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2021 (12) TMI 321 - AAR - GSTScope of supply - mere acceptance joint custody of the goods without the rights and privileges of ownership of the goods - goods are destroyed by fire before being delivered under an agreement to sell - Section 7 of the GST Act - point and time of supply - Principles of interpretation of Statutes - admissibility of application - HELD THAT:- The question regarding the act of supply of rate of GST applicable on the inward supply of the applicant is covered under the definition of Advance Ruling as per section 95(a) of the GST Act and the application is therefore admissible. Whether mere acceptance of joint custody of the goods without the rights and priviledges of ownership of the needs amounts to “Supply” within the meaning of Section 7 of the GST Act? - HELD THAT:- The definition of supply under the GST act is an inclusive definition. it defines supply as including all forms of supply or goods. Supply is an activity, including inactivity in case of supply of service, as per Schedule II to the GST Act. Supply presupposes a supplier, defined in section 2(105), a recipient, defined in section 2(93). consideration defined in section 2(31) and an activity. The activities that have been treated to be a supply in the definition are sale, transfer, barter, exchange, licence, rental, lease or disposal - It may thus be inferred that supply, so far as goods are concerned involves movement of goods or the transfer of possession of goods from one person to another. Supply of goods cannot happen without the movement of possession of the goods from one person to another. While a person has goods in his possession, he cannot be said to have supplied the goods to another. Under the GST Act there are provisions for ascertaining Time of Supply as well as the Place of Supply, which also corroborate that in supply of goods. there has to be movement of possession from one person to another. The provision of time of supply of goods, under section 12 of the GST Act slates that time of supply of goods shall be the date of issue of invoice and section 31 stales that invoice is to be issued before the removal of the goods for supply, in case where movement of goods is involved. Where movement of goods is not involved, then delivery of goods or making available for delivery shall be the time of supply - it becomes important to see at which point the delivery of the goods is given to the applicant to complete the transaction and convert the Agreement to Sell into a Sale. In this case, the payment was not made by the applicant at the point of collection and therefore, delivery was not given and the goods were stored in the Godown. In a case, the delivery was to be given from a certain place, the situs of such sate would be the place such 'right to use' is transferred. However, in case of oral or implied transfer of right to use (where the goods are not ascertained goods), the situs would be where location where the property in goods is transferred. In this case the property in goods would have been transferred upon payment of the full consideration and therefore, upon delivery at the godown, it would have been the situs. The fact that the federation has obtained insurance in its name along with the applicant, points to the fact that the risk in goods lay with the Federation. Section 26 of the Sale of Goods Act, 1930, states that the risk in goods passes with the transfer of the property in goods and thus an inference is drawn that the transfer of property in Tendupatta had not happened till the dale of the fire in the godown, since the insurance policy was in the joint name of the Federation and the applicant - It is therefore clear that neither the risk in the goods nor the property in the goods had passed to the applicant as on the date of the fire. Clearly therefore, the goods were also not delivered to the Applicant. Principles of interpretation of Statutes - HELD THAT:- Deeds and Documents refer to an absurdity Limit, which states that a statute cannot be interpreted literally if it would lead to an absurd result. Now, coining to the agreement of the applicant with the Federation, in case of non-payment of the dues, the Federation would sell the goods to another person and the sale proceeds of such sale shall be adjusted from the dues of the applicant. Now in such case, if the goods arc deemed to have already been supplied to the applicant vide joint custody, the second sale would also be taxed, being supply in terms on the GST Act. Therefore, such an interpretation would result in the same goods being sold to two different persons. This would be an absurd result and therefore such an interpretation would be erroneous in the eyes of the law. Whether in the given circumstances of the case, where the goods are destroyed by lire before being delivered under an agreement to sell, can there be “Supply” within the meaning of Section 7 of the GST Act alter the destruction of the goods by fire? - HELD THAT:- “Supply” within the meaning of Section 7 of the GST Act can only be of goods that are in existence. Although a contract may be entered into for supply of future goods and consideration also be received for such supply of future goods, non-existent or future goods cannot be supplied in terms of Section 7 of the GST Act. In this case, the goods are destroyed by fire. There cannot he any transaction in respect of such non-existent goods after their destruction that would amount to supply.
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