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CMA Final · Indirect Tax Laws and Practice · Supply under GST

Which of the following is correct about the power under Section 7(3) of the CGST Act, 2017?

Section 7(3) empowers the Government, on the Council's recommendations, to notify transactions as a supply of goods and not services, or of services and not goods. This power is subject to sub-sections (1), (1A) and (2), so it cannot override Schedule III or grant exemption.

  1. AThe Government may, on Council recommendations, notify transactions to be treated as a supply of goods and not services, or of services and not goods, subject to sub-sections (1), (1A) and (2)Correct
  2. BThe Government may notify any Schedule III activity as a taxable supply
  3. CThe Government may, without Council recommendation, reclassify supplies
  4. DThe Government may exempt any supply from tax under Section 7(3)

Explanation

Section 7(3) lets the Government, on Council recommendations, specify by notification transactions as goods-not-services or services-not-goods, subject to sub-sections (1), (1A) and (2). Schedule III activities cannot be made supplies because sub-section (2) prevails. Exemption is under Section 11.

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