The Authority of Advance Ruling(AAR) of Karnataka ruled that the Government Timber Depots are not Government Department then the transaction would not be covered and such reverse charge mechanism shall not be applicable and the Government Timber Depot shall collect the GST and issue the invoice.
Tata Coffee Limited is a registered company under the Goods and Services Act 2017. The applicant has sought advance ruling regarding Section 97 of the CGST Act, 2017 and Section 97 of the KGST Act, 2017, in FORM (1ST ARA-01 discharging the fee of Rs.5,000-00 each the CGST Act and the KGST Act.
The ruling was rendered by Harish Dharnia and Ravi Prasad M.P on an application filed by Tata Coffee
The Applicant company is registered under the Goods and Services Act, 2017, The applicant has sought the advance ruling in respect of certain question:
The Authority observed that “The transaction of depositing timber with the Government Timber depot for disposal would amount to ‘supply” within the meaning assigned to it under the 1ST Act and GST is chargeable and value of supply of timber to the Depot by the applicant-shall be the open market value or the value as may be determined under Rule 30 or Rule 31 in that order. The time of supply is the time of removal of timber/ wood by the applicant for supply to the depot and It is pertinent to note that the time of second supply involving timber i.e. by the depot (agent) to the third party does not have any impact on the value or time of supply of the first supply, i.e. supply of timber/ wood by the applicant to the depot for sale”.
There is no provision in the GST Act for shifting of the tax liability and considering that as a deemed discharge of liability. There are two supplies of timber involved in the chain of transactions, one when the timber is handed over to the depot by the applicant and the second when the timber is sold by the depot. Both are independent supplies in the eyes of the GST Act and hence the tax needs to be discharged at both stages.
The activity of providing supervision services is not covered under the exceptions in entry 5 of the same is liable to tax under reverse charge and this is subject to the condition that the Government Timber Depots are Government Departments, the applicant is liable.
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