Page 10 - Ch2_Supply
P. 10

CCP 02.05.10.00
        Sahab Sales, an air-conditioner dealer in Janakpuri, Delhi, needs 4 air conditioners for his newly

        constructed house in Safdarjung Enclave. Therefore, he transfers 4 air- conditioners [on which ITC has
        already been availed by it] from its stock, for the said purpose. Examine whether the said activity
        amounts to supply u/s 7 of the CGST Act, 2017.
               Further, a Janakpuri resident, Aakash, approached Sahab Sales. He sold an air conditioner to

        Sahab  Sales  for  ₹  5,000.  Aakash  had  bought  the  said  air  conditioner  six  months  before,  for  his
        residence. Does sale of the air conditioner by Aakash to Sahab Sales amount to supply u/s 7 of the
        CGST Act, 2017?       [RTP 2018]
        Answer:-

        Legal Provision:-
        Ü Section 7(1)(a) of CGST Act states that the supply of goods and/or services should be for a consideration
            and should be in the course or furtherance of business.
        Ü As per Section 7(1)(c) sread with Para 1 of Schedule I of CGST Act, 2017, Permanent transfer or disposal of
            business assets where input tax credit has been availed on such assets shall be treated as supply even when

            it is made without consideration.
        Discussion & Conclusion:-
        Ü In the given case, permanent transfer of air conditioners by Sahab Sales from its stock for personal use at

            its  residence  would  amount  to  supply  even  though  it  is  made  without  consideration  as  per  para  1
            discussed above.
        Ü But, sale of air conditioner by Aakash to Sahab Sales will not qualify as supply under section 7. Although it
            is made for a consideration, but it is not in the course or furtherance of business.



         CCP 02.05.11.00
        Damodar Private Ltd., registered in Delhi, is planning to transfer some goods to its branch, registered
        in West Bengal, without any consideration, so that the goods can be sold from the branch. The company

        believes  that  the  transaction  that  will  be  undertaken  by  it  would  not  qualify  as  supply  as  no
        consideration is involved. Ascertain whether the transfer of goods by Damodar Private Ltd. to its
        branch office would qualify as supply. (Study Mat)
        Answer :-
        Legal Provision:

        Ü As per Schedule I read with section 7(1)(c), supply of goods or services or both between related persons
           or between distinct persons as specified in section 25, when made in the course or furtherance of business,
           is deemed as supply even if made without consideration

        Discussion & Conclusion:
        Ü In the given case, since the Damodar Private Ltd. and its branch located in another State are distinct
           persons.
        Ü Thus, supply of goods between them would qualify as supply.



         CCP 02.05.12.00
        Raghubir transfers 1000 shirts from his factory located in Lucknow to his retail showroom in Delhi so
        that  the  same  can  be  sold  from  there.  The  factory  and  retail  showroom  of  Raghubir  Fabrics  are

        registered in the States where they are located. Although no consideration is charged, supply of goods
        from factory to retail showroom constitutes supply. Justify.            [Study Mat (Example)]

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