AAR judgment on GST applicability on lease transaction between different registrations of same company
Fact and Issue of the case
The applicant, filed the instant application, in relation to classification of any goods or services or both, application of a notification issued under the provisions of this Act and determination of value of supply of goods or services or both and hence and these questions are related to the issue covered under Section 97(2) of the CGST Act 2017 and hence the application is admitted.
The applicant, a private limited company involved in renting of re-usable unit load equipment for shared use, has sought advance ruling in respect of the following questions:
1. Whether the pallets, crates and containers (hereinafter referred as “equipment”) leased by CHEP India Private Limited (hereinafter referred to as “CIPL” or the “applicant”) located and registered in Karnataka to its other GST registration located across India (say CIPL, Kerala) would be considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the Central Goods and Services Tax Act, 2017 (“CGST Act”) and Karnataka Goods and Services Tax Act, 2017 (“KGST Act”)?
2. If the answer to Question 1 is yes, what is the value on which GST has to be charged i.e. whether it should be lease charges or the value of equipment in terms of Section 15 of the CGST Act and KGST Act read with relevant Rules?
3. What are the documents that should accompany the movement of goods from CUPL, Karnataka to CIPL, Kerala?
4. Whether movement of equipment from CIPL, Kerala to CIPL, Tamil Nadu on the instruction of CIPL, Karnataka can be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act and KGST Act, and thereby not liable to GST?
5. With reference to Question 4 above, what are the documents that should accompany the movement of the goods from CIPL, Kerala to CIPL, Tamil Nadu?
Observation and ruling of AAR
In view of the above, AAR passed the ruling as follows
(1) The pallets, crates and containers leased by CHEP India Private Limited located and registered in Karnataka to its other GST registration located across India (say CIPL, Kerala) would be considered as lease transaction if the specific goods are sent on lease as per the agreement between the two entities and accordingly taxable as supply of services in terms of the provisions of the Integrated Goods and Services Tax Act, 2017 read with Section 7 of the Central Goods and Services Tax Act, 2017.
(2) The value declared in the invoice issued by the applicant would be the value on which GST has to be charged in terms of Section 15 of the CGST Act and KGST Act read with relevant Rules.
(3) The documents to be carried for the movement of goods from CIPL, Karnataka to CIPL, Kerala would be delivery note and e-way bill for the entire value of the goods transported.
(4) The movement of goods from CIPL, Kerala to CIPL, Tamil Nadu under the instruction of CIPL, Karnataka would be as a result of a separate transaction of supply between CIPL, Karnataka and CIPL, Tamil Nadu if the terms of the contract so state. But it would be a supply of CIPL, Kerala, if it is the agreement between CIPL, Kerala and CIPL, Tamil Nadu which causes the movement of goods from CIPL, Kerala to CIPL, Tamil Nadu. Further the services of CIPL, Kerala to CIPL, Karnataka in facilitating the transportation of goods to CIPL, Tamilnadu are exigible to GST.
(5) The documents to be carried for the above movement is a delivery note and e-way bill issued by CIPL, Karnataka if the movement is as a result of supply by CIPL, Karnataka or a delivery note and e-way bill issued by CIPL, Kerala is the movement is as a result of supply by CIPL, Kerala, differentiated as per (4) above.
Read the full order from below
AAR-judgment-on-GST-applicability-on-lease-transaction-between-different-registrations-of-same-company
