As I promised in previous post related to GST Registration requirement, If covered under bill to ship to model? That I will provide the solutions relating to Litigation posted in previous post on sec 10(1)(a) and 10(1)(b).
However, Following Advance Ruling covered same litigation as we already discussed in our previous post, that provides you more clarity and analysis on litigations.
Advance Ruling
Name of Applicant :- T & D Electricals Advance Ruling No;- KAR ADRG 18/2020 Date of Advance Ruling:- 31/03/2020
Questions Sought by applicant:-
a) If registration is not required in Karnataka state and if we purchase goods from dealer of Rajasthan and want to ship goods directly from the premises of dealer of Rajasthan to township at Karnataka then whether CGST & SGST would be charged from us or IGST by the dealer of Rajasthan ?
b) If registration is not required in Karnataka state and if we purchase goods from dealer of Karnataka to use the goods at township at Karnataka then whether IGST would be charged from us or CGST & SGST by the dealer of Karnataka?
Submission of applicant:-
a) Section 22 of the CGST Act 2017 provides requirement for registration according to which every supplier shall be liable to be registered under this Act in the state or union territory, other than special category of 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.
b) Section 2(71) defines location of supplier and in the instant case location of supplier (applicant) is Rajasthan, as the supply is made from Rajasthan.
Further Section 2(71) also defines location of supplier of services and in the instant case the location of the applicant (works contractor) will be the state where his principal place of business is registered (unless he has established office / establishment in the place where the services are supplied)
c) Section 10(1) of the IGST Act 2017 determines the place of supply of goods, other than supply of goods imported into, or exported from India, which has two clauses i.e (a) and (b).
We understand that clause (b) is applicable to the instant case and hence CGST & SGST should be charged in case when registration is not required and goods are purchased from Rajasthan and shipped directly from dealer of Rajasthan to township at Karnataka. Further if the goods are purchased from dealer of Karnataka and shipped to the site of Karnataka then IGST should be charged in terms of Section 10(1)(b) of the IGST Act 2017.
Facts and Findings- As per Concerned Officer:-
i) In the instant case, the applicant intends to supply goods or services or both from their principle place of business, which is located in Rajasthan The applicant has only one principle place of business, for which registration has been obtained and does not have any other fixed establishment other than the principle place of business admitted by the applicant. Therefore the location of the supplier is nothing but the principle place of business which is in Rajasthan. Thus there is no requirement for a separate registration in Karnataka for execution of the contract referred supra
ii) The first part of the said question is related to the situation where the goods are purchased by the applicant from the dealer of Rajasthan. In this situation the supplier i.c dealer in Rajasthan and the recipient of goods ie the applicant, both are situated in the same state of Rajasthan and hence the impugned supply becomes intra-state supply, in terms of Section 8 of the IGST Act 2017 and the said supply gets covered under Bill to – Ship to transaction, in terms of Section 10(1)(b) of IGST Act 2017. Thus CGST & SGST has to be charged by the dealer in the relevant invoice.
However, the applicant has to charge IGST in their invoice addressed to M/s Karnataka Cement Project fa unit of Shree Cement.
iii) In case of part (b), In this situation the supplier is situated in Karnataka & the recipient of goods i.e , the applicant is situated in the state of Rajasthan and hence the impugned supply becomes inter-state supply in terms of Section 7(1) of the IGST Act 2017.
Further the said supply gets covered under Bill to – Ship to transaction, in terms of Section 10(1)(b) of the CGST Act 2017 Thus IGST has to be charged by the dealer in the relevant invoice . However, the applicant also has to charge IGST in their invoice Addressed to M/s Karnataka Cement Project unit of Shree Cement Ltd.
Ruling
a) The dealer in Rajasthan has to charge CGST & SGST when the goods, purchased by the applicant, are shipped to project site in Karnataka, under bill to ship to transaction in terms of Section 10(1)(b) of the IGST Act 2017
(b) The dealer in Karnataka has to charge IGST when the goods, purchased by the applicant, are shipped to project site in Karnataka, under bill to ship to transaction in terms of Section 10(1)(b) of the IGST Act 2017
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