Q 3 | Meaning of in the course or furtherance of business | GST practical faq series issued by ICAI

Please ♥Like ♥ Share ♥Subscribe ♥♥TELEGRAM CHANNEL LINK♥♥ I am practitioner (CA, CMA, CS, Lawyers, Accountants): https://t.me/taxbykk I am CA final student: https://t.me/cafinalgstkk I am CA inter student: https://t.me/cainterkk I am CMA inter student: https://t.me/cmainterkk I am CMA final student: https://t.me/cmafinalbykk I am CS Exe student: https://t.me/csexekk I am CS Profs student: https://t.me/csprofkk I am Law student: https://t.me/taxlawbykk ♥♥OUR STORE LINK♥♥ www.taxbykk.com ♥♥WHAT'S APP LINK♥♥ https://wa.me/919999227381 QUESTION What do you understand by the term “in the course of business and furtherance of business”? What is the tax treatment of the same under GST?

Ans. In GST the two basic elements are supply and ITC. The definition of ‘supply’ as given in Section 7(1)(a) of the CGST Act includes-

“all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business”

Hence, “in the course of and in furtherance of business” is the primary requirement for supply in GST and supply is the primary and necessary element for levying of GST. The term ‘further’ enables the entity to supply and receive supplies where the act is towards achieving the goals of the business.

Further, the condition mandated for availing ITC as mentioned in Section 16(1) of the CGST Act is: “Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.” ‘In the course or furtherance’ is not defined under GST Act, but is broad enough to cover any supplies made in connection with the business. The phrase widens the scope of the definition of ‘Business’ to bring more activities within its ambit. The phrase “course or furtherance” further extends to “course or furtherance of business”. Hence, it is important to understand the meaning of business which is defined in Section 2(17) of the CGST Act as under:

“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 sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods 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; (f) admission, for a consideration, of persons to any premises; (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) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and (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;

The literal meaning of the said phrase ‘in the course of or furtherance of’ is ‘during the act of or in continuation of carrying out such act in future’. Thus, in the course or furtherance of business means either of following: - anything done in relation to business, while carrying out business or - simply a revenue-generating ordinary activity of that organisation/concern.

Considering the definition of business, the sale of goods or service even as a vocation is a supply under GST.

. However, there is one exception to this ‘course or furtherance of business’ rule i.e., import of services for a consideration. Import of services for consideration, even if not in the course -or furtherance of business are liable to GST. No GST on supply not in the course or furtherance of business As elaborated above, supplies in the course or furtherance of business qualify as supply under GST. Hence, supplies made by an individual in his personal capacity do not come under the ambit of GST unless they fall within the definition of business as defined in the Act. It has been clarified vide C.B.E.&C. Press Release No. 78/2017, dated 13.7.2017 that sale of old gold jewellery by an individual to a jeweller will not constitute supply as the same cannot be said to be in the course of furtherance of business of the individual.