Page 10 - Chapter 2.cdr

terminating the contract before the expiry of its contract period, 50% of contract fee Answer- Circular No. 116/35/2019 GST dated 11.10.2019 has clarified that in case of
for 3 years amounting to ` 75 lakh is being received by it as a penalty for the same. donations received by a charitable institution, GST is not leviable where all the
CH 2 The act of tolerating the nonperformance of a contract by Chandragupta by following three conditions are satisfied namely:
Ajatasatru Industries is a supply of service where the consideration charged for such Ü Gift or donation is made to a charitable organization
Charge of Tax & Concept of Supply
supply is ` 75 lakh [50% of (` 50 Lakh × 3 years)]. Ü Payment has the character of gift or donation

Ü Purpose is philanthropic (i.e., it leads to no commercial gain) and not
09. Sec. 7(1)(a)- Supplies for consideration in course of business advertisement.
CCP 02.09.20.00 (a) In the backdrop of the above discussion, since in the given case, the way the
Whether transfer of title and/or possession is necessary for a transaction to name of Rudraksh Kapoor is displayed on the door of the room constructed in the

constitute supply of goods? [ICAI Material] school run by Divyaprakash Charitable Trust, it is only an expression of gratitude
Answer: Under sec 7(1)(a) Supply include sale, transfer, barter, exchange, lease, and public recognition of Rudraksh’s act of philanthropy and is not aimed at
license, rental or disposal for a consideration in the course of business. Thus, any advertising or promoting his business. There is no reference/mention of his
transaction without transfer of title in goods also treated as supply. publishing house which otherwise would have got advertised.
Therefore, Thus, the money donated by Rudraksh Kapoor is not a leviable to GST.
(i) Transfer of Possession as well as title is classified as supply of goods. (b) In the given case, since the name of Rudraksh Publishing House hasbeen

(ii) Transfer of possession with future transfer of title is also classified as supply of goods displayed on the door of the room constructed in the school run by Divyaprakash
(iii) In case of Transfer of possession and not title is classified as supply of service in Charitable Trust, it might be aimed at advertising or promoting his business.
terms of schedule II of the CGST Act. There is a direct mention of his publishing house which is being advertised.
In such a case, it is a supply of service by Divyaprakash Charitable
CCP 02.09.21.00 Trust for a consideration received in the form of donation.
(a) Rudraksh Kapoor, owner of Rudraksh Publishing House, Ghaziabad, U.P.,
donated some money to a Divyaprakash Charitable Trust in the memory of 10. Meaning of consideration/Supply for consideration

his late father. The Divyaprakash Charitable Trust constructed a room in CCP 02.10.22.00
the school run by it from such donation and wrote “Donated by Rudraksh Explain the term consideration?
Kapoor in the memory of his father” on the door of the room so constructed. Answer: As per section 2(31) of CGST Act, 2017, “consideration” in relation to the
Examine whether the money donated by Rudraksh Kapoor is leviable to GST.
supply of goods or services or both includes–
(b) In the above question, if the Divyaprakash Charitable Trust had written on
(a) Any payment made or to be made, whether in money or otherwise , in respect
the door of the room constructed in the school run by it from the money
of, in response to, or for the inducement of, the supply of goods or services or
donated by Rudraksh Kapoor “Donated by Rudraksh Publishing House,
both, whether by the recipient or by any other person but shall not include any
Ghaziabad, U.P.”, would the given transaction/activity qualifies as supply.
subsidy given by the Central Government or a State Government;
[ICAI Material]
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