Question41: How to deal with the distinct persons supplies '

Sch I says activities even without consideration will be supply. So stock transfer with in distinct person (branches) will be treated as supply if made without consideration. What if they raise proper invoices, Will they fall under Sec 7(1)(a)supply or Sec 7(1)(c) [ SCH I ].
The reason for asking this question is proviso of Sec 16(2) which require the payment to be made in 180 days and the only exemption from this proviso is to supply fall under Sec 7(1)(c) [SCH I].

Answer Section 16(2) requires reversal of credit when payment is not made with in 180 days. Corresponding to it Rule 37 (1) contains following provision :-

CGST RULE 37
(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, but fails to pay to the supplier thereof, the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall furnish the details of such supply, the amount of value not paid and the amount of input tax credit availed of proportionate to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice:
Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16

Please note that when supplies is made to distinct person without consideration but invoice is issued as per the provision of Section 31 then it does not mean that if the invoice is issued payment is compulsory.

Since the invoice is issued for the purpose of GST only and it will not affect finalization of Balance sheet . The financial records are to be prepared as per accounting principles and standards. (Reply dt. 13/4/2018)