Section 7 of CGST Act, 2017 : Section 7: Scope Of Supply

Explanation using Example

Imagine a local bakery owner, Mrs. Sharma, who sells cakes and pastries. When she sells a cake to a customer, this transaction falls under Section 7(1)(a) of the CGST Act, 2017, as it is a sale of goods for consideration in the course of her business.

Additionally, if Mrs. Sharma decides to rent out a part of her bakery for baking classes, this rental service is also a supply under Section 7(1)(a) because it's a lease made for consideration in furtherance of her business.

Now, if Mrs. Sharma imports an oven from another country and pays for the international shipping of the oven, this import of goods would be considered a supply under Section 7(1)(b), as it is an import for a consideration, irrespective of whether it is for business purposes or not.

If Mrs. Sharma decides to give away free bread to her regular customers without any consideration, this would be considered a supply under Section 7(1)(c) as per activities listed in Schedule I, which includes permanent transfer or disposal of business assets where input tax credit has been availed on such assets.

However, if Mrs. Sharma's bakery donates leftover bread to a local charity, this transaction may fall under Schedule III or a notified activity by the government, as per Section 7(2), and would not be considered a supply, hence not attracting GST.