CBEC clarifies the treatment of supply by artist vide circular no. 22/22/2017

Artists supply their art work either directly to the customer or they supply to exhibitions/galleries from where it is actually sold; Generally, this happens on approval basis(if the customer buys it is sold, else it is returned back to the artist).

There is a lot of confusion when to consider it a transaction of sale and charge it to tax. So the Government has issued a Circular No. 22/22/2017 dated 21st December,2017 to clarify this issue.

• If the artist sells directly to the customer or galleries then at the time of supply it should be charged to tax.
• If the artist gives it to galleries or exhibitions for exhibiting the art work n further sale from there (on approval basis) then it will be chargeable to tax only when it is actually sold from the gallery or exhibition and that time of supply a tax invoice shall be issued.
  • But when the art work is supplied to galleries or exhibitions, a delivery challanis must(if it is for reasons other than byway of supply/sale) along with e way bill (if applicable).
  • It can be supplied from the place of business of artist (the registered taxable person) toanotherplace within the same State or to a place outside the State.
• If the art work is supplied/sold from one State to another State, it will be treated as inter-State supplies and will attract integrated tax.

Circular No. 22/22/2017-GST

F. No. 349/58/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, dated 21st December, 2017

To,
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarification on issues regarding treatment of supply by an artist in various Statesand supply of goods by artists from galleriesReg.
1.Various representations have been received regarding taxation of the supply of art works byartists in different States other than the State in which they are registered as a taxable person. Insuch cases, if the art work is selected by the buyer, then the supplier issues a tax invoice only at thetime of supply. It has been represented that the artists give their work of art to galleries where it isexhibited for supply. There seems to be confusion regarding the treatment of this activity whether itis taxable in the hands of the artist when the same is given to the art gallery or at the time of actual
supply by the gallery. Therefore, in exercise of the powers conferred under section 168 (1) of theCentral Goods and Services Tax Act, 2017, for the purpose of uniformity in the implementation ofthe Act, it has been decided to clarify this matter.
2. It is seen that clause (c) of sub-rule (1) of rule 55 of the Central Goods and Services TaxRules, 2017 (hereafter referred as the said Rules) provides that the supplier shall issue a deliverychallan for the initial transportation of goods where such transportation is for reasons other than byway of supply. Further, sub-rule (3) of the said rule provides that the said delivery challan shall bedeclared as specified in rule 138 of the said Rules. It is also seen that sub-rule (4) of rule 55 of the
said Rules provides that where the goods being transported are for the purpose of supply to therecipient but the tax invoice could not be issued at the time of removal of goods for the purpose ofsupply, the supplier shall issue a tax invoice after delivery of goods.
3. A combined reading of the above provisions indicates that the art work for supply onapproval basis can be moved from the place of business of the registered person (artist) to anotherplace within the same State or to a place outside the State on a delivery challan along with the e waybill wherever applicable and the invoice may be issued at the time of actual supply of art work.
4. It is also clarified that the supplies of the art work from one State to another State will beinter-State supplies and attract integrated tax in terms of section 5 of the Integrated Goods andServices Tax Act, 2017.
5. It is further clarified that in case of supply by artists through galleries, there is noconsideration flowing from the gallery to the artist when the art works are sent to the gallery forexhibition and therefore, the same is not a supply. It is only when the buyer selects a particular artwork displayed at the gallery, that the actual supply takes place and applicable GST would bepayable at the time of such supply.
6. It is requested that suitable trade notices may be issued to publicize the contents of thiscircular.
7. Difficulty, if any, in the implementation of the above instructions may please be brought tothe notice of the Board.
8. Hindi version would follow.

(Upender Gupta)

Commissioner (GST)