Lease transactions between units of same company in different states are taxable supply liable for GST
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Applicant Name: |
Chef India Private Limited |
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Appeal No.: |
Advance Ruling No. KAR ADRG 36/2021 |
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Ruling pronounced by: |
GST AAR Karnataka |
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Date of Ruling: |
16-07-2021 |
Brief Facts:
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The applicant is an Indian company which is a wholly owned subsidiary of Brambles Limited, a company listed on the Australian Securities Exchange (ASX). The applicant is engaged in renting of re-usable unit-load equipment for shares use by multiple participants within industrial and retail sector throughout the supply chain, under a business model known as “pooling”. Ownership of the equipment rests with CIPL at all times. |
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CIPL, Karnataka would lease the equipment to its CIPL units in other states (say CIPL, Kerala) based on their demand requirement under the cover of delivery challan. CIPL, Karnataka would be raising periodical invoices for lease charges to such other CIPL units on the basis of usage. Such other CIPL unit would provide equipment to its customers against lease charges, who would be using it for movement of their goods through the supply chain. |
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Further, CIPL, Kerala may also send the equipment to other units of CIPL (say CIPL, Karnataka) on the instructions of CIPL, Karnataka. For this purpose, there may be two situations: (i) Equipment are send from CIPL, Kerala to CIPL, Tamil Nadu on the instructions of CIPL, Karnataka (ii) Equipment are send by CIPL, Kerala to CIPL, Tamil Nadu on the basis of agreement between CIPL, Kerala and CIPL, Tamil Nadu. |
Question before Authority:
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Q. No. |
Question |
Ruling |
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1 |
Whether the pallets, crates and container (equipment) leased by the applicant (CIPL, Karnataka) located and registered in Karnataka to its other GST registration located across India would be considered as lease transactions and accordingly taxable as supply of services |
Yes, the pallets, crates and containers leased by the applicant located and registered in Karnataka to its GST registration located across India 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 IGST Act read with Section 7 of the CGST Act, 2017 |
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2 |
What is the value in 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 CGST Act |
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. |
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3 |
What are the documents that should accompany the movement of goods from CIPL, Karnataka to other units of CIPL across India |
The documents to be carried for the movement of goods from CIPL, Karnataka to other CIPL units would be delivery note and e-way bill for the entire value of the goods transported. |
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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 supply in terms of Section 7 of the CGST Act and therefore not liable to GST |
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5 |
With reference to Q-4 above, What are the documents that should accompany the movements of the goods from CIPL, Karnataka to CIPL, Tamil Nadu |
The documents to be carried for the above movement is a delivery note and w-way bill issued by CIPL, Karnataka if the movement is as a result of supply of CIPL, Karnataka or a delivery note and e-way bill issued by CIPL, Kerala if the movement is as a result of supply by CIPL, Kerala, differentiated as per (4) above. |
