TMI Blog2021 (12) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. - Case No. 13/2020, Order No. 03/2021 - - - Dated:- 17-6-2021 - SHRI MANOJ KUMAR CHOUBEY AND SHRI VIRENDRA KUMAR JAIN, MEMBER Present on behalf of applicant : CA Sandeep Mukherjee PROCEEDINGS (Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods Service Tax Act, 2017) The present application has been filed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance was obtained by the Federation at the cost of the successful bidder in the joint name of the Federation and the successful bidder. 3.5 The applicant was the successful bidder in NIT No. T.P.2 Dated 01.11.2016 and accordingly entered into an agreement for sale of Tendupatta with the Federation and the paid the first two instalments out of the four instalments which were to be paid under the terms of the agreement The Federation had duly issued the invoice for the Tendupatta covered under the first two instalments and delivered the Tendupatta to the applicant. 3.6 Unfortunately, due to a fire in the Godown of the Federation, the tendupatta stored, relating to the subsequent installments, was destroyed and could not ultimately be delivered to the applicant (Successful bidden by the Federation. 3.7 The federation had obtained insurance of the Tendupaua at the cost of the applicant (Successful bidder), wherein the Federation was the joint beneficiary of the insurance. Upon the fire, the claim for insurance was filed and the insurance proceeds were received by the federation. 3.8 Thereafter, the Federation directed the applicant (Successful bidder) to pay for the subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply. 6. RECORD OF PERSONAL HEARING - 6.1. Counsel for the Applicant appeared personal hearing on 05.09.2020 and then on 18.09.2020 and 01.10.2020 through electronic mode and inform that no invoice has been issued of goods destroyed in joint custody. He made the following submission on 05.09.2020 in support of his contention. 16.1 The provisions relating to levy are given in Section 9 of the GST Act. The text of the provision is as under: 9. (1) Subject to the provisions of sub-section (2). there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. (emphasis supplied) The taxable event for levy of GST is thus supply . The moment there is supply, the liability to GST arises, even though the payment of GST may have happened prior to the supply or is to happen at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) Where under a contract of sale the property in the goods is transferred from the Federation to the bidder, the contract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property, in the goods is to he transferred. 16.5 According to this section, where the transfer of the property in the goods is to take place in the future time or subject to some condition thereafter to be fulfilled the contract is an agreement to sell. In the case of the purchase of Tendupatta the goods in question (that is. Tendupatta fit for use for making bidi) were not in existence at the point of time when the Federation and the applicant (Successful bidder) entered into the contract for the purchase of Tendupatta The sale of tendupatta was subject to the acceptance of the tendupatta for its quality. Also, the sale way to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard are as under: It is clear from the above clauses of the agreement that the delivery of the goods was not made to be made to the applicant (Successful bidder) unless the whole of the amount was paid and in case of delay in payment interest was paid along with the sum due. The storage of goods in the Joint Custody would not amount la delivery of goods to the applicant (Successful bidder) Since the installments due were not paid, there is no question of delivery of the goods to the applicant (Successful Bidder). 16.10 It is further stated in the agreement that the applicant shall have the right to remove the Tendupatta only during the duration of the agreement After the expiry of the agreement, the Tendupatta shall become the property of the Federation. In this regard, kindly see clause 6(e) reproduced hereunder:- Therefore, even though the goods were stored in the Federation's godown under the joint custody of the Federation and the applicant, the goods were not delivered or sold to the applicant till such time as all the conditions of the agreement were not fulfilled by the applicant. 16.11 Regarding the point of time on which the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property in goods. The text of the provision is as under:- 26. Risk prima facie passes with property.- Unless otherwise agreed, the goods remain at the Federation's risk unlit the property' therein is transferred to the bidder, but when the property therein is transferred to the bidder, the goods are at the bidder's risk whether delivery has been made or not: 16.14 A joint reading of the provisions of Section 23 and 26 of the Sale of Goods Act, 1932, shows that neither the risk in the goods nor the property in the goods had passed to the applicant (Successful Bidder) Also, the fact that the Federation had obtained the insurance with its name in the insurer, shows that it was accepted by the Federation that the risk had not passed to the applicant (Successful Bidder). In these facts of the case, it is established beyond any doubt that the goods were not delivered to the Applicant, the properly in goods had nut passed to the applicant and also die risk in the goods had not passed to the applicant 16.15 Further, once the goods are ascertained and stored in the godown in case of destruction of the goods. before sale and after agreement to sell, the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for ready reference:- 31. (1) A registered person supplying taxable goods shall, before or at the time of,- (a) removal of goods for supply to the recipient, where the supply involves movement of goods; or (b) delivery of goods or making available thereof to the recipient, in any other case, issue a tax invoice showing the description, quantity and value of goods, the tax charged thereon and such other particulars as may be prescribed 16.19 The summery of the terms of the agreement and their implication, has been tabulated as under: 16.20 It is therefore clear that:- a) accepting joint custody of the goods without the rights and privileges of ownership does not constitute completion of sale in the eyes of law. further such custody was not interpreted as delivery or sale of Tendupatta to the applicant; b) the agreement of the Federation with the applicant was an agreement to sell. c) sale had not been made before the fire destroyed the goods since there was no delivery or payment of consideration which are the most important events for sale to occasion under the terms of the agreement; d) delivery of the goods had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant means any person registered or desirous of obtaining registration under this Act ... Emphasis Supplied 1.2. A perusal of the above clarifies that scope of the term 'applicant', as defined under sub-section (c) of Section 95 of the CGST Act shall include both, the person registered under the CGST Act and also the person who is not registered as on dale of applying for the advance ruling, but Is desirous of seeking registration under the CGST Act, in the state where advance ruling is sought. 1.3 Further. Section 22 of the CGST Act. specifies the person liable for registration and reads as under:- 22. (1) Every supplier shall be liable to be registered under this Actin the State or Union territory , other than special category States, from where he makes a taxable supply of goods or services or both if his aggregate turnover in a financial year exceeds twenty lakh rupees: ... (Emphasis Supplied) 1.4 The above referred section can be vivisected into following essentials:- a. A supplier shall he liable to be registered under CGST Act in the State or Union Territory, from where he makes taxable supply of goods or services or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority and reads us under:- 96. Subject to the provisions of this Chapter, for the purposes of this Act the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory. ... Emphasis Supplied 1.10 Hence, an Advance Ruling Authority appointed by the concerned Stale or Union Authority Government under concerned State or Union Territory Goods and Service Tax Act. shall be the deemed to be the Advance Ruling Authority for the purpose of CGST Act, The Section 96 of the Madhya Pradesh Goods and Service Tax Act, 2017, reads as under:- (1) The Government shall, by notification , constitute an Authority to be known as the Madhya Pradesh Authority for Advance Ruling: Provided that the Government may, on the recommendation of the Council, notify any Authority located in another State to act as the Authority for the State. (2) The Authority shall consist of- (i) one member from amongst the officers of central tax; and (ii) one member from amongst the officers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Balance from the 2nd installment 29683.00 Total 21559401.00 2.6. The Federation vide its letter vide no. T.P./19/731 dated 31.05.2019. claimed an amount of ₹ 2,39.47.447.00 from the applicant and after making the appropriations as above, demanded a further sum of ₹ 2388046.00 being the balance amount for the 3rd and 4th installments after the appropriation as above. The letter demanding the money is enclosed herewith, marked as Annexure -1. 2.7 While computing the demand, the federation under the presumption that the Tendupatta stored under the joint custody was supplied to the applicant and therefore applicant was liable to pay GST on the same 3. Summary of the point of law involved: 3.1 The terms of the agreement and their implication: 3.2 The taxable event for levy of GST is thus supply The moment there is supply, the liability to GST arises, even though the payment of GST may have happened prior to the supply or is to happen at a later date as per the machinery provisions. 3.3 In this case, supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 and the provisions of the GST Act shows that;- h) accepting joint custody of the goods without the rights and privileges of ownership does not constitute completion of sale in the eyes of law. further such custody was not interpreted as delivery or sale of Tendupatta to the applicant; i) the agreement of the Federation with the applicant was an agreement to sell; j) sale had not been made before the fire destroyed the goods since there was no delivery or payment of consideration which are the most important events for sale to occasion under the terms of the agreement: k) delivery of the goods had not been made before the destruction of the goods since the delivery' could only have been made after the full payment of the goods being delivered along with the interest due for the period of delay in making the full payment; l) the property in goods and the risk were both with the Federation and had not passed to the applicant before the destruction of the goods since the Federation obtained insurance as a person with insurable interest in the property; m) the destruction of the goods resulted in the agreement to sell becoming and avoidable contract; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Federation, is not to be treated as supply, then explain the following:- (a) what is the purpose and requirement to keep the said goods under joint custody of yourself and the Federation; (b) why you are a beneficiary in insurance of the said stock, if the supply is not complete: (c) why rent of the godown, in which said stock is stored, is payable by you: and (d) why interest is payable by you for delay in payment pertaining to the said, stock, if the supply is not complete. The point-wise reply to the queries are under: 1. During the course of the hearing, it was staled that the application is not admissible on account of the fact that it is not covered under section 95(a) of the CGST Act. In this regard, we have to submit as under: 1.1 The definition of Advance Ruling as per Section 95(a) is as under:- 95(a) advance ruling means a decision provided by the Authority or the Appellate Authority [or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 [or of section 101C]. in relation to the supply of goods or services or both being underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tward transportation upto the place of removal. (emphasis supplied) 1.5 In this regard, kindly see the matter of COMMISSIONER OF C. EX.. NASIK Vs CABLE CORPORATION OF INDIA LTD. reported in 2008 02) S.T.R. 598 (Tri. - Mumbai), where the Honorable CESTAT stated as under:- 7. ..................................From the above definition it is very clear that the input services besides being used in or in relation to the manufacture of final products and clearances of final products from the place of removal includes a plethora of other services such as service used in relation to setting up. modernization, renovation or repairs of factory, premises of provider of input service or an office relating to such factory or premises, advertisement or sales, activities of business, accounting, auditing, financing, recruitment, quality control, training and coaching etc. and therefore its scope is much larger than being used directly or indirectly in relation to manufacture. The decision cited by Revenue are therefore not relevant as those decision have not considered the inclusive part of input service as defined under Rule 2(1) of Cenvat Credit Rules and these decisions hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity of manufacture. Thus, the Tribunal and Courts have consistently held the term in relation to expands the scope of the term in question. 1.7 further, the Honorable Apex Court has also interpreted the term in relation to in like matter, in the matter of Doypack Systems (Pvt.) Ltd v. Union of India - 1988 (36) E.L.T.201 (S.C.) after a magisterial analysis of precedential authority reiterated the principle that the expression in relation to signifies a broad expression indicating comprehensiveness which might both have direct as well as an indirect significance, depending on the context. Apart from pointing out that the expression in relation to has been interpreted as signifying the widest amplitude, the Court pointed out that the expression includes signifies an inclusive definition and meaning, is illustrative and not exhaustive. The relevant extract from the Apex Court judgement is as under:- 48. The expression in relation to (so also pertaining to ), is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or generating electricity, as an intermediary product, is integrally connected with several operations which results in the emergence of the final product, namely, cement/caustic soda. It is important to note that with out utilization of LSHS, it is not possible to manufacture cement/caustic soda. The electrolysis process is dependent on continuous flow of electricity. If there is disruption in the supply of electricity from the Electricity Board then the entire plant of the assessees would fail and the manufacture of cement/caustic soda would not take place. Therefore, LSHS would come within the ambit of the expression used in or in relation to the manufacture of the final product . Further, in the case of Collector of Central, Excise v. Rajasthan State Chemical Works - 1991 (55) E.L.T 444 (S.C.), it has been held that any operation in the course of manufacture, if integrally connected with the operation which results in the emergence of manufactured goods, would come within the term manufacture . This is because of the words used in Rule 57A, namely, goods used in or in relation to the manufacture of the final products . Electricity is one form of heat. It gets gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enter into finished goods. In the case of M/s . J.K. Cotton Spinning and Weaving Mills, Co. Ltd. v. The Sales Tax Officer, Kanpur and another - 'AIR 1965 S.C. 1310, this Court has held that Rule 57A refers to inputs which are not only goods used in the manufacture of final products but also goods used in relation to the manufacture of final products. Where raw-material is used in the manufacture of final product it is an input used in the manufacture of final product. However, the doubt may arise only in regard to use of some articles not in the mainstream of manufacturing process but something which is used for rendering final product marketable or something used otherwise in assisting the process of manufacture. This doubt is set at rest by use of the words used in relation to manufacture . In the present case, the LSHS is used to generate electricity which is captively consumed. With out continuous supply of such electricity generated in the plant it is not possible to manufacture cement, caustic soda etc. Without such supply the process of electrolysis was not possible. Therefore, keeping in mind the expression used in relation to the manufacture in Rule 57A we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may result in a supply. The supply need not result in the hands of the applicant However, the act of omission nr commission must by the applicant. From the above table, there appears to be a conflict in the language of Section 95(a) 97(2). In such cases, the Rule of interpretation - Harmonious Construction is to be resorted to. Law as propounded is not always rational or follows logic. Court does not import rationality in an enactment under the guise of interpretation. The law. as enacted should he interpreted in such a manner as to attempt to reconcile, to harmonize, to adjust the overlapping and often conflicting claims and demands, so that the sacrifice of the conflicting provisions is seldom made. 1.10 Harmonious Construction:- 1.10.1 The Rule of Harmonious Construction is used to avoid any inconsistency and repugnancy within a section or between a section and other parts of a statute. The rule follows a very simple premise that every statute has a purpose and intent as per law and should be read as a whole. The interpretation which is consistent with all the provisions and makes the enactment consistent shall prevail. The doctrine follows a settled r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wider provision to see further consequence. If the consequence is as reasonable as to harmonize both the provisions, and it gives their full effect separately, no further inquiry is needed. One important aspect to be kept in mind is that the legislature while framing the provisions was fully aware of the situation which they entered to cover and therefore all provisions enacted require to be given their full effect on scope. When one section of an Act takes away powers conferred by another Act, a non-obstante clause must be used. It is imperative that the Court must try to find out the extent to which the legislature has intended to give one provision an overriding power over another provision. In the case of Eastbourne Corporation v. Fortes Ltd . it was held that if two contradictory sections cannot be reconciled, then the last section must prevail. Though this is not a universal rule. 1.11 Judicial pronouncements 1.11.1 Further resort may be had to the Advance Rulings already passed under the GST, a case in point is as under: S.No. Citation Matter decided 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right of access to justice. Furthermore, effective access to justice is considered as the most basic requirement of a legal system, which purports to guarantee legal rights. The essence of the provision is that the applicant should have locus standi in the matter and it should not result in frivolous questions being asked by applicants who do not have any interest in the transaction in question per se . Thus, once the applicant has locus standi with respect to the goods, he cannot be precluded from raising a question in an Advance Ruling. From the above averment it is clear that the subject matter of the question is solely in relation to the supply made by the applicant and is therefore covered under section 95(a) read with Section 97(2). 2. Special nature of the agreement: 2.1 Before the agreement is interpreted in light of the GST Laws and for the purpose of its application to the Advance Ruling sought, the background of the agreement has to be understood and appreciated for its peculiar nature The agreement that the applicant entered into with the federation was for purchase of Tendupatta and the agreement was in pursuance of a tender for the sale of Tendupat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration and their assessment regarding fitness of Tendupatta for the purpose of making Bidi was to be final. Therefore, even if the Tendupatta was not up to the mark as per the applicant he was bound to pay for the same the officials of the Federation pronounced it to be fit. In this regard kindly see para 5(IV) of the agreement. The relevant extract from the para is as under: From the above narrative it is clear that the agreement was loaded in favour of the Federation and the cost of any non-compliance was to be borne by the applicant. (c) Conditions in the agreement regarding payment of interest, godown charges and other expenses: - a. Interest: i. The payment for Tendupatta was to be made in four installments. The agreement al clause 6(b)(1) specified the due dates of payment, which were as under: Installment Due date 1st 05.10.2017 2nd 23.11.2017 3rd 05.01.2018 4th 23.02.2018 Extract from the agreement is as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make it clear that the godown was under double lock, but the control was with the Federation and pray that this fact be borne in mind while coming to any conclusion in this matter. 3.1.2, The applicant was required to lake delivery of the Tendupatta from the collection centre. However, in the event that the applicant was not able to take the delivery at the collection centre.it was deemed that the applicant did not want to take delivery from the collection centre. In such case, as per the agreement, the Tendupatta was to be delivered from the Godown instead of the Collection Centre. The storage in godown was in terms of clause 6(a) (III). The text is as under: 3.1.3. When clause 6(a) (III) came into operation, the Tendupatta was to be stored in the godown allotted by the Federation. The storage of the Tendupatta was under the Joint Custody of the applicant and the Federation, but under the control of the Federation. This requirement of Joint Custody was in terms of clause 6(b) of the agreement. The text of the clause is as under: The control over the Tendupatta in the godown was with the Federation in terms of Clause 6(b) (5). The text of the provision is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment made for the same, the Tendupatta was stored in the Godown allotted by the Federation. One of the conditions for keeping the Tendupatta in godown was that the applicant was required to obtain insurance of the goods for sum. not less than the amount of dues of the applicant towards the Federation in respect of the Tendupatta stored in the godown. Also, the insurance claim was to be paid to the Federation in case any claim was filed. 3.2.3. The relevant clause for Insurance of The Tendupatta stored in the godown is clause 6(B)(6). The relevant extract of the clause is as under: 3.2.4. From the above discussion it is amply clear that the insurance was obtained in compliance of the terms of the agreement with the Federation and also that the beneficiary of the insurance was the Federation and not us. 3.2.5 Further, from the copy of the Insurance Cover Note, it is clear that the insurance is in the name of the MD, MPFE (T D) Co Op Fed Ltd Mandla. Insurance in the name of the Federation means the Federation has an insurable interest in the goods, which shows that not only the benefit of the insurance but the insurable interest was also that of the Federation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Why interest is payable by you for delay in payment pertaining to the said stock, if the supply is not complete. 3.4.1. A contract for sale of goods earlier formed part of the Indian Contract Act. 1872 vide Section 76 to Section 123 of the Act. Thereafter, it was repealed and a separate Act named Sale of Goods Act. 1930 came into existence. A contract may be verbal or written and in case of dispute, the terms of the agreement are tested against the provisions of the sale of goods act for their application and interpretation of the terms. Where the contract is verbal, the conduct of the parties, the common practice in the trade, legality of the actions etcetera arc taken into consideration, while in case of a documented agreement, the terms of the agreement become the foundation for the interpretation of the terms of the agreement, subject to they being legal. 3.4.2 In this contract between the Federation and the Applicant for sale of Tendupatta, special provisions, not generally found in sale agreements have been provided for. These special provisions are aimed at protecting the financial interests of the Federation. Therefore, once the agreement is entered into by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'in relation to the supply made by him But the question raised by applicant is in relation to the supply made by the Federation, of the goods which have been kept in joint custody, with joint insurance, and for storage of which godown rent has been charged by the Federation, and for balance amount of which interest has also been charged by the Federation from the applicant. 7.4. It has to be examined whether the question Whether the transaction of supply of impugned goods by the Federation is completed or not' is a question to be decided on the application of the Federation only or whether it can he decided on the application of the applicant. 7.5. Also. it is to be considered whether in a case where the supplier i.e. the Federation themselves have treated the disputed transaction as supply, then is it open for the Applicant to question whether there is supply. 7.6. Advance Ruling under the Act is defined in Section 95(a) and is as under; (a) advance ruling means a decision provided by the Authority or the Appellate Authority [or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is done away with, it becomes clear how subject matter of the questions listed in Section 97(2) get covered under an Advance Ruling as per Section 95(a) The definition of Advance Ruling contains the term in relation to , which enlarges the scope of a provision. 7.13. The Rule of Harmonious Construction is used to avoid any inconsistency and repugnancy within a section or between a section and other parts of a statute. The rule follows a very simple premise that every statute has a purpose and intent as per law, and should be read as a whole. The interpretation which is consistent with all the provisions and makes the enactment consistent shall prevail. The doctrine follows a settled rule that an interpretation that results in injustice, hardship, inconvenience and anomaly should be avoided. The interpretation with the closest conformity to justice must be picked. The / Supreme Court laid down 5 main principles of the 'Doctrine of Harmonious Construction'- The courts must avoid a 'head of clash' of contradictory provisions and they must construe the contradictory provisions so as to harmonize them. When it is not possible to completely reconcile the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the statute. Thus, the treatment of the sale of Tedupatta by the Federation as supply does not preclude the applicant from filing this application and raising the query in this regard. 7.17. further, the applicant has raised a query regarding supply of goods, which are destroyed before their delivery under an agreement to sell. This query is also squarely covered under section 97(2)(g) of the Act. being related to supply of goods. 7.18. In light of the above we are of the opinion 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. 8. Discussing and findings: 8.1. We have carefully considered the submissions made by the applicant in the application, the pleadings on behalf of the Applicant made during the course of personal hearing and the Department's view provided by the jurisdictional officer. 8.2. Admittedly, in one instance, the Tendupatta was destroyed in fire in the Godown under the joint lock and key of the applicant and the federation. The applicant has provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 8.7. 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. Under the IGST Act. place of supply in case of movement of goods, there is reference to delivery of the goods for ascertaining the place of supply thus. the provisions of the GST act. in the matter of supply of goods, envisages delivery of the goods, whether physically or constructively by delivery of document of title to the goods. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that - As per the terms of the agreement, even though the goods were in joint custody, the delivery of the goods was not given to the applicant since in case of joint custody, the delivers was to be given from the Godown . In the opinion of this Authority, to decide whether there is supply of the goods kepi in warehouse in joint custody, it is not relevant that 'the delivery was to be given from the Godown' or otherwise. However, the agreement has stated different points of delivery of the goods depending on different conditions. Therefore, 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 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.17. A perusal of the agreement between the Federation and the Applicant shows that the agreement contains many conditions that are to be completed before the transfer of the property in the goods takes place from the Federation to the Applicant. In the case of the purchase of Tendupatta. the goods in question (that is, tendupatta fit for use for making bidi) were not in existence at the point of time when the Federation and the applicant (Successful bidder) entered into the contract for the purchase of Tendupatta. The sale of tendupatta was subject to the acceptance of the tendupatta for its quality. Also, the sale was to be made at a future point of time and accepted for its quality. This fact is duly narrated in the Agreement at para 5(IV). 8.18. At the time of the contract, the goods were not in existence and therefore, the goods in question were Future Goods. The sale of future goods is governed by Section 6 of the Sale of Goods Act, 1930 Section 6(3) states that present sale of future goods is an agreement to sell goods. 8.19. The delivery of the Tendupalta was conditional on the payment of the due installment and during the pendency of the dues, the Tendupatta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d till the dale of the fire in the godown, since the insurance policy was in the joint name of the Federation and the applicant. 8.22. 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. 8.23. Apart from the points of law which show that the risk in goods and the property in goods had not passed to the applicant the terms of the agreement and the conduct of the parties to the agreement also show that the property in goods and the risk thereof was with the Federation and not the applicant. Also that the Joint Custody did not amount to the delivery of the goods to the applicant. 8.24. As per the agreement that the Federation had entered into with the applicant, the Federation was required to issue a Certificate of Sale to the applicant in terms of the Madhya Pradesh Tendu Patta (Vyapar Viniyaman), 1966. In the case of the Tendupatta destroyed by fire in the godown, the Federation had not issued Certificate of Sale to the applicant. This conduct of the Federation is determinative of the fact that the Federation did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivotal role in determination of the culmination of the transaction. As per section 8 of the Sale of Goods Act. 1930. if ascertained goods arc destroyed before passing of the risk in the goods, then contract under which the goods perished before sale but alter agreement sell becomes an avoidable transaction. The agreement entered into by the applicant with the Federation after the goods were destroyed in fire, was merely an avoidable agreement to sell and not sale. Further, in the case of the goods that were destroyed in fire, neither delivery was given nor invoice for sale was issued, which shows by the conduct of the parties that there was no sale per se. 8.28. Also, since the contract was to culminate upon compliance of numerous conditions and also after passage of certain lime, as also the contract being that of future goods, the nature of contract was an agreement to sell and therefore upon destruction of the subject matter of sale, i.e., the Tendupatta, the agreement became an avoidable agreement to sell; 8.29. In this case, the subject matter of supply does not exist. Conditions of a contract cannot go beyond the law of the land and any stipulation in a contract tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult. 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. 8.34. The second question of the applicant, is 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. 8.35. 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-existe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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