“Activities/ Transactions which shall not be treated as Supply of Goods or Services” as per Third Schedule (III) to the CGST Act 2017

Provisions under the ‘Third Schedule (III)’ to the CGST Act 2017 regarding “Activities/ Transactions which shall not be treated as Supply of Goods or Services”, are as under:

Schedule III to CGST Act 2017: Activities or Transactions which shall be treated neither as a Supply of Goods nor a Supply of Services (See Section 7)

1. Services by an employee to the employer in the course of or in relation to his employment.

2. Services by any court or Tribunal established under any law for the time being in force.

3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;

(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or

(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.

4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

6. Actionable claims, other than lottery, betting and gambling.

[7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.

8. (a) Supply of warehoused goods to any person before clearance for home consumption; (b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.]$1

Explanation [1]$2: For the purposes of paragraph 2, the term “court” includes District Court, High Court and Supreme Court.

[Explanation 2: For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962.]$2

SCHEDULES TO CGST ACT 2017

First Schedule: Activities to be treated as Supply even if made Without Consideration

Second Schedule: Activities to be treated as Supply of Goods or Services

Third Schedule: Activities/ Transactions which shall not be treated as Supply of Goods or Services

Amendments History:

$1. Paragraphs 7 & 8 inserted vide CGST (Amendment) Act, 2018. Thus certain supplies in respect of Merchant trading, Sale of goods in customs bonded warehouse and High Seas sales inserted in Schedule.

$2. Explanation 2 inserted vide CGST (Amendment) Act, 2018.

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The Central Goods and Services Tax (CGST) Act, 2017 was notified by Govt. of India on 12 April, 2017 and CBIC has notified the commencement date for various Sections/ Provisions thereof from time to time. Subsequently, Govt. has notified the Central Goods and Services Tax (CGST) (Amendment) Act, 2018 on 30 Aug. 2018. Further, CBIC has separately notified the commencement date of provisions of various Sections of the CGST (Amendment) Act 2018 vide Notification No. 2/2019 Central Tax dt. 29 Jan. 2019, except for sections where the date of commencement is different from 1 Feb. 2019 and has specifically been mentioned in the CGST Amendment Act, 2018 itself.

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