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CMA Intermediate · Direct and Indirect Taxation · Introduction to GST Law

Mehta Designs, a registered business in Pune, pays a consideration to a Singapore firm for a consulting service used in its own business. Under the CGST Act, 2017, how is this transaction treated for the purpose of 'supply'?

Import of services for a consideration is a supply under section 7(1)(b) of the CGST Act, whether or not it is made in the course or furtherance of business. So the transaction is a supply even though the supplier is abroad and regardless of registration of either party.

  1. AIt is a supply only if the importer is a registered person making taxable outward supplies
  2. BIt is a supply because import of services for a consideration is included in supply, whether or not in the course or furtherance of businessCorrect
  3. CIt is not a supply because the supplier is outside India
  4. DIt is a supply only if the Singapore firm is registered in India

Explanation

Section 7(1)(b) of the CGST Act includes import of services for a consideration in 'supply', whether or not in the course or furtherance of business. The importer's registration status or the supplier's registration is not a condition. Option A is wrong because the clause does not require the transaction to be in the course of business.

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