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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Supply under GST

Under section 7 of the CGST Act, 2017, which statement about the Government's power to notify transactions is correct?

Section 7(3) lets the Government, on the Council's recommendations, notify transactions as supply of goods and not services, or services and not goods. The power is subject to section 7(1), (1A) and (2), so it cannot override Schedule III or dispense with the Council.

  1. AThe Government may, on the Council's recommendation, notify transactions as supply of goods and not services, or of services and not goods, subject to sections 7(1), (1A) and (2)Correct
  2. BThe Government may notify any Schedule III activity as a supply of services without limit
  3. CThe Government may override Schedule II classification by notifying any transaction as neither goods nor services
  4. DThe Government may notify transactions without any recommendation of the Council

Explanation

Section 7(3) lets the Government, on the Council's recommendations, specify by notification transactions to be treated as goods and not services, or services and not goods. This power is expressly subject to sub-sections (1), (1A) and (2). So it cannot be used to turn Schedule III activities into supplies, and the Council's recommendation is required.

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