In a recent decision, the Maharashtra Appellate Authority for Advance Ruling (AAAR) ruled that the movement of equipment from CHEP India Private Limited (CIPL) Karnataka to CHEP India Private Limited (CIPL) Tamil Nadu is supply of services.
CHEP India Private Limited, the appellant is a company registered under the provisions of Companies Act, 1956 and is engaged in the business of leasing of pallets, crates and containers and registered under the GST law.
The appellant has sought advance ruling on whether movement of equipment from CIPL Karnataka to CIPL Tamil Nadu on the instruction of CIPL Maharashtra can be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act and Maharashtra GST Act, and thereby not liable to GST.
The appellant submitted that the equipment shall move to CIPL Tamil Nadu from CIPL Karnataka on the basis of instructions received from the Applicant. Such movement to CIPL Tamil Nadu is in incidence of the obligation as a lessee under the lease agreement entered between the Applicant and CIPL Karnataka. There is no transfer of interest of any kind in goods between CIPL Karnataka and CIPL Tamil Nadu in respect of the equipment. Hence, it cannot be said that there is a supply between CIPL Karnataka and CIPL Tamil Nadu in case of such movement.
The Department contended that the movement of goods in respect of any supply by CIPL, Maharashtra to its branch has to be covered by an Invoice as envisaged under Section 31 of CGST Act, 2017 and e-way bill as per Rule 138 of CGST Rules, 2017. Since, CIPL, Maharashtra being supplier has to discharge tax liability on the said supply of services, it is essential for them to raise a tax invoice and unless the said transaction is reflected in GSTR-I filed by them and tax is paid, the recipient branch of CIPL may not be able or entitled to avail input tax credit in respect of said supply in view of Section 16 of CGST Act, 2017.
A Two-Member Bench of the Appellate Tribunal comprising Dr. D.K. Srinivas, Member (Central Tax) and Rajeev Kumar Mital, Member (State Tax) observed that “Movement of equipment from CIPL Karnataka to CIPL Tamil Nadu on the instruction of CIPL Maharashtra cannot be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act, 2017 as the said transaction would fall under the ambit of supply of services in terms of section 7 of the CGST Act, 2017.”
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