We have till now discussed the definition of supply along with provisions described in schedule I and schedule II, and in this update, we will discuss the changes and consequences in schedule III.
In the previous GST draft law, the persons to be registered were specified in schedule III but in revised GST law, those activities and transactions which are neither supply of goods nor supply of services have been listed in schedule III.
1. In the first entry of new GST draft law, services provided by an employee to the employer in the course of or in relation to his employment is mentioned. This means that service provided by employee to his employer will not be considered as supply and no GST will be leviable. It is pertinent to mention that in the erstwhile GST Draft also, section 9 defining taxable person excluded the person providing services as an employee to his employer during the course of or in relation to his employment. Not only this, even the present Service Tax Laws excludes the provision of service by employee to employer from the definition of service. As such, the position of non-applicability of indirect tax on services provided by employee to employer is kept intact in the proposed GST regime also.
2. In the new GST draft law, the services provided by any court or Tribunal established under any law for the time being in force are also not considered as supply and no GST is leviable. It is worth observing that the earlier GST Draft did not incorporated such a provision. However, this provision is presently there under Service Tax Laws. Presently, definition of service excludes fees payable to a court or tribunal set up under a law for the time being in force. It appears that the Revised GST Law rectifies the anomaly of the old GST Draft.
3. In the new GST law, a new entry has been inserted whereby the functions or the services provided by any of the following will not be considered as supply:-
(a) The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
(b) The duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
(c) The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
Again, the above entry did not found place in old draft GST law but is presently is akin to explanation to definition of service. Hence, this entry seeks to rectify the old draft GST law.
4. As per the new GST law, services by a foreign diplomatic mission located in India will also not be considered as supply and hence, GST won’t be levied which was not there in the previous GST draft law. However, at present, the services of foreign diplomatic mission located in India is covered under the negative list.
5. According to the new law, the services of funeral, burial, crematorium or mortuary including transportation of the deceased will not be considered as supply and GST will not be levied. Again, at present, no service tax is leviable on such services but this was not provided for in the old GST draft law.