Schedule II of CGST Act 2017 determines the list of activities to be considered as supply of goods/Services and as per entry at Sl No. 1 of schedule II , any transfer of the title in goods is a supply of goods and liable to GST.
In response of query by M/s. Automative Components Technolory India Private Limited , it is held by AAR Tamilnadu that transfer in title of moulds by applicant for a consideration and supply is in course of business constitutes supply of goods and GST is liable to be paid on such supply.
Facts of the question raised
The applicant , M/s. Automative Components Technolory India Private Limited, is engaged in the supply of automotive components. They agree to supply certain parts, including moulds to Indian Company located in the State of TamilNadu, for which they place an order for manufacturing the said parts and moulds on a Thailand Company.
The parts manufactured are physically imported, while the moulds developed are retained in Thailand and are not physically imported into India, but the ownership in the mould is transferred from the foreign supplier to the Applicant and from the applicant to the Indian buyer by raising of separate invoices.
In this case , the applicant is undertaking two transactions
T1: Transfer of title in moulds from the foreign supplier to the Applicant
T2: Transfer of title in moulds from the applicant to the Indian buyer.
The question raised by the applicant is with respect to transaction at T2 above. It is stated that the moulds manufactured by the foreign supplier is not physically imported and only the title in the moulds are transferred from the foreign supplier to the applicant and thereupon by the applicant to the vendor located in India.
The applicant on his interpretation of law has stated that on application of Section 10(1)(c) of IGST Act 2017 , the place of supply is Thailand
As per Sec 10(1)(c) of IGST Act 2017 – where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient;
Since the place of supply is Thailand and the supplier is in India, the supply could get covered under the ambit of Inter-State Supply in terms of IGST Act, but IGST levy can be imposed only to supplies within the territorial jurisdiction of the IGST Act.
The applicant has stated that the supply in this case takes place outside the territorial jurisdiction of IGST Act and thereby not subject to IGST and has sought to clarify the applicability of GST in the said transaction.
AAR Ruling :- It is held by AAR that having seen the factual position, the relevant statutory provisions are examined and explained as under.
Supply is defined under Section 7 of the CGST Act 2017. As per sec 7(1)(d) of the said Act , supply include the activities as referred to in Schedule II.
Schedule II determines the list of activities to be considered as supply of goods/Services and as per entry at Si. No. 1 – any transfer of the title in goods is a supply of goods;
From the above, it is evident that ‘transfer of the title in goods’ is supply of goods.
In the case at hand there is transfer in title of moulds for a consideration and the supply is in the course of business therefore, the same constitutes supply of goods and GST is liable to be paid on such supply.
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