INTERGLOBE AVIATION LTD vs PRINCIPAL COMMISSIONER OF CUSTOMS ACC (IMPORT) NEW CUSTOM HOUSE NEW DELHI & ORS.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 12 November, 2024
Judgment pronounced on: 04 March, 2025

+ W.P.(C) 934/2023

INTERGLOBE AVIATION LTD …..Petitioner
Through: Mr. V. Lakshmikumaran, Ms. Jyoti Pal, Mr. Yogendra Aldak, Mr. Agrim Arora, Ms. Anjali Singh and Ms. Anjali Singh and Ms. Aditi Sharma, Advs.

versus

PRINCIPAL COMMISSIONER OF CUSTOMS ACC (IMPORT) NEW CUSTOM HOUSE NEW DELHI &
ORS. …..Respondents
Through: Mr. Anurag Ojha, SSC along with Mr. Subham Kumar, Adv. for R-1.
Ms. Sonu Bhatnagar, SSC for CBIC along with Ms. Apurva Singh and Ms. K.S. Mary Jonet, Adv. for R-2.
Mr. Niraj Kumar, Sr. CGC for R-3/UOI.
Ms. Avshreya Pratap Singh Rudy, SPC along with Ms. Usha Jamnal and Ms. Harshita Chaturvedi, Advs.

+ W.P.(C) 7845/2023

INTERGLOBE AVIATION LTD …..Petitioner
Through: Mr. V. Lakshmikumaran, Ms. Jyoti Pal, Mr. Yogendra Aldak, Mr. Agrim Arora, Ms. Anjali Singh and Ms. Anjali Singh and Ms. Aditi Sharma, Advs.

versus

PRINCIPAL COMMISSIONER OF CUSTOMS ACC (IMPORT) NEW CUSTOM HOUSE NEW DELHI &
ORS. …..Respondents
Through: Mr. Anurag Ojha, SSC along with Mr. Subham Kumar, Adv. for R-1.
Mr. Niraj Kumar, Sr. CGC for R-2/UOI.

+ W.P.(C) 4673/2024

INTERGLOBE AVIATION LTD …..Petitioner

Through: Mr. V. Lakshmikumaran, Ms. Jyoti Pal, Mr. Yogendra Aldak, Mr. Agrim Arora, Ms. Anjali Singh and Ms. Anjali Singh and Ms. Aditi Sharma, Advs.
versus

PRINCIPAL COMMISSIONER OF CUSTOMS ACC (IMPORT) NEW CUSTOM HOUSE, NEW DELHI,
& ORS. …..Respondents
Through: Mr. Anurag Ojha, SSC along with Mr. Subham Kumar, Adv. for R-1.
Ms. Avshreya Pratap Singh Rudy, SPC with Ms. Usha Jamnal, Ms. Harshita Chaturvedi & Mr. Siddhant Nagar, Advs.
CORAM:
HON’BLE MR. JUSTICE YASHWANT VARMA
HON’BLE MR. JUSTICE RAVINDER DUDEJA

J U D G M E N T

YASHWANT VARMA, J.

TABLE OF CONTENTS
PRELUDE 3
FACTUAL NARRATIVE 5
CONSTITUTIONAL AMENDMENT: LEGISLATIVE OBJECTIVES 7
CGST, IGST, CUSTOMS ACT, AND CTA: AN OVERVIEW 27
SCHEME OF THE IMPUGNED NOTIFICATIONS 58
RIVAL SUBMISSIONS 68
THE INTERSTATE LEVY ON SUPPLY OF GOODS, SERVICES OR BOTH 108
SECTION 5 AND ITS PROVISO 141
THE ARGUMENT ON ASPECT THEORY 152
DISCERNING THE INTENT OF AN ‘EXPLANATION’ 153
ORDERS OF THE COMMISSIONER OF CUSTOMS (APPEALS) 171
SUMMATION 182
DISPOSITION 184

PRELUDE

1. These three writ petitions bid us to traverse the unchartered and untested territory of the interplay between the Customs Act, 19621, and the Customs Tariff Act, 19752 on one side of the scale when pitted against the Central Goods and Services Tax Act, 20173 and the Integrated Goods and Services Tax Act, 20174. They pose two fundamental questions for our consideration: –
(A) Whether the duty leviable under Section 3(7) of the CTA is independent of the impost created by Section 5 of the IGST?
(B) Whether a supply of service conferred that character by virtue of Schedule II of the CGST would remain unimpeded by the concept of import of goods as ordinarily understood?
2. These questions themselves arise in the backdrop of the paradigm shift which was ushered in by the One Hundred and First Constitution Amendment Act, 20165 and which brought in a sea change with respect to the power to levy taxes by the Union and the States and the distribution of taxes and duties amongst the constituents of the Union.
3. The challenge itself emanates from the petitioners having moved aircraft engines and aircraft parts [hereinafter for the sake of brevity to be referred to as “the subject goods”] for repair and service outside the territory of India and the levies which could be imposed at the time of their reimport. The petitioners would contend that since the export of the subject goods for repair outside India and their subsequent reimport would fall in the category of a “supply of service”, no further impost as envisaged under Section 3(7) of the CTA would stand attracted. It is contended that once a transaction is conferred the character of a supply of service, it would be impermissible for the respondents to bring those transactions to tax by treating them as an import of goods and articles.
4. Undisputedly, the CTA is not concerned with the import or export of services. That statutory instrument stands confined to articles and goods only. A supply of service is a concept which came to be introduced by the CGST and IGST enactments and which owes its genesis to the Constitution Amending Act. It is thus contended that the integrated tax which is spoken of in the CTA can only be construed to be a reference to the tax imposed by the IGST and Section 3(7) being merely a collection mechanism placed at the point of reimport.
5. The respondents, on the other hand, would argue that Section 3(7) of the CTA is an independent charging provision levying an additional duty of customs. According to them, that levy does not stand effaced consequent to the promulgation of IGST. They would commend for our acceptance the principles underlying the “aspect theory” of taxation which envisages a tax being validly imposed upon two aspects forming part of the same transaction. It was thus argued that notwithstanding the levy of a tax under the principal provision of Section 5(1) of the IGST, the petitioner does not stand absolved of the liabilities created by Section 3(7) of the CTA.
FACTUAL NARRATIVE
6. For the purposes of appreciating the rival contentions which were addressed, we propose to take note of the following principal facts. As we gather from the disclosures made in the writ petitions, the petitioner is principally engaged in the activity of transportation of passengers and goods by air from various places in and outside India. During the course of its business, the petitioner sends the subject goods to Maintenance, Repair and Overhaul Service6 providers. These MROs’ are located outside India and the goods so consigned to them post repair and overhaul are reimported. According to the writ petitioners at the time of physical reimport of the subject goods, while a Basic Customs Duty7 would be attracted, the same is exempt by virtue of Notification No. 50/2017 dated 30 June 2017.
7. The writ petitioners assert that the reimport is liable to be treated as a transaction of supply of service or import of service in terms of Section 5(1) of the IGST read along with Entry 3 comprised in Schedule II of the CGST. The IGST component of tax is duly discharged by the writ petitioners. The respondents, however, assert that IGST is payable at the time of import of the subject goods since they are after all goods which are being reimported into the territory of India. According to them, it is at this stage that Section 3(7) of the CTA gets attracted along with the Proviso to Section 5(1) of the IGST.
8. It is the case of the writ petitioner that it had been claiming exemption from IGST by paying tax at a lower rate by virtue of Notification No. 45/2017 which obligates them to pay only so much of the duty of customs which would be leviable treating the value of the reimported goods after repair as made up of its repair value. The position and stand taken by the writ petitioners came to be accepted by the Customs, Excise and Service Tax Appellate Tribunal8 by virtue of its final orders dated 02 November 2020 and 15 January 2021. The CESTAT had held that the phrase ‘duty of customs’ as appearing in Notification No. 45/2017 would only mean BCD and not include IGST and compensatory cess. Those final orders of the CESTAT presently form the subject matter of challenge before the Supreme Court in Civil Appeal No. 1853-2198 of 2021 and 5160-5574 of 2021. However, it is pertinent to note that no interim orders operate on those civil appeals. Notification 45/2017 came to be amended on 19 July 2021 by Notification No. 36/2021 in terms of which the phrase ‘duty of customs’ came to be substituted with the phrase ‘said duty, tax or cess’. The issuance of that notification also saw the insertion of an explanation, which essentially held that IGST would be leviable on goods reimported post repairs. This was followed by Circular No. 16/2021 dated 19 July 2021. The aforenoted Circular specifically alludes to the orders of the CESTAT noted above and declares that the amendments were prompted by the felt need for all doubts being allayed and laid to rest insofar as an IGST liability on reimported goods was concerned. The said Circular thus refers to the aforesaid amendments as being clarificatory in nature.
9. As a result of the above, while the petitioners continue to remain exempt from the payment of BCD in terms of Notification No. 50/2017, they now face an additional level of IGST in light of the amendments which have come to be introduced by virtue of Notification 36/2021 read along with Section 3(7) of the CTA.
10. We have had the benefit of hearing elaborate and erudite submissions which were advanced by Mr. Lakshmikumaran, learned counsel who appeared for the writ petitioners and Mr. Ojha, who represented the respondents. However, before we proceed to notice the contentions that were advanced, it would be apposite to take note of the statutory scheme as well as the principal provisions made in the subject notifications which would enable us to appreciate and evaluate the questions which stand posited for our consideration.
CONSTITUTIONAL AMENDMENT: LEGISLATIVE OBJECTIVES

11. Our discussion would necessarily have to be prefaced by taking note of the seminal amendments which came to be introduced by the Constitution Amendment Act. The Constitution Amendment Act came to be passed on 08 September 2016. For the purposes of appreciating the broad objectives underlying the various amendments introduced by virtue of that enactment, it would be pertinent to refer to its Statement of Objects and Reasons as well as the salient parts of the Bill as introduced and which are reproduced hereinbelow: –
Constitution (One Hundred and First Amendment) Act, 2016

[September 8, 2016]

 
“
An Act further to amend the Constitution of India
Be it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:—
Statement of Objects and Reasons.— The Constitution is proposed to be amended to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States including Union territory with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. The goods and services tax shall replace a number of indirect taxes being levied by the Union and the State Governments and is intended to remove cascading effect of taxes and provide for a common national market for goods and services. The proposed Central and State goods and services tax will be levied on all transactions involving supply of goods and services, except those which are kept out of the purview of the goods and services tax.
2. The proposed Bill, which seeks further to amend the Constitution, inter alia, provides for—
(a) subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, Special Additional Duty of Customs, and Central Surcharges and Cesses so far as they relate to the supply of goods and services;
(b) subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services;
(c) dispensing with the concept of ‘declared goods of special importance’ under the Constitution;
(d) levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
(e) levy of an additional tax on supply of goods, not exceeding one per cent in the course of inter-State trade or commerce to be collected by the Government of India for a period of two years, and assigned to the States from where the supply originates;
(f) conferring concurrent power upon Parliament and the State Legislatures to make laws governing goods and services tax;
(g) coverage of all goods and services, except alcoholic liquor for human consumption, for the levy of goods and services tax. In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy of Goods and Services Tax till a date notified on the recommendation of the Goods and Services Tax Council;
(h) compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period which may extend to five years;
(i) creation of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits. The Council shall function under the Chairmanship of the Union Finance Minister and will have the Union Minister of State in charge of Revenue or Finance as member, along with the Minister in-charge of Finance or Taxation or any other Minister nominated by each State Government. It is further provided that every decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting in accordance with the following principles:—
(A) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
(B) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting.
Illustration
In terms of clause (9) of the proposed Article 279-A, the “weighted votes of the members present and voting” in favour of a proposal in the Goods and Services Tax Council shall be determined as under:—
WT = WC+WS
Where,

Wherein—
WT = Total weighted votes of all members in favour of a proposal.
WC = Weighted vote of the Union = ? i.e., 33.33% if the Union is in favour of the proposal and be taken as “0” if, Union is not in favour of a proposal.
WS = Weighted votes of the States in favour of a proposal.
SP = Number of States present and voting.
WST = Weighted votes of all States present and voting i.e. ?, i.e., 66.67%
SF = Number of States voting in favour of a proposal.
(j) Clause 20 of the proposed Bill makes transitional provisions to take care of any inconsistency which may arise with respect to any law relating to tax on goods or services or on both in force in any State on the commencement of the provisions of the Constitution as amended by this Act within a period of one year.
3. The Bill seeks to achieve the above objects.
1. Short title and commencement.— (1) This Act may be called the Constitution (One Hundred and First Amendment) Act, 2016.
(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the commencement of that provision.
2. Insertion of new Article 246-A.— After Article 246 of the Constitution, the following article shall be inserted, namely:—
“246-A. Special provision with respect to goods and services tax.— (1) Notwithstanding anything contained in Articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Explanation.— The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of Article 279-A, take effect from the date recommended by the Goods and Services Tax Council.”.
3. Amendment of Article 248.— In Article 248 of the Constitution, in clause (1), for the word “Parliament”, the words, figures and letter “Subject to Article 246-A, Parliament” shall be substituted.
4. Amendment of Article 249.— In Article 249 of the Constitution, in clause (1), after the words “with respect to”, the words, figures and letter “goods and services tax provided under Article 246-A or” shall be inserted.
5. Amendment of Article 250.— In Article 250 of the Constitution, in clause (1), after the words “with respect to”, the words, figures and letter “goods and services tax provided under Article 246-A or” shall be inserted.
6. Amendment of Article 268.— In Article 268 of the Constitution, in clause (1), the words “and such duties of excise on medicinal and toilet preparations” shall be omitted.
7. Omission of Article 268-A.— Article 268-A of the Constitution, as inserted by Section 2 of the Constitution (Eighty-eighth Amendment) Act, 2003 shall be omitted.
8. Amendment of Article 269.— In Article 269 of the Constitution, in clause (1), after the words “consignment of goods”, the words, figures and letter “except as provided in Article 269-A” shall be inserted.
9. Insertion of new Article 269-A.— After Article 269 of the Constitution, the following article shall be inserted, namely:—
“269-A. Levy and collection of goods and services tax in course of inter-State trade or commerce.— (1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Explanation.— For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
(2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under Article 246-A, such amount shall not form part of the Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under Article 246-A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.”.
10. Amendment of Article 270.— In Article 270 of the Constitution,—
(i) in clause (1), for the words, figures and letter “Articles 268, 268-A and 269”, the words, figures and letter “Articles 268, 269 and 269-A” shall be substituted;
(ii) after clause (1), the following clauses shall be inserted, namely:—
“(1-A) The tax collected by the Union under clause (1) of Article 246-A shall also be distributed between the Union and the States in the manner provided in clause (2).
(1-B) The tax levied and collected by the Union under clause (2) of Article 246-A and Article 269-A, which has been used for payment of the tax levied by the Union under clause (1) of Article 246-A, and the amount apportioned to the Union under clause (1) of Article 269-A, shall also be distributed between the Union and the States in the manner provided in clause (2).”.
11. Amendment of Article 271.— In Article 271 of the Constitution, after the words “in those articles”, the words, figures and letter “except the goods and services tax under Article 246-A,” shall be inserted.
12. Insertion of new Article 279-A.— After Article 279 of the Constitution, the following article shall be inserted, namely:—
“279-A. Goods and Services Tax Council.— (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.
(2) The Goods and Services Tax Council shall consist of the following members, namely:—
(a)
the Union Finance Minister
…
Chairperson;
(b)
the Union Minister of State in charge of Revenue or Finance
…
Member;
(c)
the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government
…
Members.
(3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.
(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—
(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the goods and services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under Article 269-A and the principles that govern the place of supply;
(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
(7) One half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—
(a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the Council; or
(b) any defect in the appointment of a person as a Member of the Council; or
(c) any procedural irregularity of the Council not affecting the merits of the case.
(11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute —
(a) between the Government of India and one or more States; or
(b) between the Government of India and any State or States on one side and one or more other States on the other side; or
(c) between two or more States, arising out of the recommendations of the Council or implementation thereof.”.
13. Amendment of Article 286.— In Article 286 of the Constitution,—
(i) in clause (1),—
(A) for the words “the sale or purchase of goods where such sale or purchase takes place”, the words “the supply of goods or of services or both, where such supply takes place” shall be substituted;
(B) in sub-clause (b), for the word “goods”, at both the places where it occurs, the words “goods or services or both” shall be substituted;
(ii) in clause (2), for the words “sale or purchase of goods takes place”, the words “supply of goods or of services or both” shall be substituted;
(iii) clause (3) shall be omitted.
14. Amendment of Article 366.— In Article 366 of the Constitution,—
(i) after clause (12), the following clause shall be inserted, namely:—
‘(12-A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;’;
(ii) after clause (26), the following clauses shall be inserted, namely:—
‘(26-A) “Services” means anything other than goods;
(26-B) “State” with reference to Articles 246-A, 268, 269, 269-A and Article 279-A includes a Union territory with Legislature;’.
15. Amendment of Article 368.— In Article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and figures “Article 162 or Article 241”, the words, figures and letter “Article 162, Article 241 or Article 279-A” shall be substituted.
16. Amendment of Sixth Schedule.— In the Sixth Schedule to the Constitution, in Paragraph 8, in sub-paragraph (3),—
(i) in clause (c), the word “and” occurring at the end shall be omitted;
(ii) in clause (d), the word “and” shall be inserted at the end;
(iii) after clause (d), the following clause shall be inserted, namely:—
“(e) taxes on entertainment and amusements.”.
17. Amendment of Seventh Schedule.— In the Seventh Schedule to the Constitution,—
(a) in List I — Union List,—
(i) for Entry 84, the following entry shall be substituted, namely:—
“84. Duties of excise on the following goods manufactured or produced in India, namely:—
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.”;
(ii) Entries 92 and 92-C shall be omitted;
(b) in List II — State List,—
(i) Entry 52 shall be omitted;
(ii) for Entry 54, the following entry shall be substituted, namely:—
“54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.”;
(iii) Entry 55 shall be omitted;
(iv) for Entry 62, the following entry shall be substituted, namely:—
“62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.”.
18. Compensation to States for loss of revenue on account of introduction of goods and services tax.— Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years.
19. Transitional provisions.— Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.
20. Power of President to remove difficulties.— (1) If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiry of three years from the date of such assent.
(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament.
———
1. Received the assent of the President on September 8, 2016 and published in the Gazette of India, Extra., Part II, Section 1, dated 8th September, 2016, pp. 1-6, No. 55 ”

12. Article 246 of the Constitution postulates that Parliament would have exclusive power to make laws with respect to any of the matters enumerated in List I of the Seventh Schedule. A similar reservation is made with respect to the power of the Legislature of States in terms of Article 246(3) thus conferring exclusive power upon the States to legislate on matters enumerated in List II in the Seventh Schedule. Article 246(2) is the repository of the concurrent power that the Constitution vests in Parliament and Legislatures of States over subjects enumerated in List III which is commonly termed as the concurrent list.
13. The Constitution Amending Act sought to introduce the concept of a concurrent taxing power vesting in the Union as well as States thus enabling them to levy a goods and services tax on every transaction concerned with a supply of goods or services or both. The principal objective was declared by Parliament to be the need for the replacement of the innumerable indirect taxes which were at that time being levied by the Union and State Governments and thus the imperative to overcome the “cascading effect of taxes” and the creation of a common “national market” for goods and services. It was with the aforesaid objective that the Constitution Amending Act sought to introduce amendments in the Constitution which were intended to ultimately lead to the levy of an integrated goods and services tax on all inter-state transactions and such a tax subsuming various Union taxes and levies as well as those being imposed by individual States.
14. It was with that avowed objective that Article 246A came to be introduced in the Constitution. That Article reads as follows: –
“[246-A. Special provision with respect to goods and services tax.—(1) Notwithstanding anything contained in Articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of Article 279-A, take effect from the date recommended by the Goods and Services Tax Council.] ”
15. On a plain reading of that provision, it becomes apparent that both Parliament and the Legislature of a State came to be conferred with the power to make laws for the imposition of a goods and services tax, notwithstanding the inhibitions comprised in Articles 246 and 254 of the Constitution. However, and by virtue of Article 246A(2), Parliament came to be vested with the exclusive power to make laws with respect to the levy of a goods and services tax, where the supply of goods or services or both were to take place in the course of inter-state trade or commerce.
16. Yet another significant provision that came to be included in the Constitution was Article 269A and which reads thus:
“[269-A. Levy and collection of goods and services tax in course of inter-State trade or commerce.—(1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
Explanation.—For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce.
(2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.
(3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under Article 246-A, such amount shall not form part of the Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under Article 246-A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.] ”
17. As per the aforesaid constitutional provision, a goods and services tax on supplies in the course of inter-state trade or commerce would be levied and collected by the Union Government and such tax thereafter to be apportioned between the Union and the States in accordance with a legislation to be framed and on the recommendation of the Goods and Services Tax Council. Of significance is the Explanation occurring at the end of Article 269A(1) and which declares that the supply of goods or services or both in the course of import into the territory of India shall be deemed to be a supply in the course of inter-state trade or commerce. Article 269 A thus left it to Parliament to formulate principles not only for the determination of the place of supply but also to prescribe instances which would be deemed to be a supply in the course of inter-state trade or commerce.
18. The GST Council, which was spoken of in Article 269A, was given shape by Article 279A. The said Article reads as follows: –
“ [279-A. Goods and Services Tax Council.—(1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.
(2) The Goods and Services Tax Council shall consist of the following members, namely:—
(a)
the Union Finance Minister
…
Chairperson;
(b)
the Union Minister of State in charge of Revenue or Finance
…
Member;
(c)
the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government
…
Members.
(3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.
(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—
(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the goods and services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under Article 269-A and the principles that govern the place of supply;
(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.
(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
(7) One half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.
(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—
(a) the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the Council; or
(b) any defect in the appointment of a person as a Member of the Council; or
(c) any procedural irregularity of the Council not affecting the merits of the case.
(11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute —
(a) between the Government of India and one or more States; or
(b) between the Government of India and any State or States on one side and one or more other States on the other side; or
(c) between two or more States, arising out of the recommendations of the Council or implementation thereof.] ”
19. Corresponding amendments were also introduced in Article 366. For our purposes, it would be apposite to extract sub-articles 12, 12A, 26A, and 26B of Article 366 hereunder: –
“366. Definitions.—In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say—
…………….
(12) “goods” includes all materials, commodities and articles;
[(12-A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;]
xxx xxx xxx
(26) “securities” includes stock;
[(26-A) “Services” means anything other than goods;
(26-B) “State” with reference to Articles 246-A, 268, 269, 269-A and Article 279-A includes a Union territory with Legislature;]”

20. As per Article 366(12A), a goods and services tax was defined to mean any tax on the supply of goods, services or both except for taxes on the supply of alcoholic liquor for human consumption. The expression ‘goods’ was defined in Article 366(12) to include all materials, commodities and articles. This, however, was a clause that existed even prior to the introduction of the Constitution Amendment Act. The expression ‘service’ was defined by Article 366(26A) to mean anything other than goods. Article 366(26B) clarified that the word ‘State’ appearing in Articles 246A, 268, 269, 269A and 279A would include a ‘union territory’.
21. Of equal significance are the following amendments which came to be made in the three legislative lists placed in the Seventh Schedule:-
Entry
Provision prior to amendment
Amended Entry
Entry 84
Duties of excise on tobacco and other goods manufactured or produced in India except:

(a) alcoholic liquors for human consumption;
(b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in subparagraph (b) of this entry
Duties of excise on the following goods manufactured or produced in India, namely:

(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol); (d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.”
Entry 92
Taxes on sale or purchase of newspaper and advertisements published therein
Omitted
Entry 92 C
Taxes on services
Omitted
Entry 92A
Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce.
No Change
Entry 92B
Taxes on the consignments of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the
course of inter-State trade or commerce.
No Change
Entry 52
Taxes on the entry of goods into a local area for consumption, use or sale therein. (Octroi / Entry Tax)
Omitted
Entry 55
Taxes on advertisements other than advertisements published in the newspapers [and advertisements broadcast by radio or television].
Omitted
Entry 54
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.
Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter- State trade or commerce or sale in the course of international trade or commerce of such goods
Entry 62
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.
Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.

22. Apart from the notable amendments, Entry 84 of List I came to be amended to read as follows: –
“ [84. Duties of excise on the following goods manufactured or produced in India, namely:—
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.]”

23. Entries 92 and 92C which dealt with the subject of taxes on sale or purchase of newspapers and services, came to be omitted. The amendments so ushered in also saw the insertion of Entry 92A in List I which defined the legislative field to be with respect to the levy of taxes on the sale or purchase of goods, other than newspapers and where such sale or purchase were taking place in the course of interstate trade or commerce. Entry 92B which was concerned with taxes on consignment of goods remained untouched. Of equal import was the omission of Entries 52 and 55 in List II which pertained to the levy of a tax on the entry of goods into a local area for consumption, use or sale as well as on advertisements other than those published in newspapers.
24. Originally, Parliament stood conferred a residuary and exclusive power to make laws with respect to any matter not enumerated in the State or the Concurrent Lists. By virtue of the Constitution Amendment Act, that power was made subject to Article 246A. Thus, the broad residuary power which otherwise stood conferred was restricted so as to not affect or impact the authority of States to levy a goods and services tax under Article 246A. Similarly, Article 268A had conferred authority upon the Union to levy a tax on services. However, since the Constitution Amending Act was principally concerned with overcoming the multitude of taxes which were at that time being levied to be substituted by a goods and services tax, the said Article came to be omitted.
25. Following that broad pattern, Article 269 which envisaged that a tax on the sale or purchase of goods as well as on consignment would be levied and collected by the Union and thereafter assigned to States, the same came to be amended to specifically exclude taxes as provided in Article 269A and thus removed the levy of a goods and services tax in the course of inter-state trade or commerce from its sweep. Similar amendments came to be introduced in Article 270 so as to ensure that its provisions coalesced with the new regime of distribution of taxes collected under Article 246A amongst the Union and the States. We deem it apposite to reproduce some of the Article noticed above hereinbelow:
Sl No.
Article
Provision it stood prior to 101st Constitutional Amendment
Amendment
1.
248
Parliament has exclusive power to make
any law with respect to any matter not enumerated in the Concurrent List or State List.
The Power of the Parliament has been made subject to Article 246A. In other words, residuary power of the Parliament will not affect the State’s power to levy Goods and Service Tax under Article 246A.
2.
249
If Rajya Sabha has declared by resolution in national interest that Parliament should make laws with respect to any matter enumerated in the State List, Parliament can make laws for the whole or any part of the territory of India with respect to that matter while the resolution remains in force.
The resolution of Rajya Sabha can mandate the Parliament to make laws with respect to GST as provided in Article 246A also and not just restrict the same to matters specified in State List.
3.
250
Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws with respect to any of the matters enumerated in the State List
This Power of the Parliament has been extended to Goods and Service Tax under Article 246A
4.
268
Stamp duties and excise duty on medicinal and toilet preparations shall be levied by the Government of India but shall be collected by states where such duties are levied within a state
Duties of excise on medicinal and toilet preparations has been deleted from this Article as GST subsumes the same
5.
268A
Taxes on services shall be levied by the
Government of India
Service tax subsumed under GST and so Article 268A Omitted
6.
269
Taxes on the sale or purchase of goods / consignment of goods in the course of inter-state trade shall be levied and collected by Central Government but shall be assigned to the States.
This Article has been amended to exclude Goods on which is GST will be levied under Article 269A in the course of inter-state trade or commerce.
Thus this Article will be effective for goods kept out of GST viz. crude, Petrol, HSD, ATF etc.
7.
270
Article 270 provides that a portion of all taxes and surcharges on such taxes that
are levied and collected by the Central Government shall be distributed to the states in the manner that is prescribed.
This article has been amended to provide that the taxes collected by the Central Government under Article 246A(1) [CGST] shall also be distributed between the states in the manner prescribed.
Further, the taxes collected IGST which has been used in payment of CGST and the amount apportioned to central government in IGST shall also be distributed to the states.
8.
271
Parliament has been provided with the power to levy surcharge on any of taxes and duties levied by it.
The power to levy a surcharge has not been extended to GST levied under Article 246A.
9.
368
Any amendment to the Constitution that seeks to make any changes that will affect the rights of states as enumerated in Proviso to Article 368(2) shall require ratification of state assemblies of not less that 50% of the states.
Article 279-A has been inserted
in the proviso. Thus, any change
that is sought to be made in relation to GST Council will require the ratification of not less than 50% of the states.

CGST, IGST, CUSTOMS ACT, AND CTA: AN OVERVIEW

26. We then proceed to examine and take note of the following salient provisions comprised in the CGST and the IGST statutes. The CGST, as its Preamble proclaims, is an enactment promulgated to make appropriate provisions for the levy and collection of taxes on intrastate supply of goods, services or both and for matters connected therewith or incidental thereto. Section 2, which constitutes the definition clause, incorporates the following significant provisions: –
“ 2. Definitions.—In this Act, unless the context otherwise requires,—
(17) “business” includes—
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
xxx xxx xxx
(21) “central tax” means the central goods and services tax levied under Section 9;
xxx xxx xxx
(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;
Illustration.—Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply;
xxx xxx xxx
(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;
(33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;
xxx xxx xxx
(36) “Council” means the Goods and Services Tax Council established under Article 279-A of the Constitution;
xxx xxx xxx
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under Section 11, or under Section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
xxx xxx xxx
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
xxx xxx xxx
(57) “Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax Act, 2017;
(58) “integrated tax” means the integrated goods and services tax levied under the Integrated Goods and Services Tax Act;
xxx xxx xxx
(64) “intra-State supply of goods” shall have the same meaning as assigned to it in Section 8 of the Integrated Goods and Services Tax Act;
(65) “intra-State supply of services” shall have the same meaning as assigned to it in Section 8 of the Integrated Goods and Services Tax Act;
xxx xxx xxx
(70) “location of the recipient of services” means,—
(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient;
(71) “location of the supplier of services” means,—
(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;
xxx xxx xxx
(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
Illustration.—A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;
xxx xxx xxx
(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;
xxx xxx xxx
(102) “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
[Explanation.—For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities;
xxx xxx xxx
(104) “State tax” means the tax levied under any State Goods and Services Tax Act;
xxx xxx xxx
(111) “the State Goods and Services Tax Act” means the respective State Goods and Services Tax Act, 2017; ”

27. Chapter III of the CGST deals with the levy and collection of taxes and incorporates the following provisions:-
“ Chapter III
LEVY AND COLLECTION OF TAX
7.Scope of Supply.—(1) For the purposes of this Act, the expression “supply” includes—
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
[(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
Explanation.—For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;]
(b) import of services for a consideration whether or not in the course or furtherance of business;  [and]
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; [* * *]
[* * *]
[(1-A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.]
(2) Notwithstanding anything contained in sub-section (1),—
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of  [sub-sections (1), (1-A) and (2)], the Government may, on the recommendations 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.
8. Tax liability on composite and mixed supplies—The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:—
(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; and
(b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.
9. Levy and collection.—(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption  [and un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption], on the value determined under Section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.
(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
[(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.]
(5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.”

28. Of significance are Schedules I, II and III of the CGST which broadly classify activities that would constitute a supply of goods or a supply of services as well as composite supply and thereafter enumerate activities that would be liable to be treated as either a supply of goods or a supply of services. Schedules I, II and III are extracted hereinbelow:-
“SCHEDULE 1
[See Section 7]
Activities to be treated as supply even if made without consideration
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified in Section 25, when made in the course or furtherance of business:
Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
4. Import of services by a  [person] from a related person or from any of his other establishments outside India, in the course or furtherance of business.
SCHEDULE II
[See Section 7]
Activities  [or Transactions] to be treated as supply of goods or supply of services
1. Transfer
(a) any transfer of the title in goods is a supply of goods;
(b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services;
(c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods.
2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land is a supply of services;
(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.
3. Treatment or process
Any treatment or process which is applied to another person’s goods is a supply of services.
4. Transfer of business assets
(a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets,  [* * *] such transfer or disposal is a supply of goods by the person;
(b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business,  [* * *] the usage or making available of such goods is a supply of services;
(c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to be a taxable person.
5. Supply of services
The following shall be treated as supply of services, namely:—
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, wher