Types of Supply under Goods and Services Act (GST)

Classification of Types of Supply under GST

Supply under GST can be classified under the following basis:

1. On the basis of movement /flow

Supply of goods and services involves the presence of two parties which are part of the transaction where one is the supplier and other is the recipient. When we classify supply on the basis of movement/flow we take into consideration the point of view of either of the parties, the classification can be as follows:

(A) INWARD SUPPLY
When we talk about a person, 'inward supply' refers to the receipt of goods and services or both, whether by purchase, acquisition or any other means with or without consideration.

(B) OUTWARD SUPPLY
When we talk about a taxable person, 'outward supply' refers to supply of goods and services or both, whether by sale, transfer, barter, exchange, license, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course of furtherance of business.

 

2. On the basis of continuity

When we classify supply on the basis of repetition of transactions between the two parties, the classification can be as follows:

(A) ONE TIME SUPPLY
Here, the transaction involving supply of goods and services between the parties occurs only once.

(B) CONTINUOUS SUPPLY

(i) CONTINUOUS SUPPLY FOR GOODS

According to Section 2(32) of CGST Act, 2017 'continuous supply of goods' means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis.

(ii) CONTINUOUS SUPPLY FOR SERVICES
According to Section 2(33) of CGST Act, 2017 'continuous supply of services' means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations.

 

3. On the basis of taxability

A transaction which qualifies to be a supply under GST need not qualify to be a taxable supply.

(A) TAXABLE SUPPLY
"Taxable supply refers to a supply of goods and services or both which is not leviable to tax under CGST Act." - Section 2(108) of CGST Act, 2017.

(B) NON-TAXABLE SUPPLY
"Non - taxable supply means a supply of goods or services or both which is not leviable to tax under CGST Act or under the IGST Act." - Section 2(78) of CGST Act, 2017.

(C) EXEMPT SUPPLY
"Exempt supply means a supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under Section 11, or under section 6 of IGST Act, and includes non-taxable supply." - Section 2(47) of CGST Act, 2017.

(D) ZERO RATED SUPPLIES
Supply of goods and services on which no tax is payable but Input Tax Credit pertaining to that supply is admissible.

According to Section 16(1) of IGST Act, 2017, 'Zero rated supplies' means any of the following goods or services or both :

(i) Export of goods of services or both.

(ii) Supply of goods or services to a Special Economic Zone developer or Special Economic Zone unit.

 

4. On the basis of geographical location

This classification considers movement of supply geographically which can be classified and explained as follows :

(A) INTER-STATE SUPPLY
According to Section 7(1) of IGST Act, subject to the provisions Section 10 , supply of goods, where the location of the supplier and the place of supply are in -

(i) Two different states;

(ii) Two different Union territories; OR

(iii) A state and a Union territory

shall be treated as supply of goods in this course.

Similarly in Section 7(3), subject to the provisions of Section 12, supply of services, where the location of the supplier and the place of supply are in -

(i) Two different states;

(ii) Two different Union territories; OR

(iii) A state and a Union territory

shall be treated as supply of service in this course.

(B) INTRA-STATE SUPPLY
As per Section 8(1) of IGST Act, subject to the provisions of Section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same state or same Union territory shall be treated as intra-state supply with respect to the fact that the following goods shall NOT be treated as intra- state supply which are -

(i) Supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;

(ii) Goods imported into the territory of India till they cross the customs frontiers of India; or

(iii) Supplies made to a tourist referred to in section 15.

(C) SUPPLIES IN THE TERRITORIAL WATERS

As per Section 9 of IGST Act, notwithstanding anything contained in this act, -

(a) Where the location of the supplier is in the territorial waters, the location of such supplier; or

(b) Where the place of supply is in the territorial waters, the place if supply, shall, for the purpose of this Act, be deemed to be in the coastal state or Union territory where the nearest point of the appropriate baseline is located.

 

5. On the basis of goods supplied in conjunction

When two or more goods or services or both are supplied together a question arises on the tax payable as both these goods or services or both may have different GST rates when sold separately. These goods supplied together are called combination supplies which CGST Act classifies into the following:

(A) Composite Supply

According to Section 2(30) of CGST Act 2017, 'composite supplies' means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundles and supplied in conjunction with each other in the ordinary course of business, one of which is principal supply.

(B) Mixed Supply
According to Section 2(74) of CGST Act 2017, 'mixed supply' means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person fir a single price where supply does not constitute a composite supply.

Author: Vaishak O