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CA Intermediate · Taxation · Supply under GST

Hindustan Pharma Ltd, Hyderabad, imports services from its associate in Singapore: the associate provides consultancy to Hindustan Pharma. In another transaction, Hindustan Pharma Ltd (Telangana) sells goods to its related person, Zenith Ltd, Delhi, on 10 July, at Rs 6,00,000 without any consideration being paid, where the goods are not in the course of business and it is a gift. Which statement is correct?

Import of consultancy services from a related person abroad is a supply, and it is taxable whether or not consideration is paid, if it is in the course or furtherance of business. A gift of goods outside business is not covered by Schedule I, so only the import is clearly a supply.

  1. AImport of service from the associate for consideration, in the course or furtherance of business, is a supply even though from a related person outside IndiaCorrect
  2. BImport of services is a supply only if for no consideration
  3. CThe gift of goods to Zenith Ltd is a supply under Schedule I even if not in the course of business
  4. DNeither transaction is a supply

Explanation

Schedule I entry 4 treats import of services from a related person or from an establishment outside India as supply even without consideration, if in the course or furtherance of business. A paid import is a supply anyway under section 7(1)(a) as defined, so A is correct. Option C is wrong because supply without consideration between related persons requires the course or furtherance of business. Option B reverses the law.

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