Meaning of Furtherance of Business Under GST
The term “business” has been defined but the phrase “in the course or furtherance of” has not been dealt with in any manner under the GST law.
The literal meaning of the said phrase ‘in the course of or furtherance of ‘ is ‘during the act of or in continuation of carrying out such act in future’
Thus, in course or furtherance of Business means either of following :
Anything done in relation to business, while carrying out business or simply a revenue-generating ordinary activity of that organisation/concern.
For example: Selling scrap generated in process of manufacturing turbines.
Purchases & Sales of spare parts by an automobile vendor.
Anything done to achieve the objectives of continuing to conduct the same business in future
For example: Activities done as part of CSR by a Company.
Hence the phrase also covers any supplies made in connection with the business.
Purpose of the phrase ‘in the course or furtherance of Business’ under GST
Any activity carried out by the entity in the course or furtherance of business is included in the ambit of business definition and hence will be considered as ‘supply’ under GST. Further one must check for the taxability of supply and exemptions.
‘In the course or furtherance’ is not defined, but is broad enough to cover any supplies made in connection with the business. The phrase widens the scope of Business definition to bring more activities in its ambit. Important to note that any supplies received by a taxable person used/ consumed in the course or further of business is eligible for claiming input tax credit.
The phrase further enables the entity to supply and to receive supplies where the act is towards achieving the goals of the business. This impacts the eligibility to claim input tax credit.
Hence, it becomes important for an entity to understand and justify that a particular act is done in the course and furtherance of its business goals and intentions.