GOODS AND SERVICES TAX (GST)
Important Definitions under GST –
The Goods and Services Tax (GST) is governed mainly by the Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act).
Understanding definitions is very important for exams, because GST liability depends on these terms.
(a) Business – Section 2(17), CGST Act, 2017
Definition (Simplified)
Under GST, business is defined very widely. It includes:
- Any trade, commerce, manufacture, profession or vocation
- Any activity done for profit or not for profit
- Supply of goods or services connected with trade
- Activities of clubs, associations, societies
- Government or local authority activities (in some cases)
👉 Profit motive is NOT necessary under GST.
Key Points for Exam
- Even one-time activity can be business
- Even charitable or religious activity may be business
- Frequency or continuity is not compulsory
Important Case Law
State of Gujarat v. Raipur Manufacturing Co. Ltd.
Held:
Business includes all activities which are connected with trade or commerce.
Profit motive is not always essential.
➡️ This principle is now clearly adopted under GST.
Exam Note
👉 GST widened the meaning of business to avoid tax evasion and cover maximum transactions.
(b) Capital Goods – Section 2(19), CGST Act, 2017
Definition
Capital goods means:
Goods, the value of which is capitalised in the books of accounts of the person claiming input tax credit, and which are used or intended to be used in the course or furtherance of business.
Examples
- Machinery
- Plant
- Equipment
- Computers used in office
- Furniture (if capitalised)
Importance under GST
- Input Tax Credit (ITC) can be claimed on capital goods
- Credit may be spread over time in some situations
Relevant Case Law (Pre-GST Principle Applied)
Jawahar Mills Ltd. v. CCE
Held:
Capital goods include goods used directly or indirectly in manufacturing.
➡️ GST follows this liberal interpretation.
Exam Tip
👉 Capitalisation in books is the key condition under GST.
(c) Export and Import of Goods and Services
(i) Export of Goods – Section 2(5), IGST Act
Definition
Export of goods means:
Taking goods out of India to a place outside India.
(ii) Export of Services – Section 2(6), IGST Act
Export of services means:
- Supplier is in India
- Recipient is outside India
- Place of supply is outside India
- Payment received in foreign exchange
- Supplier and recipient are not merely establishments of same person
(iii) Import of Goods – Section 2(10), IGST Act
Bringing goods into India from outside India.
(iv) Import of Services – Section 2(11), IGST Act
When:
- Supplier is outside India
- Recipient is in India
- Place of supply is in India
Important Case Law
Commissioner of Service Tax v. SGS India Pvt. Ltd.
Held:
If service is consumed outside India, it qualifies as export.
➡️ This principle continues under GST.
Exam Highlight
👉 Export is treated as zero-rated supply under GST (no tax burden).
(d) Goods – Section 2(52), CGST Act, 2017
Definition
Goods means:
Every kind of movable property other than money and securities, but includes actionable claim, growing crops, grass and things attached to land which are agreed to be severed before supply.
Key Elements
- Movable property
- Includes tangible goods
- Includes actionable claims (like lottery)
What is NOT Goods?
- Money
- Securities
Important Case Laws
Tata Consultancy Services v. State of Andhra Pradesh
Held:
Software (even intangible) can be treated as goods if it is:
- Capable of being bought and sold
- Capable of being transmitted, transferred, delivered
➡️ GST follows this principle.
Vikas Sales Corporation v. Commissioner of Commercial Taxes
Held:
Import licenses and similar rights are goods.
Exam Note
👉 GST adopts wide meaning of goods to cover modern transactions.
(e) Service – Section 2(102), CGST Act, 2017
Definition
Service means:
Anything other than goods, money and securities, but includes activities relating to use of money for which a separate consideration is charged.
Examples
- Banking
- Insurance
- Transport
- Consultancy
- Education services (subject to exemption)
- Renting of property
Importance
GST removed the old confusion between:
- Goods
- Services
- Works contract
Important Case Law
Bharat Sanchar Nigam Ltd. v. Union of India
Held:
Distinction between goods and services is necessary, but in composite contracts, both elements may exist.
➡️ GST solves this issue by taxing supply, not classification.
Another Case
All India Federation of Tax Practitioners v. Union of India
Held:
Service tax is a value-added tax on services.
➡️ This principle forms the foundation of GST.
Comparative Exam Summary (Quick Revision)
| Term | Section | Key Idea |
|---|---|---|
| Business | 2(17) CGST | Profit motive not required |
| Capital Goods | 2(19) CGST | Capitalised assets |
| Goods | 2(52) CGST | Movable property |
| Service | 2(102) CGST | Anything other than goods |
| Export | 2(5), 2(6) IGST | Zero-rated supply |
| Import | 2(10), 2(11) IGST | Taxable under GST |
Conclusion
The definitions of business, capital goods, goods, services, export and import under GST are broad and inclusive. These definitions are designed to widen the tax base, remove ambiguity, and ensure smooth implementation of GST. Judicial interpretations from pre-GST era continue to guide the application of GST law.
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