[Topic-(I)- Section 7 (1)(a)- Supply]

Question I (1): Define "Supply" in the context of GST Act. (or) Explain the meaning of
supply as per provisions of Section 7(1) of Central Goods and Service Tax Act, 2017.
Answer: Supply is the taxable event in GST. It is the key stone of the GST architecture. As
per section 7(1) of the CGST Act, 2017, Supply includes—
(a) All forms of supply of goods or services or both Such as Sale, Transfer, Barter, Exchange,
License, Rental, Lease or Disposal made or agreed to be made for a consideration by a
person in the course or furtherance of business,
(aa) The activities or transactions, by a person, other than an individual,
 to its members or constituents or vice-versa,
 for cash, deferred payment or other valuable consideration.
 shall be treated as a supply.
Explanation: Notwithstanding anything contained in any other law or any judgment, decree
or order of any Court, tribunal or authority,
 the person and its members or constituents
 shall be deemed to be two separate persons and
the supply of activities or transactions inter se shall be deemed to take place from one
such person to another.
(b) Importation of Services, for a consideration whether or not in the course or
furtherance of business, and
(c) The activities specified in Schedule I, made or agreed to be made without a consideration.
[Related party, deemed distinct, permanent transfer of business assets, transaction
between principal and agent, import of service by a person from the related person].
Further as per section 7(1A), The activities to be treated as supply of goods OR supply of
services as referred to in Schedule II i.e. this schedule clarifies whether a particular supply will
be supply of goods or supply of service.
But, as per section 7(2), some of the specified activities shall not be treated as supply, which
are as follows: -
(a) Activities / transactions specified in Schedule III; or
(b) Such activities / transactions undertaken by CG or SG or Local authority in
which they are engaged as public authorities, as may be notified by the Government on
the recommendations of the Council [Article 243 G/W].
(c)
Question I (2): What are the necessary elements that constitute supply under CGST Act?
Answer: In order to constitute a supply, the following parameters are required to be satisfied:
1. The activity involves supply of goods or services or both.
2. The supply is for a consideration unless otherwise specifically provided for.

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 3. The supply is made in the course or furtherance of business.
Question I (3): A car dealer sells a Mercedes Car for `50,00,000 to earn a profit. Does it
qualify as a Supply.
Answer: Relevant Provision: As per section 7(1)(a) of CGST Act, 2017, supply includes all forms
of supply of goods or services or both such as sale, transfer, barter, exchange, license,
rental, lease or disposal made or agreed to be made for a consideration by a person in the
course or furtherance of business.
Analysis & Conclusion: Yes, in the above case it will be treated as supply and liable to GST.
Question I (4): An individual buys a car for personal use and after a year sells it to a car
dealer. Will the transaction be a supply in terms of CGST/SGST Act? Give reasons for the
answer.
Answer: Relevant Provision: As per Section 7(1)(a), supply includes all forms of supply of
goods or services or both made or agreed to be made in the course or furtherance of
business. But in this case supply is not made by the individual in the course or furtherance of
business.
Analysis & Conclusion: No, it will not be treated as Supply.
Further, no input tax credit was admissible on such car at the time of its acquisition as it was
meant for non-business use.
Question I (5): Meghraj & Co. wishes to commence the business of supplying ready-made
garments within Punjab and in the neighbouring States of Delhi and Haryana. Kindly state
as to what is the taxable event under GST and leviability of CGST, SGST/UTGST and IGST
on the same? [ICAI Material]
Answer: Taxable event under GST is supply of goods or services or both. CGST and SGST/
UTGST will be levied on intra-State supplies. IGST will be levied on inter-State supplies.
Question I (6): Whether provision of service or goods by a club or association, society to its
members will be treated as supply or not?
Answer: Relevant Provision: As per Section 7(1)(aa), The activities or transactions, by a
person, other than an individual,
 to its members or constituents or vice-versa,
 for cash, deferred payment or other valuable consideration.
shall be treated as a supply.
Explanation: Notwithstanding anything contained in any other law or any judgment, decree or
order of any Court, tribunal or authority,
 the person and its members or constituents
 shall be deemed to be two separate persons and
the supply of activities or transactions inter se shall be deemed to take place from one such
person to another.

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Analysis & Conclusion: Hence, Provision of facilities by a club, association, society or any such
body to its members shall be treated as supply.
Question I (7): Mrs. Pragati received legal advice for her personal problems & paid 1,000
pound as a legal fee to Miss Unnati of U.K. (London).
Explain whether the above activity of import of service would amount to supply u/s 7 of
the CGST Act, 2017?
If in above case both of them are real sisters & no consideration is paid then will it change
your answer?
Further in the above case if both of them are real sisters & Mrs. Pragati receives legal
advice for her business & she doesn't pay any consideration then what will be your answer?
Answer: Relevant Provision: Supply, under section 7, inter alia,
 includes import of services for a consideration
 even if it is not in the course or furtherance of business.
Further, import of services by a taxable person from a related person located outside India,
without consideration is treated as supply if it is provided in the course or furtherance of
business.
Analysis & Conclusion: Thus, although the import of service for consideration by Mrs. Pragati
is not in course or furtherance of business, it would amount to supply.
Further, In the given case, import of service without consideration by Mrs. Pragati from her real
sister - Miss Unnati [real sister, being member of the same family, is a related person] will not
be treated as supply as it is not in course or furtherance of business.
However, import of service without consideration by Mrs. Pragati from her sister - Miss Unnati
(related person) will be treated as supply if she receives legal advice for her business, i. e. in
course or furtherance of business.
Question I (8): Sarvanna & Sons wishes to start supplying alcoholic liquor in the State of
Tamil Nadu. Therefore, it applies for license to the Tamil Nadu Government for selling
liquor for which the State Government has charged specified fee from it. Examine whether
the grant of alcoholic liquor license by the Tamil Nadu Government to Sarvanna & Sons
qualifies as supply. [ICAI Material]
Answer: Relevant Provision: Services by way of grant of alcoholic liquor license by the State
Governments have been notified to be treated neither as a supply of goods nor as a supply
of service. Such license is granted against consideration in the form of license fee or
application fee or by whatever name it is called.
Analysis & Conclusion: This special dispensation is applicable only to supply of service by
way of grant of liquor licenses by the State Governments as an agreement between the
Centre and States and is not applicable/has no precedence value in relation to
grant of other licenses and privileges for a fee in other situations, where GST is payable.

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 Thus, in the given case, the grant of alcoholic liquor license by the Tamil Nadu Government to
Sarvanna & Sons is neither a supply of goods nor a supply of service.

[Topic-(II)- Section 7 (1)(b)- Import of Services]

Question II (1): Discuss the taxability of import of services under GST.
Answer: As per section 7(1)(b), supply includes the importation of services for a
consideration whether or not in the course or furtherance of business.
Thus, import of services with consideration is taxable in both of the following situations:
(a) in course or furtherance of business
(b) not in course or furtherance of business
Further, Para 4 of Schedule I of CGST Act, stipulates that import of services by a person from
a related person or from his establishments located outside India is treated as "supply" even if
made without consideration if it is provided in the course or furtherance of business.
Question II (2): Mr. Santosh (an unregistered person) plans to pursue his higher education
in Canada. He receives career consultancy services from Mr. Prakash a Canada based
consultant for `10,00,000. Does it qualify as a supply?
Answer: Relevant Provision: As per section 7(1)(b), (Para 4 schedule I) supply includes import
of services for a consideration whether or not in the course or furtherance of business.
Analysis & Conclusion: Yes, in the above case it will be treated as supply. However, it would
be exempted as per exemption notification no. 9/2017 (IGST).
Question II (3): Jacky Shroff Constructions Ltd. (a registered taxable person) receives
architectural design supplied by a foreign architect to design a residential house to be built
in Kashmir for a consideration of `50,00,000. Does it qualify as supply?
Answer: Relevant Provision: As per section 7(1)(b), (Para 4 schedule I) Importation of
services for a consideration whether or not in the course or furtherance of business is
covered under supply.
Analysis & Conclusion: In the above case it will be treated as supply.
Question II (4): With reference to provisions of the CGST Act, 2017 discuss in brief, when
''Importation of services" is to be considered as supply and when it is not to be considered
as supply. [Nov 2020 Marks 5]
Answer: Importation of services for a consideration whether or not in the course or furtherance
of business is to be considered as supply.
Importation of services by a person without consideration is deemed as supply provided the
following two conditions are satisfied:-
(a) such import is from related person or from his establishments located outside India,
and
(b) such import is in the course or furtherance of business.

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In case any or both of the above two conditions is/are not satisfied, the import of services
without consideration shall not be deemed as supply.
[Topic-(III)- Section 7(1)(c)- Schedule I]
Question III (1): List the activities to be treated as Supply even if made without
consideration.
Answer: Schedule I of CGST Act, 2017 provides the following activities to be treated as supply
even if made without consideration:
(a) Permanent transfer/disposal of business assets: where input tax credit has been
availed on such assets.
(b) Supply of goods or services or both between related persons, or between distinct
persons as specified in section 25, when made in the course or furtherance of business.
Provided that gifts upto `50,000 in value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
(c) Supply of goods—
(a) By a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal, or
(b) By an agent to his principal where the agent undertakes to receive such goods
on behalf of the principal.
(d) Importation of services: by a person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
Question III (2): Whether goods supplied on hire purchase basis will be Supply of goods or
supply of services? Give reason.
Answer: As per para 1 of Schedule II, Supply of goods on hire purchase shall be treated as
supply of goods as there is transfer of title, at a future date. To qualify as supply of goods,
title as well as possession both has transferred for a transaction.
In hire purchase transaction, there is an agreement where possession is transferred
immediately but title is transferred at a future date upon payment of full consideration, then
it is termed as supply of goods.
Question III (3): PQR and Co. a manufacturer of technical equipment donated such
equipment to charitable schools on account of renovation of office. The company has taken
input tax credit on the computers so donated. Does it qualify as a supply?
Answer: Relevant Provisions: - As per section 7(1)(c) read with Para 1 schedule I of CGST
Act, 2017, Permanent transfer or disposal of business assets where input tax credit has
been availed shall be treated as supply even made without consideration.
Analysis & Conclusion: - Hence, donation equipment to charitable schools shall qualify as supply
since input tax credit has been availed by XYZ and Co.

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 Question III (4): Krishna Ltd. provides Patency services without charge to Rama Ltd. in
which Krishna Ltd. has controlling rights. The said consultancy has been provided for benefit
of entire group. Does it qualify as a supply?
Answer: Relevant Provisions: - As per section 7(1)(c) read with Para 2 of schedule I of CGST
Act, 2017, supply of goods or services between related persons is treated as supply even if it is
without consideration.
As per Explanation to Section 15 of CGST Act, 2017, persons shall be deemed to be "Related
Persons" if "one of them directly or indirectly controls the other".
Analysis & Conclusion: - Since, Krishna Ltd. has controlling rights of Rama Ltd., they will be
treated as related person and the said transaction will qualify as supply.
Question III (5): Modest Ltd., registered in Delhi dealing in supply of electronic items
transferred some of its stock to its unit located in Haryana (inter-state transfer). Whether
such self-supplies are taxable under GST?
Answer: Relevant Provisions: - As per section 7(1)(c) read with para 2 of schedule I of CGST
Act:
 Supply of goods or services or both between related persons or between distinct persons
as specified in section 25 of the CGST Act, is taxable under GST.
 Further, where a person who has obtain registration in two different States in respect
of his two establishment then such establishments shall be treated as establishments
of distinct persons [Section 25 of the CGST Act].
Analysis & Conclusion: - In view of the same, two different units of Modest Ltd. are deemed
as establishments of two distinct persons. It is further assumed that goods supplied are not
exempted goods.
Therefore, supply of goods/stock transfer from Delhi Unit of Modest Ltd. to Haryana Unit in
course/furtherance of business, is deemed supply as per section 7 of the CGST Act and hence
taxable under GST.
Question III (6): Examine whether the following activities would amount to supply under
section 7 of the CGST Act:
(a) Selecta Manufacturers have a factory in Delhi and a depot in Mumbai. Both
these establishments are registered in respective States. Finished goods are sent
from factory, in Delhi to the Mumbai depot without consideration so that the same
can be sold.
(b) Raman is an Electronic Commerce Operator in Chennai. His brother who is
settled in ban London is a well-known lawyer. Raman has taken legal advice from
him free of cost with regard to his family dispute.
(c) Management consultancy services by Mr. Ramlal but not in course or
furtherance of business.

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Answer:
(a) Relevant Provisions: Schedule I para 2 of CGST Act, stipulates that supply of goods or
services or both between related persons or between distinct persons as specified in
section 25 of the CGST Act, is supply even without consideration, provided it is made in
the course or furtherance of business.
Further, where a person who has obtain registration in two different States in
respect of his two establishment then such establishments shall be treated
as establishments of distinct persons [Section 25].
Analysis & Conclusion: - In view of the same, factory and depot of Selecta
Manufacturers are deemed as establishments of two distinct persons.
Therefore, supply of goods from Delhi factory of Sulekha Manufacturers to
Mumbai Depot without consideration, but in course/furtherance of business,
is supply under section 7 of the CGST Act.
(b) Relevant Provisions: - Schedule I para 4 of CGST Act, stipulates that import of
services by a person from a related person located outside India, without
consideration is treated as supply if it is provided in the course or furtherance of business.
Analysis & Conclusion: - In the given case, Raman has received legal services
from his brother free of cost in a personal matter and not in course or
furtherance of business Hence, services provided by Raman's brother to him
would not be treated as supply under section 7 of the CGST Act.
(c) Relevant Provisions: - Section 7 of the CGST Act, 2017 stipulates that in order to qualify
as supply,
(i) Supply should be of goods and/or services.
(ii) Supply should be made for a consideration
(iii) Supply should be made in the course or furtherance of business.
Analysis & Conclusion: - As in the given case, Services provided are not in course or
furtherance of business. Hence, services provided by Mr. Ramlal would not be treated as
supply.
Question III (7): Examine whether the activity of import of service in the following
independent cases would amount to supply under section 7?
(i) Miss Shriniti Kaushik received interior decoration services for her residence located
at Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the
said service is 5,000 Australian dollar.
(ii) Miss Shriniti Kaushik received interior decoration services for her residence located
at Bandra, Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [wholly
dependent on Miss Shriniti]. Further, Miss Shriniti did not pay any consideration for
the said service.

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 (iii) Will your answer change if in the above case, if Miss Shriniti has taken interior
decoration services with regard to her business premises and not her residence?
[ICAI Material]
Answer:
(i) Relevant Provisions: - As per section 7(1)(b) of the CGST Act 2017, Supply includes-
 import of services for a consideration
 even if it is not in the course or furtherance of business.
Analysis & Conclusion: - Thus, although the import of service for consideration by Miss.
Shriniti Kaushik, it is not in course or furtherance of business, as the interior decoration
service have been availed in respect of her residence, it would amount to supply.
(ii) Analysis & Conclusion: - Section 7 of the CGST Act, 2017 read
with Para 4 of Schedule I provides that import of services by a taxable
person from a related person located outside India, without consideration
is treated as supply if it is provided in the course or furtherance of
business.
Explanation to section 15, inter alia, provides that persons shall be deemed to be
“related persons” if they are members of the same family.
Further, as per section 2(49), family means-
(a) the spouse and children of the person, and
(b) the parents, grand-parents, brothers and sisters of the person, if they are wholly
or mainly dependent on the said person.
Analysis & Conclusion: -In the given case, Miss Shriniti Kaushik has received interior
decoration services from her brother. In view of section 2(49)(ii) above, Miss Shriniti
and her brother shall be considered to be related as Miss Shriniti’s brother is wholly
dependent on her. However, Miss Shrinti has taken interior decoration services for her
residence and not in course or furtherance of business. Consequently, services provided
by Miss Shriniti’s brother to her would not be treated as supply under section 7 read
with Schedule I.
(iii) In the above case, if Miss Shriniti has taken interior decoration services with regard
to her business premises, services provided by Miss Shriniti’s brother to her would be
treated as supply under section 7 read with Schedule I.
Question III (8): Sahab Sales, an air-conditioner dealer in Janakpuri, Delhi needs 4 air-
conditioners for his newly constructed house in Safdarjung Enclave. Therefore, he transfers
4 air-conditioners [on which ITC has already been availed by it] from its stock, for the
said purpose. Examine whether the said activity amounts to supply under section 7 of the
CGST Act. 2017.

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Further, a Janakpuri resident, Aakash, approached Sahab Sales. He sold an air-conditioner
to Sahab Sales for `5,000. Aakash had bought the said air-conditioner six months before,
for his residence. Does sale of the air conditioner by Aakash to Sahab Sales amount to
supply under section 7 of the CGST Act, 2017?
Answer: Relevant Provisions: - Section 7 stipulates that in order to qualify as supply-
(a) Supply should be of goods and/or services.
(b) Supply should be made for a consideration
(c) Supply should be made in the course or furtherance of business.
Further, Schedule I of the CGST Act, 2017 illustrates the activities to be treated as supply even
if made without consideration.
One such activity is permanent transfer or disposal of business assets where input tax credit
has been availed on such assets then the said activity is to be treated as supply even if made
without consideration.
Analysis & Conclusion: - In view of said provisions, permanent transfer of air conditioners by
Sahab Sales from its stock for personal use at its residence without consideration, would amount
to supply.
Sale of air-conditioner by Aakash to Sahab Sales will not qualify as supply under section 7 of
the CGST Act, 2017 as although it is made for a consideration, but it is not in the course or
furtherance of business.

Question III (9): A dealer of air-conditioners permanently transfers an air conditioner from
his stock in trade, for personal use at his residence. Will the transaction constitute a
supply?
Answer: Relevant Provisions: - As per section 7(1)(c) read with Para 1 schedule I of CGST
Act, 2017, Permanent transfer or disposal of business assets where input as credit has been
availed on such assets shall constitute a supply under GST even where no consideration is
involved.
Analysis & Conclusion: - Hence, transfer of Air Conditioner at residence shall be treated as
Supply.
Question III (10): ABC Shoeshines Ltd. engages "Easy-Beezee Ltd" as an agent to sell Shoes
on its behalf. For this purpose, ABC shoeshines Ltd. has supplied 500 shoes to the showroom
of "Easy-Beezee ltd." located in Jaipur. Does it qualify as supply?
Answer: Relevant Provisions: As per section 7(1)(c) read with Para 3 of schedule I of CGST
Act, 2017, supply of goods by a principal to his agent where the agent undertakes to supply
such goods on behalf of the principal shall be treated as supply even if made without
consideration.

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 Analysis & Conclusion: By referring the above view, supply of shoes by ABC Shoeshines Ltd.
to Easy-Beezee Ltd. will qualify as supply.
Question III (11): The temple of ancestral tutelary deity of Mr. Aman goel and his family
is located at Beri, Haryana. The temple is run by a charitable organisation registered under
section 12AA of the Income Tax Act, 1961. The family has got unshakeable faith in their
ancestral tutelary deity. Mr. Aman is a big entrepreneur having flourishing business of tiles
in Gurugram. Upon the birth of their first child, he donated ` 10 lakh to the said temple for
construction of a sitting hall in the temple. On the main door of the sitting hall, a name
plate was placed stating “Donated by Mr. Aman Goel upon birth of his first child”.
You are required to examine the leviability of GST on the donation received from Mr. Aman
Goel?
Answer: Relevant Provisions: It has been clarified vide Circular No. 116/35/2019 that when the
name of the donor is displayed in the religious institution premises, by placing a name
plate or similar such acknowledgement, which can be said to be an expression of gratitude
and public recognition of donor’s act of philanthropy and is not aimed at giving publicity
to the donor in such manner that it would be an advertising or promotion of his business,
then it can be said that there is no supply of service for a consideration (in the form of
donation). There is no obligation (quid pro quo) on part of recipient of the donation or gift to
do anything (supply a service). Therefore, there is no GST liability on such consideration.
Analysis & Conclusion: In the given case, there is no reference or mention of any business
activity of the donor which otherwise would have got advertised. Thus, since the gift or donation
is made to a charitable organization, the payment has the character of gift or donation and the
purpose is philanthropic (i.e., it leads to no commercial gain) and not advertisement, hence GST
is not leviable.
Question III (12): Damodar Private Ltd., registered in Delhi, has transferred some goods
to its branch, registered in West Bengal, so that the goods can be sold from the branch.
The goods have been transferred without any consideration. The company believes that
the transaction undertaken by it does not qualify as supply as no consideration is involved.
Ascertain whether the transfer of goods by Damodar Private Ltd. to its branch office
qualifies as supply. [ICAI Material]
Answer: Relevant Provisions: As per Schedule I, supply of goods or services or both between
related persons or between distinct persons as specified in section 25, when made in the course
or furtherance of business, is deemed as supply even if made without consideration.
Analysis & Conclusion: In the given case, since the Damodar Private Ltd. and its branch located
in another State are distinct persons, supply of goods between them qualifies as supply.
Question III (13): Prithvi Associates is engaged in supply of taxable goods. It enquires from
its tax advisor as to whether any activity can be treated as supply even if made without

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consideration in accordance with the provisions. You are required to enumerate such
activities, if any. [ICAI Material]
Answer: Section 7 stipulates that the supply should be for a consideration and should be in the
course or furtherance of business. However, Schedule I enumerates the cases where an activity
is treated as supply, even if the same is without consideration. These are as follows:
(i) Permanent transfer or disposal of business assets where input tax credit has been availed
on such assets.
(ii) Supply of goods or services or both between related persons or between distinct persons
as specified in section 25, when made in the course or furtherance of business.
However, gifts not exceeding fifty thousand rupees in value in a financial year by
an employer to an employee shall not be treated as supply of goods or
services or both.
(iii) Supply of goods —
(a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods
on behalf of the principal.
(iv) Import of services by a person from a related person or from any of his other
establishments outside India, in the course or furtherance of business.
Question III (14): Examine whether the following activities would amount to supply under
section 7 read with Schedule I:
(a) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from
factory in Delhi to the Mumbai depot without consideration so that the same can
be sold.
(b) Raman is an architect in Chennai. His brother who is settled in London is a well-
known lawyer. Raman has taken legal advice from him free of cost with regard to
his family dispute.
(c) Would your answer be different if in the above case, Raman has taken advice in
respect of his business unit in Chennai? [ICAI Material]
Answer:
(a) Relevant Provisions: Schedule I, inter alia, stipulates that supply of goods or
services or both between related persons or between distinct persons as specified
in section 25, is supply even without consideration provided it is made in the course
or furtherance of business.
Further, a person who has obtained more than one registration, whether in one
State/Union territory or more than one State/Union territory shall, in

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 respect of each such registration, be treated as distinct persons [Section
25(4)].
Analysis & Conclusion: In view of the same, factory and depot of Sulekha
Manufacturers are distinct persons. Therefore, supply of goods from Delhi
factory of Sulekha Manufacturers to Mumbai Depot without consideration,
but in course/furtherance of business, is supply under section 7 read with
Schedule I.
(b) Relevant Provisions: Schedule I, inter alia, stipulates that import of services by a taxable
person from a related person located outside India, without consideration is treated as
supply if it is provided in the course or furtherance of business. Explanation to section
15, inter alia, provides that persons shall be deemed to be “related persons” if
they are members of the same family. Further, as per section 2(49), family means,
—
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly
or mainly dependent on the said person.
Analysis & Conclusion: In the given case, Raman has received free of cost legal services
from his brother. However, in view of section 2(49)(ii) above, Raman and his brother
cannot be considered to be related as Raman’s brother is a well- known lawyer and is
not wholly/mainly dependent on Raman. Further, Raman has taken legal advice from
him in personal matter and not in course or furtherance of business. Consequently,
services provided by Raman’s brother to him would not be treated as supply under
section 7 read with Schedule I.
(c) In the above case, if Raman has taken advice with regard to his business unit, services
provided by Raman’s brother to him would still not be treated as supply under section
7 read with Schedule I as although the same are provided in course or furtherance
of business, such services have not been received from a related person.
Question III (15): Examine whether the activity of import of service in the following
independent cases would amount to supply under section 7:
(i) Miss Shriniti Kaushik received interior decoration services for her residence located at
Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the said
service is 5,000 Australian dollar.
(ii) Miss Shriniti Kaushik received interior decoration services for her residence located
at Bandra, Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [wholly
dependent on Miss Shriniti]. Further, Miss Shriniti did not pay any consideration for the
said service.

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(iii) Will your answer change if in the above case, if Miss Shriniti has taken interior
decoration services with regard to her business premises and not her residence? [ICAI
Material]
Answer:
(i) Relevant Provisions: Supply, under section 7, inter alia,
 includes import of services for a consideration
 even if it is not in the course or furtherance of business.
Analysis & Conclusion: Thus, although the import of service for consideration by Miss. Shriniti
Kaushik is not in course or furtherance of business [as the interior decoration services have been
availed in respect of residence], it would amount to supply.
(ii) Relevant Provisions: Schedule I, inter alia, stipulates that import of services by a taxable
person from a related person located outside India, without consideration is treated as supply if
it is provided in the course or furtherance of business. Explanation to section 15, inter alia,
provides that persons shall be deemed to be “related persons” if they are members of the same
family. Further, as per section 2(49), family means, —
 the spouse and children of the person, and
 the parents, grand-parents, brothers and sisters of the person, if they are
wholly or mainly dependent on the said person.
Analysis & Conclusion: In the given case, Miss Shriniti Kaushik has received interior decoration
services from her brother. In view of section 2(49)(ii) above, Miss Shriniti and her brother shall
be considered to be related as Miss Shriniti’s brother is wholly dependent on her.
However, Miss Shrinti has taken interior decoration services for her residence and not in course
or furtherance of business. Consequently, services provided by Miss Shrinti’s brother to her would
not be treated as supply under section 7 read with Schedule I.
(iii) In the above case, if Miss Shriniti has taken interior decoration services with regard to her
business premises, services provided by Miss Shriniti’s brother to her would be treated as supply
under section 7 read with Schedule I.
Question III (16): Gagan Engineering Pvt. Ltd., registered in Haryana, is engaged in providing
maintenance and repair services for heavy steel machinery. For carrying out the repair
work, Gagan Engineering Pvt. Ltd. sends its container trucks equipped with items like repair
equipments, consumables, tools, parts etc. from Haryana workshop to its own repairing
centres (registered under GST law) located in other States across India where the clients’
machinery are being brought and are being repaired.
Discuss the leviability of GST on the inter-State movement of trucks from the workshop
of Gagan Engineering Pvt. Ltd. in Haryana to its own repairing centres located in other
States across India. [ICAI Material]

13
 Answer: Relevant Provisions: As per section 25(4), a person who has obtained more than one
registration, whether in one State or Union territory or more than one State or Union territory
shall, in respect of each such registration, be treated as ‘distinct persons’.
Schedule I specifies situations where activities are to be treated as supply even if made without
consideration. Supply of goods and/or services between ‘distinct persons’ as specified in section
25, when made in the course or furtherance of business is one such activity included in Schedule
I under para 2.
However, as per CBIC circular, the inter-State movement of various modes of conveyance
including, inter alia, trucks, carrying goods or passengers or both or for repairs and
maintenance, between ‘distinct persons’ as specified in section 25(4), not involving further
supply of such conveyance, may be treated ‘neither as a supply of goods nor supply of
service’ and therefore, will not be leviable to IGST. Applicable CGST/SGST/IGST, however, shall
be leviable on repairs and maintenance done for such conveyance [Circular No. 1/1/2017].
Analysis & Conclusion: Thus, in the given case, inter-State movement of trucks from the
workshop of Gagan Engineering Pvt. Ltd. located in Haryana to its repair centres located in other
States is ‘neither a supply of goods nor supply of service’.
Question III (17): PTL Pvt. Ltd. is a retail store of merchandise located in 25 States/UTs
in the country. For the purpose of clearance of stock of merchandise and to attract
consumers, PTL Pvt. Ltd. launched scheme of “Buy One Get One Free” for the same type
of merchandise, for instance, one shirt to be given free with purchase of one shirt.
Determine how the taxability of the goods supplied under “Buy One Get One Free” scheme
is determined. [ICAI Material]
Answer: As per section 7(1)(a), the goods or services which are supplied free of cost (without
any consideration) are not treated as “supply” except in case of activities mentioned in
Schedule I. Under “Buy One Get One Free” scheme, it may appear at first glance that in case
of offers like “Buy One, Get One Free”, one item is being “supplied free of cost” without any
consideration. However, it is not an individual supply of free goods, but a case of two or more
individual supplies where a single price is being charged for the entire supply. It can at best be
treated as supplying two goods for the price of one.
Taxability of such supply will be dependent upon as to whether the supply is a composite
supply or a mixed supply and the rate of tax shall be determined accordingly.

[Topic-(IV)- Schedule II]

Question IV (1): Whether the following will be treated as supply of goods or services?
(a) Works contracts and Catering services
(b) Supply of software
(c)Goods supplied on hire purchase basis

14
Answer:
(a) As per para 6 of schedule II, Works contracts and Catering services shall be treated as
supply of services.
(b) As per para 5 of schedule II, Development, design, programming, customization,
adaption, upgradation, enhancement, implementation of information technology software
shall be treated as supply of services.
(c) As per para 1 of schedule II, Supply of goods on hire purchase shall be treated as supply
of goods as there is transfer of title at a future date.
Question IV (2): Aspire Ltd enters into contract with Beta Ltd for execution of works
contract for `50,00,000 excluding taxes for following activities pertaining to construction
of a complex. Determine whether the following activities fall under the ambit of 'works
contract'
(i) Erection & installation of structural designs to the complex which involved material.
(ii) Fabrication works relating to the structure of complex no material is involved.
(iii) Assembling of units pertaining to movable property which involved material and
goods.
(iv) Tiling & painting work of the entire building which involved material.
Answer: Relevant Provisions: - As per section 2(119) of CGST Act, Works contract means a
contract for building, construction, fabrication, completion, erection, installation, fitting out,
improvement, modification, repair, maintenance, renovation, alteration or commissioning of any
immovable property wherein transfer of property in goods (whether as goods or in some other
form) is involved in the execution of such contract.
Analysis & Conclusion: - Based on the above definition, the given activities can be analyzed as
follows: -
(i) Yes, the given activity is in relation to an immovable property thus qualifies as a works
contract.
(ii) No, even though the given activity of fabrication is in relation to immovable property
thus it does not qualify as works contract because material is not involved.
(iii) No, the activity of assembling units will not qualify as works contract as it is relation to
a movable property.
Yes, the given activity is in relation to building which is immovable property & thus qualifies as
works contract.

15
 Question IV (3): State whether the following supplies would be treated as supply of goods
or supply of services as per Schedule II of the CGST Act: - [ICAI Material]
Supply Nature of Supply
Renting of immovable property Supply of services
[Para 5 of Schedule
II]
Goods forming part of business assets are transferred or Supply of goods
disposed of by/under directions of person carrying on the [Para 4 of Schedule
business, So as no longer to form part of those assets, whether II]
or not for consideration
Transfer of right in goods without transfer of title in goods Supply of services
[Para 1 of Schedule II]
Transfer of title in goods under an agreement which stipulates Supply of goods
that property shall pass at a future date [Para 1 of Schedule II]
Leasing or License to occupy immovable property Supply of services
[Para 2 of Schedule
II]
Sale of Under Construction Property Supply of services
[Para 5 of Schedule
II]
Transfer of right in goods as well as title in goods. Supply of goods
[Para 1 of Schedule II]
Any Treatment or Process applied on another person's goods Supply of services
[Para 3 of Schedule
II]
Temporary Transfer of use of any Intellectual Property Right Supply of services
[Para 5 of Schedule
II]
Agreeing to the obligation to refrain from an act or to do an Supply of services
act [Para 5 of Schedule
II]
Supply of goods by any unincorporated association to a Supply of goods
member thereof [Section 7(1)(aa)]
Works contracts Supply of services

16
 Supply Nature of Supply
[Para 6 of Schedule
II]

Question IV (4): The goods supplied on hire purchase basis will be treated as supply of
services. Examine the validity of the statement. [ICAI Material]
Answer: The statement is not correct. Supply of goods on hire purchase shall be treated as
supply of goods as there is transfer of title, albeit at a future date.
Question IV (5): Whether transfer of title and/or possession is necessary for a transaction
to constitute supply of goods? [ICAI Material]
Answer: Yes.
Title as well as possession both has to be transferred for a transaction to be considered as a
supply of goods in terms of Schedule II (1)(a).
In case, title is not transferred, the transaction would be treated as supply of service in terms
of Schedule II (1) (b) of the CGST Act.
In some cases, possession may be transferred immediately but title may be transferred at a
future date like in case of sale on approval basis or hire purchase arrangement. Such transactions
will also be termed as supply of goods.
Question IV (6): ABC Consultancy, registered in Mumbai, supplies technical consultancy
services to its clients. It has been providing technical services to XY Ltd, Mumbai since
past two years. Consideration is settled by XY Ltd assignment wise. XY Ltd paid `45 lakh
to ABC Consultancy on 10th January, 20XX on which ABC consultancy agreeing to not
provide similar technical services to any other business entity in India or abroad for a period
of 8 years. ABC Consultancy is of the view that `45 lakh is not chargeable to GST.
You are required to examine whether the view taken by ABC Consultancy is valid in law.
Calculate GST liability of ABC Consultancy, if any. The technical services provided by ABC
consultancy is otherwise chargeable to GST at the rate of 18%. It may be noted that XY
Ltd is not ready to pay any further amount to ABC Consultancy in addition to the amount
already agreed.
Answer: The view taken by ABC Consultancy is not valid in law.
Relevant Provisions: The scope of supply is defined by section 7(1). It includes deemed supply
given under Schedule I. Para 5(e) of Schedule II provides that agreeing to the obligation to
refrain from an act, or to tolerate an act or a situation, or to do an act is treated as supply
of service.
Analysis & Conclusion: Thus, any consideration received for agreeing to the obligation to refrain
from an act, is subject to GST. Consideration received for non-compete agreement is deemed as

17
 consideration for supply of services Consideration of `45 lakh received on the promise of ABC
consultancy of not providing similar services to any other person, is consideration for supply
which is chargeable to GST.
Since GST is not separately collected, it will be assumed that it is included in `45 lakh. Rule
35 of CGST Rules, 2017 provides that where the value of supply is inclusive of GST, the tax
amount is determined in the following manner: -
Tax amount = (Value inclusive of taxes x tax rate in % of IGST or, CGST, SGST or UTGST)
÷ (100 + sum of tax rates, as applicable, in %)
Consequently, value of taxable supply will be `38,13,559 (i.e., `45,00,000 x 100/118). GST liability
on `38,13,559 will be calculated as follows-

Particulars Amount in `

Taxable value of supply 38,13,559

Add- CGST @ 9% of `38,13,559 3,43,220

SGST @ 9% of `38,13 3,43,220
559
Total GST liability 6,86,440

[Topic-(V)- Schedule III]

Question V (1): Enumerate the activities or transactions which shall be treated neither as
a supply of goods nor a supply of services.
Answer: Schedule III specifies transactions/activities which shall be neither treated as supply
of goods nor a supply of services: -
1. Services by an employee to the employer in the course of or in relation to his
employment.
Note: Any perquisites provided by the employer to its employees in terms of
contractual agreement entered into between the employer and the employee are in
lieu of the services provided by employee to the employer in relation to his
employment. Hence it will not be subjected to GST.
2. Services by any court or Tribunal established under any law for the time being in force.
3. (a) Functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local
authorities;
(b) Duties performed by any person who holds any post in pursuance of the provisions
of the Constitution in that capacity; or
(c) Duties performed by any person as a Chairperson or a Member or a Director in a

18
 body established by the Central Government or a State Government or local authority
and who is not deemed as an employee before commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the
deceased.
5. Sale of land and constructed or completed building.
[Note: Land may be sold either as it is or after some development such as
levelling, laying down of drainage lines, water lines, electricity lines, etc.
It is clarified that sale of such developed land is also sale of land and
is covered by Schedule III and accordingly does not attract GST. However,
it may be noted that any service provided for development of land, like
levelling, laying of drainage lines (as may be received by developers)
shall attract GST at applicable rate for such services.]
6. Actionable claims, other than lottery, betting and gambling.
7. Supply of goods from a place in the non-taxable territory to another place in the
non-taxable territory without such goods entering into India.
8. (a) Supply of warehoused (custom bonded warehouse) goods to any person before
clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by endorsement of
documents of title to the goods, after the goods have been dispatched from the
port of origin located outside India but before clearance for home consumption.
Question V (2): Whether actionable claims are liable to GST?
Answer: As per sec. 2(52) of the CGST, Definition of Goods includes actionable claims. Further,
Schedule III read with sec.7 of the CGST Act lists the activities or transactions which shall be
treated neither as supply of goods nor supply of services. The schedule lists actionable claims
other than lottery, betting and gambling as one of such transactions.
Thus, only lottery, betting and gambling shall be treated as supplies under the GST regime.
All other actionable claims shall not be liable to GST.
Question V (3): Employer provides bus service, meal coupon, telephone at residence, gives
vehicle for official and personal use, uniform and shoes, to employee. Explain implication of
GST?
Answer: Relevant Provisions: - As per Sec 7(2) of CGST Act read with Para 1 of Schedule III
any service provided by an employee to employer in the course of or in relation to employment
then it is not called as supply.
Further, as per Schedule I para 2 any gift given by the employer to an employee upto `50,000
in a financial year does not qualify as a supply.

19
 Further, Any perquisites provided by the employer to its employees in terms of contractual
agreement entered into between the employer and the employee are in lieu of the services
provided by employee to the employer in relation to his employment,
Analysis & Conclusion: - In given case bus, service, meal coupon etc. are provided by the
employer in course or in relation to employment then no GST is payable, but if it is provided
as a gift & not as a part of employment, then GST is payable if value thereof exceed `50,000
in a financial year.
Question V (4): "Coop", a cooperative society gives Diwali Gifts to employee worth `5,00,000.
Does it qualify as a supply? Would your answer be different if gifts of `40,000 has been
given to employee?
Answer: Relevant Provisions: - As per section 7(1)(c) read with Para 2 schedule I of CGST
Act, 2017, supply of goods or services between related persons is treated as supply even if it is
without consideration. As per Explanation to Section 15 of CGST Act, 2017, persons shall be
deemed to be "relating persons" if such persons are employer and employee. Thus, Diwali
gifts to employee worth `5,00,000 will qualify as supply and such supply would be leviable to
GST.
Analysis & Conclusion: - If gifts of `40,000 is given instead of `5,00,000, the answer will not
qualify as supply since it has been specifically provided that gifts not exceeding `50,000 in
value in a financial year by an employer shall not be treated as supply of goods and services
or both.
Question V (5): ABC Associates received management consultancy services from its head
office located in Malaysia. The head office has rendered such services free of cost to its
branch office. Does it qualify as supply?
Answer: Relevant Provisions: - As per section 7(1)(c) read with Para 4 schedule I of CGST
Act, 2017, Import of services by a taxable person from a related person or from any of his
other establishments outside India, in the course or furtherance of business will be treated
as supply even if made without consideration.
Analysis & Conclusion: - Thus, management consultancy services received by ABC Associates
will qualify as supply even though the head office has not charged anything from it and will
be liable to GST.
Question V (6): Mr. Zombi, a supplier registered in Hyderabad (Telangana), procures goods
from China and directly supplies the same to a customer in US. With reference to the
provisions of GST law, examine whether the said activity of supply of goods by Mr. Zombi
to customer in US is taxable under GST. If yes, determine the place of supply of the same.
Answer: Relevant Provisions: - Schedule III to the CGST Act specifies transactions/activities
which shall be neither treated as supply of goods nor supply of services. One of such
activity/transaction is supply of goods from a place in the non-taxable territory to another

20
place in the non-taxable territory without such goods entering into India, under Para 7 of
Schedule III.
Analysis & Conclusion: - Therefore, in view of the above-mentioned provisions, the said activity
is not a supply. Hence, it is not leviable to GST since “supply” is the taxable event for
chargeability of GST. Therefore, since the transaction is not leviable to GST, the question of
place of supply does not arise in the given case.

[Topic (VI)- Composite and Mixed Supply]

Question VI (1): What do you mean by composite supply & mixed supply? Briefly discuss
the manner in which the tax liability on composite supplies and mixed supplies is
determined?
Answer: As per section 8 of CGST Act, 2017
Composite supply means-
 a supply made by a taxable person to a recipient and:
 Comprises two or more taxable supplies of goods or services or both, or any combination
thereof are naturally bundled
 and supplied in conjunction with each other, in the ordinary course of business.
This means that in a composite supply, goods or services or both are bundled owing to natural
necessities. The elements in a composite supply are dependent on the ‘principal supply'.
Determination of tax liability on composite supplies:-
A composite supply comprising of two or more taxable supplies, one of which is a principal
supply, shall be treated as a supply of such principal supply.
Example: - Where goods are packed and transported with insurance, the supply of goods, packing
materials, transport and insurance is a composite supply and supply of goods is a principal supply.
Mixed supply means:
 two or more individual supplies of goods or services, or any combination thereof, made
in conjunction with each other by a taxable person
 For a single price where such supply does not constitute a composite supply.
The individual supplies are independent of each other and are not naturally bundled.
Determination of tax liability on mixed supplies:-
A mixed supply comprising of two or more supplies shall be treated as supply of that
particular supply that attracts highest rate of tax.
Example: - A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry
fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of
these items can be supplied separately and is not dependent on any other however It shall not
be a mixed supply if these items are supplied separately. GST in case of mixed supplies shall be
determined on the basis of that element which attracts highest tax rate.

21
 Question VI (2): “Diligent Force” a professional training institute gets its training material
of “Aptitute Quotient” printed from “Durga printing House” a printing press. The content
of the material is provided by the Diligent Force who owns the usage rights of the same
while the physical inputs including paper used for printing belong to the Durga Printing
House.
Ascertain whether supply of training material by the Durga Printing House constitutes
supply of goods or supply of services.
Answer: Relevant Provisions: - Circular No. 11/11/2017 has clarified that supply of books printed
with contents supplied by the recipient of such printed goods, is composite supply and the
question, whether such supplies constitute supply of goods or services would be determined
on the basis of what constitutes the principal supply.
Principal supply has been defined in section 2(90) of the CGST Act as supply of goods or
services which constitutes the predominant element of a composite supply and to which any
other supply forming part of that composite supply is ancillary.
Analysis & Conclusion: - In the case of printing of books where content is supplied by the
publisher or the person who owns the usage rights to the intangible inputs while the physical
inputs including paper used for printing belong to the printer, supply of printing [of the content
supplied by the recipient of supply] is the principal supply and such supplies would constitute
supply of service.
Thus, the supply of training material by the Durga Printing House would constitute supply of
services.
Question VI (3): Agrawal Carriers is a Goods Transport Agency (GTA) engaged in
transportation of goods by road. As per the general business practice, Agrawal Carriers also
provides intermediary and ancillary services like loading/ unloading, packing/unpacking,
transshipment and temporary warehousing, in relation to transportation of goods by road.
With reference to the provisions of GST law, analyze whether such services are to be treated
as part of the GTA service, being a composite supply, or as separate supplies.
Answer: Relevant Provisions: - Composite supply means a supply made by a taxable person
to a recipient consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with each other
in the ordinary course of business, one of which is a principal supply [Section 2(30) of the
CGST Act].
Analysis & Conclusion: - The GTA provides various intermediary and ancillary services, such as,
loading/unloading, packing/unpacking, transshipment and temporary warehousing, which are
provided in the course of transport of goods by road. These services are not provided as
independent services but as ancillary to the principal service, namely, transportation of goods

22
by road. The invoice issued by the GTA for providing the said service includes the value of
intermediary and ancillary services.
In view of this, if any intermediary and ancillary service is provided in relation to transportation
of goods by road, and charges, if any, for such services are included in the invoice issued by the
GTA, such service would form part of the GTA service, being a composite supply, and would
not be treated as a separate supply.
However, if such incidental services are provided as separate services and charged
separately, whether in the same invoice or separate invoices, they shall be treated as
separate supplies.
Question VI (4): Determine whether the following supplies amount to composite supplies:
(a) A hotel provides 4 days-3 night's package wherein the facility of breakfast
and dinner is provided along with the room accommodation.
(b) A toothpaste company has offered the scheme of free toothbrush along with
the toothpaste
(c)A package consisting of canned foods, sweets, chocolates, dry fruits supplied for a
single price. [ICAI Material]
Answer: Relevant Provisions: Under composite supply, two or more taxable supplies of goods
or services or both, or any combination thereof, are naturally bundled and supplied in
conjunction with each other, in the ordinary course of business, one of which is a principal
supply [Section 2(30) of the CGST Act].
Analysis & Conclusion: In view of the same,
(a) Since, supply of breakfast and dinner with the accommodation in the hotel are naturally
bundled, said supplies qualify as 'composite supply'.
(b) Since supply of toothbrush along with the toothpaste are not naturally bundled,
said supplies doing not qualify as 'composite supply'.
(c) Since these items can be supplied separately and are not naturally bundled, said
supplies do not qualify as ‘composite supply'.
Question VI (5): Mahajan Ltd. is a manufacturer of gift items and other related products,
supplied a "FAMILY PACKAGE" consisting of toys (GST rate- 18%), beauty cream (GST
rate- 28%), baby- care products (GST rate-28%) and Cosco balls (GST rate- 12%). The
price per package is `1,000 (exclusive of taxes). 25000 packages are supplied by the company
to its dealers. Determine the nature of supply and its tax liability.
Answer: Relevant Provisions: This supply would be regarded as mixed supply, since in this case
each of the goods in the package have individual identity and can be supplied separately,
but are deliberately supplied conjointly for a single consolidated price.

23
 The tax rates applicable in case of mixed supply would be the rate of tax attributable to that
one supply (goods or services) which suffers the highest rate of tax from amongst the supplies
forming part of the mixed supply. Therefore, the package will be chargeable to 28% GST.
Analysis & Conclusion: The tax liability will be arrived as under:

Particulars Amount

Value of taxable supply per package 1000

No. of packages 25,000

Total taxable value of supply 2,50,00,000

Applicable GST rate 28%

Total tax liability 70,00,000

Question VI (6): Explain the composite supply and mixed supply. If a trader launches a
package sales for marriage containing double bed, refrigerator, was hing machine, wooden
wardrobe at a single rate. He is issuing invoice showing value of each goods separately .
Whether this is case of mixed supply or composite supply. Explain. [July 2021 Marks 4]
Answer: Relevant Provisions: Composite supply comprises of two or more taxable supplies of
goods or services or both, or any combination thereof , which are naturally bundled and
supplied in conjunction with each other in the ordinary course of business, one of which is
a principal supply.
Mixed supply means two or more individual supplies of goods or services, or any combination
thereof, made in conjunction with each other by a taxable person for a single price, where
such supply does not constitute a composite supply.
Analysis & Conclusion: Items such as double bed, refrigerator, washing machine and wooden
wardrobe are not naturally bundled and also the invoice for the supply shows separate values for
each item i.e., the package is not supplied for a single price .
Therefore, supply of such items as a package will neither constitute a composite supply nor a
mixed supply. Thus, the various items of the package will be treated as being supplied individually.
Note: The question specifies that the various items are supplied at a ‘single rate’. The “single
rate” expression is construed as single rate of tax in the above answer. Further, the “single
rate” may also be construed as single price as given in the below mentioned answer.
Items such as double bed, refrigerator, washing machine and wooden wardrobe are not naturally
bundled. Therefore, supply of such items as a package will not constitute composite supply.
Further, a single price has been charged for the package.
Consequently, supply of such items as a package will be treated as mixed supply.

24
Question VI (7): Dumdum Electronics has sold the following electronic items to Akbar Retail
Store.
(i) Refrigerator (500 litres) taxable @ 18%
(ii) Stabilizer for refrigerator taxable @ 12%
(iii) LED television (42 inches) taxable @ 12%
(iv) Split air conditioner (2 Tons) taxable @ 28%
(v) Stabilizer for air conditioner taxable @12%
Dumdum Electronics has issued a single invoice, indicating price of each of the above
items separately in the same. Akbar Retail Store has given a single cheque of ` 1,00,000/-
for all the items as a composite discounted price. State the type of supply and the tax
rate applicable in this case. [ICAI Material]
Answer: In the given case, the items supplied by Dumdum Electronics are not naturally bundled
in the ordinary course of business. Therefore, such supply is not a composite supply. Further,
although Akbar Retail Store has paid a composite discounted price for these goods, Dumdum
Electronics has not charged a single price for the said supply. Therefore, said supply is also not
a mixed supply.
Supply of these goods is, therefore, supply of individual items which are taxable at the respective
rates applicable to them.

Question VI (8): Manikaran, a registered supplier of Delhi, has supplied 20,000 packages
at ` 30 each to Mukhija Gift Shop in Punjab. Each package consists of 2
chocolates, 2 fruit juice bottles and a packet of toy balloons. Determine the rate(s) of
GST applicable in the given case assuming the rates of GST to be as under: [ICAI Material]

Goods / Services Supplied GST Rate %

Chocolates 18%
Fruit Juice Bottles 12%
Toy Balloons 5%

Answer: Relevant Provisions:- As per section 2(74), mixed supply means two or more
individual supplies of goods or services, or any combination thereof, made in conjunction
with each other by a taxable person for a single price where such supply does not constitute
a composite supply.
Analysis & Conclusion: - Supply of a package containing chocolates, fruit juice bottles and a
packet of toy balloons is a mixed supply as each of these items can be supplied separately and
is not dependent on any other. Further, as per section 8(b), the mixed supply is treated as

25
 a supply of that particular supply which attracts the highest rate of tax. Thus, in the given
case, supply of packages is treated as supply of chocolates [since it attracts the highest rate of
tax] and the rate of GST applicable on the package of ` 6,00,000 (20,000 × ` 30) is 18%.

26