Legal ruling: "Bill to Ship to" mode allowed under IGST Act, E-way bill provisions clarified
The ruling confirmed the permissibility of the "Bill to Ship to" mode under Section 10(1)(b) of the IGST Act, 2017 for the supply from M/s. SSPL to M/s. X. It was affirmed that an E-way bill can be issued with M/s. RSE/RPG as "Bill to" and M/s. X as "Ship to." Additionally, the provisions of Section 15 of the CGST Act, 2017, along with Rule 28 of the CGST Rules, 2017, apply to the value of supply for transactions between M/s. SSPL and M/s. RSE, considering full input tax credit availability. Lastly, transactions between M/s. Goyal and M/s. X are covered under Section 15 as they involve unrelated parties.
Issues Involved:
1. Permissibility of "Bill to Ship to" mode under Section 10(1)(b) of IGST Act, 2017.
2. Use of E-way bill in "Bill to Ship to" transactions.
3. Applicability of Section 15 of CGST Act, 2017 read with Rule 28 of CGST Rules, 2017 for value determination in business-to-business transactions.
4. Coverage of transactions between unrelated parties under Section 15 of CGST Act, 2017.
Issue-wise Detailed Analysis:
1. Permissibility of "Bill to Ship to" Mode:
The applicant, engaged in manufacturing TMT Steel Bars, inquired about the permissibility of using the "Bill to Ship to" model as per Section 10(1)(b) of the IGST Act, 2017. The section states that when goods are delivered by the supplier to a recipient or another person on the direction of a third person, it is deemed that the third person has received the goods, and the place of supply shall be the principal place of business of such person. The ruling confirmed that the supply from M/s. SSPL to M/s. X on a "Bill to Ship to" mode is permissible under the provisions of Section 10(1)(b) of the IGST Act, 2017.
2. Use of E-way Bill in "Bill to Ship to" Transactions:
The applicant sought clarification on the use of the E-way bill in "Bill to Ship to" transactions. According to the press note dated 23.04.2018, only a single E-way bill is required, issued either by the supplier or the third party. The ruling affirmed that the applicant can generate an E-way bill showing M/s. RSE as "Bill to" and M/s. X as "Ship to."
3. Applicability of Section 15 of CGST Act, 2017 Read with Rule 28 of CGST Rules, 2017:
The applicant questioned whether the provisions of Section 15 of the CGST Act, 2017, read with Rule 28 of the CGST Rules, 2017, apply to the value of supply for transactions between M/s. SSPL and M/s. RSE, and subsequently between M/s. RSE and M/s. Goyal. Section 15 defines the value of supply as the transaction value where the supplier and recipient are not related, and the price is the sole consideration. Rule 28 provides that the value of supply between distinct or related persons shall be the open market value or 90% of the price charged for like goods if the recipient is eligible for full input tax credit. The ruling confirmed that these provisions apply to the transactions in question, as all parties are registered persons, and the transactions are business-to-business with full input tax credit availability.
4. Coverage of Transactions Between Unrelated Parties Under Section 15:
The applicant also inquired whether the transactions between M/s. Goyal and the ultimate customer, M/s. X, are covered under the provisions of Section 15 of the CGST Act, 2017, given that they are not related persons. The ruling agreed with the applicant's submission, stating that the transactions between M/s. Goyal and M/s. X are covered under Section 15 as they are unrelated parties.
Conclusion:
1. The supply from M/s. SSPL to M/s. X on a "Bill to Ship to" mode is permissible under Section 10(1)(b) of the IGST Act, 2017.
2. The applicant can issue an E-way bill with M/s. RSE/RPG as "Bill to" and M/s. X as "Ship to."
3. The provisions of Section 15 of the CGST Act, 2017, read with Rule 28 of the CGST Rules, 2017, apply to the value of supply for transactions between M/s. SSPL and M/s. RSE, with full input tax credit availability.
4. The transactions between M/s. Goyal and M/s. X are covered under Section 15 as they are unrelated persons.
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