Table of Contents
1. What are the main elements of a supply?
- Supply of goods or services or both
- Consideration
- Course of furtherance of business.
2. Can a transaction without consideration be regarded as supply?
- Yes, only under specific circumstances, namely,
- Permanent transfer or disposal of business asset where ITC has been availed
- Supply between related or distinct persons
- Supply between principal and agent
- Import of services from related person in the course of furtherance of business.
- The above mentioned transactions are deemed to be supply even If there is no consideration.
3. Should all transactions be made in the course of furtherance of business to qualify as supply for the purpose of GST law?
- Import of services need not be in the course of furtherance of business to qualify as supply.
4. What do you mean by permanent transfer of business asset?
- Permanent transfer means transfer without any intention of getting it back.
5. Do goods sent on job work/testing qualify as permanent transfer?
- No, since the goods are sent out temporarily and there is every intention of receiving the goods back, it cannot be considered as permanent transfer.
6. Is donation of goods considered as permanent transfer of assets?
- Yes, it is considered as permanent transfer and will be considered as supply if ITC has been availed in respect of such goods as per Section 7(1)(c) read with Schedule 1 of CGST Act, 2017
7. What do you mean by business assets as per schedule 1 of the CGST Act, 2017?
- Business Assets shall include all assets of a person, including capital assets and stock in trade.
- If the above mentioned assets are transferred/disposed without receiving any consideration, they shall be treated as supply as per section 7(1)(c) read with schedule 1 of the CGST Act, 2017 provided ITC has been availed on such asset.
8. I have gifted an asset to an employee, will GST apply on such transaction?
- If the value of the gift exceeds Rs. 50,000, the transaction shall be considered as supply as per para 2 of Schedule 1 of CGST Act. Therefore, GST will be applicable.
- However, there seems to be a conflict between provisions of Schedule 1 and Schedule 3 of the CGST Act, where schedule 3 of the act says that all services provided by the employee to employer in the course of or in relation to his employment shall not be considered as supply. Hence not chargeable to GST.
- It has to be noted that Schedule 3 covers only those transactions where there is a consideration. If there is no consideration, Schedule 1 of the Act becomes applicable.
- Therefore, as per Schedule 1, any gift to employee exceeding Rs. 50,000 shall be considered as supply and hence chargeable to GST.