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CA Intermediate · Taxation · Supply under GST

Kapoor Interiors, Delhi, supplies furniture to a customer under a hire-purchase-type agreement where the customer takes possession of the goods immediately, the property in the goods passes only on payment of the last instalment, and the agreement provides that title will pass on that payment. How is this classified under GST?

It is a supply of goods. Schedule II treats goods delivered under an agreement that property will pass at a future date on payment of full consideration as supply of goods, so passing of title later does not change the classification.

  1. ASupply of services, as title has not passed
  2. BSupply of goods, as the goods are delivered under an agreement stating that property will pass on payment of considerationCorrect
  3. CNeither goods nor services until the last instalment
  4. DComposite supply of goods and services taxed at the service rate

Explanation

Schedule II treats goods delivered by one person to another under any agreement stating the property in goods will pass at a future date upon payment of full consideration as supply of goods. The supply is thus of goods, not services. Distractors wrongly wait for transfer of title.

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