M/s Radha Krishan Ltd. (supplier) is engaged in the services of leasing photocopying machines to various clients (recipient) on a rental basis. As per the terms of the contract, the supplier shall charge lease rentals on the basis of per printing price i.e. Say Rupee 1 per page photocopy made. All the consumables relating to running and maintenance of such photocopying machines such as paper, ink, spares and other parts shall be provided by the supplier. Sometimes, the supplier also provides the operator of the machine for making copies. Contract between supplier and recipients enter generally at the corporate or central office but machines are installed across the country at various locations. Machines and consumables regularly move from supplier to recipients.
Following questions with respect to GST come to the surface for clarification-:
1. What is the nature of this supply?
2. How would machines and consumables move from supplier to various recipients? What all documents are required for such movement?
3. Whether supplier requires to take registration from every place where the machines are installed across the states? Or, the supplier can do inter-state invoicing from the origin state where he is located?
4. What is the Relevant HSN of this entry?
5. What shall be the rate of tax on this transaction?
6. Whether ITC available in case repairs are done locally at the location of the machine which is different from that of the supplier?
Replies to all questions in their sequence-:
1. Principle supply under this transaction shall be of supply of services of leasing/renting of photocopy machines.
2. Machines and consumables (required for running and maintenance of the machine) shall be transported from the supplier to the location of the recipient on the strength of the delivery challan. E-way bill shall be generated by the supplier (principally, but can be generated by the recipient also, depends who causes the movement of goods as per rule 138). A complete set of documents should accompany the goods carrying vehicle such as delivery challan, e-way bill, copy of lease/renting agreement/copy of invoice raised for advance rentals (if any).
3. Requirement of registration and provisions of place of supply (POS) are two different tangents. POS rules should not be confused with registration requirements. Supplier is located at one place and pos in the specific transaction is the location of the recipient. Therefore, it would not be necessary for the supplier to take registration in respective states wherever the pos falls. The supplier can charge IGST on its invoice with POS as the specific place where the recipient is located. (Considering the supply as inter-state supply).
4. Relevant HSN for this transaction shall be 9973 under chapter 99 of the Customs Tariff Act.
5. Rate of tax on renting of goods is same as that of goods which are leased\rented in this case, which may or may not be 18%.
6. ITC of those inward supplies which are directly received at the location where machines are installed shall be available.
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