OVERVIEW

 Definition of Sale
 Article 366(29A)
 Limbs of Article 366(29A)
 Otherwise than in pursuance of a contract
 Works Contract
 Hire Purchase or Instalment Payments
 Right to Use the Goods for any Purpose
 Supply of Goods by Unincorporated Association
 Food or Article for Human Consumption and Drink
 Deemed Export under GST
 Deemed Import under GST
 Concepts under GST
DEFINITION OF SALE

Section 2(g) of the CST Act defines the Sales means any
term “Sale” transfer of property in goods by one
person to another for cash or deferred
payment or any other valuable
consideration, and includes hire purchase,
instalment purchase ; excludes mortgage,
hypothecation, charge or pledge
ARTICLE 366(29A) INSERTED W.E.F 02-02-1983
 Certain transactions were not subject to tax prior to introduction
 Examples of a few such transactions:
 Compulsory acquisition (in the absence of free will)
 Works Contract- Only the goods forming part of the contract were
subject to tax
LIMBS OF ARTICLE 366(29A)
Tax on purchase or sale of goods includes:
(a) a tax on the transfer, otherwise than in pursuance of a contact, of property in
any goods for cash, deferred payment or other valuable consideration;
(b) a tax on the transfer of property in goods (whether as goods or in some other
form) invoked in the execution of a works contract;
(c) a tax on the delivery of goods on hire purchase or any system of payment by
installments;
(d) a tax on the transfer of the right to use any goods for any purpose (whether or
not for a specified period) for cash, deferred payment or other valuable
consideration;
 LIMBS OF ARTICLE 366(29A)- CONT’D
Tax on purchase or sale of goods includes:
(e) tax on the supply of goods by any unincorporated association or body of persons
to a member thereof for cash, deferred payment or other valuable consideration;
(f) a tax on the supply, by way of or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human consumption or
any drink (whether or not intoxicating), where such supply or service, is for cash,
deferred payment or other valuable consideration,
and such transfer, delivery or supply of any goods shall be deemed to be a sale of those
goods by the person making the transfer, delivery or supply and a purchase of those goods
by the person to whom such transfer, delivery or supply is made;
A. OTHERWISE THAN IN PURSUANCE OF A
CONTRACT
 For a sale to be constituted, there needs to be a contract
 New India Sugar Mills vs CST Bihar {1963 14 STC 316 (SC)}
 Transfer of controlled commodities not a sale
 ONGC vs State of Bihar
 Where there are any statutory compulsions, the statute itself should
be treated as supplying the consensus and furnishing the modality of
the consensus
B. WORKS CONTRACT
 For a Sale to be constituted, there needs to be a transfer of property in
goods
 In a works contract, there is a supply of goods in a different form
 State of Madras vs. Gannon Dunkerley & Company and others, (Madras),
9 STC 353:
 No sale of Goods in a composite and indivisible Works Contract
 Builders Association of India- Constitutional validity upheld
C. HIRE PURCHASE OR INSTALMENT PAYMENTS

On payment
Possession Payment by
Hirer has of nominal
given by agreed
option to amount
owner to number of
purchase after last
hirer instalments
instalment
D. RIGHT TO USE THE GOODS FOR ANY
PURPOSE
 Except the primary ownership, all rights transferred to transferee
 Transaction to have the following features:
 Goods available for delivery
 Consensus as to identity of goods
 Transferee to have legal right to use for the duration of his right
 Owner cannot transfer right to any other person during the aforesaid
duration
D. RIGHT TO USE THE GOODS FOR ANY
PURPOSE
 Rashtriya Ispat Niham v. CTO (1990) 77 STC 182 (AP)

 it was held that hire charges are taxable only when full possession and control is given to
the hirer.
 If the owner (person giving equipment) retains effective control over the equipment, it is
not ‘transfer of right to use’
 20th Century Finance Corporation Ltd. v. State of Maharashtra (2000) 119 STC 182 (SC)

 the situs of sale would be the place where the contract is executed and not
where the goods are located for use
 Industrial Oxygen vs State of AP- Sales Tax to be levied on hire of cylinders

 GS Lamba & Sons vs State of AP (2012)- Not transfer of property; but right in property
E. SUPPLY OF GOODS BY AN
UNINCORPORATED ASSOCIATION
 No Sale when goods are sold to members of the club or hostel run by the inmates

 Associated Hotels of India (1976) 17 STC 555:

 Supreme Court held that there is no sale involved in the supply of food or drink by a
hotelier to a person lodged in the hotel.
 However, in the light of present position, this is ‘deemed sale’ and is taxable
F. FOOD OR OTHER ARTICLE FOR HUMAN
CONSUMPTION AND DRINK
 Northern India Caterers Ltd. v. Lt. Governor of Delhi (1978) 42 STC 386 (SC)

 Service of food is not a Sale of Good for the purpose of levy of sales tax;

 It is rendering of a service in the satisfaction of a human need or

ministering to the bodily want of human beings
 Delta Jute Industries vs CTO- Sale of food to workmen in canteen also is taxable
CONCEPT OF DEEMED EXPORT UNDER CST
Section 5(3)
 The last sale or purchase of any goods preceding the sale or purchase occasioning
the export of those goods out of the territory of India shall also be deemed to be
in the course of such export,
 if such last sale or purchase took place after and was for the purpose of
complying with, the agreement or order for or in relation to such export
 Declaration in Form-H to be given by the exporter
CONCEPT OF DEEMED IMPORT UNDER CST
Section 5(2)
 A sale or purchase of goods shall be deemed to take place in the course of the
import of the goods into the territory of India;
 only if the sale or purchase either occasions such import;

 or is effected by a transfer of documents of title to the goods before the goods

have crossed the customs frontiers of India
CONCEPT UNDER GST
No separate section for Deemed Sale. Concepts mentioned in
Article 366(29A) find place in Schedule II
Schedule II specifies certain supplies to be treated as “supply
of goods” or “supply of services”
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
1. Transfer
a) Any transfer of the title in goods is a supply of goods.

b) Any transfer of goods or of right in goods or of undivided share in goods without

the transfer of title thereof, is a supply of services.
c) Any transfer of title in goods under an agreement which stipulates that property in
goods will pass at a future date upon payment of full consideration as agreed, is a
supply of goods.
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
2. Land and Building
a) Any lease, tenancy, easement, license to occupy land is a supply of services.

b) Any lease or letting out of the building including a commercial, industrial or

residential complex for business or commerce, either wholly or partly, is a supply of
services
3.Treatment or Process
a) Any treatment or process which is being applied to another person’s goods is a
supply of services.
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
4.Transfer of Business Assets
a) Part of business assets transferred or disposed of by or under the directions of
person carrying the business whether or not for consideration – supply of goods
b) goods held or used for the purposes of the business are put to any private use or
make available to others for other than business use is Supply of Service
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
4.Transfer of Business Assets
c) Any person ceases to be a taxable person, any goods forming part of the assets of
any business shall be deemed to have supplied by him (supply of goods) in course
of business unless:
a) business is transferred as a going concern
b) business is carried on by a personal representative who is deemed to be a
taxable person
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
5. Supply of Services
a) Renting of immovable property
b) Construction of a complex, building, civil structure or a part thereof, including a complex or
building intended for sale to a buyer, wholly or partly, except where the entire
consideration has been received after the issuance of the completion certificate,
where required, by the competent authority, or after first occupation, whichever is
earlier
c) Temporary transfer or permitting the use or enjoyment of any intellectual property right;
d) Development, design, programming, customization, adaptation, up gradation, enhancement,
implementation of information technology software;
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
5. Supply of Services
e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation,
or to do an act; and
f) Transfer of the right to use any goods for any purpose
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
6. Composite Supply to be treated as “Supply of Service”:
a) Works Contract
b) Supply, by way of or as part of any service or in any other manner whatsoever, of
goods, being food or any other article for human consumption or any drink (other
than alcoholic liquor for human consumption)
SCHEDULE II IN GST
Certain Supplies to be treated as “Supply of Goods” and “Supply of Services”
7. Supply of Goods:
a) Supply of Goods by any unincorporated association or body of persons to a
member thereof for cash, deferred payment or other valuable consideration.
CONCEPT UNDER GST

Point under Article Present Regulations Under GST

366(29A)
Otherwise than in Taxable event liable to tax Not specifically mentioned
pursuance of a contract in Schedule II. But is taxable
under GST since taxable
event is supply
Works Contract Liable to tax both under Specifically treated as
VAT and Service Tax Service by virtue of
Schedule II- Item No. 6(a)
CONCEPT UNDER GST
Point under Article Present Regulations Under GST
366(29A)
Hire Purchase or Instalment Liable to Tax as Sale of Specifically mentioned in
Payments Goods; VAT Applicable 1(c) of Schedule II to be
treated as Supply of Goods
Right to Use the Goods for Liable to Tax as Sale of Specifically mentioned in
any Purpose Goods; VAT and Service Tax 1(b) of Schedule II to be
applicable treated as Supply of
Services
CONCEPT UNDER GST
Point under Article Present Regulations Under GST
366(29A)
Supply of Goods by Liable to Tax as Sale of Specifically treated as
Unincorporated Association Goods; VAT Applicable Supply of Goods by virtue
of Schedule II- Item No. 7
Food or any other article Levy attracted as Sale of Specifically treated as
for human consumption; or Goods; VAT and Service Tax Supply of Services by virtue
drink applicable of Schedule II- Item No.
6(b)
CONCEPT UNDER GST
Section under CST Act Present Regulations Under GST
Deemed Export Exempt from Tax on No such concept in GST
furnishing of Form F
Deemed Import Exempt from Tax – Section 7(2) of IGST Act
– Liable to IGST
QUESTIONS???