What does section 7 regulate?

It regulates scope of supply. Read the exact text, conditions, exceptions and transaction date together.

Which subordinate law should be checked?

No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.

What evidence should be retained?

Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.

Can portal behaviour override the statute?

No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.

Section 7 - Scope of supply

Chapter III - Levy and Collection of Tax

ACTIVEOFFICIAL_TEXT_CAPTUREDindex,follow

Source control: The text/status on this page is tied to the official source gateway and the Phase 1 legal-review register. Open official source.

Finin2min Summary - Section in 2 Minutes

Defines the gateway concept of supply. First establish supply under section 7(1), then classify it through Schedule II, and finally test exclusions under section 7(2)/Schedule III. Consideration plus business nexus is the ordinary route. Import of services for consideration can be supply even without business nexus. Schedule I can deem specified transactions to be supplies without consideration. Schedule II classifies an already- established supply as goods or services. Schedule III and notified public-authority activities are neither goods nor services.

Exact operative text

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; (1A) 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), (1A) 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.

Paragraph-wise decode

Section-Rule-Form-Notification bridge

No direct Rule certified in Phase 1. Check notifications, circulars, forms and corresponding State law.

The mapping is a legal concordance, not a round-robin related-link list. It is limited to instruments certified in this phase.

Practical example

A head office transfers business assets to a separately registered branch without charging a price. The distinct-person limb of Schedule I can create a supply despite no consideration. PROFESSIONAL ALERT Do not start with Schedule II; it does not independently create supply after the retrospective section 7(1A) architecture.

Professional alert

Confirm the transaction-date amendment and commencement position before reliance.

Implementation checklist

Fix the transaction, taxable period and jurisdiction.
Read every subsection, proviso, explanation and omission marker.
Open the mapped Rule, form, notification and circular.
Test State/UT variation and portal version.
Preserve evidence, approvals, working papers and acknowledgements.
Record the conclusion, assumptions, source date and reviewer.

Evidence and retention checklist

Contract, purchase order, invoice or underlying transaction document.
Registration, return, ledger, challan and portal acknowledgement.
Official Act/Rule/notification version used and effective date.
Internal tax position paper, computation and management approval.
Correspondence, notices, replies, orders and appeal papers where applicable.

Practical Q&A

What does section 7 regulate?: It regulates scope of supply. Read the exact text, conditions, exceptions and transaction date together.
Which subordinate law should be checked?: No direct CGST Rule has been certified in this phase. Notifications, circulars, forms and the corresponding SGST/UTGST layer may also apply.
What evidence should be retained?: Preserve the contract or transaction record, invoice or form, portal acknowledgement, payment/ledger evidence, correspondence, legal working and the official source version used.
Can portal behaviour override the statute?: No. Portal functionality is operational evidence; legal entitlement and liability remain controlled by the Act, Rules, notifications and binding decisions.

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