Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:-
Section 2(28): Consideration: the new definition reads as follows:
Consideration in relation to the supply of goods or services includes
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
(b) the monetary value of any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
PROVIDED that a deposit, whether refundable or not, given in respect of the supply of goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply;
One major change bought in the new definition is the addition of the clause stating that consideration would not include any subsidy given by the Central or State Government. This amendment gains utmost importance in the light of decision of Supreme Court in the case of Maruti Suzuki Ltd. which states that subsidy provided by the government in form of adjusted payment of VAT will be treated as additional consideration and will be added in the assessable value of the goods for the purpose of excise duty. Relying on this decision, notices were sent to assessees claiming this subsidy. Now the new definition has specifically excluded the subsidies from its purview putting rest to all the possible litigations that may arise on this issue.
Another point of probable litigation is that the definition states that consideration can be voluntary or non voluntary. Although the main phrase uses the term ‘any act or forbearance’, but it does not limits the scope of the involuntary considerations. It can be interpreted to mean that even the acts of theft or robbery would result in consideration and such considerations gained will be subject to GST. No matter how weird the interpretation looks, it is not beyond the scope of imagination. The need arises of clarifying that involuntary consideration shall, in a broader sense mean or limited to charges such as cancellation charges or detention charges or it would mean the charges for specifically not doing or not agreeing to do a certain act.
