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Interpretation Of Central Goods And Services Tax (Cgst) Act (Part-8) (Meaning Of Important Terms)
June, 06th 2017

This part of the series contains meanings of certain terms covered in Section 2 of the CGST Act, 2017.  These are Tax Invoice, Inward Supply, Job Work, Local Authority, Market Value, Mixed Supply and Money.

Invoice [Section 2(66)]

'Invoice' or 'tax invoice' means the tax invoice referred to in section 31. 'Tax invoice’ is required to be issued by a registered taxable person showing description of goods and/or services, value, tax and other particulars at the time of supply. It is a document evidencing supply of goods and services which becomes the basis for charge of tax. ‘Tax invoice’ shall be deemed to include a document issued by an input service distributor(ISD). 

'Tax invoice’ shall be deemed to include-

  • a document issued by an input service distributor, and
  • any supplementary or a revised invoice issued by the supplier in respect of a supply made earlier.

Invoice is a document which provides evidence of existence of transaction of supply of goods and/or services. Tax invoice issued by the registered taxable person is an essential document to establish time of supply and for the recipient of goods and/or services to avail input tax credit. The matching of transactions of inwards and outward supplies is also done on the basis of tax invoice.

Inward Supply [Section 2(67)]

'Inward Supply' in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or any other means with or without consideration.

Inward supply shall be in relation to person. Receipt of goods and / or services is important to constitute an inward supply. Means of such receipt is not important for the determination.

Purchase, acquisition or any other means of receiving goods and / or services will not matter in determination of supply to be an inward supply. Similarly, payment of consideration for such receipt of goods and / or services will also be not a factor in determination of inward supply.

Inward supply may be with or without consideration.

Job Work [Section 2(68)]

'Job work' means any treatment or process undertaken by a person on goods belonging to another registered person and the expression 'job worker' shall be construed accordingly.

Job work is any treatment or process which is undertaken by a person on goods belonging to other registered person. The person on whose goods, some activity or process is carried out is called the principal and the person who carries out such process is called the job worker.

The consideration which is paid to the job worker is called the job work charges and carrying out the activity of job work will constitute as provision of services by job worker.

Job work activity carried out on the goods belonging to an unregistered person will not be covered by this definition as the goods belonging to the registered taxable person are proposed to be regulated under the Act as such registered taxable person has taken input tax credit on such goods. Whereas there is no case of input tax credit in case of unregistered person.

Local Authority [Section 2(69)]

'local authority' means––

  1. a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
  2. a “Municipality” as defined in clause (e) of article 243P of the Constitution;
  3. a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;
  4. a Cantonment Board as defined in section 3 of the Cantonments Act 2006;
  5. a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
  6. a Development Board constituted under article 371 of the Constitution; or
  7. a Regional Council constituted under article 371A of the Constitution;

Market Value [Section 2(73)]

'Market value' shall mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related.

Market value implies full value / amount which a recipient is required to pay for same quality, kind, at same time, at same commercial level and both parties are not related.

It may be noted that the concept of market value has not been used in the Act for determination of taxable liability of supplier.

The concept of market value has been used only in section 130 providing for the option to pay fine in lieu of confiscation of goods and the value of the fine not to exceed market value of goods.  Other than for levy of the maximum value of fine which can be imposed at the time of confiscation of the goods, market value of goods has no relevance in GST law.

Mixed Supply [Section 2(74)]

'Mixed supply' means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Supply of two or more goods and / or services or any combination thereof for a single price will constitute mixed supply.

It may be noted that the supplies made in case of mixed supply are not naturally bundled but different goods and / or services in case of mixed supply are bundled consciously otherwise each item of goods and / or services consisting in mixed supply can be supplied independently also.

Single price is a feature of mixed supply because price of each item consisted in mixed supply is not considered and made known to recipient. The taxability of transaction of mixed supply of goods have been dealt in section 8 of CGST law.

Money [Section 2(75)]

'Money' means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;

‘Money’ means and includes:

  • the Indian legal tender or any foreign currency,
  • cheque,
  • promissory note,
  • bill of exchange,
  • letter of credit,
  • draft pay order,
  • traveller cheque,
  • money order,
  • postal or electronic remittance or any other instrument recognised by the Reserve Bank of India

        when used as

  • a consideration to settle an obligation, or
  • exchange with Indian legal tender of another denomination

Money shall not include any currency that is held for its numismatic value.  Money is not 'goods'. Transaction in money is not a service.

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