Q 1. What is the taxable event under GST?
Ans. The taxable event under GST shall be the supply of
goods and / or services made for consideration in the course or furtherance of
business. The taxable events under the existing indirect tax laws such as
manufacture, sale, or provision of services shall stand subsumed in the taxable
event known as ‘supply’.
Q 2. What is the meaning of ‘Supply’?
Ans. The term ‘supply’ is wide in its import and includes all
forms of supply of goods and / or services such as sale, transfer, barter,
exchange, license, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business. It also
includes import of service. The model GST law also provides for including
certain transactions made without consideration within the scope of supply.
Q 3. What is a taxable supply?
Ans. A ‘taxable supply’ means a supply of goods and / or
services which is chargeable to good and services tax under the GST Act.
Q 4. What are the necessary elements that constitute supply
under MGL?
Ans. In order to constitute a ‘supply’, the following elements
are required to be satisfied, i.e.-
(i)
supply of goods and / or services;
(ii)
supply is for a consideration;
(iii)
supply is made in the course or furtherance of business;
(iv)
supply is made in the taxable territory;
(v)
supply is a taxable supply; and
(vi)
supply is made by a taxable person.
Q 5. Can a transaction in which any one or more of the above
criteria is not fulfilled, be still considered as supply under GST?
Ans. Yes. Under certain circumstances such as importation of
service (Section 3(1) (b)) or supplies made without consideration, specified
under Schedule-I of MGL, where one or more ingredients specified in answer to
question no. 4 are not satisfied, it shall still be treated as supply under GST
Law.
Q 6. Importation of Goods is conspicuous by its absence in
Section 3. Why?
Ans. Importation of goods is dealt separately under the
Customs Act, 1962, wherein IGST shall be levied as additional duty of customs
in addition to basic customs duty.
Q 7. Are self-supplies taxable under GST?
Ans. Inter-state self-supplies such as stock transfers will be
taxable as a taxable person has to take state wise registration in terms of
Schedule 1(5). Such transactions have been made taxable even if there is no
consideration. However, intra-state self-supplies are not taxable.
Q 8. Whether transfer of title and/or possession is necessary
for a transaction to constitute supply of goods?
Ans. Title as well as possession both have to be transferred
for a transaction to be considered as a supply of goods. In case title is not
transferred, the transaction would be treated as supply of service in terms of
Schedule II (1). In some cases, possession may be transferred immediately but
titled may be transferred at a future date like in case of sale on approval
basis or hire purchase arrangement. Such transactions will also be termed as
supply of goods.
Q 9. What do you mean by “supply made in the course or
furtherance of business”?
Ans. No definition or test as to whether the activity is in
the course or furtherance of business has been specified under the MGL.
However, the following business test is normally applied to arrive at a
conclusion whether a supply has been made in the course or furtherance of
business:
1. Is the activity, a serious undertaking earnestly pursued?
2. Is the activity is pursued with reasonable or recognizable
continuity?
3. Is the activity conducted in a regular manner based on
sound and recognised business principles?
4. Is the activity predominantly concerned with the making
of taxable supply for consideration/ profit motive?
The test may ensure that occasional supplies, even if made
for consideration, will not be subjected to GST.
Q 10. An individual buys a car for personal use and after a
year sells it to a car dealer. Will the transaction be a supply in terms of
MGL? Give reasons for the answer.
Ans. No, because supply is not made by the individual in the
course or furtherance of business. Further, no input tax credit was admissible
on such car at the time of its acquisition as it was meant for non-business
use.
Q 11. A dealer of air-conditioners transfers an air conditioner
from his stock in trade, for personal use at his residence. Will the
transaction constitute a supply?
Ans Yes. As per Schedule-I (1) business assets put to a private
or non-business use without consideration will be treated as supply.
Q 12. Whether provision of service or goods by a club or
association or society to its members will be treated as supply or not?
Ans. Yes. Provision of facilities by a club, association, society
or any such body to its members shall be treated as supply. This is included in
the definition of ‘business’ in section 2(17) of MGL.
Q 13. What are inter-state supplies and intra-state supplies?
Ans. Inter-state and intra-state supplies have specifically been
defined in Section 3 & 3A of IGST Act respectively. Broadly, where the
location of the supplier and the place of supply are in same state it will be
intra-state and where it is in different states it will be inter-state
supplies.
Q 14. Whether transfer of right to use goods will be treated
as supply of goods or supply of service? Why?
Ans. Transfer of right to use goods shall be treated as supply
of service because there is no transfer of title in such supplies. Such
transactions are specifically treated as supply of service in Schedule-II of
MGL
Q 15. Whether Works contracts and Catering services will be
treated as supply of goods or supply of services? Why?
Ans. Works contract and catering services shall be treated as
supply of service as specified in Schedule-II of MGL.
Q 16. Whether goods supplied on hire purchase basis will be
treated as supply of goods or supply of services? Why?
Ans. Supply of goods on hire purchase shall be treated as
supply of goods as there is transfer of title, albeit at a future date.