We are a Private Limited Company registered in Maharashtra. We have transferred goods to our branch in Gujrat. We wish to sell the goods from Gujrat. The goods have been transferred without any consideration. We believe that since there is no consideration involved, it is not a supply. Is this contention correct?
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Greetings from Ssk Advisory. We are happy to resolve your query.
Please note that, Section 7(1) of the CGST Act, provides for activities specified in Schedule I to be treated as supply even if they are undertaken without any consideration. As per para 2 of Schedule I, an activity where you supply goods or services to a related person or to a distinct person in course of business or for furtherance of business, it is to be treated as a supply even if it is made without consideration.
It may be a common practice in your business that one branch of your company may supply goods or services to other branch of your company without any consideration. You can term these transactions as self-supplies. Under GST, when you undertake such transactions, without consideration, it also qualifies as a supply as Gujrat and Maharashtra (in-spite of being different locations of the same entity) have separate GST registrations.
If you are transferring goods from one branch in Maharashtra to another branch in Maharashtra without any consideration, it will not be considered as a supply. However, if you are transferring goods from one branch having a GST registration in one state to another branch having a GST registration in another state, it is considered as a supply, in-spite of both branch being a part of a same company.
Please also refer to Explain the Taxability of Transfer of Business Assets under GST ? for an additional type of transaction covered in Schedule I.
Hope we have been able to solve your query. Please comment below in case of any other queries or questions.