The Gujarat Authority of Advance Ruling (AAR) has differentiated between the concept of ‘Sale’ and ‘Supply’ under GST and ruled that the goods and service tax (GST) must be paid even without receiving payment.

The bench of P.B. Meena and Kamal Shukla has observed that a supply has been done by the applicant, that the goods were removed which in terms of the FIR have also been received at the destination. The applicant’s averment is that since the entire transaction emanated out of a fraudulent/bogus order, it goes out of the ambit of supply. An element of fraud may vitiate a contract, but how it would enable the applicant to move out of the ambit of the term supply as defined under section 7 of the GST Act.

The applicant was stated to be duped by a group of persons who fraudulently placed a bogus order by falsifying the same to make it appear as an order from Matak Autonomous Council. Consequent to the supply of the goods, the applicant realized that the order documents, etc., purportedly from Matak Autonomous Council, were forged.

The applicant sought the advance ruling on the issue whether the goods supplied by us [becoming victim of fraud without receiving consideration] could be considered as supply of goods under the provisions of section 21 under the IGST Act.

The AAR held that the goods supplied by us [becoming victim of fraud without receiving consideration] could be considered as supply of goods under the provisions of section 21 under the IGST Act.

Ruling Details

Applicant Name: Acube Engitech Company

Date: 21/03/2025

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