Section 2 of the CGST Act is the interpretative cornerstone of the entire legislation, containing over 100 definitions that provide precise meanings to terms used throughout the Act. The opening clause states: “In this Act, unless the context otherwise requires” – indicating that while these definitions are standard, contextual interpretation remains permissible where the legislative intent demands it.

This section is critical because the scope, applicability, and liability under the CGST Act often depend on how specific terms are defined. Below is a detailed analysis of key definitions that form the foundation of GST jurisprudence.

Key Definitions and Their Significance

Section 2(1): Actionable Claim

Definition: “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882[5].

An actionable claim refers to 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 possession of the claimant, which can be enforced only through legal proceedings. This definition is relevant for determining the taxability of financial instruments, derivatives, and other claims that may constitute supply under GST.

Section 2(2): Address of Delivery

Definition: “Address of Delivery” means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both[5].

This definition is crucial for determining:

• The place of supply for taxation purposes
• Whether a transaction is intra-state or inter-state
• The applicable tax rate and jurisdiction
• Compliance with e-way bill requirements for goods transportation

The address of delivery may differ from the billing address or the principal place of business, making this distinction important for correct tax treatment.

Section 2(3): Address on Record

Definition: “Address on Record” means the address of the recipient of goods or services or both as available in the records of the supplier[5].

This definition serves as a fallback mechanism when the address of delivery is not explicitly mentioned. It refers to information maintained by the supplier in their customer records or database. This becomes relevant for recurring supplies, standing orders, or when delivery addresses are not specified on individual invoices.

Section 2(6): Aggregate Turnover

Definition: “Aggregate Turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both, and inter-state supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess[5].

Aggregate turnover is one of the most critical concepts in GST, as it determines:

• Threshold for mandatory registration (₹20 lakhs for services, ₹40 lakhs for goods in most states)
• Eligibility for composition scheme (up to ₹1.5 crores)
• Requirement for tax audit (exceeding ₹2 crores)
• Applicability of various compliance provisions
• Penalties and interest calculations

The all-India basis calculation means that a business with multiple locations across different states must aggregate turnover from all locations under the same PAN for determining these thresholds.

Section 2(7): Agriculturist

Definition: “Agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land by own labour or by the labour of family, or by servants on wages payable in cash or kind or by hired labour under personal supervision[3][5].

This definition is significant because supply of produce from land cultivation by an agriculturist is excluded from the scope of “business” and hence may not attract GST. The definition emphasizes personal involvement and supervision, distinguishing small farmers from large-scale agricultural enterprises.

Section 2(17): Business

Definition: “business” includes:

1. Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit
2. Any activity or transaction in connection with or incidental or ancillary to the above
3. Any activity or transaction in the nature of the above, whether or not there is volume, frequency, continuity or regularity of such transaction
4. Supply or acquisition of goods including capital goods and services in connection with commencement or closure of business
5. 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
6. Admission, for a consideration, of persons to any premises
7. Activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club
8. Any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities

However, the definition specifically excludes:

• Any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities

This expansive definition of “business” is intentionally broad to capture all commercial activities within the tax net[2][5]. The inclusion of non-pecuniary activities means that even activities conducted without profit motive may constitute business if they fall within the specified categories.

The significance of this definition lies in determining who qualifies as a “person” liable to register and pay GST. Once an activity falls within the definition of business, the person conducting such activity becomes subject to GST provisions.

Section 2(18): Business Vertical

Definition: “Business Vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of other business verticals[5].

This definition is relevant for determining whether different divisions or segments of a business can be treated separately for GST purposes, particularly in the context of:

• Separate registration for different business verticals
• Input tax credit allocation
• Compliance requirements

Section 2(19): Capital Goods

Definition: “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business[2][5].

This definition is crucial for determining eligibility for input tax credit (ITC). Capital goods include machinery, equipment, plant, apparatus, and other assets that have long-term utility in business operations. The key criteria are:

1. Capitalisation in books of account (not expensed immediately)
2. Use in the course or furtherance of business

Input tax credit on capital goods can be claimed in the same manner as on other inputs, subject to restrictions specified in Section 17 of the CGST Act. Notably, immovable property (except where supplied as part of composite supply with construction services) is generally excluded from the definition of capital goods.

Section 2(20): Casual Taxable Person

Definition: “Casual Taxable Person” means a person who occasionally undertakes transactions involving the supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a state or a Union territory where he has no fixed place of business[5].

Casual taxable persons are required to:

• Obtain registration regardless of turnover threshold
• Make advance deposit of tax before obtaining registration
• Cannot opt for composition scheme

This category typically includes traders who occasionally participate in exhibitions, fairs, or conduct business in states where they have no permanent establishment.

Section 2(21): Central Tax

Definition: “central tax” means the central goods and services tax levied under section 9[2][5].

This is the tax component levied by the Central Government on intra-state supplies. In a typical intra-state transaction, both CGST and SGST (or UTGST) are levied simultaneously at equal rates. For example, if the total GST rate is 18%, it would comprise 9% CGST and 9% SGST.

Section 2(30): Composite Supply

Definition: “Composite Supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply[3].

The importance of this definition lies in tax rate determination. In composite supplies, the entire bundle is taxed at the rate applicable to the principal supply. Classic examples include:

• Hotel accommodation with food and laundry services (principal: accommodation)
• Transportation of goods with insurance (principal: transportation)
• Smartphone sold with charger, earphones, and carry case (principal: smartphone)

The concept prevents artificial splitting of supplies for tax arbitrage and ensures practical compliance.

Section 2(31): Consideration

Definition: “consideration” in relation to the supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both[3].

This expansive definition covers:

• Monetary payments
• Payments in kind (barter, exchange)
• Deferred payments
• Deposits, security amounts applied as payment
• Subsidies directly linked to price

The value of supply for GST purposes is generally based on the transaction value, which comprises the consideration. This definition ensures that all forms of economic value transfer are captured for taxation.

Section 2(52): Goods

Definition: “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply[3].

This definition clarifies that:

• Goods are essentially movable property
• Money and securities are excluded
• Growing crops can be goods
• Fixtures can become goods when severed from land

The distinction between goods and services is fundamental because different provisions may apply based on whether a supply is of goods, services, or both.

Section 2(84): Person

Definition: “person” includes:

• An individual
• A Hindu Undivided Family
• A company
• A firm
• A Limited Liability Partnership
• An association of persons or a body of individuals, whether incorporated or not, in India or outside India
• Any corporation established by or under any Central Act, State Act or Provincial Act or a Government company
• Any body corporate incorporated by or under the laws of a country outside India
• A co-operative society registered under any law relating to co-operative societies
• A local authority
• Central Government or a State Government
• Society as defined under the Societies Registration Act, 1860
• Trust
• Every artificial juridical person, not falling within any of the above

This comprehensive definition ensures that all legal entities capable of conducting business are brought within the ambit of GST. The inclusion of government entities as “persons” clarifies that governmental commercial activities are also subject to GST (except where specifically exempted)[3][8].

Section 2(102): Services

Definition: “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged[3].

This residuary definition means that if a supply is not of goods, money, or securities, it is deemed to be of services. This approach eliminates classification disputes and ensures comprehensive tax coverage.

Section 2(105): Supply

Definition: “supply” includes 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[3].

“Supply” is the taxable event under GST, replacing various taxable events under the pre-GST regime (manufacture, sale, provision of service). The definition is intentionally broad, covering all commercial transactions. Schedule I, II and III of the CGST Act further clarify activities treated as supply, activities treated as supply of goods or services, and activities that are neither supply of goods nor services.

Section 2(107): Taxable Person

Definition: “taxable person” means a person who is registered or liable to be registered under section 22 or section 24.

This definition identifies who must comply with GST provisions. Taxable persons are required to:

• Charge and collect GST on taxable supplies
• File periodic returns
• Pay tax collected to the government
• Maintain prescribed records and accounts
• Undergo audits where applicable