Worked Solution
✓ VerifiedAnswer: (a)
The free distribution of laptops to needy students does NOT amount to supply for consideration under GST law. Under the CGST Act 2017, a "supply" is defined as transfer of goods or services for consideration. The case explicitly states that Dhruvatara Limited gifted 500 laptops "बिना व्यवसाय बढ़ावे के इरादे से मुफ्त उपहार" (as a free gift without business promotion intent). Since no consideration (monetary or otherwise) flows in exchange for the laptops, this transfer is not a supply for consideration. Gifts remain outside the purview of GST as they lack the essential element of consideration.
In contrast, the other activities involve consideration:
Option (b) - The old age home charges ₹15,000 per member per month for food, accommodation, and maintenance. This nominal charge constitutes consideration; hence, a taxable supply for consideration arises. Even though charitable trusts may claim exemptions under Schedule III of the CGST Act, the activity itself constitutes a supply with consideration involved.
Option (c) - The community hall is rented for ₹5,000 (religious ceremony) and ₹6,000 (art exhibition). These rental amounts are consideration for providing venue services. This is a supply for consideration.
Option (d) - Rooms are rented to devotees at ₹950 per room per day. The daily rental amount is consideration for providing accommodation service. This is a supply for consideration.
Key Principle: The absence of consideration is the defining criterion. While some supplies may be exempt under Schedule III, exemption does not negate the status of being a "supply for consideration." Only gifts and activities expressly excluded from the definition of supply (specified in Schedule III and Section 7 of CGST Act) fall outside "supply for consideration."
Write it like this
1The skeleton
- State the answer in your first line — write 'Option (a) does not amount to supply' before any explanation; examiners scan MCQ answers top-down and reward instant clarity.
- Invoke Section 7 of CGST Act, 2017 immediately — define 'supply' as requiring consideration, because without pinning the section, your entire reasoning floats on air.
- Lift the exact phrase from the question — quote 'free gift without business promotion intent' and link it to 'no consideration flows'; this shows you read the facts, not just the options.
- Dismiss options (b), (c), (d) in one line each — name the rupee amount as 'consideration' for each; examiners reward contrast answers that show you tested all options, not just the correct one.
- End with the key principle — 'exemption under Schedule III ≠ not a supply; only absence of consideration takes a transaction outside Section 7'; this one-liner separates a 2-mark answer from a 1-mark answer.
2Examiner-rewarded phrases
3Common trap
Heads up — most students mark the old age home (option b) as 'not a supply' because the trust is charitable and the fee is 'nominal'. That's wrong. Nominal charge = consideration. The fact that it may be exempt under a notification is a separate analysis from whether it's a supply at all.