Introduction: Schedule I of the CGST Act 2017 delineates activities to be treated as supply, even if undertaken without monetary consideration. This section explores the key provisions, including permanent transfer of business assets, supply between related parties, and import of services, shedding light on relevant case laws for clarity.
Schedule I of CGST ACT 2017 – ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
Lets understand the schedule I read with section 7 of CGST Act 2017
| Particulars | Schedule 1 |
| Title | ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
As per Schedule 1 following are activities that are considered as supply even though there is no monetary consideration is available |
| 1 | Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
Meaning of transfer/or disposal of business assets: Transfer without any intention of receiving the goods back |
| Illustration: | 1. Mr. A transferred his old mobile used in business to Mr. B without consideration it shall be considered as supply if ITC availed by Mr. A
2. A dealer of AC transferred motor vehicle free of cost to his friend shall not be trated as supply as ITC on motor vehicle not allowed |
| 2 | Supply between related party/ distinct person when made in the course or furtherance of business: |
| Note: | But gifts by employer to employees not exceeding 50000 in a Financial year will not be considered as supply
Related persons are defined u/s 2(84) of the GST Act. Persons shall be deemed to be related if they fall under any of the categories below: Officer or director of one business is the officer/ director of another business Businesses legally recognised as partners An employer and an employee Any person who holds at least 25% of shares in another company, either directly or indirectly One of them controls the other directly or indirectly They are under common control or management The entities together control another entity The promoters or managerial persons are members of the same family Distinct persons are persons with different GSTINs belong to one legal entity (single PAN) situated within the same State or in two different States or in a different country. |
| 3 | Supply of goods by agent on the behalf of principal (supply of service not included) |
| 4 | Import of services from a related person or from any of his other establishments outside India, in the course |
| Refer Case Laws on the above for the better clarity: | |
| In re Crystal Crop Protection Limited (GST AAR Maharashtra); Advance Ruling No. GST-ARA-31/2021-22/B-50; 21/04/2022 | |
| In re Orient Cement Limited (GST AAR Karnataka); Advance Ruling No. KAR ADRG 27/2023; 24/08/2023 |
Conclusion: Schedule I of the CGST Act 2017 plays a pivotal role in defining taxable supplies, encompassing various scenarios where transactions are deemed supply, regardless of monetary consideration. By delving into its provisions and associated case laws, businesses can navigate GST regulations effectively, ensuring compliance and minimizing legal uncertainties.
Author Bio
Sir, Article is good and informative.
Pl clarify whether ITC available for Imported goods/services received from Foreign supplier free of cost for which IGST paid by us.
Whether restriction applies under Sec.16(2) of CGST Act for free sample received since we don’t pay to the supplier of goods/services.
Your valued opinion is solicited