Case-1-Penna Cement Industries Ltd. [2020] 116 taxmann.com 876 (AAR- TELANGANA)-Place of Supply in case of Ex-Factory Sales-Section 10(1)(a) of IGST Act, 2017
Held-In case of ex-factory inter-State sales affected by applicant, goods are made available by the supplier to the recipient at the factory gate, but this is not the point where movement terminates since the recipient subsequently assumes the charge for transportation of the goods up to the destination in another state. Thus, termination of the movement of goods evidently takes place at the location (in a different state) to which the goods are consigned/destined and such movement is effected by the recipient or by any other person such as transporter authorized by the recipient.
Applying the inference made by us in the preceding para to the facts of the case on hand, the place (in the other state) where the goods are destined turns out to be the ‘place of supply’ in terms of section 10(1)(a) ibid. Consequently, the ‘location of supplier’ and the ‘place of supply’ fall under different states and the supply qualifies as inter State supply. Accordingly, it was held that, supplier in the stated instance is liable to charge IGST in respect of ex-factory inter-State supplies made by them.
Case-2-Deputy Conservator of Forests [2019] 109 taxmann.com 365 (AAR – KARNATAKA)-Place of Supply in case of Ex-Factory Sales- Section 10(1)(a) of IGST Act, 2017
Held-Also, as per of sub-section (1) of section 10, the stress is on the words “supply” and “movement of goods”. If the movement of goods is involved within the supply contract then it, then clause (a) is attracted and the place of supply would be the place where the movement of goods terminates for delivery to the recipient. The words clearly say that the there must be termination of movement and delivery to the recipient is a subsequent action. In the pertinent case, it is seen that the goods are delivered to the buyer and the supply transaction is completed. The contract is over the moment the invoice is raised and the payment is made and there is no condition of the movement of goods being an ingredient in the supply contract. The buyer then after clearing the goods and taking possession of goods applies for permit and takes the goods to whichever place he wants. The delivery of the goods happens when the possession of goods is handed over to the supplier and the movement of goods is not a precondition for supply, they both being independent events. There is no breach of contract of supply, if the purchaser, being from outside the state does not actually take the goods to his place outside the state. Hence as per clause (c), the place of supply would be the place of the location of such goods at the time of the delivery to the recipient and hence Karnataka.
In the pertinent type of transaction, since the location of the supplier, [Department of Forests, Government of Karnataka is within the State of Karnataka], is Karnataka and the place of supply (as per the conclusion arrived in the preceding paragraphs), is also Karnataka, as per section 8(1) of the IGST Act, 2017, the nature of supply would be an “intra-State supply” within Karnataka State and hence CGST and SGST would be applicable on the transaction and not IGST.
Comment-Contrary to Penna Cement Industries Ltd. [2020] 116 taxmann.com 876 (AAR- TELANGANA) as referred above in Case-1
Case-3- Agenda 7(iii) of GST Council Meeting was Issues pertaining to interpretation of Section 10(1)(a) of the IGST Act, 2017- Reference to Ex-Factory or OTC Sales
The agenda stated that
An issue was raised by Commissioner of State Tax (Punjab) vide letter dated 28.05.19 seeking clarification on the issue related to place of supply in case where Goods are purchased over the counter (on OTC basis) in one State and thereafter transported to another State by the recipient. States like Punjab & Himachal Pradesh have noticed that in case of OTC supply to recipient outside the State, some suppliers are levying CGST and SGST instead of IGST. Further, one of the Tax authorities has issued direction to do the same i.e. in case of OTC supply, the supplier has been directed to charge CGST and SGST instead of IGST even in case of inter-State supply.
Accordingly, the agenda was placed before the GST Council for further deliberation and approval of the draft circular. The draft circular stated that
It has been informed that even though the goods are supplied on OTC basis but the supply involves further movement of goods which is arranged by the recipient, the expression “movement of goods terminates” would mean the place where the movement of goods terminates when the goods reach the place of registration of the recipient or to the address that has been declared in the tax invoice, as the case may be. It is, accordingly, clarified that the place of supply in case of such supplies, i.e. where the recipient is registered or the address declared in the tax invoice (in case such recipient is not registered) in a State other than the State in which the supplier is located, shall be determined in accordance with the provisions contained in clause (a) of sub-section (1) of section 10 of the IGST Act. Accordingly, such supplies would be treated as inter State supplies in accordance with the provisions contained in sub-section (1) of section 7 of the IGST Act. It is further clarified that the supplier would be liable to pay integrated tax in such cases.
2.4 However, where the supply is to an unregistered person and where the recipient’s address is not available on record, the place of supply would be determined in accordance with the provisions contained in clause (c) of sub-section (1) of section 10 of the IGST Act. The place of supply in such cases would be the location of goods at the time of delivery to the recipient. Accordingly, such supplies would be treated as intra-State supplies in accordance with the provisions contained in subsection (1) of section 8 of the IGST Act. It is further clarified that the supplier would be liable to pay Central tax and State tax / Union territory tax in such cases.
However, when the Draft Circular was put up before the GST Council there were varied responses to the circular.
a) Views of Punjab and Himachal- The draft Circular was in accordance with the views of States like Punjab and Himachal Pradesh i.e. such OTC supplies may be treated as the intra-State supplies where the supply was made to an unregistered person and the recipient’s address was not available on record and inter-State supplies where the address of recipient is available.
b) View of Haryana-Shri Amit Kumar Agarwal, Commissioner, E & T, Haryana stated that they were opposed to the proposal as they felt that the proposal went beyond Section 10(1)(a) of the IGST Act and that the proposed Circular would affect the revenue flowing to his State in the form of GST revenue.
c) Views of Delhi-The Hon’ ble Deputy Chief Minister of Delhi also supported the views expressed by Haryana. Hon’ble Deputy Chief Minister of Delhi further felt that the law was being grossly misinterpreted. ln his view, the destination principle meant where the supply chain terminated and not necessarily the address of the buyer.
d) Views of Kerala-The Hon’ble Minister from Kerala suggested to follow the destination principle and agreed with the views expressed by State of Punjab.
e) Views of Gujarat-The Hon’ble Minister from Gujarat stated that it appeared that if any person belonging to one State purchased goods in any other State and got the address of his/her residing State recorded in the invoice then the revenue would flow to the native State and not to the State where bill was actually issued. In his view, this would be a big change and it was not clear as to how would one verify the address of the buyer and what would be the mechanism of the revenue flow to the States etc.
The Minutes of the Meeting concluding the issue and referring the issue back to Law Committee to be considered afresh after obtaining opinion of the States in writing along with reasons thereof are being reproduced herewith-
The Hon’ble Chairperson felt that the issue should be looked into afresh by the Law Committee as the destination principle was being questioned and the entire edifice of GST was based on it. She requested the States to give their opinion in writing along with reasons thereof for consideration of the issue afresh in the Law Committee.
21. For Agenda item 7(iii), the Council recommended to refer the agenda back to the Law Committee for considering the issue afresh after obtaining opinion of the States in writing along with reasons thereof.
Case-4-Ms. Umax Packaging (GST AAR Rajasthan)-2nd November 2018-Place of Supply in Bill to Ship to Transaction- Section 10(1)(b) of IGST Act, 2017
Held-IGST in this case is applicable on both the transactions i.e. Supply by M/s Uma Polymers Ltd., Guwahati (Supplier) to Ms. Umax Packaging, Jodhpur (Third Party) and Ms. Umax Packaging, Jodhpur (Third Party) to M/s Pratap Snacks Ltd., Guwahati (Recipient).
Thus, M/s Uma Polymers Ltd., Guwahati can charge IGST from the applicant, against which the applicant ie. M/s Umax Packaging, Jodhpur are eligible to claim full input tax credit as per the relevant provisions of Section 16 and 17 of Chapter V of CGST Act, 2017.
Case-5-Sanjog Steels (P.) Ltd-[2018] 100 taxmann.com 405 (AAR- RAJASTHAN)-Place of Supply in Bill to Ship to Transaction with Four Parties involved-Section 10(1)(b) of IGST Act, 2017
Facts-
Stage-1- The Applicant sells manufactured goods under the Brand name Rathi Powertech to M/s. RSE.
Stage-2-M/s. RSE would be selling the said goods after adding its margin of about Rs. 50 per metric tonne to M/s. Goyal Alloys Pvt. Ltd., E- 231, Phase-II, Bagru Industrial Area, Bagru, Jaipur, Rajasthan-303007 (hereinafter referred to as “M/s Goyal”).
Stage-3-M/s. Goyal will be selling the said products to various customers (hereinafter referred to as “M/s X”) as per the demand of market.
The manufactured goods are directly dispatched by M/S SSPL to M/s X and E-Way Bill is prepared on a “Bill to Ship to” model as per the provisions of Section 10(1)(b) of the IGST Act, 2017. Applicant is an associate company of M/s. Goyal.
Held-
Query 1: Supply from M/s. SSPL to M/s. X on a “Bill to Ship to” mode as per provisions of Section 10(1) (b) of IGST Act, 2017 is permissible.
Query 2: Applicant can issue an e-way bill in which the ‘bill to’ will be mentioned in the name of M/s RSE whereas ‘ship to’ would be in the name of final customer i.e. M/s X.
Case-6-High Tech Refrigeration & Air Conditioning Industries-[2020] 117 taxmann.com 819 (AAR – GOA)-Place of Supply ion case of Bill to Ship to Transaction-Section 10(1)(b) of IGST Act, 2017
Only one issue could be dealt by this authority for issuing Ruling and that is whether supply made by applicant from Goa on behalf of third person who is not in the taxable territory of Goa to a place in Goa is to be taxed as Inter-State Supply or Intra-State Supply.
For classification of any supply as Inter-State Supply or Intra-State Supply, two ingredients are relied upon and these are location of the supplier and place of supply. In the instant case, as said by the applicant, location of the supplier is Goa, place of supply will be outside Goa as per section 10(1)(b) of the IGST Act since, goods are supplied on behalf of a registered person outside Goa to a place in Goa.
Section 10(1)(b) of IGST Act is reproduced as “where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.”
Case-7-IAC Electricals (P.) Ltd. [2018] 93 taxmann.com 476 (AAR-WEST BENGAL)-Place of Supply in case of assembly and installation of Goods- Section 10(1)(d) of IGST Act, 2017
Held-As the goods to be supplied under the First Contract involve movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation [refer to Section 10(1)(a) & (d) of the IGST Act, 2017].
