# Non-Supplies Notified via Notification

The Government, in exercise of powers, has notified certain activities/transactions of CG/SG/local authorities as neither supply of goods nor supply of services. Two such activities have been notified so far:

## 1. Activities Relating to Panchayat/Municipality Functions

Services by way of any activity in relation to a function entrusted to:

A Panchayat under Article 243G of the Constitution, OR
A Municipality under Article 243W of the Constitution

…are treated neither as supply of goods nor supply of services.

## 2. Grant of Alcoholic Liquor License

Services by way of grant of alcoholic liquor license by State Governments for consideration (in the form of license fees or application fees) are neither supply of goods nor supply of services.

### Important Clarifications:

This treatment is specific to alcoholic liquor licenses only.
It does NOT extend to other licenses/privileges granted by the Government for a fee – GST IS payable on those.
Government services to business entities generally fall under Reverse Charge Mechanism (RCM).

Worked example

### Example 1

Example 1: A Municipal Corporation provides garbage collection services (entrusted under Art. 243W). → Not a supply; outside GST.

### Example 2

Example 2: State of Maharashtra grants a liquor vending license to Mr. P for ₹10 lakh. → Outside GST (notified non-supply).

### Example 3

Example 3: State of Maharashtra grants a mining lease to ABC Ltd for ₹50 lakh annual royalty. → IS a supply; GST payable under RCM by ABC Ltd (this is not the specifically notified non-supply).

⚠️ Common exam mistakes

Extending the liquor license non-supply treatment to other government licenses (mining, telecom spectrum, etc.) – those are taxable.
Forgetting that the Panchayat/Municipality non-supply applies only when the activity is in relation to functions entrusted under Art. 243G/243W.

Reference:

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