Home List Manuals GSTGST Ready ReckonerGST - Levy and Collection This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
Supply Includes Without Consideration -Section 7(1)(c) Schedule I - GST Ready Reckoner - GSTExtract Supply Without Consideration shall be considered as Supply - Schedule I As per section 7(1) (c) , the activities specified in Schedule I, made or agreed to be made without a consideration shall be considered as supply. [More details] Accordingly, Schedule I to the CGST Act contain the certain activities or transaction specified in, made or agreed to be made without a consideration, have also been include in the definition of Supply . (a) Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. [ Para 1 ] Permanent Transfer implies that the goods should be transferred without any intention or requirement of having to receive the goods back. Disposal which is permanently getting rid of sometime that is no longer wanted or need. Temporary transfers are not included here. The term Business Assets includes Fixed Assets and Current Assets There must be transfer of ownership in respect of business assets. This para should be read along with section 18(6) of the CGST Act, read with rule 40 and read with section 15 for determining the transaction value of capital goods. Transfer of a business assets without consideration will attract GST only in respect of those goods where ITC has been availed. This clause also read with clause 4(c) of schedule II, which state that transfer of business as going concern is not a supply, thus transfer of entire business as a going concern cannot be subject to GST. CASE LAW M/S. AIRPORTS AUTHORITY OF INDIA ( 2023 (4) TMI 959 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN ) whether Supply or not - transfer of business or business assets In this case activity held is transfer of business as a going concern without consideration is supply of service which is exempt supply in light of Sl.No. 2 of Notification 12/2017 of CGST Act 2017 Further, as per section 17 read with rule 42 of CGST Rules, 2017, in case any registered person is having any exempted supplies, then ITC pertaining to such exempted supplies shall be reversed proportionately. (b) Supply of goods or services or both between related persons or distinct persons as specified in section 25, when made in the course of furtherance of business. [ Para 2 ] Supply of goods or services or both between related person [Explanation (a) of section 15 ] when made in the course of furtherance of business will be subject to GST, even if there is no consideration. Supply of goods or services or both between distinct persons [section 25(4)] when made in the course of furtherance of business will be subject to GST, even if there is no consideration. Inter- state stock transfer or branch will be subject to GST, even intra- state stock transfer or branch transfer will be subject to GST if there are separate GST registration. Supply of services by HO or one branch /division to another will be subject to GST if there are separate registrations. Leasing equipment to own branch having different GST registration will be subject to GST. Services supplied by establishment of person in India to own establishment out of India is exempt, if place of supply is out of India. Services supplied by an establishment of a person in India to any establishment of that person outside India, which are treated as establishments of distinct persons is exempt, if the place of supply of the service is outside India in accordance with section 13 of IGST Act, 2017. Maintaining liaison office/branch office in India is not supply of service. Inter-state supply of craft engines, parts and accessories by airlines to own branch in another state will be subject to IGST. Service supplied by branch to HO/branch out of India not taxable, even if it is not export. Case Law IN RE: M/S. PROFISOLUTIONS PRIVATE LIMITED ( 2023 (4) TMI 541 - AUTHORITY FOR ADVANCE RULING, TAMILNADU ) HELD THAT :- Services, including the services of common employees of a person, provided by branch office to head office and vice versa, each having separate GST registration, will attract GST liability under respective Acts, viz IGST Act, 2017 or CGST Act, 2017 and SGST Act, 2017 or UTGST Act, 2017. GST on Gift / fringe benefits / perquisites to employees Employer and employee have been defined as related person [ Explanation (a) of Section 15 ] . The gifts (Exclude the Perquisites , Fringe benefits ) not exceeding 50,000/- rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. The gifts given by employers to employees are liable to GST if the value of the gift exceeds Rs. 50,000. It may noted that when goods are disposed of by way of gift, however, reversal of input credit will required as per u/s 17(5) . The employer is required to track the supply without consideration for each employee since the limit is for an employee during the financial year. However, if any amount recovered from the employee, it will be subject to GST and value will be determined as per section 15 of CGST Act. Example , a computer of INR 1,00,000/- is given to the employee for INR 20,000/-, then value of supply shall be INR 1,00,000/- (i.e. INR 80,000/- without consideration and INR 20,000/- as money consideration) determined as per valuation rules described the CGST Act. Meaning of Gift is transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called doner to another called donee and accepted by or on behalf of the done section 122 of transfer of property Act, 1882. It is a common practice among certain sections of trade and industry, such as, pharmaceutical companies which often provide drug samples to their stockists, dealers, medical practitioners, etc. without charging any consideration. It is clarified in Circular No. 92/11/2019-GST Dated 07th March, 2019, Free samples and gifts to unrelated person will not be subject to GST but input tax credit will have to be reversed. to related person will be subject to be GST and ITC will be available. Free/subsidised transport to employees:- If free transport, free car or free telephones (for personal use) is supplied as perquisite, GST will be payable on basis of Open Market Value. Cross - Charge of Service Cross-charge is nothing but a Supply between- Two or more Offices/establishment of a company or related companies enjoying common facilities It may also be termed as a mechanism to allocate the value, as per the valuation rules and charge GST form distinct/related person. Nevertheless, when it falls within the scope of the term supply , it is mandatory to cross-charges. Example - ABC Co. is registered in Delhi as well as Gurugram. Establishment in Delhi and Gurugram shall be treated as establishments of distinct person. Suppose, Delhi office transfer 5 member of staff to Gurgram office for some internal work for 10 days, it will considered as supply of manpower services from Delhi office to Gurugram Office. (c) Transaction between principal and agent [ Para 3 ] The supply of goods by agent on behalf of the principal without consideration has been deemed to be supply. [sec. 7(1)(c) of CGST Act.] Supply of goods- by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal, will be subject to GST, even if there is no consideration-para 3 of Schedule I of CGST Act. Note - Supply of services between principal and agent not fall under this para 3 of Schedule I of CGST Act. Registration Provision The agent is mandatorily required irrespective of their turnover. It may noted that as per sec. 24(vii) of the CGST Act, person who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise, are not eligible for the threshold limit of INR 40 Lakh/10 Lakh/ 20 Lakh for registration. There is misunderstanding that all commission agents required mandatory registration under GST irrespective of his commission income(i.e even if income from commission is below 20/10 lakhs per annum). It is Clarified in the . Circular No. 57/31/2018-GST Dated 04 September 2018 . Now it has been clarified that such registration is required only by C F agents who stock and sale goods on behalf of principal. In case registration is not required by ordinarily commission agents who do not deal in goods or services themselves, if their annual turnover is less than 20/10 lakhs. In case Commission agent of agricultural produce, the commission agent is not a taxable person and agriculturist is also not a taxable person.. hence, the commission agent does not require registration under GST. However, if he is liable to pay GST under reverse charge, he will be liable to be registered u/s 24(iii) of CGST Act. CASE LAW IN RE: M/S. BHAKTAWAR MAL KAMRA SONS ( 2019 (11) TMI 1715 - APPELLATE AUTHORITY FOR ADVANCE RULING, HARYANA ) The commission agent is liable for registration since they qualify as agents under schedule I subject to the provisions of Section 22(1) of the Acts ibid where the aggregate turnover of supply of exempted as well as taxable goods or services exceeds the threshold limit and that such commission agents shall also be liable for compulsory registration as per provisions of Section 24 (vii) of the Acts ibid and they shall be liable to charge tax on RCM basis on the supply of raw cotton. In order to determine whether a particular principal and agent are fall within ambit of para 3 of Schedule I of CGST Act. (1) Where agent shall invoice issue, for the further supply invoice Invoice issued by agent in his name then agent shall be covered under para 3, Schedule I, Example 3:- Mr. Anil , an artist, appoints M/s Ram (auctioneer) to auction his painting. M/s Ram arranges for the auction and identifies the potential bidders. The highest bid is accepted and the painting is sold to the highest bidder. The invoice for the supply of the painting is issued by M/s Ram on the behalf of Mr. Anil but in his own name and the painting is delivered to the successful bidder. In this scenario, M/s Ram is not merely providing auctioneering services, but is also supplying the painting on behalf of Mr. Anil to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. Anil. This scenario is covered under Schedule I Invoice in his name of principal then agent shall not be covered under para 3, Schedule I, Example: - Mr. Ramesh appoints Mr. Bablu to procure certain goods from the market. Mr. Bablu identifies various suppliers who can provide the goods as desired by Mr. Ramesh, and asks the supplier (Mr. Chaman) to send the goods and issue the invoice directly to Mr. Ramesh. In this scenario, Mr. Bablu is only acting as the procurement agent, and has in no way involved himself in the supply or receipt of the goods. Hence, in accordance with the provisions of this Act, Mr. Bablu is not an agent of Mr. Ramesh for supply of goods in terms of Schedule I. 2) where goods being procured by agent on behalf of principal, invoice : - Invoice issued in the name of agent shall be covered under para 3, Schedule I, Example :- A C F agent or commission agent take possession of goods on behalf of principal and issue of invoice in his name . Such case , the C F commission agent is a agent of principal for the supply of goods in term para 3 of schedule 1. The disclosure or non-disclosure of the name of principal is immaterial in such situation. Invoice issued in the name of principal then agent shall not be covered under para 3, Schedule I. Example:- Mr. A sells agricultural produce by utilizing the services of Mr B who is a commission agent as per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr B identifies the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A. As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on behalf of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and receives, by way of remuneration, a commission or percentage upon the amount involved in such transaction. In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Schedule I. However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission agent (Mr. B) doesn t fall under the category of agent covered under Schedule I . The scope and ambit of principal and agent relationship under GST in the context of del-credere agent (DCA) was clarified in Circular No. 73/47/2018, 05 Nov. 2018. Del credere agent is similar to commission agent the only difference is that he guarantees payment to supplier of goods or services, if recipient does not pay. in some cases the del credere agent himself pays to supplier and then recovers amount from recipient. In some cases the del credere agent advances short term loan to buyer and then buyer pays to the supplier. Thus, the key ingredient for determining relationship under GST would be whether the invoice for the further supply of goods on behalf of the principal is being issued by the agent or not. Where the invoice for further supply is being issued by the agent in his name then, any provision of goods from the principal to the agent would fall within the fold of the said entry. However, it may be noted that in cases where the invoice is issued by the agent to the customer in the name of the principal, such agent shall not fall within the ambit of Schedule I of the CGST. (d) Import of services by a person [ Para 4 ] Import of services by a person, from a related person outside India or from any of his other establishments outside India, in the course or furtherance of business. Supply of any services where the supplier is located outside of India, the recipients located in India and place of supply of services is in India. Import of Services with consideration in the course or furtherance of business - Taxable not in the course or furtherance of business - Taxable Import of Services without consideration from Related/ Distinct person and in the course or furtherance of business Taxable . other case - Taxable Example :- A company in Noida received Technical Services from its head office in USA in the course of furtherance of business free of cost. this services will be treated as supply even if it is without consideration. ABC India Company (Sister concern of ABC USA) provides consulting engineers services to ABC USA in the relation to immovable property located in India.
|