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GST : The Eight Terms of Supply – Section 7 of CGST Act 2017

Goods –  As per Section 2(52) of CGST Act, 2017 ‘goods’ means every kind 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.

Immovable property is not considered as goods under GST.

In this article, we will brief about the Eight different terms that should be considered as Supply of Goods or Services in GST.

1. SALE

Sales are a lawful, permanent, and absolute transfer of ownership of property in goods for money consideration under a valid contract such that no rights are left behind with the transferor. Here the Title of goods is moving.

2. TRANSFER

Transfer means to pass over, convey, relinquishment of a right, abandonment of a claim lawfully. Hence in simple terms transfer means Lawful convey of property from one person to another person. Here right in goods are moving not Title.

3. BARTER

Barter means ‘Things or Commodity’ given in return for another. In other words, no value is fixed. In simple terms, barter means consideration is in the form of goods or services or both (not in money) for sale or transfer. Therefore, the barter will cover two supplies and not one. Each of these supplies would need to be examined for its respective taxability. Here the exchange is of movable property.

4. EXCHANGE

Exchange is similar to the barter where consideration is not in form of money but in form of Immovable property. Similar to barter exchange also involves two supplies. Here the exchange is of Immovable property. It can be noted that law has been excluded the Immovable property from the definition of the supply but exchange of Immovable property for sale or transfer considered as supply.

5. LEASE

A lease means a transfer of possession along with the right to use the immovable property for consideration in the form of a non-recurring premium only or along with recurring rent. The main essence of a lease is the delivery of possession with user rights, hence the lease is also used in the context of movable property. Here supplier of lease does not have possession, hence, not enjoyed the right to use but retain the right to repossess property subject to normal wear and tear after the terms of the lease.

6. RENTAL

Rental is a lease in respect of the movable property. Since recurring payment in the lease (of Immovable property) is called rental, transfer of possession with user rights for a recurring payment of consideration is interchangeably applied for movable and immovable property.

7. LICENSE

License is similar to lease but the difference is that possession of movable or Immovable property does not transfer but permission to enter and use the property is allowed. Supplier of license retains possession of the property during the term of license without right to use. (E.g. Software license or Use Copyright or Franchisee)

8. DISPOSAL

Disposal means distribution, transferring to new hands, extinguishment of control over, forfeit or pass over control to another but in respect of goods that are unfit for sale.

Vikas TaxClue
Vikas Sharmahttp://taxclue.in
A writer by passion. Reading and traveling in my free time enhances my creativity in work. I enjoy exploring my creative side, and so I keep myself engaged in learning new skills.

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