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CA Intermediate · Taxation · Supply under GST

Mehta Pvt Ltd, Mumbai, transfers goods worth Rs 5,00,000 to its own branch in Pune, both registered under the same PAN but in different states, for further sale. No consideration is charged. Which statement is correct?

It is a supply. Registered establishments of the same entity in different states are distinct persons, and Schedule I treats supplies between distinct persons in the course of business as supply even without consideration. IGST is therefore chargeable on the stock transfer value.

  1. ANo supply, as the branch is the same legal person
  2. BSupply, because the branches are distinct persons when registered in different statesCorrect
  3. CSupply only if the goods are capital goods
  4. DSupply only if the branch pays consideration in cash

Explanation

Under Section 25(4), an establishment in one state and its establishment in another state are treated as distinct persons. Schedule I treats supply of goods between related or distinct persons in the course or furtherance of business as supply even without consideration. So tax applies (IGST).

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