2. Business 2(17)
“Business” includes –
(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 assets and services in connection with
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, as the case may be;
(f) admission, for a consideration, of persons to any premises; and
(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) services provided by a race club by way of totalisator or a license to book maker in such
club;
(i)Any activity or transaction undertaken by the Central Government, a State Government or
any local authority in which they are engaged as public authorities.
3. Inclusive Vs. Exhaustive Definition
The Supreme court in west Bengal state warehousing corporation Vs.
Indrapuri studio Pvt. Ltd. has examined the meaning of inclusive and
exhaustive definition as appearing in various statues. The word “include” when
used, enlarge the meaning of expression defined so as to comprehend not only
such things as they signify according to their natural import but also those
things which the clause declared that they shall includes.
4. History behind the clause (a)(b) and (c)
The clause (a) (b) and (c) is the main part of definition which is borrowed from sales tax act.
In the state of Gujarat V. Raipur Mfg. Co. Ltd. AIR 1967 SC 1066.It was held that normally, to
constitute a business there should be volume, frequency, continuity and regularity in
transaction of sale. Transaction must be enter with profit motive, though profit need not be
in fact earned. In this case it was held that when a person carry on business is required to
sale of fixed assets and discarded goods then he is not constitute business because he does
not carry on business of selling of fixed assets.
To override this decision and cover more transaction in tax net definition of business is expended.
a. Profit motive is immaterial.
b. even a single transaction may get covered under the ambit of ‘business’.
c. ancillary and incidental activity also cover in ambit of business.
5. Taxation of NGOs under GST
The supreme court of India in case of State of Tamil Nadu and Another Vs
Board of the port has held the following ratio
Principal emerge from the judgments of supreme court
of India
if main activity is not a business
Integral
activity is
not a
business
incidental and
ancillary activity
normally is not
business.
Exception: Burdon of proof is on
department to prove that non
business activity were
constitute an independent
business.
if main activity is a
business
incidental and
ancillary activity
shall also
constitute
business
6. FAQ on GST Bill on charitable activity
Q 4. Will giving away essential commodities by a charitable institution be
taxable activity?
Ans. In order to be a supply which is taxable under GST, the transaction
should be in the course or furtherance of business. As there is no quid pro
quo involved in supply for charitable activities, it is not a supply under GST.
7. (d)supply or acquisition of goods including capital
assets and services in connection with
commencement or closure of business;
Overruling the judgments of courts in case of Coromandal Fertilizers Vs. State of AP (1999)112 STC held
that sale of business as going concern it is not in the course of or in connection with or incidental or
ancillary to business.
Clause (d) read with Schedule II para 4.
Transfer of business assets
(a) where goods forming part of the assets of a business are transferred or disposed of by or under the
directions of the person carrying on the business so as no longer to form part of those assets, whether or
not for a consideration, such transfer or disposal is a supply of goods by the person;
(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes
of the business are put to any private use or are used, or made available to any person for use, for any
purpose other than a purpose of the business, whether or not for a consideration, the usage or making
available of such goods is a supply of services;
(c) where 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, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be taxable person.
8. (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, as the case may be;
Schedule II para no.7..
Supply of goods by unincorporated associations or body of person to a
member thereof for cash deferred payment or other valuable consideration
shall be treated as supply of goods.
Overruling the Judgment of Ranchi High Court on deeming provision and
“concept of mutuality”.
9. (f) admission, for a consideration, of
persons to any premises;
Constitutional validity;
Entry no 62 of state list as amended by amendment no 101 of constitution:
“Taxes on entertainment and amusement to the extent levied and collected
by a panchayat or a municipality or a regional council or a district council”.
Entry no 62 is amended by constitution amendment no. 101, to take the
benefit of aspect theory given by supreme court in case of Tata sky Ltd
Vs. state of MP and Ors. 9 (2013) 4 SCC 656.
10. (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;
Read clause (g) above with Schedule III ;
Services by an employee to the employer in the course of or in relation to his
employment shall be treated nether as a supply of goods nor a supply of service.
Example: Service provide by non executive director to company.
11. (h) services provided by a race club by
way of totalisator or a license to book
maker in such club;
Overruling the judgment in case of Madras Race Club Versus Commissioner
of Service Tax, Chennai over commission charged by club from book maker
or by way of totalisator.
12. (i) any activity or transaction undertaken by
the Central Government, a State Government
or any local authority in which they are
engaged as public authorities shall be
deemed to be business.
Overruling the judgments of courts on service provide by CISF,Police,election
commission and various Government department and local authority.
Once activity or transaction undertaken by Govt. is cover in the definition
of business then it should be necessary to exclude the transaction through
exemption notification, which Govt. do not want to tax.