Page 12 - Chapter 2.cdr

though the same is made without consideration. However, this provision would Thus, the storage services provided by Punyabhumi Ltd. to Mokshabhumi
apply only if input tax credit has been availed on such assets. Industries in course or furtherance of business qualifies as supply under GST even
CH 2 Therefore, the disposal of computers by Sudama Associates is not a though no consideration has been charged for the same.
supply as the input tax credit has not been availed on the same.
Charge of Tax & Concept of Supply
(b) As per section 7(1)(c) read with Schedule I of the CGST Act, supply of goods by CCP 02.12.27.00 (Para 2)
an agent to his principal where the agent undertakes to receive such goods on
Whether transfer of goods to another branch located outside the State is
behalf of the principal qualifies as supply even if the same is made without taxable? What would be your opinion on taxability of goods are transfer to
consideration. another branch of same state.
Further, Circular No. 57/31/2018 GST dated 04.09.2018 clarifies that Answer: In terms of Section 25(4) of the CGST Act, 2017 , every person is required
principal-agent relationship falls within the ambit of the Schedule I only where to obtain separate registration for every branch located in different state or union
the goods being procured by the agent on behalf of the principal are invoiced in territory and shall be treated as distinct persons. Also after amended provision he can

the name of the agent. In that case, further provision of the said goods by the take separate registration of branch located in same state. Accordingly, the supply of
agent to the principal without consideration, would be covered in Schedule I and goods (stock transfers) to a branch located outside the State would qualify as supply
thus would qualify as supply. liable to tax in terms of para 2 to Schedule I of the CGST Act, 2017.
In the given case, Champak is only acting as the procurement agent, Further, it is important to note that, supply of goods to a branch / unit located within
and has in no way involved himself in the supply or receipt of the goods. The the same State is not liable to GST if such branch is not separately registered.

invoice is being issued in the name of Prithvi Enterprises and not Champak. In case branch in a same state having separate registration then it would also be
Hence, Champak is not an agent of Prithvi Enterprises for the supply of goods liable to tax since both such units (supplying unit and recipient unit) would qualify
in terms of Schedule I of the CGST Act. as distinct person in terms of Section 25(4).

CCP 02.12.26.00 (Para 2) CCP 02.12.28.00 (Para 2)
Mokshabhumi Industries has its manufacturing unit in the State of Daksh gold pvt ltd. On occasion of Diwali distributes gift hamper to its employee

Maharashtra. It stores the finished goods manufactured by it at a depot located worth ` 3, 00,000. Does it qualify as supply? Would your answer differ if gifts of
in the State of Gujarat. The depot is owned by Punyabhumi Ltd. – a related ` 42,000 have been given to a employee?
person of Mokshabhumi Industries. Punyabhumi Ltd. has not charged any
Answer: As per section 7(1) (c) read with Schedule I of CGST Act, 2017, Supply of
consideration from Mokshabhumi Industries for usage of depot for storage
goods or services between related persons is treated as supply even if it is without
purpose. Whether the storage of goods permitted by Punyabhumi Ltd. to
consideration.
Mokshabhumi Industries qualifies as supply under GST? [ICAI Material]
As per explanation to section 15 of CGST Act 2017, persons shall be deemed
Answer- As per section 7(1)(c) read with Schedule I of the CGST Act, supply of
to be as “related persons” if such persons are employer and employee.
goods or services or both between related persons without consideration when made
Thus, Diwali gifts to employee worth ` 3,00,000, will qualify as supply and
in the course or furtherance of business qualifies as supply.
such supply would be leviable to GST.
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