TNC Rajagopalan: GST changes on excise matters

The Central Board of Excise and Customs (CBEC) had put the draft model Goods and Services Tax (GST) law on its website in June this year and called for comments from the trade. It has since put up the revised model law, drafted by the secretariat to the GST Council.

The new draft shows a number of suggestions from the trade have been accepted, some left out and some new provisions have been introduced. It is not possible to deal with all these in the limited space available here; I will deal with some aspects.  

GST is a tax on ‘supply of goods and services’. The revised draft changes the definition of ‘supply’, ‘goods’ and ‘services’ from the original draft.   Essentially, with some exceptions, ‘supply’ covers all  forms  of  supply  of  goods  and/or  services  such  as  sale,  transfer,  barter, exchange,  licence,  rental,  lease  or  disposal  made  or  agreed  to be  made  for  a consideration by a person in the course or furtherance of business. 

Thus, the draft law does not say what ‘supply’ means but what all it includes.  Second, ‘consideration’ (meaning, a price or fee) has been made an essential ingredient of supply. Third, ‘supply’ has to be in the course of furtherance of ‘business’. The draft law separately defines what all gets included in ‘business’. 

The exceptions include importation  of  services  for  a  consideration,  whether  or  not  in  the  course  of furtherance of business; four types of ‘supply’  specified  in  ‘Schedule  I’,  made  or  agreed  to  be  made  without a consideration; five types of activities  or  transactions  mentioned in Schedule 3, which  shall  be  treated  neither  as  a supply of goods or a supply of services; and, seven types of activities or transactions mentioned in Schedule 4, undertaken by the central government, a state government or any local authority which shall be treated neither as a supply of goods or a supply of services. 

‘Goods’ means every type 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. This definition leaves out ‘securities’ that appeared in the original draft, a significant change and taking into account representations from the trade. 

In the original draft, ‘services’ was defined as anything other than goods. An explanation said ‘services’ include intangible property and actionable claim but not money. The revised draft drops that explanation and inserts one that ‘services’ includes transactions in money but not money and securities. 

And, another explanation that ‘services’ does not include a transaction in money other than an activity 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. Taking intangible property and actionable claim out of the coverage of ‘services’ is a significant change. 

The changes made in the revised draft throw up fresh issues but, overall, most of these look sensible.

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