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CA Final · Indirect Tax Laws · Supply under GST

Bharat Cooperative Society, a society registered under a State law, supplies stationery to its member Mr Anil for a cash consideration in the course of its activities. The society argues that it and its members are one and the same, so no supply arises. Which of the following is correct under section 7 of the CGST Act, 2017?

A supply arises, because section 7(1)(aa) covers transactions between a person other than an individual and its members for consideration, and the Explanation deems them to be two separate persons notwithstanding any other law or judgment.

  1. ANo supply arises, because a person and its members are treated as the same person under the general law
  2. BSupply arises only if the society makes a profit on the transaction
  3. CSupply arises only if the member is a registered person
  4. DSupply arises, because the society, being a person other than an individual, and its member are deemed to be two separate personsCorrect

Explanation

Section 7(1)(aa) covers activities or transactions by a person other than an individual to its members or constituents for cash, deferred payment or other valuable consideration. The Explanation deems the person and its members to be two separate persons, notwithstanding any other law or court order. Hence the argument of identity fails, and profit or registration of the member is irrelevant.

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