NEGATIVE LIST [Sec 7(2) + Schedule III] Neither goods nor services & thus NO GST.
Services provided by Employee to Employer in course of or in relation to his employment
Service provided by Casual Workers (daily basis) who are employed by employer treated as services
provided by worker in course of employment & thus NO GST.
Casual workers are employed by a contractor, like a building contractor or a security services agency,
who deploys them for execution of a contract or for provision of security services to a client,
respectively are services in course of employment & thus NO GST.
Compensation for Premature Termination treated as amounts paid in relation to services
provided by employee to employer in course of employment & thus NO GST.
Non-Compete Fees: Any amount paid for not joining a competing business Not in course of
employment & this liable to GST being paid for providing service of forbearance to act.
Note: Services provided on contract basis (principal to principal) are not services provided in the
course of employment & thus GST will be levied.
Ex: If employee provides his services on contract basis to associate company of employer, then these are not services in course of employment & thus, it would be treated as supply.
Q. Mr. X is marketing head of Y Ltd., a car manufacturing company. As per employment contract, salary of X is Rs. 3,50,000 per month. Besides, he gets commission, bonus & allowances. On October 19,2017, Y Ltd. transfers a new car to X as Diwali gift (this gift is not covered by the employment agreement). Taxable value of the gift as per section 15 is Rs. 19,90,000. Besides, Y Ltd. provides tea, coffee, light snacks during tea break to all of its employees in office premises. Annual expenditure on this account is Rs. 4,10,000. State whether GST is applicable?
(a) Any amount paid by employer to the employee as per the terms of employment agreement is covered in Negative list & thus no GST shall be payable on such amount. Thus Salary & commission, bonus & allowances paid by Y Ltd. to Mr. X is not liable to GST.
(b) Supply of Car is not covered by employment agreement. Thus Car transferred by Y Ltd. to X without consideration is liable to GST (X & Y Ltd. are related persons since employer & employee) since VoS > Rs. 50,000.
(c) Provision of tea, coffee, light snacks is not subject to GST (since it is usual to be given during employment).
Services by any Court or Tribunal established under any law for the time being in force.
(a) Functions performed by MPs, MLAs, Members of Panchayats/Municipalities/other LAs.
(b) Duties performed by any person who holds any post in pursuance of the provisions of Constitution in that capacity. [
Ex: President, Vice President, PM, Chief Justice, Speaker of LS, Chief Election Commissioner, C&AG
of India, Chairman of UPSC, Attorney in that capacity].
(c) Duties performed by any person as a Chairperson/Member/Director in a body established by
CG/SG/LA & who is not deemed as employee before commencement of this clause.
Services of funeral, burial, crematorium or mortuary including transportation of deceased.
Sale of Land; & [subject to para 5(b) of Schedule II] Sale of building.
Actionable claims, other than lottery, betting & gambling.
Note: Only Lottery, betting & gambling are treated as supply.
All other actionable claims are outside the ambit of definition of supply.
Some other actionable claims are: Right to recover insurance money, claim for arrears of rent etc.
Q. Sahara Ltd., an NBFC transfers bad loans (unsecured) to Vasooli Capital Advisors Ltd. Does it qualify as supply?
Ans: Even though Actionable claims are covered in ‘goods’ but Schedule III specifically excludes actionable claims other than lottery, gambling & betting. Transfer of unsecured loans would not amount to supply.
Q. Raheja Developers constructs a commercial complex in Vijaywada. Completion certificate is issued by municipality on 23rd March 2019. However, the occupants are using the complex for commercial purposes since 1st November 2018. The complex has 3 commercial flats which are sold to A Ltd, B Ltd & C Ltd. as follows:
|Particulars||Consideration (if includes cost of land )||Amount received during October 2018||Amount received on/after November 1, 2018|
|Flat 1: A Ltd||92,00,000||1,00,000||91,00,000|
|Flat 2: B Ltd||94,00,000||94,00,000||Nil|
|Flat 3: C Ltd||91,00,000||Nil||91,00,000|
Answer: Construction of Complex, Building etc. is treated as supply of service except where entire consideration has been received after issuance of completion certificate or after its first occupation, whichever is earlier. Thus if entire consideration has been received after issuance of completion certificate or after its first occupation, whichever is earlier, GST will not be levied. Completion certificate is issued on 23rd March 2019. Commercial building was first occupied on 1st November 2018. Earlier date is 1st November 2018. C Ltd: Entire consideration is received from C Ltd. after 1st November 2018. Consequently, service provided to C Ltd. is not deemed supply under Schedule II & not chargeable to GST. A Ltd & B Ltd: Supply of service to A Ltd. & B Ltd. is deemed supply under Schedule II & chargeable to GST.
Q. X enters into a contract with DLF Construction Ltd. for purchase of a flat for which the payment has to be made in 10 monthly installments of Rs. 30,00,000 each. 1st installment is paid at the time of signing of the contract on July 1, 2018. The flat is likely to be completed during June 2019. On 1st Feb 2019, X transfers his right to Y after paying 6 installments. Whether such activity of transfer by X to Y is treated as “declared supply” under Schedule II.
Answer: Activity of transfer of right in flat by X to Y does not fall in ‘deemed supply’, as X is not providing any construction service to Y. It is a case of transfer of interest in immovable property. Such transfer of immovable property (or any interest therein) is outside the ambit of GST. However, on 6 installments paid to DLF by X (& subsequent 4 installments payable), GST will be applicable
|Activities/transactions Notified by Government → Neither goods nor services|
|1. Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G or to a Municipality under article 243W of the Constitution for the said purpose.|
|2. Inter-State movement of various modes of conveyance b/w distinct person u/s 25(4) including:
Trains, Buses, trucks, tankers, trailers, vessels, containers, aircrafts for
(a) carrying goods or passengers or both; or
(b) Repairs & Maintenance, (Except where such movement is for further supply of same conveyance)
Thus, above activity may not be treated as supply & IGST is not payable on such supply.
However, applicable CGST/SGST/IGST shall be leviable on repairs & maintenance done for such conveyance.
|3. Inter-State movement of Rigs, Tools & Spares, & all goods on wheels [like cranes]
Point no. 2 shall mutatis mutandis apply to inter-State movement of rigs, tools & spares, & all goods on wheels (except where movement of such goods is for further supply of same goods)