GST Glossary: Levy of GST on intra state supplies

Section 7 of SCST/CGST Act of Model GST Law provide for the levy of GST on intra state supply. Section reads as”

“Levy and Collection of Central/State Goods and Services Tax
(1) There shall be levied a tax called the Central/State Goods and Services Tax
(CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in
the Schedule . . . to this Act and collected in such manner as may be prescribed.
(2) The CGST/SGST shall be paid by every taxable person in accordance with the
provisions of this Act.
(3) Notwithstanding anything contained in sub-section (2), the Central or a State
Government may, on the recommendation of the Council, by notification, specify
categories of supply of goods and/or services the tax on which is payable on reverse
charge basis and the tax thereon shall be paid by the person receiving such goods
and/or services and all the provisions of this Act shall apply to such person as if he is the
person liable for paying the tax in relation to such goods and/or services.” (Text from Model GST law)

Analysis: A pair of CGST/SGST will be charged on all

1) Intra state: Section 3 of IGST Act defines intra state supply as “when the “Location of supplier” and “place of supply” is in same state. They supply will be intra state supply and will attract CGST and SGST.

2) Supplies: Supply is defined in section 2(92) read with section 3 of Model GST Law to include all forms of sale, transfer, exchange, barter and any form of supply in course or furtherance of business and for consideration. Section further provide for cases where supply without consideration and non business use will also be covered. Schedule I of Model GST Law provides for items to be considered as supply even without consideration. There were some disputes for some transaction about their nature like works contracts, IP right , restaurant services. This definition also clarify on those transaction and fix their nature under schedule II of Model GST Law.

3) of Goods and services: Goods and services are also defined in Model GST Law. Goods exclude immovable property and services. Services are defined to be everything other than Goods and money.

It is important to determine the nature of levy of appropriate tax on every transaction. We will also cover levy of IGST in our next article.