GST#3 - Understanding Important Terms of GST

Unit Objectives:

. Business
. Consideration
. Goods
. Services
. Supply
. Intra State Supply
. Inter-state Supply
. Continuous Supply

Business - Section 2(17)

Importance: Lavy of Service Tax is on Supply of Goods or Services. (Section 9).

Definition of Supply (Season 7) uses the words 'in furtherance of business' on many occasions. Therefore, it is necessary for us to understand the meaning of the word business. since in case the activity is out of the definition of business, then it will be out of definition of supply and GST will not be applicable.

Apart from this, there are several occasions where the word business is used.

Following important points emerge from definition of 'Business'

The definition of 'business' is an inclusive definition.

Following points emerge from the definition of 'business' -

• This definition is very wide and covers all the transactions that are currently subjected to various taxes that are being subsumed in the GST Laws 
• Similar activities are also included which means that it is not necessary that the activity should exactly match with the defined activates. 
• volume, frequency, continuity or regularity of such transaction is irrelevant. Such aspects are important in understanding 'business' under the Income Tax Act. Occasional transactions are subjected to GST. Adventure is also covered.
• 'Wager ' includes betting. This is also included in the definition of business 
• Charitable or religious activities are not specifically covered; Exempted services from GST list includes charitable trusts etc. subject to certain terms and conditions. 
• Profit motive irrelevant, immaterial. 
• Incidental or ancillary business is also covered.

Consideration - Section 2(31)

Importance: Levy of Service Tax is on Supply of Goods or Services. (Section 9)

Definition of the word Supply includes the word "for a consideration" at many places. In many cases, the consideration has been made necessary for the transaction to be called a supply. In some cases consideration is specified to be not necessary.

Following important points emerge out of it.

• This is an inclusive definition. Therefore, what is not specifically mentioned in the definition, but has the features of consideration can also be treated as consideration.
• Consideration can be in the form of money or otherwise.
• Deposits received are not a consideration. However, when they have applied towards supply are a consideration.
  e.g. Three months deposit may be received at the time of renting a property This is not Consideration. However, if the tenant does not pay the rent for the last three months and asks the owner to adjust it against rent, it becomes Consideration at that time.
• Payment received by the supplier in relation to the supply, whether from the recipient or any other person can be a consideration. Thus advance received in relation to supply shall also be subject to GST.
• Third-party to a contract can also pay and it is not necessary that only the recipient or the service has to pay towards consideration.

Goods - Section 2(52)



Services - Section 2(102)



Supply - Section 7



Intra State Supply Section 8 of IGST



Inter-state Supply - Section 7



Continuous Supply