Example

1. ABC Ltd. ,a manufacturer of Machines registered in Delhi supplies parts of machinery without consideration to its unit located in Punjab on 15-04-2018 for further supply of machinery parts there. Whether sending of machinery parts to its own unit is taxable under GST? (Open Market value of parts is Rs 7,85,000/-)

2. ABC Ltd. Punjab unit is engaged in providing services of repair and maintenance to its customers by visiting at their location. The truck equipped with tools , repair equipments etc is sent from Delhi office to punjab unit from where it is send to customer location for doing repair and the customer is billed depending on the repairs to be done and equipments used. 
Value of items in the truck Rs. 500000/-
Value of truck Rs. 2500000/-
Repair and Maintenance charges receipts of Punjab unit Rs. 6,55,000/-
Whether GST is charged on the truck send to Punjab unit?
Whether GST is charged on combined value of truck plus items contained in truck?
Determine GST liability of Punjab unit?

Let GST= 12%

Answer

1. As the units are situated in different states So both units are required to take separate registration under GST as per section 22.

Further as per section 25(4) of CGST Act A person who has obtained or is required to obtain 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 for the purposes of this Act.

In view of above section Delhi unit and Punjab unit are distinct persons and Supply of goods between distinct persons is treated as taxable supply even if it is without consideration as per section 7 read with schedule I.

Therefore it is chargeable to GST and taxable value is determined in accordance with Rule 28 i.e. open market value.
Taxable amount = 7,85,000/-
GST= 94,200/-

2. A person who has obtained or is required to obtain 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 for the purposes of this Act as per section 25.

Delhi unit and Punjab unit are distinct persons and Supply of goods between distinct persons is treated as taxable supply even if it is without consideration as per section 7 read with schedule I.

GST LIABILITY OF PUNJAB UNIT

Note 1 Value of Truck

Circular No. 1/1/2017 IGST dated 07.07.2017, it has been clarified that the inter- State movement of various modes of conveyance between ‘distinct persons’ as specified in section 25 (4), not involving further supply of such conveyance, including trucks carrying goods or passengers or both, or for repairs and maintenance, may be treated ‘neither as a supply of goods nor supply of service’ and therefore, will not be leviable to IGST.