The relationship will be examined based on the explanation appended to Section 15 of the CGST Act, 2017 which defines the term “related persons”. Accordingly, the following persons shall be deemed to “related persons” for the purpose of GST, if:
such persons are officers or directors of one another’s businesses;
such persons are legally recognized partners in business;
such persons are employer and employee;
any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them;
one of them directly or indirectly controls the other;
both of them are directly or indirectly controlled by a third person;
together they directly or indirectly control a third person; or
they are members of the same family;
Further, persons who are associated in the business of one another where one is the sole agent/ sole distributor/ sole concessionaire of the other, shall be deemed to be related.
(ICAI FAQ PUBLICATION 06-09-2017 : Time and Value of Supply -FAQ NO. 47)