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SCOPE OF SUPPLY SERIES – PART 9 Last week we have gone-through the several topic SCHEDULE II services under GST. Read Part 8 of Scope of Supply under GST, in the following link:
SCHEDULE II OF THE GST ACT, 2017
Schedule II of the GST Act has certain activities clearly classified as goods or services under GST to avoid any such confusion
In this article we will try to understand some other entries of Schedule II. The third entry is as follows:
Treatment or process:
“Any treatment or process which is applied to another person’s goods is a supply of services.”
The definition of ‘Job-work’ under GST is covered under section 2(68) of the CGST act, 2017 states “Any treatment or process undertaken by a person on goods belonging to another registered person”. Therefore, job-worker is the person (registered or unregistered) who is processing or treating the goods of another registered person and the owner of the goods is called the Principal in this respect.
The said entry does not restrict itself only to such treatment or process which qualifies as ‘Job work’ under GST. It covers all transactions i.e. either Job work as per above mentioned definition or otherwise. Therefore, as discussed above, the activity of treatment or process not qualifying as ‘job work’ as the principal is un-registered, should amount to supply of service.
For example, big shoe manufacturers (principals) send out the half-made shoes (upper part) to smaller manufacturers (job workers) to fit in the soles. The job workers send back the shoes to the principal manufacturer. The supply made by the job worker shall be treated as supply of services.
The fourth entry in the schedule is as follows:
Transfer of business assets
(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;
(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, the usage or making available of such goods is a supply of services;
(c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person.
This clause has been discussed in detail along with schedule I.
Now let us see some of the supply that are to be treated as supply of services:
Renting of immovable property involves:
However, it must be noted that renting out of a religious place owned and managed by a registered charitable or religious Trust for the public shall be exempt from GST
Where consideration in respect of construction of complex, building, civil structure or part of it whether ‘even a part’ or “wholly” is received before issuance of completion certificate, then whole of consideration shall be considered as service, taxable under the act.
Here “Construction” means addition, alteration, replacement or remodelling of any existing civil structure.
GST shall not be applicable on the sale of units of complex after completion certificate or before its first occupation whichever is earlier.
Where in respect of civil structure (for ex. Roads, bridges, railways), even if whole of consideration is received after issuance of certificate, tax can be levied as it is neither a land nor building.
Therefore, contracts for construction, building, modification, installation of immovable property (building, civil structure, railways, bridge, roads, etc) shall be considered to be services.
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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY TEAM)
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