Supply of Goods and Services: What does it Mean?

Under the current indirect tax structure, the taxable event differs for each type of tax. The taxable events under the current indirect tax structure are captured below:

Type of Tax	Taxable Event
Central Excise	Removal of excisable goods
VAT	On sale of goods
Service Tax	Provision of taxable services

The taxable event under GST is the Supply of Goods and/Services. All taxes such as Central Excise, Service Tax and VAT/CST will be subsumed under GST, and the concept of manufacture of goods, sale of goods, and provision of services would no longer be relevant.

Thus, for every business, it is crucial to understand the relevance of supply which sets the scope of transactions liable for the levy of GST.

Relevance of Supply under GST

The term ‘supply’ includes all forms of supply of goods or services, supplied or to be supplied, for a consideration, in the course of or for furtherance of business.

However, there are specific types of supplies mentioned in the law which need to be considered as supply even without a consideration.

Let us understand by categorising the different types of supply as;

• Supplies made for a consideration in the course of or for furtherance of business
• Supplies without consideration
• Supplies made for a consideration whether or not in the course of or for furtherance of business

Supplies made for a consideration in the course of or for furtherance of business 

 

The following are considered as supply with consideration:  

SALE	Any sale of goods or services which broadly result in the transfer of title in case of goods, and transfer of right to use in case of services.
TRANSFER	Any transfers between branches form a part of supply and are taxable. However, GST paid on branch transfers are fully available as Input Tax Credit.
BARTER/EXCHANGE	When the consideration is paid through goods instead of money. For example: a seller has supplied goods and the buyer, supplies goods to the extent of payment. Or when one product is exchanged with another product.
LICENSE	Any grant of license to use forms part of supply. For example: online subscriptions
RENTAL	Renting of property fully or partially is a supply under GST
LEASE	Letting out the building or property on lease is a supply under GST
DISPOSAL	Disposal of business assets forms part of supply

Stay tuned for our next blogs on exceptional scenarios which need to be treated as supply, and are liable for levy of GST.