Trading of goods under service tax
Trading of goods means buying and selling of every kind of movable property other then actionable claims and money, and includes securities, growing crops, grass and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale.
And here actionable claims means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent.
Illustrations of actionable claims are –
- Unsecured debts
- Right to participate in the draw to be held in a lottery
Trading of goods is in Negative List of Service
Trading of goods has been included in Negative List. However, ‘transfer of title in goods or immovable property, by way of sale, gift or in any other manner’ has been excluded from definition of ‘service’ itself vide section 66F (44) (a) (i).
- Goods include securities. Hence, trading in securities will also be in negative list.
- If some incidental activity is done as part of trading, service tax is not payable
Some examples of trading of goods and related provision
- Activities of a commission agent or a clearing and forwarding agent who sell goods on behalf of another for a commission are not in the nature of trading of goods. These are auxiliary for trading of goods. Moreover the title in the goods never passes on to such agents to come within the ambit of trading of goods.
- Forward contracts would be covered under trading of goods as these are contracts which involve transfer of title in goods on a future date at a pre-determined price.
- In commodity futures actual delivery of goods does not normally take place and the purchaser under a futures contract normally offset all obligations or closes out by selling an equal quantity of goods of the same description under another contract for delivery on the same date. These are in the nature of derivatives
- Auxiliary services relating to future contracts or commodity futures would not be covered in the negative list entry relating to trading of goods