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CMA Final · Indirect Tax Laws and Practice · Supply under GST

Sri Venkatesh Traders, a registered dealer in Chennai, imports consulting services from a Singapore firm for a fee of Rs 8,00,000 for use in its business. Separately, an individual, Mr Ramesh, imports a design service for Rs 2,00,000 for personal use from the same Singapore firm for consideration. Based on Section 7(1)(b) of the CGST Act, 2017, which statement is correct?

Both imports are supplies. Section 7(1)(b) includes import of services for a consideration whether or not in the course or furtherance of business, so the personal-use import by Mr Ramesh is also a supply, just like the business import by Sri Venkatesh Traders.

  1. AOnly the import by Sri Venkatesh Traders is a supply, because import must be in the course of business
  2. BBoth imports are supplies, because import of services for a consideration is a supply whether or not in the course or furtherance of businessCorrect
  3. CNeither is a supply, because import of services is covered only under the IGST Act
  4. DOnly the import by Mr Ramesh is a supply, because individuals are not in business

Explanation

Section 7(1)(b) includes import of services for a consideration whether or not in the course or furtherance of business. Both imports are for consideration, so both are supplies. Option A is wrong because the business-purpose test applies to clause (a), not clause (b).

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