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CA Intermediate · Taxation · Supply under GST

Mr. Arjun, a registered dealer in Pune, supplies goods to his branch in Bengaluru, which is registered in Karnataka under the same PAN. The goods are sent without any consideration for sale by the branch. How is this transaction treated under GST?

It is a taxable supply. A Pune unit and a Bengaluru branch with separate State registrations are distinct persons, and supply between them in the course of business is treated as supply even without consideration. Being across States, it is inter-State, so IGST applies.

  1. ANot a supply, as there is no consideration and both are the same person
  2. BA supply, being supply of goods between distinct persons, taxable as inter-State supplyCorrect
  3. CA supply, taxable as intra-State supply under CGST and SGST
  4. DNot a supply because the goods are only stock transfer

Explanation

Establishments in different States with separate registrations are distinct persons. Schedule I entry 2 treats supply between related or distinct persons in the course of business as supply even without consideration. As the locations are in different States, it is an inter-State supply attracting IGST. Option D is wrong because stock transfer between distinct persons is taxable.

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