2023 (6) TMI 776 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA

Classification of supply - supply of services - business of leasing of pallets, crates and containers - interstate movement of goods between the Units of the appellant or between the Unit of the appellant and customers premises - taxability of the aforesaid transaction since the business model is not operational - documentation for the movement of goods.

Supply of leasing services - input tax credit as per the lease value charged by the supplier branch of CIPL - HELD THAT:- The recipient CIPL Karnataka who is recipient of the leasing services is eligible for full input tax credit in the transaction between the applicant and the CIPL Karnataka and hence the value declared in the invoice would be the value of goods or services or both as per the second proviso to Rule 28 and hence would be treated at the value of such supply - The aforesaid observation has been affirmed by AAR Maharashtra in the case of IN RE: M/S. B.G. SHIRKE CONSTRUCTION TECHNOLOGY PVT. LTD. [2021 (9) TMI 949 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] Wherein it has been held that we agree with the contention of the applicant that they may resort to valuation under Rule 28 of the CGST Rule in respect of transaction with related distinct persons who are eligible for full input tax credit as per the second proviso to Rule 28 of the CGST Rules 2017 - the valuation in the present case will be governed as per the Second proviso to Rule 28 of CGST Rules 2017 read with Section 15 of the CGST and MGST Act 2017.

Documents that should be accompanied for the transaction - HELD THAT:- It is found that the question raised by the applicant doesn’t fall in any of the categories mentioned under the provisions of Section 97(2) of CGST Act, 2017. Also, the present application has been done under the provisions of Section 97(2)(c) and 97(2)(g) of CGST Act, 2017. The question sought by the applicant doesn’t fall in either of the categories and hence cannot be answered. Further, it is on record that no supply of goods or services in the scenario explained by the appellant has been undertaken.

Whether movement of 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 supply in terms of Section 7 of the CGST Act and MGST Act, and thereby not liable to GST? - HELD THAT:- CIPL, Karnataka would be acting in two capacities, first as an independent entity under the CGST Act for the leased goods while the lease contract of the specific goods is in force and next as a bailee of CIPL, Maharashtra. Once the lease contract is over, the CIPL, Maharashtra should enter into lease transaction with the CIPL, Tamil Nadu for the specific goods which are given on lease or rent and in effect it would amount to CIPL, Maharashtra picking the goods and sending to CIPL, Tamil Nadu - it cannot be said that the goods are moving not as a result of supply under Section 7 of the CGST Act, 2017. It cannot be termed as a mere movement without any involvement of supply and the said transaction of supply of goods on rental or lease basis by CIPL, Maharashtra to CIPL, Tamil Nadu is liable to tax in the hands of CIPL, Maharashtra as the transaction is between CIPL, Maharashtra and CIPL, Tamil Nadu. Further, the services provided by CIPL, Karnataka to CIPL, Maharashtra in facilitating the transportation of goods to CIPL, Tamil Nadu are exigible to GST.

Other questions are not covered under the ambit of the Advance Ruling in terms of section 97 of the CGST Act, 2017.