## The 'Business' Test

For most supplies, GST kicks in only when the transaction is in the course or furtherance of business — a private/personal sale by an individual is NOT a supply.

### Definition of Business – Section 2(17)

'Business' includes:

(a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any similar activity, whether or not for pecuniary benefit.

(b) Any activity or transaction incidental or ancillary to (a).

(d) Supply or acquisition of goods including capital goods in connection with commencement or closure of business.

(e) Provision by a club, association, society of facilities or benefits to its members.

(f) Admission, for a consideration, of persons to any premises (zoo, cinema, exhibition).

(g) Services as the holder of an office accepted in the course of trade/profession.

(h) Activities of a race club (including book-maker, totalisator).

(i) Any activity or transaction by Central Government, State Government, or local authority in which they are engaged as public authorities.

### Key Insights

1. No profit motive needed: Even charitable, not-for-profit activities can be 'business' (relevant for NGOs, religious trusts running commercial canteens).

2. One-off transactions count: Volume / frequency / regularity not required.

3. Ancillary activities count: Sale of fixed assets (e.g. old company car) is incidental to business → covered.

4. Setup & closure activities count: Purchase of machinery before commencing business; sale of stock on closure — both are 'business'.

5. Government public functions are business for GST purposes — but most are then exempted by notification.

### Critical Exception – Import of Service

For import of services for consideration, the 'business' condition is NOT required (Section 7(1)(b)). Even a private individual importing a service must pay GST.

### Why This Matters

If the seller is a private individual not engaged in business, their sale is outside GST. But the moment they sell repeatedly, or as an extension of business, GST may attract.

### Quick Checks

Transaction	In course of business?
Salaried employee sells his old TV on OLX	❌ No → Not a supply
Electronics shop sells used display units	✅ Yes (ancillary)
NGO runs paid yoga classes	✅ Yes (not-for-profit still business)
ABC Ltd. sells its old furniture on company closure	✅ Yes (closure of business)
Cinema sells popcorn at counter	✅ Yes (ancillary to admission)
Individual imports legal services from US lawyer	✅ Supply (business condition relaxed)

Worked example

### Example 1

Example – Sale of Fixed Asset

ABC Ltd. sells an old laptop (used for office work, ITC was claimed) to Mr. Z for ₹15,000.

Analysis: Sale of fixed asset is ancillary to business → in the course of business → Supply. GST applies on the consideration.

### Example 2

Example – Personal Sale

Mr. Suresh, a salaried employee, sells his personal car on OLX for ₹3,00,000.

Analysis: Not in the course or furtherance of any business → Not a supply → No GST.

### Example 3

Example – Import of Service in Personal Capacity

Mr. Yuji obtained services of a London-based lawyer for his divorce matter in India for which $5,000 is paid.

Analysis: This is an import of service for consideration. Even though it is in personal capacity (not business), it is still treated as supply by virtue of Section 7(1)(b). Mr. Yuji must pay IGST under reverse charge.

### Example 4

Example – NGO Running Café

A registered charitable trust runs a café in its premises and charges customers for snacks and drinks (no profit motive — surplus used for charitable activities).

Analysis: 'Business' includes activities without profit motive. The café operation is trade/commerce → Supply. GST applies (subject to threshold and any specific exemption for charitable activities).

⚠️ Common exam mistakes

Believing a 'one-off' transaction never counts as business — the definition expressly says volume/frequency/regularity is irrelevant.
Assuming non-profit activity = no business — Section 2(17) covers business 'whether or not for pecuniary benefit'.
Forgetting the import-of-service carve-out — even non-business imports for consideration are taxable.
Treating sale of an old fixed asset as outside business — it is incidental/ancillary, hence supply.
Treating government activities as automatically outside GST — under Section 2(17)(i), they are business; exemption (if any) is granted separately by notification.

Bare-Act text Section 2(17) read with Section 7(1)(a) and 7(1)(b) · CGST Act, 2017 · click to expand

Section 2(17) CGST Act: 'Business' includes — (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) activities of a race club including by way of totalisator or a licence to book maker or activities of a licensed book maker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.

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In the Course or Furtherance of Business

Worked example

⚠️ Common exam mistakes