CMA Final · Indirect Tax Laws and Practice · Supply under GST
Arjun Pharma Ltd, Pune, imports legal advisory services from a UK law firm for ₹6,00,000 and also gives free samples of medicines to a doctor with no consideration and no business relationship to a related person. Considering Section 7(1) only, which statement is correct about the import of services and the free samples?
Import of services for a consideration is a supply under Section 7(1)(b) whether or not it is in the course or furtherance of business. A supply without consideration qualifies only if it is an activity specified in Schedule I under clause (c), so free samples are not a supply merely because they are given free.
- ANeither is a supply, since both lack a consideration in the course of business
- BBoth are supplies only if Arjun Pharma is registered
- CThe import of services is a supply only if it is in the course or furtherance of business, and free samples are a supply under Schedule I
- DThe import of services for consideration is a supply under clause (b) whether or not in the course or furtherance of business; free samples are not a supply under Section 7(1)(c) merely because they are freeCorrect
Explanation
Section 7(1)(b) treats import of services for a consideration as a supply whether or not in the course or furtherance of business, so the ₹6,00,000 import qualifies. Clause (c) covers only activities specified in Schedule I made without consideration; free samples to an unrelated doctor are not listed in the provided text and cannot be assumed to be a supply under clause (c). Hence option four is correct and option three wrongly requires a business nexus for imports.
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