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CA Intermediate · Taxation · Supply under GST

Mehta Textiles of Surat (registered) transfers goods worth Rs 4,00,000 from its Surat head office to its own branch in Indore, which is registered under the same PAN in Madhya Pradesh. No consideration is charged. How is this transaction treated under GST?

It is a supply under Schedule I. Surat and Indore branches have separate registrations in different States, so they are distinct persons, and goods sent between them in the course of business are taxable even without consideration.

  1. ANot a supply, as there is no consideration and both are the same person
  2. BSupply under Schedule I, as supply of goods between distinct persons without considerationCorrect
  3. CSupply of services, because it is an internal transfer
  4. DExempt supply, as it is a stock transfer within the same legal entity

Explanation

Establishments in different States with separate registrations 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 IGST applies on Rs 4,00,000. Option A overlooks the distinct person rule.

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