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GST Knowledge Series 1 – What to Tax?

GST Knowledge Series 1 – What to Tax?

Everyone is eager to hear the onset of Goods and Service Tax (“GST”) in India.  The proposed GST likely to be introduced by 2017, would replace a number of indirect taxes levied by the Centre and State governments on goods and services.  It intends to replace the numerous laws as are prevailing on supply of goods and services and introduce a single taxing mechanism.  122nd Constitution Amendment Bill defines “goods and services tax” as to mean any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption.  Thus, it is important to understand the thre most crucial terms of this new law – supply, goods and services.  We shall now examine each of the said word in detail hereinunder.

  1. Goods

Article 366(12) of Constitution defines goods to include all materials, commodities, and articles.  The definition however, is a more restrictive one in Sale of Goods Act.   Section 2(7) of Sale of Goods Act defines goods as to mean every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.  Moveable property has further been defined as property of every description, except immovable property.  It is also pertinent to note that the definition of goods is of wide connotation since it is based on an inclusive definition.  The word “include” provides a wide connotation to the definition. [Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology, (2002) 5 SCC 111].  Thus, the ambit of term goods is wide enough to include all corporeal and incorporeal property held in oneself other than immovable goods.  Characteristics of movable goods has been defined as things which are capable of abstraction, consumption and use.  Things which can be transmitted, transferred, delivered, stored, possessed etc. are goods as much as a movable property.  Such observations have been made by the Apex Court in the case of Commissioner of Sales Tax, Madhya Pradesh, Indore vs. Madhya Pradesh Electricity Board, Jabalpur reported in (1969) 1 SCC 200 and TCS v State of Andhra Pradesh. Things like Copyright, Gas, water, electricity, DEPB scraps, Information technology software etc have been held as goods in various judgments by Hon’ble courts.

 

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By | 2017-04-06T10:49:06+00:00 June 16th, 2016|Uncategorized|

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