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2019 (10) TMI 946 - AAR - GSTSupply or not - delivery of spares by JNSIPL, Karnataka - whether constitutes supply under Schedule I of the CGST Act, 2017? - HELD THAT - The transaction of the applicant is examined and found that the contract of AMC is between the JNSIPL, Maharashtra and the ultimate consumer and the applicant is not a party to it. JNSIPL, Maharashtra is paying the taxes on these services and they shall be responsible for the delivery of the services to the consumer - The applicant, on request for goods to execute the contractual obligation, delivers the goods from his account to the ultimate consumer and raises the invoice on JNSIPL, Maharashtra. The applicant charges IGST on the invoice as it is an interstate supply, which is deemed to be a supply even without consideration. The delivery of spares by the applicant to the ultimate consumer on account of M/s. JNSIPL, Maharashtra, where invoice is raised against M/s. JNSIPL, Maharashtra and the goods are delivered to the ultimate consumer of M/s. JNSIPL, Maharashtra, would not amount to a supply to the ultimate consumer under the GST Act. However, the supply is made to M/s. JNSIPL, Maharashtra and invoice needs to be raised on them.
Issues:
- Whether the delivery of spares by one entity to another entity for further delivery to the ultimate consumer constitutes a supply under Schedule I of the CGST Act, 2017? Analysis: 1. The applicant, a Private Limited Company registered under the Goods and Services Act, sought an advance ruling on whether delivering spares by them would be considered a supply under Schedule I of the CGST Act, 2017. 2. The applicant is engaged in importing and selling networking equipment in India and providing maintenance contracts (AMC) related to the supplied equipment. The AMC services are executed by the applicant in Maharashtra, where applicable GST is paid. 3. The applicant imports spares to reduce downtime and delivers them to the location directed by the customer in Maharashtra without receiving any consideration. The spares are supplied to the applicant in Karnataka, and an invoice is issued to the Maharashtra entity for the supplies made to the customer. 4. The applicant argued that under the CGST Act, for an activity to be considered a supply, there must be a consideration attached to it unless specified in Schedule I. The Act treats separate GST registrations in different states as distinct persons. 5. The applicant contended that any movement between related or distinct persons without consideration would be considered a supply under GST. In this case, the delivery of spares by the Karnataka entity to the customer is on account of a contractual obligation between the Maharashtra entity and the customer. 6. The Authority considered the submissions and found that the Maharashtra entity is responsible for the delivery of services to the consumer under the AMC contract. The Karnataka entity delivers goods on request and raises an invoice on the Maharashtra entity, charging IGST for interstate supply without consideration. 7. The delivery of spares is a bill to ship transaction, and the ultimate delivery is on account of the Maharashtra entity. The supply is made to the Maharashtra entity, not directly to the consumer. 8. The ruling stated that the delivery of spares to the ultimate consumer on account of the Maharashtra entity does not amount to a supply to the consumer under the GST Act. The supply is made to the Maharashtra entity, and the invoice should be raised on them.
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