Ch 3 - Supply of Goods | GST Saral by CA Dhruv Aggarwal PDF Download

 Page 1


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 3 - Suppl y of Goods 
 
 
 
 
 
CHAPTER 3 
 
Supply of Goods 
 
EXECUTIVE SUMMARY 
 
?   Though tax is payable whether supply is goods or service, distinction has been made in some cases. 
This is given in Schedule II 
?   This distinction is relevant to determine place of supply and time of supply and also for valuation and 
composition schemes. 
?   Hire purchase of goods and financial lease is 'goods'. 
?   Supply of goods in club is taxable. 
?   Software in physical form should be 'goods'. 
?   Permanent transfer of IPR should be 'goods'. 
?   Lottery, betting and gambling is taxable as 'goods' but any other Actionable Claim is not subject to 
tax. 
?   Free gifts to non-related persons is not subject to GST, but input tax credit will have to be reversed. 
3.1 Meaning of 'goods' 
 
'Goods' include a l materials, commodities and articles - Article 366(12) of Constitution of India. 
This is inclusive definition. It should cover a l movable property. 
GST Law defines 'goods' as follows - 
 
"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) of CGST Act. 
"Actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 
of 1882) - section 2(1) of CGST Act. 
3.1-1 Goods must be movable  and marketable 
 
The item must be such that it is capable  of being bought or sold. This is the test of 'Marketability'. The goods 
must be known in the market. Unless this test of marketability is satisfied, these will not be goods. This view, 
expressed in UOI v. Delhi Cloth Mills - AIR 1963 SC 791 = 1963 (Suppl.) (1) SCR 586 = 1977 (1) ELT 
(J 177) (SC 5 member Constitution bench), has been consistently fo lowed by Supreme Court in subsequent 
cases and by a l High Courts. It was held that to become 'goods' an article must be something which can 
ordinarily come to market to be bought and sold. 
Some important judgments where test of 'marketability' is upheld are : South Bihar Sugar Mills Ltd. v. UOI - 
2 ELT (J336) (SC) = AIR 1968 SC 922 = (1968) 3 SCR 21 * A P State Electricity Board v. CCE - 1994 
(2) SCC 428 = 70 ELT 3 (SC) = 95 STC 595 (SC) * Union Carbide  India Ltd. v. UOI - 24 ELT 169 
Page 2


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 3 - Suppl y of Goods 
 
 
 
 
 
CHAPTER 3 
 
Supply of Goods 
 
EXECUTIVE SUMMARY 
 
?   Though tax is payable whether supply is goods or service, distinction has been made in some cases. 
This is given in Schedule II 
?   This distinction is relevant to determine place of supply and time of supply and also for valuation and 
composition schemes. 
?   Hire purchase of goods and financial lease is 'goods'. 
?   Supply of goods in club is taxable. 
?   Software in physical form should be 'goods'. 
?   Permanent transfer of IPR should be 'goods'. 
?   Lottery, betting and gambling is taxable as 'goods' but any other Actionable Claim is not subject to 
tax. 
?   Free gifts to non-related persons is not subject to GST, but input tax credit will have to be reversed. 
3.1 Meaning of 'goods' 
 
'Goods' include a l materials, commodities and articles - Article 366(12) of Constitution of India. 
This is inclusive definition. It should cover a l movable property. 
GST Law defines 'goods' as follows - 
 
"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) of CGST Act. 
"Actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 
of 1882) - section 2(1) of CGST Act. 
3.1-1 Goods must be movable  and marketable 
 
The item must be such that it is capable  of being bought or sold. This is the test of 'Marketability'. The goods 
must be known in the market. Unless this test of marketability is satisfied, these will not be goods. This view, 
expressed in UOI v. Delhi Cloth Mills - AIR 1963 SC 791 = 1963 (Suppl.) (1) SCR 586 = 1977 (1) ELT 
(J 177) (SC 5 member Constitution bench), has been consistently fo lowed by Supreme Court in subsequent 
cases and by a l High Courts. It was held that to become 'goods' an article must be something which can 
ordinarily come to market to be bought and sold. 
Some important judgments where test of 'marketability' is upheld are : South Bihar Sugar Mills Ltd. v. UOI - 
2 ELT (J336) (SC) = AIR 1968 SC 922 = (1968) 3 SCR 21 * A P State Electricity Board v. CCE - 1994 
(2) SCC 428 = 70 ELT 3 (SC) = 95 STC 595 (SC) * Union Carbide  India Ltd. v. UOI - 24 ELT 169 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
(SC) = 1986 (2) SCR 162 = AIR 1986 SC 1097 = 64 STC 444 = (1986) 2 SCC 547 (SC 3 member 
bench) * Bhor Industries Ltd. v. CCE - 40 ELT 280 = AIR 1989 SC 1153 = (1989) 1 SCC 602 = 184 
ITR 129 = 73 STC 145 = (1989) 1 SCR 382 * Hindustan Polymers v. CCE - 43 ELT 165 (SC) = (1989) 
4 SCC 323 = AIR 1990 SC 1676 * Moti Laminates (P.) Ltd. v. CCE 76 ELT 241 (SC) = (1995) 3 SCC 
23 = 1995 AIR SCW 2035 =7 RLT 1 (SC) - 3 member bench.* Porritts  and Spencer (Asia) Ltd. v. CCE 
- AIR 1995 SC 2344 = 106 ELT 18 = 1995 (Suppl) SCC 219 (SC 3 member bench) * Anil Starch 
Products Ltd. v. CCE 1997(89) ELT 21 (SC) * Rajasthan  State Electricity Board v. Associated Stone 
Industries 2000 AIR SCW 2482 = (2000) 6 SCC 141 * FGP Ltd. v. UOI (2003) 10 SSC 270 = 168 ELT 
289 (SC) * CCE v. Aldec Corporation  2005 (188) ELT 241 (SC) * White Machines v. CCE (2008) 224 
ELT 347 (SC) * Medley Pharmaceuticals v. CCE (2011) 2 SCC 601 = 263 ELT 641 (SC). 
 
3.1-2 Illustrations of 'goods' 
 
Goods includes a l movable property. It includes * steam - Nizam Sugar Factory  Ltd. v. CST - (1957) 8 
STC 61 (AP HC) * animals and birds in captivity - K J Abraham v. Asstt. STO - (1960) 11 STC 291 (Ker 
HC). 
 
Crops, grass, trees attached  to earth - Growing crops, grass and things attached to or forming part of the 
land which are agreed to be severed before supply or under the contract of supply has been specifica ly 
defined as 'goods'. 
Standing trees are not 'goods' and not taxable. However, standing timber will be taxable under CST if timber 
is identified, contract is unconditional and timber is in deliverable state. In such case, it is 'movable property' 
and 'goods' hence can be taxed. - State of Orissa v. Titaghur Paper Mills Co. Ltd. - AIR 1985 SC 1293 = 
(1985) 60 STC 213 (SC) * Shantabai  v. State of Bombay AIR 1958 SC 532 - same view in CST v. 
Durga Shellac Factory (1999) 116 STC 282 (MP HC DB). 
Master  copies of film songs and  music - Master copies of f ilm songs and music are 'goods'. Intangible 
property can be 'goods' - CIT v. Giza Impex (2008) 166 Taxman 30 (Mad HC DB). 
Drawings - Technical drawings are goods - Associated Cement Companies Ltd. v. CC 2001(4) SCC 593 
= 2001 AIR SCW 559 = 128 ELT 21 = AIR 2001 SC 862 = 124 STC 59 (SC 3 member bench). 
Knowledge in the form of drawing and design relating to machinery are 'goods' - Prerna  Textiles v. CCE 
2000(117) ELT 241 (CEGAT) - civil appeal dismissed by SC (2001) 134 ELT A169. 
 
Design and drawings are 'goods' and supply of drawings and designs would not be liable to service tax - Solitz 
Corporation  v. CST (2009) 18 STT 550 (CESTAT). 
 
Design and drawings expressed on media are 'goods' and same cannot be subjected to service tax - Mitsui & 
Co v. CCE (2013) 42 GST 157 = 32 Latest Case31 = 68 VST 43 (CESTAT) * CCE v. Kirloskar 
Brothers (2014) 43 GST 282 = 39 Latest Case153 (CESTAT). 
Films and programmes  on disk is 'goods' - In Ushakiran  Movies v. State of Andhra Pradesh  (2006) 
148 STC 453 (AP HC DB), the appe lant had produced films and programmes. These were copies on disks 
and rights to telecast films and programmes were given to ETV for minimum guaranteed fee and share of 
advertisement revenue. Senior Counsel of applicant gave up the contention (in words of Court 'fairly gave up 
contention') that these are not goods. Hence, Court proceeded on the basis that these are 'goods'. 
3.2 Intangibles can be 'goods' 
 
Any movable property is 'goods'. Thus, intangible property can be 'goods'. 
 
Sale of Copyright - In Bharat Sanchar Nigam Ltd. v. UOI (2006) 3 SCC 1 = 152 Taxman 135 = 3 STT 
245 = 145 STC 91 = 282 ITR 273 = AIR 2006 SC 1383 = 3 VST 95 = 2 STR 161 (SC 3 member bench), 
Page 3


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 3 - Suppl y of Goods 
 
 
 
 
 
CHAPTER 3 
 
Supply of Goods 
 
EXECUTIVE SUMMARY 
 
?   Though tax is payable whether supply is goods or service, distinction has been made in some cases. 
This is given in Schedule II 
?   This distinction is relevant to determine place of supply and time of supply and also for valuation and 
composition schemes. 
?   Hire purchase of goods and financial lease is 'goods'. 
?   Supply of goods in club is taxable. 
?   Software in physical form should be 'goods'. 
?   Permanent transfer of IPR should be 'goods'. 
?   Lottery, betting and gambling is taxable as 'goods' but any other Actionable Claim is not subject to 
tax. 
?   Free gifts to non-related persons is not subject to GST, but input tax credit will have to be reversed. 
3.1 Meaning of 'goods' 
 
'Goods' include a l materials, commodities and articles - Article 366(12) of Constitution of India. 
This is inclusive definition. It should cover a l movable property. 
GST Law defines 'goods' as follows - 
 
"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) of CGST Act. 
"Actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 
of 1882) - section 2(1) of CGST Act. 
3.1-1 Goods must be movable  and marketable 
 
The item must be such that it is capable  of being bought or sold. This is the test of 'Marketability'. The goods 
must be known in the market. Unless this test of marketability is satisfied, these will not be goods. This view, 
expressed in UOI v. Delhi Cloth Mills - AIR 1963 SC 791 = 1963 (Suppl.) (1) SCR 586 = 1977 (1) ELT 
(J 177) (SC 5 member Constitution bench), has been consistently fo lowed by Supreme Court in subsequent 
cases and by a l High Courts. It was held that to become 'goods' an article must be something which can 
ordinarily come to market to be bought and sold. 
Some important judgments where test of 'marketability' is upheld are : South Bihar Sugar Mills Ltd. v. UOI - 
2 ELT (J336) (SC) = AIR 1968 SC 922 = (1968) 3 SCR 21 * A P State Electricity Board v. CCE - 1994 
(2) SCC 428 = 70 ELT 3 (SC) = 95 STC 595 (SC) * Union Carbide  India Ltd. v. UOI - 24 ELT 169 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
(SC) = 1986 (2) SCR 162 = AIR 1986 SC 1097 = 64 STC 444 = (1986) 2 SCC 547 (SC 3 member 
bench) * Bhor Industries Ltd. v. CCE - 40 ELT 280 = AIR 1989 SC 1153 = (1989) 1 SCC 602 = 184 
ITR 129 = 73 STC 145 = (1989) 1 SCR 382 * Hindustan Polymers v. CCE - 43 ELT 165 (SC) = (1989) 
4 SCC 323 = AIR 1990 SC 1676 * Moti Laminates (P.) Ltd. v. CCE 76 ELT 241 (SC) = (1995) 3 SCC 
23 = 1995 AIR SCW 2035 =7 RLT 1 (SC) - 3 member bench.* Porritts  and Spencer (Asia) Ltd. v. CCE 
- AIR 1995 SC 2344 = 106 ELT 18 = 1995 (Suppl) SCC 219 (SC 3 member bench) * Anil Starch 
Products Ltd. v. CCE 1997(89) ELT 21 (SC) * Rajasthan  State Electricity Board v. Associated Stone 
Industries 2000 AIR SCW 2482 = (2000) 6 SCC 141 * FGP Ltd. v. UOI (2003) 10 SSC 270 = 168 ELT 
289 (SC) * CCE v. Aldec Corporation  2005 (188) ELT 241 (SC) * White Machines v. CCE (2008) 224 
ELT 347 (SC) * Medley Pharmaceuticals v. CCE (2011) 2 SCC 601 = 263 ELT 641 (SC). 
 
3.1-2 Illustrations of 'goods' 
 
Goods includes a l movable property. It includes * steam - Nizam Sugar Factory  Ltd. v. CST - (1957) 8 
STC 61 (AP HC) * animals and birds in captivity - K J Abraham v. Asstt. STO - (1960) 11 STC 291 (Ker 
HC). 
 
Crops, grass, trees attached  to earth - Growing crops, grass and things attached to or forming part of the 
land which are agreed to be severed before supply or under the contract of supply has been specifica ly 
defined as 'goods'. 
Standing trees are not 'goods' and not taxable. However, standing timber will be taxable under CST if timber 
is identified, contract is unconditional and timber is in deliverable state. In such case, it is 'movable property' 
and 'goods' hence can be taxed. - State of Orissa v. Titaghur Paper Mills Co. Ltd. - AIR 1985 SC 1293 = 
(1985) 60 STC 213 (SC) * Shantabai  v. State of Bombay AIR 1958 SC 532 - same view in CST v. 
Durga Shellac Factory (1999) 116 STC 282 (MP HC DB). 
Master  copies of film songs and  music - Master copies of f ilm songs and music are 'goods'. Intangible 
property can be 'goods' - CIT v. Giza Impex (2008) 166 Taxman 30 (Mad HC DB). 
Drawings - Technical drawings are goods - Associated Cement Companies Ltd. v. CC 2001(4) SCC 593 
= 2001 AIR SCW 559 = 128 ELT 21 = AIR 2001 SC 862 = 124 STC 59 (SC 3 member bench). 
Knowledge in the form of drawing and design relating to machinery are 'goods' - Prerna  Textiles v. CCE 
2000(117) ELT 241 (CEGAT) - civil appeal dismissed by SC (2001) 134 ELT A169. 
 
Design and drawings are 'goods' and supply of drawings and designs would not be liable to service tax - Solitz 
Corporation  v. CST (2009) 18 STT 550 (CESTAT). 
 
Design and drawings expressed on media are 'goods' and same cannot be subjected to service tax - Mitsui & 
Co v. CCE (2013) 42 GST 157 = 32 Latest Case31 = 68 VST 43 (CESTAT) * CCE v. Kirloskar 
Brothers (2014) 43 GST 282 = 39 Latest Case153 (CESTAT). 
Films and programmes  on disk is 'goods' - In Ushakiran  Movies v. State of Andhra Pradesh  (2006) 
148 STC 453 (AP HC DB), the appe lant had produced films and programmes. These were copies on disks 
and rights to telecast films and programmes were given to ETV for minimum guaranteed fee and share of 
advertisement revenue. Senior Counsel of applicant gave up the contention (in words of Court 'fairly gave up 
contention') that these are not goods. Hence, Court proceeded on the basis that these are 'goods'. 
3.2 Intangibles can be 'goods' 
 
Any movable property is 'goods'. Thus, intangible property can be 'goods'. 
 
Sale of Copyright - In Bharat Sanchar Nigam Ltd. v. UOI (2006) 3 SCC 1 = 152 Taxman 135 = 3 STT 
245 = 145 STC 91 = 282 ITR 273 = AIR 2006 SC 1383 = 3 VST 95 = 2 STR 161 (SC 3 member bench), 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
it was also observed that incorporal right of copyri ght could be regarded as 'goods'. In CIT v. Sun TV Ltd. 
(2007) 161 Taxman 351 (Del HC DB), it has been held that right to telecast TV program in foreign countries 
is 'sale of goods'. 
Trade mark - Trade mark is intangible goods - SPS Jayam & Co. v. Registrar,  TNTST (2004) 137 STC 
117 (Mad HC DB) * Malabar  Gold v. CTO (2013) 38 STT 606 = 30 Latest Case606 = 58 VST 191 
(Ker HC). 
In CST v. Duke and  Sons (1999) 112 STC 370 (Bom HC DB), it was held that transfer of intangible 
property like trade mark by mere permission in writing is 'transfer of right to use goods' and is taxable. Trade 
mark itself or right therein need not be transferred. 
Royalty collected on mining  lease - Royalty to remove minerals is 'profit a prendre'.  No transaction of 
sale or purchase is involved - Tamilnadu Magnesite Ltd. v. State of Tamilnadu (2007) 9 VST 360 (Mad 
HC DB) - fo lowing State of Himachal Pradesh v. Gujarat  Ambuja Cement (2005) 142 STC 1 (SC). 
Carbon credit - Certified Emission Reductions (CER) commonly known as carbon credit is 'goods' and Vat 
is payable - Ruling published vide Notification No. 256/CDVAT/2009/43  dated 13-1-2010 issued by Delhi 
Government [28 VST 29 (St)]. 
Duty credit  scrips which are  saleable  are  'goods' - In fo lowing cases, duty credit scrips were held as 
goods. 
In Yash Overseas v. CST (2008) 8 SCC 681 = 15 STT 375 = 17 VST 182 (SC 3 member bench), it has 
been held that DEPB has intrinsic value that makes it marketable commodity. Hence it is 'goods'. It is like 
prepaid meal ticket. If DEPB has to be compared with a lottery ticket, it can only be compared with a lottery 
ticket that has won the prize. The prize-winning lottery ticket ceases to be a mere piece of paper having no 
value itself. It acquires inherent value and becomes itself a thing of value [Principle applies to Duty Credit 
Scrips and DFIA as these are transferable] 
REP Licenses (now DFIA or Duty Credit Scdrips) which can be sold in market at premium are 'goods' - 
Bharat  Fritz  Werner Ltd. v. Commissioner  of Commercial  Taxes -  (1992)  86 STC  170  (Kar HC) 
affirmed in 86 STC 175 (Kar HC DB) * P S Apparels v. Dy CTO - (1994) 94 STC 139 (Mad HC DB) * 
Hemant Spices v. ACST - (1994) 95 STC 336 (Ker HC) * Shivdam Wood v. CTO (1999) 112 STC 87 
(WBTT) * Inter Gold (India) v. State of Maharashtra (2010) 3 GST 260 = 29 VST 360 (Bom HC DB) * 
CTO v. State Bank of India (2016) 10 SCC 595 = 341 ELT 481 (SC). 
DEPB (Duty Entitlement Passbook Scheme) is freely tradable. It is right to claim back credit. It is freely 
tradable and is 'goods'. It is taxable under sales tax. It is not actionable claim. - Philco Exports v. STO 
(2001) 124 STC 503 (Del HC DB) * Jindal Drugs v. State of Maharashtra 2004 (178) ELT 105 = 17 
VST 164 (Bom HC DB) * International  Creative Foods v. State of Kerala  (2008) 17 VST 178 (Ker 
HC). 
 
In Vikas Sales Corporation  v. CCT AIR 1996 SC 2082 = (1996) 102 STC 106 (SC) = 86 Taxman 369 
(Mag) (SC 3 member bench), it was held that REP licenses (now DEPB) have their own value. They are 
bought and sold as such. It is by itself a property. For a l purposes and intents, it is 'goods'. 
In Baraka Overseas Traders v. CCT (2001) 121 STC 277 (Kar HC DB), it was held that tax is payable if 
REP licenses are renounced for a 'charge'. The charge is nothing but sale. 
 
There can be inter-state sale of DEPB authorisation - Hansa  Overseas  Enterprises  v. State of Andhra 
Pradesh (2012) 47 VST 524 (AP HC DB). 
 
Electricity - In fo lowing cases, it was held that electricity is 'goods'. Electricity has been mentioned in Central 
Page 4


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 3 - Suppl y of Goods 
 
 
 
 
 
CHAPTER 3 
 
Supply of Goods 
 
EXECUTIVE SUMMARY 
 
?   Though tax is payable whether supply is goods or service, distinction has been made in some cases. 
This is given in Schedule II 
?   This distinction is relevant to determine place of supply and time of supply and also for valuation and 
composition schemes. 
?   Hire purchase of goods and financial lease is 'goods'. 
?   Supply of goods in club is taxable. 
?   Software in physical form should be 'goods'. 
?   Permanent transfer of IPR should be 'goods'. 
?   Lottery, betting and gambling is taxable as 'goods' but any other Actionable Claim is not subject to 
tax. 
?   Free gifts to non-related persons is not subject to GST, but input tax credit will have to be reversed. 
3.1 Meaning of 'goods' 
 
'Goods' include a l materials, commodities and articles - Article 366(12) of Constitution of India. 
This is inclusive definition. It should cover a l movable property. 
GST Law defines 'goods' as follows - 
 
"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) of CGST Act. 
"Actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 
of 1882) - section 2(1) of CGST Act. 
3.1-1 Goods must be movable  and marketable 
 
The item must be such that it is capable  of being bought or sold. This is the test of 'Marketability'. The goods 
must be known in the market. Unless this test of marketability is satisfied, these will not be goods. This view, 
expressed in UOI v. Delhi Cloth Mills - AIR 1963 SC 791 = 1963 (Suppl.) (1) SCR 586 = 1977 (1) ELT 
(J 177) (SC 5 member Constitution bench), has been consistently fo lowed by Supreme Court in subsequent 
cases and by a l High Courts. It was held that to become 'goods' an article must be something which can 
ordinarily come to market to be bought and sold. 
Some important judgments where test of 'marketability' is upheld are : South Bihar Sugar Mills Ltd. v. UOI - 
2 ELT (J336) (SC) = AIR 1968 SC 922 = (1968) 3 SCR 21 * A P State Electricity Board v. CCE - 1994 
(2) SCC 428 = 70 ELT 3 (SC) = 95 STC 595 (SC) * Union Carbide  India Ltd. v. UOI - 24 ELT 169 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
(SC) = 1986 (2) SCR 162 = AIR 1986 SC 1097 = 64 STC 444 = (1986) 2 SCC 547 (SC 3 member 
bench) * Bhor Industries Ltd. v. CCE - 40 ELT 280 = AIR 1989 SC 1153 = (1989) 1 SCC 602 = 184 
ITR 129 = 73 STC 145 = (1989) 1 SCR 382 * Hindustan Polymers v. CCE - 43 ELT 165 (SC) = (1989) 
4 SCC 323 = AIR 1990 SC 1676 * Moti Laminates (P.) Ltd. v. CCE 76 ELT 241 (SC) = (1995) 3 SCC 
23 = 1995 AIR SCW 2035 =7 RLT 1 (SC) - 3 member bench.* Porritts  and Spencer (Asia) Ltd. v. CCE 
- AIR 1995 SC 2344 = 106 ELT 18 = 1995 (Suppl) SCC 219 (SC 3 member bench) * Anil Starch 
Products Ltd. v. CCE 1997(89) ELT 21 (SC) * Rajasthan  State Electricity Board v. Associated Stone 
Industries 2000 AIR SCW 2482 = (2000) 6 SCC 141 * FGP Ltd. v. UOI (2003) 10 SSC 270 = 168 ELT 
289 (SC) * CCE v. Aldec Corporation  2005 (188) ELT 241 (SC) * White Machines v. CCE (2008) 224 
ELT 347 (SC) * Medley Pharmaceuticals v. CCE (2011) 2 SCC 601 = 263 ELT 641 (SC). 
 
3.1-2 Illustrations of 'goods' 
 
Goods includes a l movable property. It includes * steam - Nizam Sugar Factory  Ltd. v. CST - (1957) 8 
STC 61 (AP HC) * animals and birds in captivity - K J Abraham v. Asstt. STO - (1960) 11 STC 291 (Ker 
HC). 
 
Crops, grass, trees attached  to earth - Growing crops, grass and things attached to or forming part of the 
land which are agreed to be severed before supply or under the contract of supply has been specifica ly 
defined as 'goods'. 
Standing trees are not 'goods' and not taxable. However, standing timber will be taxable under CST if timber 
is identified, contract is unconditional and timber is in deliverable state. In such case, it is 'movable property' 
and 'goods' hence can be taxed. - State of Orissa v. Titaghur Paper Mills Co. Ltd. - AIR 1985 SC 1293 = 
(1985) 60 STC 213 (SC) * Shantabai  v. State of Bombay AIR 1958 SC 532 - same view in CST v. 
Durga Shellac Factory (1999) 116 STC 282 (MP HC DB). 
Master  copies of film songs and  music - Master copies of f ilm songs and music are 'goods'. Intangible 
property can be 'goods' - CIT v. Giza Impex (2008) 166 Taxman 30 (Mad HC DB). 
Drawings - Technical drawings are goods - Associated Cement Companies Ltd. v. CC 2001(4) SCC 593 
= 2001 AIR SCW 559 = 128 ELT 21 = AIR 2001 SC 862 = 124 STC 59 (SC 3 member bench). 
Knowledge in the form of drawing and design relating to machinery are 'goods' - Prerna  Textiles v. CCE 
2000(117) ELT 241 (CEGAT) - civil appeal dismissed by SC (2001) 134 ELT A169. 
 
Design and drawings are 'goods' and supply of drawings and designs would not be liable to service tax - Solitz 
Corporation  v. CST (2009) 18 STT 550 (CESTAT). 
 
Design and drawings expressed on media are 'goods' and same cannot be subjected to service tax - Mitsui & 
Co v. CCE (2013) 42 GST 157 = 32 Latest Case31 = 68 VST 43 (CESTAT) * CCE v. Kirloskar 
Brothers (2014) 43 GST 282 = 39 Latest Case153 (CESTAT). 
Films and programmes  on disk is 'goods' - In Ushakiran  Movies v. State of Andhra Pradesh  (2006) 
148 STC 453 (AP HC DB), the appe lant had produced films and programmes. These were copies on disks 
and rights to telecast films and programmes were given to ETV for minimum guaranteed fee and share of 
advertisement revenue. Senior Counsel of applicant gave up the contention (in words of Court 'fairly gave up 
contention') that these are not goods. Hence, Court proceeded on the basis that these are 'goods'. 
3.2 Intangibles can be 'goods' 
 
Any movable property is 'goods'. Thus, intangible property can be 'goods'. 
 
Sale of Copyright - In Bharat Sanchar Nigam Ltd. v. UOI (2006) 3 SCC 1 = 152 Taxman 135 = 3 STT 
245 = 145 STC 91 = 282 ITR 273 = AIR 2006 SC 1383 = 3 VST 95 = 2 STR 161 (SC 3 member bench), 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
it was also observed that incorporal right of copyri ght could be regarded as 'goods'. In CIT v. Sun TV Ltd. 
(2007) 161 Taxman 351 (Del HC DB), it has been held that right to telecast TV program in foreign countries 
is 'sale of goods'. 
Trade mark - Trade mark is intangible goods - SPS Jayam & Co. v. Registrar,  TNTST (2004) 137 STC 
117 (Mad HC DB) * Malabar  Gold v. CTO (2013) 38 STT 606 = 30 Latest Case606 = 58 VST 191 
(Ker HC). 
In CST v. Duke and  Sons (1999) 112 STC 370 (Bom HC DB), it was held that transfer of intangible 
property like trade mark by mere permission in writing is 'transfer of right to use goods' and is taxable. Trade 
mark itself or right therein need not be transferred. 
Royalty collected on mining  lease - Royalty to remove minerals is 'profit a prendre'.  No transaction of 
sale or purchase is involved - Tamilnadu Magnesite Ltd. v. State of Tamilnadu (2007) 9 VST 360 (Mad 
HC DB) - fo lowing State of Himachal Pradesh v. Gujarat  Ambuja Cement (2005) 142 STC 1 (SC). 
Carbon credit - Certified Emission Reductions (CER) commonly known as carbon credit is 'goods' and Vat 
is payable - Ruling published vide Notification No. 256/CDVAT/2009/43  dated 13-1-2010 issued by Delhi 
Government [28 VST 29 (St)]. 
Duty credit  scrips which are  saleable  are  'goods' - In fo lowing cases, duty credit scrips were held as 
goods. 
In Yash Overseas v. CST (2008) 8 SCC 681 = 15 STT 375 = 17 VST 182 (SC 3 member bench), it has 
been held that DEPB has intrinsic value that makes it marketable commodity. Hence it is 'goods'. It is like 
prepaid meal ticket. If DEPB has to be compared with a lottery ticket, it can only be compared with a lottery 
ticket that has won the prize. The prize-winning lottery ticket ceases to be a mere piece of paper having no 
value itself. It acquires inherent value and becomes itself a thing of value [Principle applies to Duty Credit 
Scrips and DFIA as these are transferable] 
REP Licenses (now DFIA or Duty Credit Scdrips) which can be sold in market at premium are 'goods' - 
Bharat  Fritz  Werner Ltd. v. Commissioner  of Commercial  Taxes -  (1992)  86 STC  170  (Kar HC) 
affirmed in 86 STC 175 (Kar HC DB) * P S Apparels v. Dy CTO - (1994) 94 STC 139 (Mad HC DB) * 
Hemant Spices v. ACST - (1994) 95 STC 336 (Ker HC) * Shivdam Wood v. CTO (1999) 112 STC 87 
(WBTT) * Inter Gold (India) v. State of Maharashtra (2010) 3 GST 260 = 29 VST 360 (Bom HC DB) * 
CTO v. State Bank of India (2016) 10 SCC 595 = 341 ELT 481 (SC). 
DEPB (Duty Entitlement Passbook Scheme) is freely tradable. It is right to claim back credit. It is freely 
tradable and is 'goods'. It is taxable under sales tax. It is not actionable claim. - Philco Exports v. STO 
(2001) 124 STC 503 (Del HC DB) * Jindal Drugs v. State of Maharashtra 2004 (178) ELT 105 = 17 
VST 164 (Bom HC DB) * International  Creative Foods v. State of Kerala  (2008) 17 VST 178 (Ker 
HC). 
 
In Vikas Sales Corporation  v. CCT AIR 1996 SC 2082 = (1996) 102 STC 106 (SC) = 86 Taxman 369 
(Mag) (SC 3 member bench), it was held that REP licenses (now DEPB) have their own value. They are 
bought and sold as such. It is by itself a property. For a l purposes and intents, it is 'goods'. 
In Baraka Overseas Traders v. CCT (2001) 121 STC 277 (Kar HC DB), it was held that tax is payable if 
REP licenses are renounced for a 'charge'. The charge is nothing but sale. 
 
There can be inter-state sale of DEPB authorisation - Hansa  Overseas  Enterprises  v. State of Andhra 
Pradesh (2012) 47 VST 524 (AP HC DB). 
 
Electricity - In fo lowing cases, it was held that electricity is 'goods'. Electricity has been mentioned in Central 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
Excise and Customs Tari ff. 
 
In case of electrical energy, generation or production coincides almost instantaneously with its consumption. 
Sale, supply and consumption takes place without any hiatus. - - Electricity is movable property though it is 
not tangible. It is 'goods'. - State of Andhra Pradesh  v. National Thermal Power Corporation  (NTPC) 
2002 AIR SCW 1956 = (2002) 5 SCC 203 = 127 STC 280 (SC 5 member bench). 
 
The 'electricity' is 'goods' - CST v. MPEB - (1970) 25 STC 188 (SC) = (1969) 2 SCR 939 = AIR 1970 SC 
732 (partly overruled in 2002 only to the extent that it was held in 2002 judgment that electricity cannot be 
stored). - fo lowed in Indian Oil Corpn. v. CTO (1997) 107 STC 463 (Raj TT) - same view in CMS (India) 
Operations  and  Maintenance  Co.  P  Ltd. v. CCE  (2007)  10  STT 65  = 9  VST 228  = 7  STR 369 
(CESTAT). 
Electrical energy has been specified in heading 2716 in both Central Excise and Customs Tariff and hence is 
'goods'. 
 
Duty drawback  is simply money not  goods - Duty drawback received in respect of exports is simply 
money. It is not goods and no sales tax is payable if exporter receives duty drawback - KMA Finished 
Leather v. State of Tamil Nadu (2004) 134 STC 185 (Mad HC DB). 
Since money is neither goods nor service, GST should not apply on duty drawback. 
 
3.3 Actionable claim 
 
Definition of 'goods' specifica ly includes 'actionable claim'. 
 
"Actionable claim" shall have the meaning assi gned to it in section 3 of the Transfer of Property Act, 1882 - 
section 2(1) of CGST Act. 
Actionable claims, other than lottery, betting and gambling are neither as a supply of goods nor a supply of 
services - Schedule III of CGST Act read with section 7(2)(a) of CGST Act. 
Thus, only activities relating to lottery, betting and gambling will be subject to GST. 
 
As per section 3 of Transfer of Property Act, 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 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, 
accrui ng, conditional or contingent. 
Section 130 of Transfer of Property Act provides that an actionable claim may be assigned for value. 
 
Basica ly, actionable claim means a claim for any amount receivable (debt) or claim for benefit of any movable 
property  not  in  possession  for  which  relief  can  be  claimed   in  Civil  Court.   Such  claim  can  be 
assigned/transferred. 
Insurance claim is 'actionable  claim' - Transfer/assignment  of unsecured debt is assignment/transfer  of 
'actionable  claim'.  Claim to secured  debt is not actionable  claim.  Thus,  transfer of secured  debt through 
securitization is not assignment of 'actionable claim'. However, it is mere transaction in money or mere transfer 
of title of immovable property and hence not a 'service'. 
Debt for which action is necessary to realise can only be said to be an actionable claim. Where no action is 
necessary  to  realise  the  debt,  it  cannot  be  said  to  be  actionable  claim  -  Jindal  Drugs  v.  State  of 
Maharashtra 2004 (178) ELT 105 = 17 VST 164 (Bom HC DB) [In this case, it was held that DEPB credit 
is not actionable claim as no action in law is necessary for its realisation. In case of transfer of DEPB, it confers 
upon the transferee the immediate right to pay duty (through DEPB credit). 
Page 5


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 3 - Suppl y of Goods 
 
 
 
 
 
CHAPTER 3 
 
Supply of Goods 
 
EXECUTIVE SUMMARY 
 
?   Though tax is payable whether supply is goods or service, distinction has been made in some cases. 
This is given in Schedule II 
?   This distinction is relevant to determine place of supply and time of supply and also for valuation and 
composition schemes. 
?   Hire purchase of goods and financial lease is 'goods'. 
?   Supply of goods in club is taxable. 
?   Software in physical form should be 'goods'. 
?   Permanent transfer of IPR should be 'goods'. 
?   Lottery, betting and gambling is taxable as 'goods' but any other Actionable Claim is not subject to 
tax. 
?   Free gifts to non-related persons is not subject to GST, but input tax credit will have to be reversed. 
3.1 Meaning of 'goods' 
 
'Goods' include a l materials, commodities and articles - Article 366(12) of Constitution of India. 
This is inclusive definition. It should cover a l movable property. 
GST Law defines 'goods' as follows - 
 
"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) of CGST Act. 
"Actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882 (4 
of 1882) - section 2(1) of CGST Act. 
3.1-1 Goods must be movable  and marketable 
 
The item must be such that it is capable  of being bought or sold. This is the test of 'Marketability'. The goods 
must be known in the market. Unless this test of marketability is satisfied, these will not be goods. This view, 
expressed in UOI v. Delhi Cloth Mills - AIR 1963 SC 791 = 1963 (Suppl.) (1) SCR 586 = 1977 (1) ELT 
(J 177) (SC 5 member Constitution bench), has been consistently fo lowed by Supreme Court in subsequent 
cases and by a l High Courts. It was held that to become 'goods' an article must be something which can 
ordinarily come to market to be bought and sold. 
Some important judgments where test of 'marketability' is upheld are : South Bihar Sugar Mills Ltd. v. UOI - 
2 ELT (J336) (SC) = AIR 1968 SC 922 = (1968) 3 SCR 21 * A P State Electricity Board v. CCE - 1994 
(2) SCC 428 = 70 ELT 3 (SC) = 95 STC 595 (SC) * Union Carbide  India Ltd. v. UOI - 24 ELT 169 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
(SC) = 1986 (2) SCR 162 = AIR 1986 SC 1097 = 64 STC 444 = (1986) 2 SCC 547 (SC 3 member 
bench) * Bhor Industries Ltd. v. CCE - 40 ELT 280 = AIR 1989 SC 1153 = (1989) 1 SCC 602 = 184 
ITR 129 = 73 STC 145 = (1989) 1 SCR 382 * Hindustan Polymers v. CCE - 43 ELT 165 (SC) = (1989) 
4 SCC 323 = AIR 1990 SC 1676 * Moti Laminates (P.) Ltd. v. CCE 76 ELT 241 (SC) = (1995) 3 SCC 
23 = 1995 AIR SCW 2035 =7 RLT 1 (SC) - 3 member bench.* Porritts  and Spencer (Asia) Ltd. v. CCE 
- AIR 1995 SC 2344 = 106 ELT 18 = 1995 (Suppl) SCC 219 (SC 3 member bench) * Anil Starch 
Products Ltd. v. CCE 1997(89) ELT 21 (SC) * Rajasthan  State Electricity Board v. Associated Stone 
Industries 2000 AIR SCW 2482 = (2000) 6 SCC 141 * FGP Ltd. v. UOI (2003) 10 SSC 270 = 168 ELT 
289 (SC) * CCE v. Aldec Corporation  2005 (188) ELT 241 (SC) * White Machines v. CCE (2008) 224 
ELT 347 (SC) * Medley Pharmaceuticals v. CCE (2011) 2 SCC 601 = 263 ELT 641 (SC). 
 
3.1-2 Illustrations of 'goods' 
 
Goods includes a l movable property. It includes * steam - Nizam Sugar Factory  Ltd. v. CST - (1957) 8 
STC 61 (AP HC) * animals and birds in captivity - K J Abraham v. Asstt. STO - (1960) 11 STC 291 (Ker 
HC). 
 
Crops, grass, trees attached  to earth - Growing crops, grass and things attached to or forming part of the 
land which are agreed to be severed before supply or under the contract of supply has been specifica ly 
defined as 'goods'. 
Standing trees are not 'goods' and not taxable. However, standing timber will be taxable under CST if timber 
is identified, contract is unconditional and timber is in deliverable state. In such case, it is 'movable property' 
and 'goods' hence can be taxed. - State of Orissa v. Titaghur Paper Mills Co. Ltd. - AIR 1985 SC 1293 = 
(1985) 60 STC 213 (SC) * Shantabai  v. State of Bombay AIR 1958 SC 532 - same view in CST v. 
Durga Shellac Factory (1999) 116 STC 282 (MP HC DB). 
Master  copies of film songs and  music - Master copies of f ilm songs and music are 'goods'. Intangible 
property can be 'goods' - CIT v. Giza Impex (2008) 166 Taxman 30 (Mad HC DB). 
Drawings - Technical drawings are goods - Associated Cement Companies Ltd. v. CC 2001(4) SCC 593 
= 2001 AIR SCW 559 = 128 ELT 21 = AIR 2001 SC 862 = 124 STC 59 (SC 3 member bench). 
Knowledge in the form of drawing and design relating to machinery are 'goods' - Prerna  Textiles v. CCE 
2000(117) ELT 241 (CEGAT) - civil appeal dismissed by SC (2001) 134 ELT A169. 
 
Design and drawings are 'goods' and supply of drawings and designs would not be liable to service tax - Solitz 
Corporation  v. CST (2009) 18 STT 550 (CESTAT). 
 
Design and drawings expressed on media are 'goods' and same cannot be subjected to service tax - Mitsui & 
Co v. CCE (2013) 42 GST 157 = 32 Latest Case31 = 68 VST 43 (CESTAT) * CCE v. Kirloskar 
Brothers (2014) 43 GST 282 = 39 Latest Case153 (CESTAT). 
Films and programmes  on disk is 'goods' - In Ushakiran  Movies v. State of Andhra Pradesh  (2006) 
148 STC 453 (AP HC DB), the appe lant had produced films and programmes. These were copies on disks 
and rights to telecast films and programmes were given to ETV for minimum guaranteed fee and share of 
advertisement revenue. Senior Counsel of applicant gave up the contention (in words of Court 'fairly gave up 
contention') that these are not goods. Hence, Court proceeded on the basis that these are 'goods'. 
3.2 Intangibles can be 'goods' 
 
Any movable property is 'goods'. Thus, intangible property can be 'goods'. 
 
Sale of Copyright - In Bharat Sanchar Nigam Ltd. v. UOI (2006) 3 SCC 1 = 152 Taxman 135 = 3 STT 
245 = 145 STC 91 = 282 ITR 273 = AIR 2006 SC 1383 = 3 VST 95 = 2 STR 161 (SC 3 member bench), 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
it was also observed that incorporal right of copyri ght could be regarded as 'goods'. In CIT v. Sun TV Ltd. 
(2007) 161 Taxman 351 (Del HC DB), it has been held that right to telecast TV program in foreign countries 
is 'sale of goods'. 
Trade mark - Trade mark is intangible goods - SPS Jayam & Co. v. Registrar,  TNTST (2004) 137 STC 
117 (Mad HC DB) * Malabar  Gold v. CTO (2013) 38 STT 606 = 30 Latest Case606 = 58 VST 191 
(Ker HC). 
In CST v. Duke and  Sons (1999) 112 STC 370 (Bom HC DB), it was held that transfer of intangible 
property like trade mark by mere permission in writing is 'transfer of right to use goods' and is taxable. Trade 
mark itself or right therein need not be transferred. 
Royalty collected on mining  lease - Royalty to remove minerals is 'profit a prendre'.  No transaction of 
sale or purchase is involved - Tamilnadu Magnesite Ltd. v. State of Tamilnadu (2007) 9 VST 360 (Mad 
HC DB) - fo lowing State of Himachal Pradesh v. Gujarat  Ambuja Cement (2005) 142 STC 1 (SC). 
Carbon credit - Certified Emission Reductions (CER) commonly known as carbon credit is 'goods' and Vat 
is payable - Ruling published vide Notification No. 256/CDVAT/2009/43  dated 13-1-2010 issued by Delhi 
Government [28 VST 29 (St)]. 
Duty credit  scrips which are  saleable  are  'goods' - In fo lowing cases, duty credit scrips were held as 
goods. 
In Yash Overseas v. CST (2008) 8 SCC 681 = 15 STT 375 = 17 VST 182 (SC 3 member bench), it has 
been held that DEPB has intrinsic value that makes it marketable commodity. Hence it is 'goods'. It is like 
prepaid meal ticket. If DEPB has to be compared with a lottery ticket, it can only be compared with a lottery 
ticket that has won the prize. The prize-winning lottery ticket ceases to be a mere piece of paper having no 
value itself. It acquires inherent value and becomes itself a thing of value [Principle applies to Duty Credit 
Scrips and DFIA as these are transferable] 
REP Licenses (now DFIA or Duty Credit Scdrips) which can be sold in market at premium are 'goods' - 
Bharat  Fritz  Werner Ltd. v. Commissioner  of Commercial  Taxes -  (1992)  86 STC  170  (Kar HC) 
affirmed in 86 STC 175 (Kar HC DB) * P S Apparels v. Dy CTO - (1994) 94 STC 139 (Mad HC DB) * 
Hemant Spices v. ACST - (1994) 95 STC 336 (Ker HC) * Shivdam Wood v. CTO (1999) 112 STC 87 
(WBTT) * Inter Gold (India) v. State of Maharashtra (2010) 3 GST 260 = 29 VST 360 (Bom HC DB) * 
CTO v. State Bank of India (2016) 10 SCC 595 = 341 ELT 481 (SC). 
DEPB (Duty Entitlement Passbook Scheme) is freely tradable. It is right to claim back credit. It is freely 
tradable and is 'goods'. It is taxable under sales tax. It is not actionable claim. - Philco Exports v. STO 
(2001) 124 STC 503 (Del HC DB) * Jindal Drugs v. State of Maharashtra 2004 (178) ELT 105 = 17 
VST 164 (Bom HC DB) * International  Creative Foods v. State of Kerala  (2008) 17 VST 178 (Ker 
HC). 
 
In Vikas Sales Corporation  v. CCT AIR 1996 SC 2082 = (1996) 102 STC 106 (SC) = 86 Taxman 369 
(Mag) (SC 3 member bench), it was held that REP licenses (now DEPB) have their own value. They are 
bought and sold as such. It is by itself a property. For a l purposes and intents, it is 'goods'. 
In Baraka Overseas Traders v. CCT (2001) 121 STC 277 (Kar HC DB), it was held that tax is payable if 
REP licenses are renounced for a 'charge'. The charge is nothing but sale. 
 
There can be inter-state sale of DEPB authorisation - Hansa  Overseas  Enterprises  v. State of Andhra 
Pradesh (2012) 47 VST 524 (AP HC DB). 
 
Electricity - In fo lowing cases, it was held that electricity is 'goods'. Electricity has been mentioned in Central 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
Excise and Customs Tari ff. 
 
In case of electrical energy, generation or production coincides almost instantaneously with its consumption. 
Sale, supply and consumption takes place without any hiatus. - - Electricity is movable property though it is 
not tangible. It is 'goods'. - State of Andhra Pradesh  v. National Thermal Power Corporation  (NTPC) 
2002 AIR SCW 1956 = (2002) 5 SCC 203 = 127 STC 280 (SC 5 member bench). 
 
The 'electricity' is 'goods' - CST v. MPEB - (1970) 25 STC 188 (SC) = (1969) 2 SCR 939 = AIR 1970 SC 
732 (partly overruled in 2002 only to the extent that it was held in 2002 judgment that electricity cannot be 
stored). - fo lowed in Indian Oil Corpn. v. CTO (1997) 107 STC 463 (Raj TT) - same view in CMS (India) 
Operations  and  Maintenance  Co.  P  Ltd. v. CCE  (2007)  10  STT 65  = 9  VST 228  = 7  STR 369 
(CESTAT). 
Electrical energy has been specified in heading 2716 in both Central Excise and Customs Tariff and hence is 
'goods'. 
 
Duty drawback  is simply money not  goods - Duty drawback received in respect of exports is simply 
money. It is not goods and no sales tax is payable if exporter receives duty drawback - KMA Finished 
Leather v. State of Tamil Nadu (2004) 134 STC 185 (Mad HC DB). 
Since money is neither goods nor service, GST should not apply on duty drawback. 
 
3.3 Actionable claim 
 
Definition of 'goods' specifica ly includes 'actionable claim'. 
 
"Actionable claim" shall have the meaning assi gned to it in section 3 of the Transfer of Property Act, 1882 - 
section 2(1) of CGST Act. 
Actionable claims, other than lottery, betting and gambling are neither as a supply of goods nor a supply of 
services - Schedule III of CGST Act read with section 7(2)(a) of CGST Act. 
Thus, only activities relating to lottery, betting and gambling will be subject to GST. 
 
As per section 3 of Transfer of Property Act, 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 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, 
accrui ng, conditional or contingent. 
Section 130 of Transfer of Property Act provides that an actionable claim may be assigned for value. 
 
Basica ly, actionable claim means a claim for any amount receivable (debt) or claim for benefit of any movable 
property  not  in  possession  for  which  relief  can  be  claimed   in  Civil  Court.   Such  claim  can  be 
assigned/transferred. 
Insurance claim is 'actionable  claim' - Transfer/assignment  of unsecured debt is assignment/transfer  of 
'actionable  claim'.  Claim to secured  debt is not actionable  claim.  Thus,  transfer of secured  debt through 
securitization is not assignment of 'actionable claim'. However, it is mere transaction in money or mere transfer 
of title of immovable property and hence not a 'service'. 
Debt for which action is necessary to realise can only be said to be an actionable claim. Where no action is 
necessary  to  realise  the  debt,  it  cannot  be  said  to  be  actionable  claim  -  Jindal  Drugs  v.  State  of 
Maharashtra 2004 (178) ELT 105 = 17 VST 164 (Bom HC DB) [In this case, it was held that DEPB credit 
is not actionable claim as no action in law is necessary for its realisation. In case of transfer of DEPB, it confers 
upon the transferee the immediate right to pay duty (through DEPB credit). 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
In Jugal Kishore v. Raw Cotton Co. AIR 1955 SC 376, it was held that a Judgment Debt or Decree is not 
an actionable claim as no action is necessary to realise it. 
An actionable claim would include right to recover insurance money or a partner's ri ght to sue for account of a 
dissolved partnership or ri ght to claim benefit of a contract not coupled with any liability - UOI v. Sri Sarada 
Mills (1972) 2 SCC 877 = 43 Comp Cas 431 (SC). 
A claim for arrears of rent is an actionable claim - State of Bihar v. Maharajadhiraja Sr Kameshwar Singh 
(1952) SCR 889. 
 
Right to claim provident fund is actionable claim - Official Trustee v. L Chippendale AIR 1944 Cal 335 * 
Bhupati Mohan Das v. Phanindra Chandra Chakravarty AIT 1935 Cal 756. 
 
In Sunrise Associates v. Government of NCT of Delhi (2006) 5 SCC 603 = 4 STT 105 = 145 STC 576 = 
3 VST 151 (SC 5 member Constitution Bench), it was held that actionable claim is transferable [In this case, it 
was held that lottery ticket is an actionable claim]. 
Recharge coupon vouchers are sold by distributors of mobile telephone companies. The recharge coupon is 
for accessing telephone services for pre-determined period of time. Thus, recharge coupon is acknowledgment 
of receipt of money in advance for providing telecom service in future is actionable claim and hence not subject 
to sales tax - Bharti Airtel v. ACST (2010) 4 GST 342 = 34 VST 202 (WBTT). 
An actionable claim can be enforced only through Court of Law and cannot be bought and sold as goods, 
though it can be assigned. 
3.3-1 Lottery tickets  are subject  to GST 
 
Lottery ticket is actionable claim. Actionable claim has been included from definition of 'goods' under GST 
Law. 
However, earlier, actionable claim was excluded from definition of 'goods'. 
 
Lottery ticket is 'actionable claim' - Sunrise Associates v. Government of NCT of Delhi (2006) 5 SCC 603 
= 4 STT 105 = 3 VST 151 = 145 STC 576 (SC 5 member Constitution Bench) - fo lowed in State of 
Kerala v. PrabhavathyThankamma (2009) 3 SCC 511 (SC) * Commercial Corporation  of India Ltd. v. 
ASTO (2007) 10 VST 175 (Ker HC) * LIS v. State of Kerala (2008) 17 VST 432 (Ker HC DB) * MRS 
Lucky Lottery Centre v. State of Tamil Nadu (2010) 29 VST 16 (Mad HC DB). 
3.3-2 Transfer of unsecured debt is actionable claim but not subject  to GST 
 
If an unsecured debt is transferred to a third person for a consideration, the activity be treated as 'goods' as it 
is actionable claim. 
However, in essence, it is mere transaction in money. 
 
However, actionable claims, other than lottery, betting and gambling are neither as a supply of goods nor a 
supply of services - Schedule III of CGST Act read with section 7(2)(a) of CGST Act, 
Hence, such transfer of unsecured debt will not be subject to GST. 
 
3.3-3 Securitisation of debts, mortgage 
 
Often debts are securitized and transferred to another Financial Institution/Bank. Sometimes, this is done under 
'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'. 
Technica ly, such debt is not unsecured debt and hence cannot fa l within the definition of 'actionable claim'. 
The  transaction  is not 'transfer  of actionable  claim'  (under  Transfer  of Property Act),  but acquisition  of 
'financial asset'  under 'Securitisation  and Reconstruction  of Financial Assets and Enforcement  of Security