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the State Government in which they are engaged as public authorities. CCP 02.08.19.00
Shall be treated neither as a supply of goods nor a supply of Ajatasatru Industries enters into a contract with an actor – Chandragupta - to
act as a brand ambassador of products manufactured by Ajatasatru Industries. CH 2
services.
The duration of the contract is 5 years and the contract fee payable to

CCP 02.08.18.00 Chandragupta for being a brand ambassador is ` 50 lakh per annum. As per the
terms of the contract, in case the contract is terminated by Chandragupta
Discuss whether the following activities constitute 'Supply' in accordance with
before the end of the contract period, Chandragupta will have to repay to
section 7 of CGST Act
Ajatasatru Industries, 50% of the contract fee received by him till the time of
(i) Mr. Raj sold electronic gadgets to XYZ Co.
termination of contract.
(ii) Arya pvt. ltd. entered into a hire purchase agreement with AB pvt. ltd. for
At the end of 3rd year, Chandragupta terminates the contract with Ajatasatru Charge of Tax & Concept of Supply
supply of a machine unit.
Industries. He has received the contract fee for 3 years at the time of
(iii) Asha purchase an LED TV of 24 inch from Sony electronics store and in
termination of contract.
return gave away her old TV.
You are required to determine whether the given transaction(s) qualifies(y) as
(iv) VB associates a CA firm appointed Mr. Urja as an interior decorator to
supply(ies).[ICAI Material]
design it's office outlet in exchange for such service, VB associates rendered
tax compliance services to Mr. Urja. Answer- As per section 7(1)(a), supply includes all forms of supply of goods or
services or both made or agreed to be made for a consideration by a person in the
(v) M/s Bharat Electronics disposed scrap part of electric unit to a scrap
dealer. course or furtherance of business.
(vi) Supply of Beer Shampoo @ 28% In the given case, Chandragupta has agreed to provide his services as a brand
Answer:- ambassador of the products manufactured by Ajatasatru Industries at an agreed
i) Yes , as term sale is included in the expression supply annual consideration.

ii) Yes, it is supply as per sec 7(1) and it is classified as a supply of goods as per sec Thus, his services fall within the purview of the term “supply” under GST where the
7 (1A)read with schedule II consideration charged for such supply is ` 50 lakh per annum.
iii) Yes, as the above supply falls under barter transaction which is also included Further, section 7(1A) provides that when certain activities or transactions constitute
under the scope of supply a supply in accordance with the provisions of section 7(1), they shall be treated either
iv) Yes, it is a form of exchange which is included under the scope of supply as a supply of goods or supply of services as referred to in Schedule II of the CGST Act.
v) Yes, if the disposal is in course or furtherance of business of M/s Bharat Tolerating non-performance of a contract is an activity or transaction which
electronics then it shall be considered as a supply. is treated as a supply of service as per Schedule II and the person is deemed to have

vi) Yes , it is a supply, only the supply of alcoholic liquor for human consumption is received the consideration in the form of fines or penalty and is, accordingly, required
out of the scope of GST to pay tax on such amount.
In the given case, since Ajatasatru Industries is tolerating the act of Chandragupta of

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