2020 (3) TMI 242 - AAR - GST

GST applies to transfer of moulds as supply of goods under CGST Act

The Authority for Advance Ruling (AAR) ruled that GST is applicable on the transfer of title in moulds from the applicant to the Indian buyer, as it ... Transfer of the title in goods - supply - transfer of title as supply of goods under Schedule II - territorial jurisdiction of IGST - admissibility of input tax credit - scope of advance ruling authority under Section 97(2)Transfer of the title in goods - supply - transfer of title as supply of goods under Schedule II - GST liability on transfer of title in moulds from the applicant to the Indian buyer - HELD THAT: - The Authority examined the statutory definition of 'supply' under Section 7 and the classificatory provision in Schedule II which treats 'any transfer of the title in goods' as a supply of goods. The factual position recorded is that title in the moulds was transferred for consideration by the applicant to the Indian buyer though physical possession remained with the foreign manufacturer. Applying the statutory test, the Authority concluded that a transfer of title in goods for consideration in the course of business constitutes a supply of goods and is therefore subject to GST. The determinative reasoning rests on the plain statutory provision treating transfer of title as a supply of goods without conditioning liability on physical movement of the goods into India. [Paras 6, 7]GST is applicable on the transfer of title in moulds from the applicant to the Indian buyer.Admissibility of input tax credit - scope of advance ruling authority under Section 97(2) - Whether the Authority would rule on the buyer's eligibility to claim input tax credit of GST paid - HELD THAT: - The Authority considered the scope of matters on which an advance ruling may be given as enumerated in Section 97(2). Clause (d) permits a ruling on admissibility of input tax credit of tax paid or deemed to have been paid to the applicant. The question posed by the applicant related to eligibility of the Indian buyer to take credit of tax paid to the applicant, which pertains to the buyer's entitlement and does not fall within any category in Section 97(2) when raised by the applicant on behalf of the buyer. On that basis the Authority recorded that the question on the buyer's input tax credit is not within the ambit of the Authority's jurisdiction and therefore cannot be answered. [Paras 5, 7]The question on eligibility of the Indian buyer to take input tax credit is not answered as it is not within the ambit of this Authority under Section 97(2).Final Conclusion: The Authority ruled that the transfer of title in moulds from the applicant to the Indian buyer constitutes a supply of goods and is subject to GST; the question whether the Indian buyer may claim input tax credit was not answered because it does not fall within the matters on which the Authority may give an advance ruling under Section 97(2). Issues Involved:1. Applicability of GST on the transfer of title in moulds from the applicant to the Indian buyer.2. Eligibility of the Indian buyer to take credit of the GST paid to the applicant for the said purchase.Detailed Analysis:Issue 1: Applicability of GST on the Transfer of Title in MouldsThe applicant, engaged in supplying automotive components, proposed a transaction involving the transfer of title in moulds to an Indian buyer. The moulds are manufactured by a foreign supplier in Thailand and remain there, while only the title is transferred to the applicant and then to the Indian buyer. The applicant argued that since the moulds are not physically imported into India, the transaction should not be liable to GST under Section 5 of the IGST Act read with Section 7(5)(a) of the Integrated Goods and Services Tax Act 2017.The applicant further contended that the transaction does not constitute an import of goods due to the absence of physical movement into India. They referenced Section 10(1)(c) of the IGST Act, suggesting that the place of supply is Thailand, and hence, the transaction should not fall within the territorial jurisdiction of the IGST Act.Upon review, the Authority for Advance Ruling (AAR) noted that the definition of 'supply' under Section 7 of the CGST Act 2017 includes the transfer of title in goods for consideration in the course of business. Schedule II of the Act specifies that any transfer of title in goods is a supply of goods. Therefore, the transfer of title in moulds from the applicant to the Indian buyer constitutes a supply of goods, making it liable for GST.Ruling: GST is applicable on the transfer of title in moulds from the applicant to the Indian buyer.Issue 2: Eligibility of the Indian Buyer to Take Credit of the GST PaidThe applicant sought clarification on whether the Indian buyer would be eligible to take credit of the GST paid for the purchase of moulds. However, the AAR clarified that the eligibility of input tax credit at the buyer's end does not fall under the scope of the questions that the Advance Ruling Authority is authorized to address, as per Section 97(2) of the CGST Act.Ruling: The question regarding the eligibility of the Indian buyer to take credit of the GST paid is not answered, as it is outside the ambit of the Advance Ruling Authority.Conclusion:The judgment concluded that GST is applicable on the transfer of title in moulds from the applicant to the Indian buyer. However, the question of the buyer's eligibility to claim input tax credit on the GST paid could not be addressed by the Authority for Advance Ruling due to jurisdictional limitations.