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2019 (4) TMI 2026 - AAR - GSTClassification of supply - forgings - whether the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply or it may be said that manufacture of tooling kit is only incidental to the ultimate supply of forgings? - amount recovered from Indian customers after the manufacture of tooling kit is excisable to CGST and SGST or IGST - whether amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated? HELD THAT:- On going through the application and other documents submitted by the applicant as well as the view of the applicant, it is observed that the applicant is engaged in manufacture of forgings. For manufacture of forgings the applicant manufacture capital goods namely tools, dies and mould, generally known as the tooling kit based on the drawing and design specifications given by each customer and the charges incurred for the manufacture of this tool kit is borne by the customer. This agreed charge has been recovered from their customer by raising separate invoice which is reflected in the copy of invoice, submitted by the applicant. The legal provisions as stated above, it is clear that the liabilities of tax arise on the date of issue of invoice by the supplier with respect to the supply. In the instant case, the applicant has issued separate invoice to their customers to recover the agreed amount for manufacture of tooling kit, which is treated as a supply of the goods as per Paragraph 1 of Schedule II of the Act. Hence, the manufacture of tooling kit for further manufacture of forgings is to be treated as a separate supply and chargeable to GST. The amount recovered from foreign customers after the manufacture of tooling kit can be treated as export and thus, zero rated. The view if the applicant, in this regard, is that since the supply of forgings to a foreign customer involves movement of forgings to a place outside India, the supply shall be treated as an export of forgings further, since the amount recovered after manufacture of tooling kit is incidental to such export of forgings, the amount so received is actually a consideration for export of goods. Hence, the amount so received shall also be zero rated as the export of forgings attracts zero rated under Section 16 of the IGST, Act. Thus, it is clearly established that the amount recovered from foreign customers after the manufacture of tooling kit cannot be treated as export, hence no question of zero rated arises.
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