GST is levied on Supply of Goods and Services or both, however the treatment of supply of goods and supply of serives are different in respect of many aspects including place of supply, time of supply, exemptions, composition scheme and so on. Accordingly, Classification of Supply is important for levy of correct GST.

Section 7(1A) of CGST Act provides certain activities or transactions which shall be treated as supply of goods or supply of services in Schedule II of CGST Act. Similarly, Section 7(3) of CGST Act empowers the Government to specify, by notification, the transactions that are to be treated as a supply of goods and not as a supply of services or a supply of services and not as a supply of goods.

(A)Schedule II of CGST Act specifies following activities or transactions as supply of goods ‐

• (a) any transfer of the title in goods;
• (b) 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;
• (c) 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;

(B)Schedule II of CGST Act specifies following activities or transactions as supply of services ‐

• (a) any transfer of right in goods or of undivided share in goods without the transfer of title thereof;
• (b) any lease, tenancy, easement, licence to occupy land;
• (c) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly;
• (d) Any treatment or process which is applied to another person's goods;
• (e) 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;
• (f) renting of immovable property;
• (g) 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, where required, by the competent authority or after its first occupation, whichever is earlier;
  Note‐ the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure;
• (h) temporary transfer or permitting the use or enjoyment of any intellectual property right;
• (i) development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software;
• (j) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
• (k) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
• (l) works contract as defined in clause (119) of section 2;
  Note ‐ Section 2(119) of CGST Act defines "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.
• (m) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration;

(C) Place of Supply ‐ Separate Rules are provided for Place of supply which is important to decide nature of supply on the basis of which CGST and SGST or IGST is chargable,

• (a) Section 10 and Section 11 of IGST Act provides rules for place of supply of goods; [Refer chart on "Place of Supply of Goods"] and
• (b) Section 12 and Section 13 of IGST Act provides rules for place of supply of services.
  [Refer chart on "Place of Supply of Services where both supplier and recipient are in India"] and
  [Refer chart on "Place of Supply of Services where either supplier or recipient is outside India"]

(D) Time of Supply ‐ Separate Rules are provided for Time of supply which determine time when tax becomes payable,

• (a) Section 12 of CGST Act provides rules for time of supply of goods; [Refer chart on "Time of Supply of Goods and Services"] and
• (b) Section 13 of CGST Act provides rules for time of supply of services. [Refer chart on "Time of Supply of Goods and Services"]

(E) Exemptions ‐ Separate Notifications are issued for exemptions for supply of goods and Services which exempts from tax subject to conditions as notified,

• (a) Refer chart on "Exemptions to Supply of Goods" and
• (b) Refer chart on "Exemptions to Supply of Services"

(F) Composition Scheme ‐ Separate Composition Schemes are prescribed with different terms and conditions,

• (a) Refer short note on "Composition Scheme for Supplier of Goods" and
• (b) Refer short note on "Composition Scheme for Supplier of Services"

(G) Tax payable on RCM basis ‐ Separate Notifications are issued for supply of goods and supply of Services on which tax is payable on Reverse Charge subject to conditions as notified,

• (a) Refer chart on "List of Goods liable for RCM u/s 9(3)" and
• (b) Refer chart on "List of Services liable for RCM u/s 9(3)"
• (c) Refer chart on "List of Goods or Services or both liable for RCM u/s 9(4)"