# Specific Transactions — Clarifications via Circulars

GST law has been clarified through circulars on several specific transactions. Key positions:

## 1. Supply of Artwork to Galleries

When an artist sends artwork to a gallery for display/exhibition without sale — not a supply at that stage. Supply arises only when the gallery actually sells the artwork.

## 2. Transfer of Tenancy Rights (Pagdi System)

Transfer of tenancy rights against tenancy premium → Taxable as supply of service (even though immovable property is involved). 'Pagdi' premium is consideration for grant of tenancy right.

## 3. Supply of Food and Beverages at Cinema Halls

When supplied independently (not as part of ticket) and consumed at the cinema → Taxable as restaurant service (lower rate 5%).

When bundled with cinema ticket as a single price → Composite supply; rate of cinema ticket applies.

## 4. Holding of Shares (Holding–Subsidiary)

Mere holding of shares of a subsidiary by a holding company is NOT regarded as supply of any service. No GST.

## 5. Inter-state Movement of Conveyances

Inter-state movement of various modes of conveyance (trucks, buses, rigs, tools) for use in providing service or self-use → Not a supply.

However, repair and maintenance of such conveyance → Regarded as supply and taxable.

## 6. Printing Contracts (Composite Supplies)

Content owned by recipient (recipient supplies design/content; printer prints on its paper) → Supply of service (printing service).
Content/design supplied by printer (e.g., printer printing & supplying envelopes designed by it) → Supply of goods.

## 7. Priority Sector Lending Certificates (PSLC)

Treated as goods; sale of PSLC by one bank to another → Taxable supply of goods (GST applies).

## 8. Honorarium to Guest Anchors

Honorarium paid to guest anchors → Taxable supply of service (above threshold). GST applies.

## 9. Sale of Plotted Land (after development)

Sale of developed land — leveling, laying drainage, electric lines etc. done before sale → Still covered under Schedule III (sale of land); not taxable.

## 10. Pre-paid Instruments (PPI)

A Pre-paid Instrument that meets RBI's PPI definition → Treated as money. Loading/redemption is not supply.

## 11. Not a PPI (Vouchers etc.)

If an instrument does not qualify as PPI → Treated as actionable claim / appropriate classification; tax implications differ.

## 12. ESOP / ESPP / RSU from Overseas Holding Company

Where Indian employee receives shares of overseas holding company under ESOP/ESPP/RSU scheme and Indian subsidiary reimburses cost on cost-to-cost basis (no markup) → No supply between holding and subsidiary. Hence no GST. If markup is charged → that markup is taxable.

Worked example

### Example 1

Example (Cinema): Multiplex sells movie ticket ₹250 and separately sells popcorn ₹150 at the counter inside the hall. → Popcorn taxed as restaurant service (5%). Movie ticket taxed at applicable rate (18%).

### Example 2

Example (Holding-Subsidiary): Holding Co. holds 80% shares of Subsidiary Co. No service is rendered by holding to subsidiary merely by virtue of holding. → No GST.

### Example 3

Example (Conveyance): Transporter sends empty truck from Delhi to Mumbai to pick up consignment. → Not a supply. But sending it to a Mumbai workshop for repair → Repair service is taxable supply.

### Example 4

Example (ESOP): Indian subsidiary recharges US parent ₹5 lakh (cost of shares granted to employees) at cost. → No GST. If recharge is ₹5.5 lakh (10% markup) → ₹50,000 markup is taxable as service.

⚠️ Common exam mistakes

Treating food sold inside cinema hall as cinema service — it is restaurant service.
Charging GST on cost-to-cost ESOP reimbursement between subsidiary and overseas holding — explicitly clarified as not supply.
Treating sale of developed plotted land as taxable — it remains Schedule III (sale of land).
Forgetting that PSLCs are goods and attract GST.
Treating holding-subsidiary share holding as a taxable service.

Reference: — CBIC Circulars — including Circular Nos. 22/22/2017-GST (Artwork), 44/18/2018-GST (Tenancy/PSLC), 177/09/2022-GST (Cinema F&B), 196/08/2023-GST (Holding-Subsidiary shares), 210/4/2024-GST (ESOP), and others

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Important Circulars and Clarifications on Specific Transactions

Worked example

⚠️ Common exam mistakes