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CA Intermediate · Taxation · Supply under GST

Kiran Pvt Ltd, a registered company in Mumbai, supplies a taxable service to its Chennai branch (registered separately in Tamil Nadu under the same PAN) without any consideration. The service is not a pure inter-branch activity outside business. Which statement is correct?

It is a supply. Establishments of the same person registered in different States are distinct persons, and Schedule I treats supplies between distinct persons in the course of business as taxable even when made without consideration.

  1. AIt is not a supply because there is no consideration
  2. BIt is not a supply because both are the same legal person
  3. CIt is a supply, as distinct persons include establishments of the same person registered in different States, and Schedule I covers such supplies without considerationCorrect
  4. DIt is a supply only if the Chennai branch is unable to claim input tax credit

Explanation

Under Section 25(4), an establishment in one State and another in a different State of the same person are treated as distinct persons. Schedule I para 2 treats supply between related or distinct persons in the course or furtherance of business as supply even without consideration. So tax is payable. The ITC ability of the branch does not affect this.

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