Furtherance of Business

In the course or furtherance of business: As per section 7(a), a supply of goods and services shall be made in the course or furtherance of business. 

What do you mean by supply in the course or furtherance of business? The word ‘business ’has been defined in the GST law. Broadly it means any trade, commerce, manufacturer, profession, vacation adventure, wager, or any other similar activity whether or not it is for pecuniary benefits. Any activity ancillary or incidental to these activities are also covered as a business. It has also has been provided that any activity or transaction falling in the above categories would be business whether or not there is volume, frequency, continuity, or regularity in transactions. Considering that pecuniary benefit is not determining criterion, issues will arise whether charitable or philanthropic activities would get covered. This would depend on the facts and circumstances of each case. To give an example, if a charitable medical diagnostic lab provides facilities free of cost, it would not fall in the services are provided at subsidized rates to recover only the cost or part of the cost, the activities will fall in the ambit of GST as the activity need not necessarily be carried out for pecuniary benefits. Supply of goods free of cost to a charitable organization by a business house for free distribution to meet its CSR obligation will not get covered as a taxable supply as the same is without consideration. However, this activity would be in the course of business for the business house as meeting CSR obligation is an activity ancillary or incidental to its main business. On the other hand, if the charitable organization is are related person of the business house then the supply of goods free of cost to such an organization would be taxable as supplies to related persons without consideration are taxable under Schedule I.
 

An activity, which is carried out mainly as a hobby, such as a stamp collecting, or any other personal or private or private activity is not a business. However, if you start to sell items you collect or have made, on a regular and continuing basis, then your hobby could become a business for GST purposes. There is no definite yardstick to find out whether some activity is being carried as a business or not. A body whose main activities are non-business may still have some activities which count as a business for GST Purposes, such as selling goods to raise funds, running a staff canteen, etc. Each case would need to be examined on its facts on the touchstone of the definition of “business”. Supplies made not as a main activity of business gets covered under the ambit of supply by use of words “course or furtherance. A banking company selling hypothecated vehicles due to default in payment of installment by borrowers sells them in the course of furtherance of business. An insurance company selling waste paper generated in its office does so in the course or furtherance of its business of insurance.