EXAMPLE-70
Ms ABC Co. supplied 150 LED to
distributor D for Rs. 35000 per piece for Rs 52,50,000 and charged GST.
An Agreement between Ms ABC Co. and MR. D provides that if Mr. D sold 100
LED in a month Ms ABC Co. will provide free Singapore trip to Mr. D worth Rs
50000. Mr. D sold 102 LED in a month and company provided free Singapore trip to
Mr. D. The issue that arises is whether free Singapore trip given by M/s ABC Co.
is chargeable to GST when they both are not related person under GST.
Answer
Schedule
II point 5(e) specifies 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
services.
In
view of above provision in the given example Mr. D does the act by selling more
than 100 LED in the month. Thus, act of sale of 100 LED is as supply of
services under GST and free Singapore trip
worth Rs 50000 is
consideration for doing an Act.
Thus,
this transaction comes under the net of supply.