2018 (12) TMI 1156 - AAR - GST

Supply - e-way bill - supply from M/s. SSPL to M/s. X - Bill to Ship to mode - Section 10(1) (b) of IGST Act, 2017 - ship to of ultimate customer M/s. X - input tax credit - related person. Held that - The cycle of supply of goods from the applicant to the final customer, involves four persons. i.e. the applicant, M/s. RSE/RPG, M/s. Goyal and the M/s. X - Section 10(1)(b) of IGST Act, 2017 does nowhere limit the transaction to only three parties/ persons. The said section only contemplates about role of third party and declaration of principal place of business . Therefore, the supply from M/s. SSPL to M/S. X on a Bill to Ship to mode as per provisions of Section 10(1) (b) of IGST Act, 2017 is permissible. The Press Note of ministry of Finance on Issues regarding Bill to Ship to for e-way bill under CGST rules 2017 dated 23.04.2018 clearly emphasise that only a single e-way bill is to be issued either from the supplier of goods or by third party - In the instant case, the applicant can issue an e-way bill in which the bill to will be mentioned in the name of M/S RSE/RPG whereas ship to would be in the name of final customer i.e. M/S X. Input tax credit - Held that - TMT Steel Bars manufactured by the applicant is similar in quality of what is made by M/s. RSE/RPG, (trademark contract is emphasising on it) and therefore, the value of supply of goods can be ascertained or established in accordance with Section 15 of CGST Act read with second proviso of Rule 28 of CGST Rules, 2017 with eligibility to full Input Tax Credit. Related party transaction - Held that - The relationship between M/s Goyal and M/s X is not Related party relationship in accordance with sub-section (4) and (5) of section 25 of CGST Act, 2017. Thus, the transactions between M/s. Goyal and the ultimate customer i.e. M/S. X would be covered by the provisions of Section 15 of CGST Act, 2017. Ruling - The supply from M/s. SSPL to M/s. X on a Bill to Ship to mode as per provisions of Section 10(1) (b) of IGST Act, 2017 is permissible. The applicant can issue an e-way bill in which the bill to will be mentioned in the name of M/s. RSE/RPG whereas ship to would be in the name of final customer i.e. M/s. X. The provisions of Section 15 of the CGST Act, 2017 read with Rule 28 of CGST Rules, 2017 and in particular the second proviso to Rule 28 would apply for the value of supply for the transactions between M/s. SSPL and M/s. RSE with availability of full Input Tax Credit. The transactions between M/s. Goyal and M/s. X (the ultimate customer) would be covered under the provisions of Section 15 as both are unrelated persons. (as declared in submissions by the applicant).

Issues Involved:
1. Permissibility of "Bill to Ship to" mode under Section 10(1)(b) of IGST Act, 2017.
2. Use of E-way bill in "Bill to Ship to" transactions.
3. Applicability of Section 15 of CGST Act, 2017 read with Rule 28 of CGST Rules, 2017 for value determination in business-to-business transactions.
4. Coverage of transactions between unrelated parties under Section 15 of CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Permissibility of "Bill to Ship to" Mode:
The applicant, engaged in manufacturing TMT Steel Bars, inquired about the permissibility of using the "Bill to Ship to" model as per Section 10(1)(b) of the IGST Act, 2017. The section states that when goods are delivered by the supplier to a recipient or another person on the direction of a third person, it is deemed that the third person has received the goods, and the place of supply shall be the principal place of business of such person. The ruling confirmed that the supply from M/s. SSPL to M/s. X on a "Bill to Ship to" mode is permissible under the provisions of Section 10(1)(b) of the IGST Act, 2017.

2. Use of E-way Bill in "Bill to Ship to" Transactions:
The applicant sought clarification on the use of the E-way bill in "Bill to Ship to" transactions. According to the press note dated 23.04.2018, only a single E-way bill is required, issued either by the supplier or the third party. The ruling affirmed that the applicant can generate an E-way bill showing M/s. RSE as "Bill to" and M/s. X as "Ship to."

3. Applicability of Section 15 of CGST Act, 2017 Read with Rule 28 of CGST Rules, 2017:
The applicant questioned whether the provisions of Section 15 of the CGST Act, 2017, read with Rule 28 of the CGST Rules, 2017, apply to the value of supply for transactions between M/s. SSPL and M/s. RSE, and subsequently between M/s. RSE and M/s. Goyal. Section 15 defines the value of supply as the transaction value where the supplier and recipient are not related, and the price is the sole consideration. Rule 28 provides that the value of supply between distinct or related persons shall be the open market value or 90% of the price charged for like goods if the recipient is eligible for full input tax credit. The ruling confirmed that these provisions apply to the transactions in question, as all parties are registered persons, and the transactions are business-to-business with full input tax credit availability.

4. Coverage of Transactions Between Unrelated Parties Under Section 15:
The applicant also inquired whether the transactions between M/s. Goyal and the ultimate customer, M/s. X, are covered under the provisions of Section 15 of the CGST Act, 2017, given that they are not related persons. The ruling agreed with the applicant's submission, stating that the transactions between M/s. Goyal and M/s. X are covered under Section 15 as they are unrelated parties.

Conclusion:
1. The supply from M/s. SSPL to M/s. X on a "Bill to Ship to" mode is permissible under Section 10(1)(b) of the IGST Act, 2017.
2. The applicant can issue an E-way bill with M/s. RSE/RPG as "Bill to" and M/s. X as "Ship to."
3. The provisions of Section 15 of the CGST Act, 2017, read with Rule 28 of the CGST Rules, 2017, apply to the value of supply for transactions between M/s. SSPL and M/s. RSE, with full input tax credit availability.
4. The transactions between M/s. Goyal and M/s. X are covered under Section 15 as they are unrelated persons.

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