# Chapter 2: Supply Under GST — Statutory Framework
## Why Supply Matters
Under GST, 'Supply' is the single comprehensive taxable event that replaced multiple taxable events under earlier laws (manufacture, sale, service, purchase, entry tax). Identifying whether an activity is a 'supply' is the first step in any GST analysis.
## Statutory Scope Map
Provision
What It Covers
Section 7
Meaning and scope of supply
Section 8
Taxability of composite and mixed supplies
Schedule I
Activities treated as supply even without consideration
Schedule II
Activities/transactions to be treated as supply of goods or services
Schedule III
Activities/transactions treated NEITHER as supply of goods NOR supply of services (negative list)
## Decision Flow for Identifying Supply
Think of Sec 7 as a funnel: inclusion provisions [Sec 7(1)(a), (aa), (b), (c)] bring transactions IN, while Schedule III carves them OUT.
Key inclusion branches:
Sec 7(1)(a): Consideration + Course of Business
Sec 7(1)(aa): Association / Club to Members (or vice versa)
Sec 7(1)(b): Importation of services for consideration
Sec 7(1)(c): Schedule I deemed supplies (without consideration)
## Memorising Tip
Inclusion clauses bring transactions IN; Schedule III carves them OUT. Always check both sides before concluding.
Worked example
### Example 1
Quick Classification Drill: Identify the relevant statutory provision:
1. Mr. A sells a TV to Mr. B for ₹50,000 → Sec 7(1)(a) (consideration + business)
2. RWA charges maintenance to its members → Sec 7(1)(aa)
3. An Indian company imports consultancy from a US firm → Sec 7(1)(b)
4. Company transfers laptop (ITC availed) to its director without consideration → Sec 7(1)(c) + Schedule I
5. Salary paid to an employee → Schedule III (not supply)
⚠️ Common exam mistakes
Treating Section 7 as exhaustive — it is INCLUSIVE (the words 'such as' confirm this)
Forgetting Schedule III acts as the carve-out (negative list) and overrides the inclusion provisions
Not checking Schedule I first when there is NO consideration — many students wrongly conclude 'no consideration = no supply'
Bare-Act text Section 7 · CGST Act, 2017 · click to expand
Section 7(1): For the purposes of this Act, the expression 'supply' includes — (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration.