"BUSINESS" means, according to GST
(A) Any trade, commerce, manufacture, profession, vocation, adventure, wager, or any other similar activity, whether or not it is for a pecuniary benefit.
(B) Any activity or transaction in connection with or incidental or ancillary to (A) above
(C) Any activity or transaction in the nature of (A) above, whether or not there is volume, frequency, continuity or regularity of such transaction.
(D) Supply or acquisition of goods, including capital goods and services in connection with the commencement or closure of business.
(E) Provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members.
(F) Admission for a consideration of persons to any premises.
(G) Services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation.
(H) Any activity or transaction undertaken by the Central Govt., a state Govt. or any local authority in which they are engaged as public authorities.
Government activities are subject to GST
Section 2(17)(i) of CGST Act states that 'business' includes any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.
Thus, excluding sovereign activities of State, all activities of the Government is 'business'.
Deemed supply of goods and services
Section 7(1)(d) of the CGST Act states that supply includes activities to be treated as supply of goods or supply of services referred to in Schedule II to the CGST Act.
Thus, these are 'deemed supply of goods' or 'deemed supply of services', subject to GST
Schedule II [Section 7]- Activities or transactions to be treated as supply of goods or supply of services
1. Transfer
(a) Any transfer of the title of goods is a supply of goods (this cover sale, barter, exchange etc.) In fact, it should cover the gift of goods also, as this clause does not talk of consideration.
(b) Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services (This cover renting or operating lease of goods. 'Undivided shares' means that exclusive possession is not required to be transferred e.g. renting of one locker by bank, share taxi).
(c) Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, is a supply of goods (This covers financial lease and hire purchase).
2. Land and Building
(a) Any lease, tenancy, easement, license to occupy land is a supply of services (The lease of tenancy of land can be of any period-even 99 or 999 years).
(b) Any lease or letting out of the building, including a commercial, industrial, or residential complex for business or commerce, either wholly or partly, is a supply of services.
3. Treatment or process
Any treatment or process that is being applied to another person's goods is a supply of services (This covers job work, testing).
4. Transfer of business assets
(a) Transfer of the entire business as a going concern can't be subject to GST.
(b) 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.
5. Supply of services
(a) Renting of immovable property, which can cover other immovable property like plant and machinery.
(b) This cover, any sale of a flat in a residential complex before it is occupied. Once it is occupied, any sale by the buyer after that will not attract GST, even if a completion certificate is not obtained. However, if the builder himself is selling, he will be exempt from GST only if he sells after the completion certificate is obtained.
(c) Temporary transfer or permitting the use or enjoyment of any intellectual property rights.
(d) Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of Information technology software.
(e) Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do act.
6. Composite Supply
(a) Works contract as defined in Section 2(119) of CGST Act (The definition covers only immovable property).
(b) Supply, by way of or as part of any services or in any other manner whatsoever, of goods, being foods or any other article of human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration [supply of food. The clause doesn't say 'in restaurant'. Thus, even home delivery of cooked food will be covered, as it includes service. However, sale of tinned food items is sale of goods as no 'service' element is involved].
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