2020 (4) TMI 693 - AAR - GST

Supplier registered in one state doesn't need separate registration for executing contracts in another state under Section 22 CGST Act 2017

In Re: M/s. T and D Electricals

The AAR Karnataka ruled that a supplier with principal place of business in Rajasthan executing contracts in Karnataka does not require separate ... Requirement of separate registration - Execution of contract in different state - whether agreement would suffice as address proof since nothing else is with the assesse and service recipient will not provide any other proof? - What documents would be required with transporter to transit/ ship material at Karnataka site from dealer/ supplier of Rajasthan and in case of dealer/ supplier is of Karnataka. Advance ruling may kindly be issued in case of registration is required or not required in both the situation? Whether separate registration is required to execute the aforesaid contract in Karnataka State or not? - HELD THAT:- Section 22 of the CGST Act 2017 is relevant to registration and stipulates that every supplier shall be liable to be registered in the state from where the said supplier makes the taxable supply of goods or services or both, subject to the threshold limit of the aggregate turnover in a financial year - 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, as 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. 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? - 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? - HELD THAT:- In this situation the supplier i.e. dealer 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 IGST 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 (a unit of Shree Cement Ltd.,). What documents would be required with transporter to transit/ ship material at Karnataka site from dealer/ supplier of Rajasthan and in case of dealer/ supplier is of Karnataka. Advance ruling may kindly be issued in case of registration is required or not required in both the situation? - HELD THAT:- The impugned question does not gets covered under the issue/s on which the advance ruling can be sought under CGST Act 2017, in terms of Section 97 (2) of the said Act. Therefore no ruling is given to this question. Issues involved:1. Requirement of separate registration in Karnataka state for executing a contract.2. Charging of CGST & SGST or IGST based on the location of the dealer and recipient.3. Documentation required for transporting goods from Rajasthan and Karnataka to Karnataka Cement Project.Analysis:Issue 1: Requirement of separate registration in Karnataka state for executing a contractThe applicant, a registered works contractor in Rajasthan, sought an advance ruling on whether separate registration is needed in Karnataka for a project awarded by M/s. Shree Cement Ltd. The Authority ruled that as the applicant's principal place of business is in Rajasthan and they do not have any fixed establishment in Karnataka, no separate registration in Karnataka is required for executing the contract.Issue 2: Charging of CGST & SGST or IGST based on the location of the dealer and recipienta) If goods are purchased from a dealer in Rajasthan and shipped to Karnataka, both the dealer and recipient are in Rajasthan, making it an intra-state supply. The dealer must charge CGST & SGST, while the applicant must charge IGST in the invoice addressed to the project site in Karnataka.b) If goods are purchased from a dealer in Karnataka and shipped to Karnataka, it becomes an inter-state supply. In this case, the dealer in Karnataka must charge IGST, and the applicant must also charge IGST in the invoice addressed to the project site in Karnataka.Issue 3: Documentation required for transporting goods to Karnataka Cement ProjectThe question regarding the documents required for transporting goods from Rajasthan and Karnataka to the project site was deemed not covered under the issues for which an advance ruling can be sought under the CGST Act 2017. Therefore, no ruling was provided on this question.In conclusion, the ruling stated that the applicant does not need a separate registration in Karnataka for the project. It clarified the tax implications based on the location of the dealer and recipient for intra-state and inter-state supplies. Additionally, it highlighted the limitation on seeking a ruling for certain documentation requirements for transporting goods.