The Authority for Advance Rulings (AAR), Gujarat has held that the movement of raw material, semi-finished, finished, and capital goods between the two units under same GST registration shall not be a ‘supply’ under the provisions of the GST Act, 2017 and no GST sustain.
The applicant M/s. Crown Craft India Private Limited, engaged in the manufacture of Thermocol, PET Bottles, Tableware, Kitchenware & Tiffin, Toilet ware and Plastic casserole, Steel ware Household, Plastic Chair and Flask with inner steel falling under chapter heading Nos. 392190, 392330, 392410, 392490, 732393, 940370 & 961700 respectively. They are availing Input Tax credit on Capital Goods, Inputs as well as Input services used in or about the manufacture of the final product as per the provisions of GST Act. 2017 and rules made.
The applicant contended that due to limited space at the present factory and planned to establish a new unit within the Jaipur district. The new unit would be manufacturing similar goods as they are manufacturing in their present registered premises and the new unit would also be used to manufacture semifinished goods which may be sent to their first unit for finishing and further sale to customers. The petitioner stated that the new unit would be registered with their PAN number and thus would be registered as an additional place of business as per section 25 of GST Act, 2017 which have a single registration number under GST Act,2017.
The Authority comprising Vikas Kumar Jeph Member (Central Tax) and M. S. Kavia Member (State Tax) viewed that “as per Sub-Section (2) of Section 25 of the CGST Act, 2017, in the case where a person has multiple establishments in a state, he shall be liable to take single registration in the state by adding establishment as additional place of business”. It was observed that the person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to conditions prescribed.
The applicant’s present unit and the new unit have the same registration, they are not a distinct person as per Sub-Section (4) of Section 25 of the CGST Act, 2017. The supply of goods or services or both between these two establishments of the applicant does not constitute ‘supply, as these units are not the distinct person to each other due to single registration.
Further viewed that there was no consideration involved in the unit transfer of raw material, semi-finished, finished, or capital goods and the activity was neither specified in Schedule I nor like import of services. The Authority held that there was no liability of GST for the transfer of raw material, semi-finished, finished, capital goods between two units within the state and working under the same GSTIN. Ritul Patwa, C.A. appeared for the applicant.
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