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TMI Blog2018 (10) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... t-liable on the said movement as per the clarification issued by the CBEC vide Circular No. 21/ 21/ 2017 - CGST read with Circular No. 1/ 1/ 2017 - IGST? 2. In the present situation and under the given facts, if GST is payable on the aforesaid transaction, whether the recipient office of SML duty registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit of GST charged? 3. In case when a lyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purpose, without any further supply to unrelated customers, whether such movement of crane would be treated as "taxable supply" under the GST law or can it be said that it would not tantamount to "supply" as per clarification issued by the CREC vide Circular No. 21/ 21/ 2017 - CGST read with Circular No. 1/1/2017 - IGST? 4. If the transaction stated above in question 1 is liable to tax, whether GST would be payable Only on the movement of tyre-mounted cranes being goods on wheels or GST would also be payable on movement of both types of cranes (i.e. tyre-mounted cranes and crawler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition. 5. As the movement of cranes involves significant time and cost, SML has set up various branches ("SML branch offices") across India at strategic locations to minimize transportation time and costs. II. Under GST, SML has obtained registration for 10 locations across India, including its head office ("SML Maharashtra") located in Pune, Maharashtra. III. Brief facts of Existing business model in applicant's case- 6. SML has multiple offices across India from where it undertakes business activities. At present, SML branch offices receive enquiries from various customers for supply of cranes on hire charges. SML branch offices negotiate with customers and receive final work orders from customers. 7. The title and ownership of all the different types of cranes along with their components vest with SML Maharashtra. Therefore, on receipt of the final work order, all the SML branch offices in turn raise Internal work orders on SML Maharashtra to provide requisite cranes on hire charges along with appropriate support and assistance to various customers across India. 8. with the introduction of GST with effect from 1 July, 2017, all the branches of a single legal person l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet at the customer/ project location, wherein the daily and hourly details of crane usage and idle time are maintained, based on which the monthly service invoice is raised by SML branch offices on respective customers. Further, an invoice from SML Maharashtra is issued to the SML branch office and the value considered for levying GST is approximately 95% of the value charged to the customer by the SML branch, following the principle under Rule 28 of the Central Goods and Services Tax Rules, 2017 ("CGST Rules") read with section 15 of CGST Act. 16. In most cases, cranes are moved from one GST registered office of SML to another registered office when there is an underlying work order received by the recipient branch office. However, in some cases, it may happen that the crane is moved from one registered branch office to another registered branch office for temporary upkeepment and maintenance purposes. 17. As the title and ownership of all cranes vest with SML Maharashtra; therefore, for such upkeepment and maintenance activity, the respective SML branch office providing such services levies charges for the same on SML Maharashtra on a monthly basis, depending upon the type ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, as per Rule 37 of the CGST Rules, 2017, in case of supplies made between distinct persons as specified under section 25(4) of the CGST Act, it shall be deemed that the payment has been made and no input tax credit reversal is required to be made for non-payment of consideration. Hence, the recipient SML branch offices can avail credit of IGST charged by SML Maharashtra on the value of hire charges charged on the invoice. Clarification issued under Circular NO. 21/ 21/ 2017-CGST read with Circular No. 1/1/2017-IGST 23. The GST Council in its 23rd meeting held on 10 November, 2017 clarified that inter-State movement of goods like rigs, tools, spares and goods on wheels like cranes, not being in the course of furtherance of supply of such goods, does not constitute supply. This clarification was issued to give major compliance relief to industry, as there are frequent inter-State movement of such kind in the course of providing services to customers or for the purposes of getting such goods repaired or refurbished or for any self-use. Service provided using such goods would in any case attract applicable tax. 24. In order to give effect to the recommendations of the GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es leaves to submit such further facts at or before the hearing of the application as may be relevant. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission of the Assessing authority as follow - The Applicant hereby seeks to determination in respect of the following questions: Qu. 1). Based on the facts and business model adopted by Sanghvi Movers Limited ("SML" or "Applicant" or "the Company") under the GST regime as discussed below in detail, whether movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to -customers would be treated as '"taxable supply" under GST law or whether GST would not be leviable on the said movement as per the clarification issued by the CBEC vide Circular No. 21/21/2017-CGST read with Circular No. - IGST? Answer: - As per section 24(1) (i) of the CGST act, persons making any inter-state taxable supply shall be compulsorily required to be registered under the CGST Act. As per section of the CGST Act, supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble subject to payment of the total value of supply along with tax amount to the supplier within 180 days from the invoice date. As per my opinion, the input tax credit to SML branch offices will not applicable because in this case supplies made without consideration as specified in CGST Act, Qu. 3. In case when at tyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purposes without any further supply to unrelated customers, whether such movement of crane would be treated as "'taxable supply" under the GST law or can it be said that it would not tantamount to "supply" as per clarification issued by the CBEC vide Circular No. 21/ 21/ 2017 - CGST read with Circular No.- 1/1/2017 IGST? Answer:- As per Circular No. 21/21/2017- CGST read with Circular No. 1/1/2017-IGST , inter-state movement of goods on wheels such as cranes between distinct person as specified in section 25(4) of the CGST Act, is not leviable to IGST if the cranes are moved for internal use for carrying any goods, or for repairs and maintenance, etc., except in cases where such movement is for further sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value, 04. HEARING The case was taken up for preliminary hearing on DT. 10.04.2018, with respect to admission or rejection of the application when Sh. Nitin Vijaivergia, C.A. along with Sh. Vipin Bang and Sh. Abhijit Savarkar, G.M. Taxation appeared and made contentions as per details in their ARA The jurisdictional officer, Sh. B K. Shedge, Dy Commissioner of S.T. (PUN-VAT-E-810) Pune appeared and stated that they would be making submissions in due course. The application was admitted and final Hearing was held on 16.05.2018, Sh. Nitin Vijaivergia, C.A. along with Sh. Vipin Bang and Sh. Abhijit Savarkar, G.M. Taxation appeared made written submissions. The jurisdictional officer, Sh. B K. Shedge, Dy. Commissioner of S.T. (PUN-VAT-E-810) Pune appeared and made written submissions. 5 OBSERVATIONS: We have gone through the facts of the case and various written submissions made by the applicant and jurisdictional officer during the course of the proceeding before us. We find that the Applicant Sanghavi Mover Ltd (herein referred as SML) is a Public Limited Company incorporated under the provision of the Company Act, 1956 holding GST registration number ('GSTN') 27AACCS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, the ownership and title to the crane vests with HO. Whenever crane moves from SML HO to SML branch office for further supply on hire, the invoice is issued by SML HO to SML branch office and the value considered For levying GST is approximately 95% of the value charged to customer by the branch. Whereas when crane move from one registered location to another registered location for upkeepment and maintenance activity the respective branch office providing such services levies charges on H.O. along with applicable rate of GST. ON this factual matrix we have been called upon to answer the questions made in the ARA. We now deal each questions as below: Que: 1 Based on the facts and business model adopted by Sanghvi Movers Limited ("SML" or "Applicant or "the Company") under the GST regime as discussed below in detail, whether movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to -customers would be treated as "taxable supply" - under GST law or whether GST would not be leviable on the said movement as per the clarification issued by the CBEC vide Circular No._21/21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of full consideration as agreed, is a supply of goods. 2. Land and Building (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Treatment or process Any treatment or process which is applied to another person's goods is a supply of services. 4. Transfer of business assets (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; (b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services; (c) where any person ceas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 7. Supply of Goods The following shall be treated as supply of goods, namely:- Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. From the co-joint reading of section 7 and schedule - II applicant's activity of providing crane on hire is nothing but transfer of right in cranes without the transfer of title thereof and is therefore a is supply of services. The next issue raised by the applicant for our consideration is under claim that all the branches located in different state are of single legal person and as such the movement of crane for supply on hire from HO in Maharashtra to branch office in another state would not be leviable to under the GST as per the clarification issued by CBEC vide circular No. 21/21/2017-GST r/w Circular No. 01/01/2017. As per general understanding, the HO and branches of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was clarified that such movement may not be treated as supply and therefore would not be leviable to IGST. Further the Board in order to give effect to the discussions held in GST councils meeting held on 10th November 2017 pertaining to interstate movement of rigs, tools and spares, and all goods on wheels [like cranes] issued circular No. 21/21/2017- GST and clarified that the circular 1/1/2017- IGST shall mutatis mutandis apply to interstate movement of such goods, and except in cases where movement of such goods is for further supply of same goods; such interstate movement shall be treated 'neither as a supply of goods or supply of service' and consequently no IGST' would be applicable on such movement. It is further reiterated that applicable CGST/SGST/IGST, as the case may be, is leviable on repairs and maintenance done for such goods. It appears from the first circular 1/1/2017-IGST that it is applicable to interstate movement of various modes of conveyance, carrying goods or passenger or for repairs and maintenance of such conveyance. By second circular 21/21/2017-GST, the benefit of the first circular was extended to rigs, tools and spares, and all goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered in another state for further supply on hire charges to customer and thus the circular 21/21/2017-IGST is not applicable to the facts of the present transaction. Que: 2 In the present situation and under the given facts, if GST is payable on the aforesaid transaction, whether the recipient office of SML duly registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit Of GST charged? This question is in respect of recipient office of SML registered under the GST Act in a taxable territory other than Maharashtra State. We are, therefore, of the opinion that applicant is not proper person to raise this question and therefore we are not expressing our opinion on this question. Que: 3. In case when a tyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purpose, without any further supply to unrelated customers, whether such movement of crane would be treated as "taxable supply" under the GST law or can it be said that it would not tantamount to "supply" as per clarification issued by the CBEC Vide Circular NO. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained the method of invoicing in his submissions. As per the method SML branch office on the basis of monthly log sheet raise invoices on their respective customer and on the basis of same, SML Maharashtra that is applicant in turn raises taxable invoice on the respective SML branch offices. SML Maharashtra recovers hire charges equivalent to 95% of hire charges recovered by SML branch offices from their respective customers. Applicant discharges GST as applicable on the said 95% value. On this factual matrix we have been called upon to answer the impugned question. As per section 15 of the GST Act, the value of supply of goods or supply of services or both shall be transaction value that is actually price paid or payable provided that the supplier and recipient are not related person and the price is the sole consideration. For the discussion herein above we find that SML HO and SNIL branches situated in other states are distinct persons as per section 25(4) of the GST Act. As per MOU between SML HO and SML branches are separate entity doing the business on its own. This fact is not disputed by the applicant. The GST Rules, 2017 provide scheme of determination of value of supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-43/2017-18/B-50 Mumbai, dt. 15/06/2018 For reasons as discussed in the body of the order, the question is answered thus Question 1. Based on the facts and business model adopted by Sanghvi Movers Limited ("SML" or "Applicant" or "the Company') under the GST regime as discussed below in detail, whether movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to customers would be treated as "taxable supply" under GST law or whether GST would not be leviable on the said movement as per the clarification issued by the CBEC vide Circular No. 21/ 21/ 2017- CGST read with Circular No. 1/ 1/ 2017 - IGST? Answer: - Answered in Affirmative, Further circular No.2i/21/2017- IGST which exempts from tax interstate movement of rigs, tools, spares, and al! goods on wheels [like cranes] where interstate movement of such goods is not for further supply of same goods is not applicable to the facts of present transaction as in the present case interstate movement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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