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TMI Blog2019 (8) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... . 600 123 (hereinafter referred to as 'Applicant') is a branch office of Sanghvi Movers Limited (hereinafter referred to as SML), a public Limited Company engaged in the business of providing medium-sized heavy-duty cranes on rental/ lease/ hire basis to clients without transferring the right to use the cranes. SML have pan-India presence and cranes are deployed across India as per the requirements of customers. The applicant are registered under GST in the State of Tamilnadu with GSTIN 33AACCS3775K1Z4. The applicant has sought Advance Ruling on Whether on facts and circumstances of the case, since Integrated Goods and Services Tax ("IGST") is payable on inter-state movement of cranes by the supplier (i.e. SML Maharashtra), whether the recipient office of SML (i.e. SML Tamil Nadu) duly registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit (ITC) of IGST charged? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1, The appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch offices (including SML TamilNadu) by entering into a Memorandum of Understanding (MoU), wherein SML Maharashtra has agreed to provide cranes and crane components to all SML branch offices on hire charges. As part of the service arrangement, whenever the applicant receives a final work order from its customers for providing cranes on hire charges, they will in turn raise an internal work order on SML Maharashtra for providing the required cranes on hire charges. Thus, for each final work order received by the applicant from customers, an internal work order is raised by them on SML Maharashtra, wherein such class/ type of crane, as required by customers, is provided on hire charges by SML Maharashtra to the applicant, who in turn sub-hires them to the ultimate customers. On receipt of internal work order from the applicant, SML Maharashtra transports the crane and its components to the customer's location / project location on the instructions of the applicant. For each type of crane given on hire charges, the crane operator maintains a separate monthly log sheet at the customer/ project location, wherein daily and hourly details of crane usage and idle time are maintained, based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recipient SML branch offices of SML would be eligible to avail input tax credit of GST charged by SML Maharashtra. However, the Hon'ble Maharashtra Authority of Advance Ruling did not answer the question and stated that the applicant in that case i.e. SML Maharashtra is not the proper person to raise this question. 2.6 The applicant has stated that an advance ruling pronounced by the Authority for Advance Ruling is binding only on the applicant who has sought the ruling and on the concerned officer or the jurisdictional officer in respect of the applicant and not applicable to similarly placed other taxable persons in the state or any other state. Therefore, the ruling pronounced by the Maharashtra Authority for Advance Ruling is only limited to SML Maharashtra.; that it may be imperative to note that the authority for Advance Ruling observed that supply of cranes, Crane components and trailer on lease / hire charges by SML Maharashtra to the applicant constitutes inter-state taxable supply of service between two distinct person and liable to pay IGST under the provision of IGST Acts.; GST being a consumption based tax, the IGST paid by SML Maharashtra, would be available with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of cranes to be leased out to customers in Tamil Naidu and GST returns filed by them. 4.2 All the documents submitted by the applicant were examined. It is seen that Sanghvi movers Ltd, Pune, (Head Office)(SML HO), service provider, has entered into an MOU with the applicant, Sanghvi movers Ltd, Chennai (TN Depot) , service recipient, on 01.07.2017. As per the MOU, * the applicant will place an internal work order on SML as and when the applicant receives work order from their customers for lease or hire of Cranes, Crane components, etc. (Para 2) * The applicant shall take the Cranes, Crane components, etc. on lease/ hire for sub-leasing/ sub-hiring purpose for the term based on the period of underlying work-order between the applicant and their customers and can be extended if the underlying work-order is extended (Para 3) * SML HO will retain the right, title, interest, ownership in the equipment and the same will remain property of SML HO but SML shall have full right to retain possession for further sub-leasing/ hiring to its customers(Para 4) * During the period when the Cranes, Crane components, etc. are in Tamilnadu, the applicant will keep all cranes, component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit (ITC) of IGST charged? 6.1 The facts of the case as available on record is that the applicant is a branch office of SML HO, Maharashtra. Under GST, the applicant and SML being distinct entity has obtained registrations separately Section 25 of CGST ACT states (4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act Accordingly, SML HO and SML are distinct persons for the persons of CGST ACT. Further the applicant has entered into a Memorandum of understanding with SML for 'Crane & Trailer Supplies to SML Depot at TN (Chennai) on 01.07. 2017 where SML HO agrees to provide cranes, cranes components, parts & trailer on monthly rental basis to SML as and when an internal work order on SML HO is placed by SML. The period will commence from the date the underlying work-order with customer of SML Depot and post the completion of the lease / hire, the cranes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. 6.3 The applicant has furnished a set of documents giving a sample transaction along with the application. On perusal, it is seen that the customer has placed a service order for Crane hiring, based on which the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant. However, the proviso clearly states that, the value of supplies "made without consideration" as specified in Schedule I shall be deemed to have been paid as per second proviso to Section 16(2). In the instant case, there is a consideration to be paid by SML to SML HO as per Para 10 of the MOU and the consideration in specified in the invoices raised by SML HO on the applicant. Hence, proviso to Rule 37 i.e. exemption from making full payment, will not be applicable to the applicant. Accordingly, the applicant will not be eligible for the full ITC as per the inward supplies received from SML HO as they would be required to reverse such ITC if taken as per second proviso Section 16(2) of CGST Act and Rule 37 of CGST Rules. In the instant case, the transaction is an inter-state supply as the supplier is in a different state from the place of supply, the applicant would be paying IGST on their inward supplies from SML HO. As per Section 20 (iv) of IGST Act, provisions of Central Goods and Services Tax Act relating to input tax credit shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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