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2018 (7) TMI 76 - AAR - GSTLevy of GST on supply made to related party without consideration - Tripartite Agreement - scope of supply - By virtue of tripartite agreement between NDDB, State Government & Unions, whether the arrangement between NDDB and Unions would be considered as supply between ‘related persons’ in accordance with Schedule 1 of the Central Goods & Service Tax Act, 2017? - developing dairying in the respective states - state governments have entrusted NDDB to run the management, appoint key managerial persons and provide end to end services which ultimately would help the Unions in developing. - Held that:- Section 7 of CGST Act defines ‘supply’. Some of the scope of supply, as per Section 7c of the Act, are the activities specified in Schedule I, made or agreed to be made without a consideration. One of the activities to be treated as a supply even if made without consideration, as per clause 2 of Schedule I, is the 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. In the present case, pursuant to the agreements made by the applicant with the state government of Jharkhand and Assam, the applicant provides services to Unions. It is also seen that the actual services are received by the concerned State Governments and the Unions are simply beneficiaries of the services performed by the applicant. Thus, there is no question of exercise of control by the applicant over the Unions. Unions are in fact provide support to the applicant to fulfill the purposes as per the agreements made with the state governments and the applicant and in return they receive the benefits of it - The Unions are only beneficiaries of agreement entered into by the state governments with the applicant. The Unions are required only to provide adequate support to the applicant. In such a situation, there is no kind of relationship between NDDB and the Unions. Hence situation specified at sl no. 5 of Section 15(5) of CGST Act is not found in existence in the transaction between NDDB and WAMUL and NDDB & JMU and accordingly such transactions are not to be considered as related party transactions in GST. Whether the applicant would be required to determine value of activities undertaken by them in accordance with Section 15(5) of CGST Act, 2017 read with Rule 28 of the CGST Rules, 2017? - Held that:- Since the answer to the first part of the points raised by the applicant is negative no need to examine the next point of them. Ruling:- The transactions undertaken by NDDB and Unions in accordance with the agreements made by NDDB with State Government of Assam and Jharkhand are not to be considered as supply between ‘related persons’ in accordance with Schedule I of Central Goods and Service Tax Act, 2017 read with Section 15 of CGST Act and corresponding provisions under the Gujarat Goods and Services Tax Act, 2017.
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