Analysis of Entry (e): Trading of goods in negative list :

The above entry refers to the activity of trading of goods.

Thus, the check has to be twofold –

(1) the activity should be of trading and

(2) trading should be of goods.

Whether the following would be covered under trading of goods?

(a) Activities of a commission agent/CHA selling goods on behalf of another for a commission: The services provided by commission agent or a clearing and forwarding agent (CHA) are not in the nature of trading of goods. These are auxiliary for trading of goods. In terms of the provision of section 66F(1) reference to a service does not include reference to a service used for providing such service [Refer heading 1.14 for detailed discussion on section 66F]. Moreover, the title in the goods never passes on to such agents to come within the ambit of trading of goods.

(b) Forward contracts in commodities: 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.

(c) Commodity futures: Commodity futures would be covered under trading of goods. 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.

(d) Auxiliary services relating to future contracts or commodity futures: Such services provided by commodity exchanges clearing houses or agents would not be covered in the negative list entry relating to trading of goods.

Note: It is relevant to note here that in common parlance whenever the term ‘trading’ is used, it is considered as ‘trading in goods’. The term ‘trading of service’ seems to be little uncommon to use but these kind of activities commonly takes place where a person procures services from one person and provides to another, practically such transactions most of the times get recognised as commission agent’s services though may not be strictly commission based.

Goods means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale [Section 65B(25)].

Securities include —

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;

(ia) derivative;

(ib) Units or any other instrument issued by any collective investment scheme to the investors in such schemes;

(ii) Government securities;

(iia) such other instruments as may be declared by the central Government to be Securities; and

(iii) rights or interest in securities [Section 65B(43)].