, and its members/ constituents for 
consideration
Import of services for a consideration whether or not in 
course/ furtherance of business treated as supply course/ furtherance of business treated as supply
Activities treated as supply even made without 
consideration consideration
Activities classified as either Supply of goods or Supply of 
services
Activities treated as neither supply of goods nor supply of 
services
Concept of Composite and Mixed Supplies
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
 
SUPPLY UNDER GST a
a
 
 
2.3 
The GST laws resolve these issues by laying down one comprehensive taxable event 
i.e. “Supply” - Supply of goods or services or both.   
Various taxable events namely manufacture, sale, rendering of service, purchase, 
entry into a territory of State etc. that existed prior to introduction of GST have 
been done away with in favour of just one event i.e. Supply. 
The GST Law, by levying tax on the ‘supply’ of goods and/or services, depart s from 
the historically understood concepts of ‘taxable event’ under the State VAT Laws, 
Excise Laws and Service Tax Law i.e. sale, manufacture and provision of services 
respectively. 
In the GST regime, the entire value of supply of goods and/or services is taxed 
in an integrated manner, unlike the earlier indirect taxes, which were charged 
independently either on the manufacture or sale of goods, or on the provision 
of services. 
2. RELEVANT DEFINITIONS 
? 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. [Section 2(52)].  
? Services: means anything other than goods, money and securities but 
includes activities 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.  
Explanation: It is clarified that the expression “services” includes 
facilitating or arranging transactions in securities [Section 2(102)]. 
? Principal: means a person on whose behalf an agent carries on the 
business of supply or receipt of goods or services or both [Section 2(88)]. 
? Competent authority: means such authority as may be notified by the 
Government [Section 2(29)]. 
 
© The Institute of Chartered Accountants of India
Page 4


 
 
1.1 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
2 
 
 
 
SUPPLY UNDER GST  
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? comprehend the taxable event under GST 
? analyse the taxable event – Supply – its meaning and scope. 
? identify the transactions that will amount to supply even 
without any consideration.  
? identify the transactions which will be neither the supply of 
goods nor the supply of services. 
? classify the specified transactions either as supply of goods 
or as supply of services. 
? explain the composite and mixed supplies and their taxability 
under GST. 
 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.2 
 
 
 
1. INTRODUCTION 
A taxable event is any transaction or occurrence 
that results in a tax consequence.  Before levying 
any tax, taxable event needs to be ascertained.  
It is the foundation stone of any taxation system; 
it determines the point at which tax would be 
levied.   
Under the earlier indirect tax regime, the 
framework of taxable event in various statutes 
was prone to catena of interpretations resulting in litigation since 
decades.  The controversies largely related to issues like whether 
a particular process amounted to manufacture or not, whether the 
sale was pre-determined sale, whether a particular transaction was 
a sale of goods or rendering of services etc.  
Taxable Event (Supply)
Meaning of supply - Supply for a consideration in course/ 
furtherance of business furtherance of business
Activities/transactions between a person, other than an 
individual, and its members/ constituents for 
consideration
Import of services for a consideration whether or not in 
course/ furtherance of business treated as supply course/ furtherance of business treated as supply
Activities treated as supply even made without 
consideration consideration
Activities classified as either Supply of goods or Supply of 
services
Activities treated as neither supply of goods nor supply of 
services
Concept of Composite and Mixed Supplies
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
 
SUPPLY UNDER GST a
a
 
 
2.3 
The GST laws resolve these issues by laying down one comprehensive taxable event 
i.e. “Supply” - Supply of goods or services or both.   
Various taxable events namely manufacture, sale, rendering of service, purchase, 
entry into a territory of State etc. that existed prior to introduction of GST have 
been done away with in favour of just one event i.e. Supply. 
The GST Law, by levying tax on the ‘supply’ of goods and/or services, depart s from 
the historically understood concepts of ‘taxable event’ under the State VAT Laws, 
Excise Laws and Service Tax Law i.e. sale, manufacture and provision of services 
respectively. 
In the GST regime, the entire value of supply of goods and/or services is taxed 
in an integrated manner, unlike the earlier indirect taxes, which were charged 
independently either on the manufacture or sale of goods, or on the provision 
of services. 
2. RELEVANT DEFINITIONS 
? 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. [Section 2(52)].  
? Services: means anything other than goods, money and securities but 
includes activities 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.  
Explanation: It is clarified that the expression “services” includes 
facilitating or arranging transactions in securities [Section 2(102)]. 
? Principal: means a person on whose behalf an agent carries on the 
business of supply or receipt of goods or services or both [Section 2(88)]. 
? Competent authority: means such authority as may be notified by the 
Government [Section 2(29)]. 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.4 
? Family: means, — 
(i) the spouse and children of the person, and 
(ii) the parents, grand-parents, brothers and sisters of the person if they 
are wholly or mainly dependent on the said person [Section 2(49)]. 
? Government: means the Central Government [Section 2(53)]. 
? Local authority: means — 
(a) a “Panchayat” as defined in clause (d) of article 243 of the 
Constitution. 
(b) a “Municipality” as defined in clause (e) of article 243P of the 
Constitution. 
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any 
other authority legally entitled to, or entrusted by the Central 
Government or any State Government with the control or 
management of a municipal or local fund. 
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 
2006. 
(e) a Regional Council or a District Council constituted under the Sixth 
Schedule to the Constitution. 
(f) a Development Board constituted under article 371 and article 371J 
of the Constitution. 
(g) a Regional Council constituted under article 371A of the 
Constitution [Section 2(69)]. 
? Consideration: in relation to the supply of goods or services or both 
includes: 
? 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, 
© The Institute of Chartered Accountants of India
Page 5


 
 
1.1 
 
 
 
LEARNING OUTCOMES 
a
a
    
 
CHAPTER 
2 
 
 
 
SUPPLY UNDER GST  
 
The section numbers referred to in the Chapter pertain to the CGST Act, 2017, unless 
otherwise specified.  Examples/illustrations/Questions and Answers given in the 
Chapter are based on the position of GST law existing as on 30.04.2023. 
 
 
 
After studying this Chapter, you will be able to – 
? comprehend the taxable event under GST 
? analyse the taxable event – Supply – its meaning and scope. 
? identify the transactions that will amount to supply even 
without any consideration.  
? identify the transactions which will be neither the supply of 
goods nor the supply of services. 
? classify the specified transactions either as supply of goods 
or as supply of services. 
? explain the composite and mixed supplies and their taxability 
under GST. 
 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.2 
 
 
 
1. INTRODUCTION 
A taxable event is any transaction or occurrence 
that results in a tax consequence.  Before levying 
any tax, taxable event needs to be ascertained.  
It is the foundation stone of any taxation system; 
it determines the point at which tax would be 
levied.   
Under the earlier indirect tax regime, the 
framework of taxable event in various statutes 
was prone to catena of interpretations resulting in litigation since 
decades.  The controversies largely related to issues like whether 
a particular process amounted to manufacture or not, whether the 
sale was pre-determined sale, whether a particular transaction was 
a sale of goods or rendering of services etc.  
Taxable Event (Supply)
Meaning of supply - Supply for a consideration in course/ 
furtherance of business furtherance of business
Activities/transactions between a person, other than an 
individual, and its members/ constituents for 
consideration
Import of services for a consideration whether or not in 
course/ furtherance of business treated as supply course/ furtherance of business treated as supply
Activities treated as supply even made without 
consideration consideration
Activities classified as either Supply of goods or Supply of 
services
Activities treated as neither supply of goods nor supply of 
services
Concept of Composite and Mixed Supplies
CHAPTER OVERVIEW 
© The Institute of Chartered Accountants of India
 
 
 
SUPPLY UNDER GST a
a
 
 
2.3 
The GST laws resolve these issues by laying down one comprehensive taxable event 
i.e. “Supply” - Supply of goods or services or both.   
Various taxable events namely manufacture, sale, rendering of service, purchase, 
entry into a territory of State etc. that existed prior to introduction of GST have 
been done away with in favour of just one event i.e. Supply. 
The GST Law, by levying tax on the ‘supply’ of goods and/or services, depart s from 
the historically understood concepts of ‘taxable event’ under the State VAT Laws, 
Excise Laws and Service Tax Law i.e. sale, manufacture and provision of services 
respectively. 
In the GST regime, the entire value of supply of goods and/or services is taxed 
in an integrated manner, unlike the earlier indirect taxes, which were charged 
independently either on the manufacture or sale of goods, or on the provision 
of services. 
2. RELEVANT DEFINITIONS 
? 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. [Section 2(52)].  
? Services: means anything other than goods, money and securities but 
includes activities 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.  
Explanation: It is clarified that the expression “services” includes 
facilitating or arranging transactions in securities [Section 2(102)]. 
? Principal: means a person on whose behalf an agent carries on the 
business of supply or receipt of goods or services or both [Section 2(88)]. 
? Competent authority: means such authority as may be notified by the 
Government [Section 2(29)]. 
 
© The Institute of Chartered Accountants of India
GOODS AND SERVICE TAX 
a
a
GOODS AND SERVICE TAX
 
 
 
 
2.4 
? Family: means, — 
(i) the spouse and children of the person, and 
(ii) the parents, grand-parents, brothers and sisters of the person if they 
are wholly or mainly dependent on the said person [Section 2(49)]. 
? Government: means the Central Government [Section 2(53)]. 
? Local authority: means — 
(a) a “Panchayat” as defined in clause (d) of article 243 of the 
Constitution. 
(b) a “Municipality” as defined in clause (e) of article 243P of the 
Constitution. 
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any 
other authority legally entitled to, or entrusted by the Central 
Government or any State Government with the control or 
management of a municipal or local fund. 
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 
2006. 
(e) a Regional Council or a District Council constituted under the Sixth 
Schedule to the Constitution. 
(f) a Development Board constituted under article 371 and article 371J 
of the Constitution. 
(g) a Regional Council constituted under article 371A of the 
Constitution [Section 2(69)]. 
? Consideration: in relation to the supply of goods or services or both 
includes: 
? 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, 
© The Institute of Chartered Accountants of India
 
 
 
SUPPLY UNDER GST a
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2.5 
• 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. 
However, 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. [Section 
2(31)]. 
? Actionable claim:  means a claim to any debt, other than a debt secured 
by mortgage of immovable property or by hypothecation or pledge of 
movable property, or to any beneficial interest in movable property not in 
the possession, either actual or constructive, of the claimant, which the 
civil courts recognise as affording grounds for relief, whether such debt 
or beneficial interest be existent, accruing, conditional or contingent 
[Section 2(1) of CGST Act read with section 3 of the Transfer of Property 
Act, 1882]. 
? 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 [Section 2(72)]. 
? Money: means the Indian legal tender or any foreign currency, cheque, 
promissory note, bill of exchange, letter of credit, draft, pay order, traveller 
cheque, money order, postal or electronic remittance or any other 
instrument recognised by the Reserve Bank of India when used as a 
consideration to settle an obligation or exchange with Indian legal tender 
of another denomination but shall not include any currency that is held 
for its numismatic value [Section 2(75)]. 
? Taxable supply: means a supply of goods or services or both which is 
leviable to tax under this Act [Section 2(108)]. 
? Taxable territory: means the territory to which the provisions of this Act 
apply [Section 2(109)]. 
© The Institute of Chartered Accountants of India