Free supply of service

This query is : Resolved

CA Padmasri Manyam (Querist)
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03 July 2018 Reversal of ITC is applicable even for free supply of services?
As per my knowledge, Section 17(5)(h) covers only goods supplied as free samples.
Further, supply of services to unrelated customers is not a supply. The same cannot be considered as exempted supply as well to attract Section 17(2) of CGST Act.
Provide your views on the same.

CA Ankit R Momaya

CA Ankit R Momaya (Expert)
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03 July 2018 Reversal of ITC is not applicable for free supply of services.

RAJA P M

RAJA P M (Expert)
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03 July 2018 Dear Mr CA Ankit R Momaya., Please, Can You explain the details....!!!

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CA Ankit R Momaya

CA Ankit R Momaya (Expert)
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04 July 2018 Dear Raja Sir,

Section 17(5)(h) reads as follows: Notwithstanding anything contained in Sec 16(1) and 18(1) , ITC shall not be available in respect of the foll.......
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples;

There are two aspects to be considered here.
1) This sub section doesnot cover services
2) Goods in subsection (h) can be interpreted as Inputs and not finished Goods as ITC is available only in respect of Input and not Finished Goods.

Please share your views on these also.

Vishakha Kejriwal.

Vishakha Kejriwal. (Expert)
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04 July 2018 ITC reversal is not applicable in case of supply of services. Further supply of services to unrelated persons for non-consideration is not a supply subject to levy u/7 and u/s 9 of CGST Act. Thus Section 17(2) for reversal of credit should not be applicable.

CA Ankit R Momaya

CA Ankit R Momaya (Expert)
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04 July 2018 Agree with Vishakha Kejriwal's views that the transaction is not a supply as there is no consideration.

RAJA P M

RAJA P M (Expert)
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04 July 2018 Dear Mr. CA Ankit R Momaya.,

Yes... I agreed to above replies...

But.,

What is the Meaning of "FREE SUPPLY OF SERVICE"....? with invoice or without Invoice...?
Where is notify "FREE SUPPLY OF SERVICE"....?

Please guide me if i'm wrong....

For example,
Can I give Accounting service as per above like "FREE SUPPLY OF SERVICE"...? If Yes...
How can I bill...?