Activities or Transactions which Shall be Treated as Neither Supply of Goods nor as Supply of Services

Under the CGST Act, 2017, GST is levied only on the supply of goods or services. However, Schedule III specifies certain activities and transactions that are treated as neither a supply of goods nor a supply of services. Since these transactions are outside the scope of GST, no GST is payable on them. These provisions help avoid taxation on activities that do not involve a taxable supply in the commercial sense. Understanding these exclusions is important for determining the correct GST liability and ensuring proper compliance with the GST law while avoiding unnecessary tax disputes.

1. Services by an Employee to the Employer

Services provided by an employee to the employer in the course of or in relation to employment are treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. Accordingly, salaries, wages, bonuses, and other employment related remuneration paid by the employer are not subject to GST. However, services provided by an employee outside the scope of employment or by an independent consultant are not covered by this exclusion. This provision ensures that employer employee relationships remain outside the GST framework.

2. Services by a Court or Tribunal

Services provided by any court or tribunal established under any law are treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. Judicial functions performed by courts and tribunals are therefore outside the scope of GST. This exclusion applies to activities carried out in the exercise of judicial authority and ensures that the administration of justice is not treated as a commercial supply. It maintains the independence of judicial institutions while preventing GST from being imposed on judicial proceedings.

3. Functions Performed by Members of Parliament and Other Constitutional Authorities

Functions performed by Members of Parliament, Members of State Legislatures, Members of Panchayats, Members of Municipalities, and other constitutional office holders are treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. These functions are performed in the discharge of constitutional or statutory responsibilities rather than as commercial activities. Therefore, remuneration or allowances received for performing such official duties are outside the scope of GST, ensuring that constitutional functions are not subjected to taxation.

4. Duties Performed by Constitutional Functionaries

Services performed by persons holding constitutional offices, such as the President of India, Governors of States, Judges of the Supreme Court and High Courts, the Comptroller and Auditor General of India, and similar authorities, in the discharge of their official duties are treated as neither a supply of goods nor a supply of services. Since these functions arise from constitutional responsibilities and not from commercial transactions, they remain outside the GST framework under Schedule III of the CGST Act, 2017.

5. Funeral, Burial, Crematorium, or Mortuary Services

Services relating to funeral, burial, crematorium, or mortuary activities, including the transportation of the deceased, are treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. These activities are kept outside the GST framework considering their humanitarian and social nature. As a result, GST is not levied on such services. This provision ensures that essential services connected with the final rites of a deceased person are not burdened with indirect taxation.

6. Sale of Land

The sale of land is treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. Therefore, the transfer of ownership of land does not attract GST. However, transactions involving the construction of buildings before completion or other taxable activities relating to land may be subject to GST, depending on the applicable legal provisions. This exclusion prevents the taxation of simple land transfers and clearly distinguishes them from taxable real estate transactions.

7. Sale of Building After Completion Certificate

The sale of a building after obtaining the completion certificate from the competent authority, or after its first occupation, whichever is earlier, is treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. Consequently, such transactions are not liable to GST. However, the sale of an under construction building before completion may attract GST as provided under the law. This distinction ensures proper taxation of real estate transactions.

8. Transactions in Securities and Actionable Claims

Transactions involving securities are treated as neither a supply of goods nor a supply of services under Schedule III of the CGST Act, 2017. Similarly, actionable claims, other than lottery, betting, and gambling, are also excluded from the scope of GST. Since these transactions do not constitute taxable supplies under the GST law, no GST is payable on them. This provision provides clarity regarding financial transactions and prevents the taxation of activities specifically excluded by the Act.