The Authority for Advance Ruling (AAR) Maharashtra, ruled that Pallets, crates leased by CHEP India Private Limited (CHPL), in Maharashtra to other GST Registrations located in India, is lease transaction and taxable as supply of services.
CHEP India Private Limited (CIPL), the Applicant has sought and advance ruling on whether the pallets, crates and containers leased by CHEP India Private Limited located and registered in Maharashtra to its other GST registrations located across India would be considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the CGST Act and MGST Act.
CHEP India Private Limited is an Indian company and a wholly owned subsidiary of Brambles Limited, a company listed on the Australian Securities Exchange (ASX) and its business is primarily renting of re-usable unit-load equipment for shared use by multiple participants within industrial and retail sector throughout the supply chain, under a business model known as “pooling”.
The applicant contended that Section 25 of the CGST Act has created a deeming provision, as per basis which two registrations of same Company are considered as distinct person under GST. Accordingly, there can be supply of goods or services between such registrations even in case no consideration is involved as per the entry in Schedule I of the CGST Act.
The applicant further contended that CIPL, Maharashtra can enter into lease transaction with CIPL branches in other States registered under the respective State GST legislation across India and such transaction would be taxable under GST as a lease transaction between the two branches which are deemed to be distinct entities for the purpose of GST legislation.
A Two Member Bench of the Authority comprising M Rammohan Rao and T R Ramnaniruled that “Pallets, crates and containers leased by CHEP India located and registered in Maharashtra to its other GST registrations located across India is considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the CGST Act and MGST Act.”
On the question of whether movement of leased 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 MGST Act, and thereby not liable to GST, the Bench answered that “If the situs of transaction in question is not within the state of Maharashtra, then as per provisions of section 96 of the Central Goods and service Tax Act 2017 (and similar provision under the MGST Act), the Maharashtra AAR cannot acquire the jurisdiction over the questions raised, hence no ruling can be given on this question.”
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