Page 10 - Ch2_Supply

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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