Case Details: In re: PSB Traders (2025) 32 Centax 18 (A.A.R. - GST - T.N.)
Judiciary and Counsel Details
- S/Shri Balakrishna S. & B. Suseel Kumar, Members
Facts of the Case
The Applicant, engaged in the business of crafting new silver ornaments from old or scrap silver, approached the AAR seeking clarity on the taxability of exchanges conducted without monetary consideration. The factual matrix disclosed that the Applicant routinely received old or scrap silver from vendors and, in turn, provided finished silver ornaments to the same parties without involving any financial transaction. It was contended that such exchanges did not amount to ‘supply’ under Section 7 of the CGST Act, read with Section 2(31), since no consideration in monetary terms was received. The Applicant submitted that in the absence of a monetary flow, the transaction fell outside the purview of the taxable event envisaged under GST law. The matter was accordingly placed before the AAR Tamil Nadu.
AAR Held
The AAR Tamil Nadu held that the transaction constituted a taxable ‘supply’ under Section 7 of the CGST Act read with Section 2(31), which explicitly includes barter within the definition of ‘consideration’. It observed that the Applicant received old or scrap silver and, in exchange, provided finished ornaments—thereby establishing mutual benefit and reciprocal obligations, fulfilling the conditions of a supply even in the absence of money. The AAR emphasised that under GST, barter transactions are legally recognised and attract tax liability as they meet the essential criteria of a ‘supply’ made for ‘consideration’ in the course or furtherance of business.
