free supplies GST

[Madhavan iyengar]

A Company X based in delhi is a distributor of product a manufacturer Y

Y supplies Free of Cost product to X X in turn Distributes it free of Cost to its customer

Whether any GST implication on X on FOC supply made to its Customer( since no ITC is claimed on the FOC material by X so no ITC reversal is required when same material is supplied as FOC to Customer )

X need not discharge any GST also since there is no supply being FOC

AI Summary

Supply without consideration may attract GST where parties are related; unrelated free distributions generally not taxable.
Distribution of manufacturer-supplied goods free of cost is taxable only where Schedule I categorises the movement as a supply even without consideration, notably between related persons or in principal-agent transfers; if distributor and manufacturer are unrelated and no ITC was claimed, GST normally does not apply and no ITC reversal arises.