The Authority for Advance Ruling ( AAR ) has held that Goods and Services Tax ( GST ) will be applicable for transfer of title in moulds from the foreign supplier to the Applicant and Transfer of title in moulds from the Applicant to the Indian buyer.
The applicant has stated that they are engaged in the supply of automotive components such as door locks and strikers for various sectors of the automotive industry. They supply such parts to a wide range of customers which inter – alia include moulds and tools.
They propose to enter into the transaction that they agree to supply certain parts, including the moulds to an Indian company, located in the State of Tamil Nadu. In this regard, they place an order for manufacturing the said parts and moulds on a Thailand Company.
Accordingly, the foreign supplier manufactures the parts and the same are physically imported into India. However, the moulds developed by the foreign supplier are retained in Thailand and are not physically imported into India.
Thus, there is only a transfer of ownership in the mould from the foreign supplier to Applicant and the foreign supplier retains the physical possession of the moulds. With regard to the invoicing, the foreign supplier raises an invoice on the Applicant for the parts and moulds separately.
Similarly, the Applicant raises separate invoices on the Indian buyer that is one for the supply of parts and another for transfer of ownership of the moulds from the Applicant to the Indian buyer.
The applicant has stated that in the present case as well, only the title in moulds are transferred to the Indian buyer, wherein the moulds physically continue to remain in possession of the foreign supplier.
Thus, with regard to the moulds, there are two transactions involved in the present case they are transfer of title in moulds from the foreign supplier to the Applicant and Transfer of title in moulds from the Applicant to the Indian buyer.
They have also stated that the moulds are never physically imported into India. The moulds will be disposed of as waste in Thailand after its usage for manufacturing the requisite parts.
In the above background, with regard to ground 2, the Applicant is of the view that the transfer of title in moulds would not make the said transaction liable to GST under Section 5 of the IGST Act read with Section 7(5)(a) of Integrated Goods and Services Tax Act 2077 and thereby not required to charge IGST on the moulds sold to the Indian buyer.
The order was pronounced by Additional Commissioner, Manasa Gangotri Kata and Joint Commissioner, Thiru Kurinji Selvaan on an application filed by Automative Components Technology India Private Limited.
The Supply is defined under Section 7 of the CGST Act 2Ol7 and elaborated as
(1) For the purposes of this Act, the expression “supply” includes-
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, Licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) Import of services for a consideration whether or not in the course or furtherance of business; and
(c) The activities specified in Schedule I, made or agreed to be made without a consideration;
(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.
The authority observed that any transfer of the title in goods is a supply of goods and it is evident that ‘transfer of the title in goods’ is the supply of goods. The transfer in title of moulds for consideration and the supply is in the course of business therefore, the same constitutes the supply of goods and GST is liable to be paid on such supply.Subscribe Taxscan AdFree to view the Judgment