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TMI Blog2019 (4) TMI 2026X X X X Extracts X X X X X X X X Extracts X X X X ..... which is reflected in the copy of invoice, submitted by the applicant. The legal provisions as stated above, it is clear that the liabilities of tax arise on the date of issue of invoice by the supplier with respect to the supply. In the instant case, the applicant has issued separate invoice to their customers to recover the agreed amount for manufacture of tooling kit, which is treated as a supply of the goods as per Paragraph 1 of Schedule II of the Act. Hence, the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply and chargeable to GST. The amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated. The view if the applicant, in this regard, is that since the supply of forgings to a foreign customer involves movement of forgings to a place outside India, the supply shall be treated as an export of forgings further, since the amount recovered after manufacture of tooling kit is incidental to such export of forgings, the amount so received is actually a consideration for export of goods. Hence, the amount so received shall also be zero rated as the export of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to remove the tooling kit from the Applicant's factory for any reason whatsoever. The tooling kit is generally retained by the Applicant for use in further manufacture of forgings. 2. The applicant sought Advance Ruling on the following question/issue.- 1. Whether the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply or it may be said that manufacture of tooling kit is only incidental to the ultimate supply of forgings. Hence, the supply is only that of the forgings and not of the tooling kit? 2. Whether the amount recovered from Indian customers after the manufacture of tooling kit is excisable to CGST and SGST or IGST? 3. Whether the amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated? 3. As per Section 97(2) of the Central Goods and Services Tax Act, 2017(herein after referred to as the 'CGST ACT, 2017) and Jharkhand Goods and Services Tax Act, 2017 empowers the Advance Ruling authority to decide the issue, which are as follows:- (a) classification of any goods or services or both (b) applicability of a notification is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers, it may be said that the arrangement only purports the supply of forgings by the Applicant to its customers on the basis of the designs approved by their customers. Neither parties intend to transfer the title in tooling kit. Preparation of tooling kit is only incidental and inter-linked to the supply of such forgings. (iii) It must be noted that the invoice issued by the Applicant on their customers after the manufacture of tooling kit, for recovery of expenses incurred with respect to tooling kit may be considered as milestone payment in the course of supply of the forgings leviable to GST at the rate applicable to forgings. (iv) Sub-section (2) of Section 15 of CGST Act which defines the value of supply stipulates that the value of supply shall include incidental expenses, including commission land packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services. (v) It may be said that the amount recovered by the Applicant for manufacture of tooling kit is actually the recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of the customer, the place of supply shall be determined by Section 10(1)(a) of the IGST Act. Accordingly, the place of supply of forgings shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient, which is generally the place where the customer is located. (v) It must be noted that as per Section 7(1) of IGST Act, a 'supply' of goods shall be treated as an inter-state supply when the location of the supplier and the place of supply are in two different States, two different Union Territories or in a State and Union Territory. Section 8(1) stipulates that subject to certain exception, in cases where the location of supplier of goods and the place of supply are in the same State, then the supply is to be treated as intra-state supply of services. (vi) Therefore, it may be concluded that where the forgings are supplied by the Applicant to customers situated outside Jamshedpur, it shall be treated as an inter-sate supply of goods including the tooling kit and thus, IGST shall be levied on the invoice issued for milestone payment after the manufacture of tooling kit. Similarly, if the customer is situated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the questions/issues on which Advance Rulings have been sought for by the applicant, relevant facts having bearing on the questions/issues raised, the applicant's understanding/interpretation of law in respect of the issue. The applicant sought Advance Ruling on the three questions i.e.- 1. Whether the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply or it may be said that manufacture of tooling kit is only incidental to the ultimate supply of forgings. Hence, the supply is only that of the forgings and not of the tooling kit? 2. Whether the amount recovered from Indian customers after the manufacture of tooling kit is excisable to CGST and SGST or IGST? 3. Whether the amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated? In view of the above the issues before us to decide Whether the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply or it may be said that manufacture of tooling kit is only incidental to the ultimate supply of forgings, the amount recovered from Indian customers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12 of the CGST Act is as:- (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of goods shall be the earlier of the following dates, namely:- (a) the date of issue of invoice by the supplier or the last date on which he is required, under subsection (1) of section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount. Explanation 1.- For the purposes of clauses (a) and (b), supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. Explanation 2.- For the purposes of clause (b), the date on which the supplier receives the payment shall be the date on which the payment is ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice to their customers to recover the agreed amount for manufacture of tooling kit, which is treated as a supply of the goods as per Paragraph 1 of Schedule II of the Act. Hence, the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply and chargeable to GST. 7.2 The amount recovered from Indian customers after the manufacture of tooling kit is excisable to CGST and SGST or IGST. The view of the applicant, in this regard, is that the tooling kit is not a standalone supply but actually involves supply of forgings, the determination of whether the amount recovered after manufacture of tooling kit attracts CGST and SGST or IGST shall depend upon the place of supply of the forgings and the location of the recipient of forgings as lay down under Section 10 of the IGST, Act. Which is as under:- (1) The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under,- (a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied on the invoice issued for milestone payment. While it is clearly mentioned under Section 7(1) of the IGST, Act that Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in two different States; two different Union territories; or a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce and under Section 8(1) of the IGST Act that subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply: It is pertinent to mention here that the Jamshedpur has not been given a status of state under First Schedule of Article 1 of the Constitution of India. Jamshedpur falls under the jurisdiction of Jharkhand State. Hence, the goods supplied by the applicant to the customer situated outside the Jharkhand State, is treated as inter-state supply and the goods supplied by the applicant to the customer situated inside the Jharkhand State, is treated as intra-state supply. Hence, the separate invoice issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly established that the amount recovered from foreign customers after the manufacture of tooling kit cannot be treated as export, hence no question of zero rated arises. 8. In view of the foregoing, we pass the following under Section 98 of the Central Goods and Services Tax Act, 2017 and the Jharkhand Goods and Services Tax Act, 2017: ADVANCE RULING 1. Whether the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply or it may be said that manufacture of tooling kit is only incidental to the ultimate supply of forgings. Hence, the supply is only that of the forgings and not of the tooling kit? Ans . - The manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply. 2. Whether the amount recovered from Indian customers after the manufacture of tooling kit is excisable to CGST and SGST or IGST? Ans . - The amount recovered from Indian customers after the manufacture of tooling kit is leviable to CGST and SGST or IGST. 3. Whether the amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated? Ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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