Skip to content

CA Final · Indirect Tax Laws · Supply under GST

Ganga Cooperative Society Ltd, a registered society, charges its member Mr Rao Rs 12,000 as a fee for providing him a facility (an activity for cash consideration). Rao is an individual member. Under section 7 of the CGST Act, 2017, how is this transaction treated?

It is a supply. Section 7(1)(aa) treats activities by a person other than an individual, such as a society, to its members for consideration as supply, and deems the society and its members to be two separate persons, notwithstanding any other law or court judgment.

  1. ANot a supply, because a society and its members are one person
  2. BNot a supply, because the member is an individual
  3. CA supply only if the society is carrying on business with a profit motive
  4. DA supply, because a person other than an individual and its members are deemed separate persons and the activity for consideration is coveredCorrect

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 separate. The society is not an individual, so the member being an individual is irrelevant. Option A reflects the old mutuality view that the clause overrides.

Did you get it right without looking?

One question tells you little. A timed set on Supply under GST shows your real accuracy, how long you take and where you lose marks.

Practise Supply under GSTFree diagnostic mock

More Supply under GST questions