Taxable Event under GST
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Taxable event means any event or instance, occurrence of which triggers or result in a tax liability. In simple, taxable event result in tax liability.
In earlier indirect tax regime, there are multiple taxes with multiple taxable events, like for excise duty, the taxable event was production or manufacturing of goods and for service tax, taxable event is performance of services etc., however, in GST, the taxable event is supply of goods or services or both.
Supply itself is a vast topic to discuss, as the GST foundation is based on supply. It means, if any transaction unless it does not falls into the definition of supply, the GST liability would not arise.
For example, supply of alcoholic liquor for human consumption kept outside preview of GST, hence no GST liability would arise in this case.
In GST, there are two important definitions to understand i.e., Supplier and Recipient of supply of goods or services:
- Supplier of goods or services or both: In general, supplier means a person who supplies goods or services, however, in GST, the term supplier has been defined under Section 2(105) of CGST Act, 2017, where supplier means the person who makes supply of goods or services or both is treated as supplier. Here, Supplier does not only include the person who is to party to transaction as seller, but also agents or person who is acting on behalf of supplier, then in such case, agent is treated as supplier.
- Recipient of goods or services of both: The term “Recipient” has been defined under section 2(93) of CGST Act, 2017, where there is consideration involved, then person who is liable to pay consideration shall be recipient, however, in case there is no consideration is involved, then recipient shall be the person to whom goods are delivered or services are performed.
In nutshell, any transaction would be liable to GST, only if such transaction falls under the definition of goods or services, and such transaction falls under the definition of supply. If such, transaction falls under the definition of supply, then such event will trigger taxable event and it will be attract GST liability.
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Team Taxation Insight
