Introduction:
The GST Act came in force from 1st July, 2017. There were many interpretation issues with respect to the definitions, glossary and terms use in the law. Since, such definitions were adopted from various legacy laws in India prior to GST; such as Service Tax, State VAT, Central Excise Act, Luxury Tax, Entertainment Tax, etc. it was difficult to make applicable one definition for different sectors. Hence, some modifications from existing definitions were made. Therefore, it was important to established a nexus of the terms used in the GST definitions. The definition discussed here is “Business vertical”.
So what do you mean by “Business vertical”.?
“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 the other business verticals.
Explanation.––For the purposes of this clause, factors that should be considered in determining whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance, or public utilities;
Conclusion:
Hence, It is understood that they are different from those of the other business vertical because the 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 therefore they are different from those of
the other “business verticals”.