Section -3 Meaning and scope
of supply
(1)
Supply includes—
(a) all
forms of supply of goods and/or services such as sale, transfer, barter, exchange,
license, rental, lease or disposal made or agreed to be made for a consideration
by a person in the course or furtherance of business,
(b)
importation of services, for a consideration whether or not in the course or furtherance
of business, and
(c) a
supply specified in Schedule I, made or agreed to be made without a
consideration.
(2)
Schedule II, in respect of matters mentioned therein, shall apply for
determining what is, or is to be treated as a supply of goods or a supply of
services.
(3)
Notwithstanding anything contained in sub-section (1),
(a)
activities or transactions specified in schedule III; or
(b)
activities or transactions undertaken by the Central Government, a State Government
or any local authority in which they are engaged as public
authorities
as specified in Schedule IV,
shall be treated neither as a supply of goods
nor a supply of services.
(4)
Subject to sub-section (2) and sub-section (3), the Central or a State
Government
may, upon recommendation of the Council, specify, by notification, the
transactions that are to be treated as—
(a) a
supply of goods and not as a supply of services; or
(b) a
supply of services and not as a supply of goods; or
(c)
neither a supply of goods nor a supply of services.
(5) The
tax liability on a composite or a mixed supply shall be determined in the following
manner —
(a) a
composite supply comprising two or more supplies, one of which is a principal supply,
shall be treated as a supply of such principal supply;
(b) a
mixed supply comprising two or more supplies shall be treated as supply of that
particular supply which attracts the highest rate of tax.
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