Timber deposit at Govt Depot is a taxable supply under GST

The appellate authority upheld the advance ruling, confirming that depositing timber at the Government Timber Depot (GTD) constitutes a supply under GST. The value of supply should be determined as per the CGST Rules, the time of supply is at the time of removal of the timber, and supervision charges are taxable. The appeal filed by the appellant was dismissed on all counts.

---

---

Issues Involved:
1. Whether the activity of depositing timber with the Government Timber Depot (GTD) constitutes a "supply" under GST.
2. Determination of the value of supply for the timber deposited at GTD.
3. The time of supply for the timber deposited at GTD.
4. GST liability on supervision charges collected by GTD.

Detailed Analysis:

1. Constitution of "Supply" Under GST:
The primary issue is whether depositing timber at GTD constitutes a "supply" under Section 7 of the CGST Act. The term "supply" includes all forms of supply of goods or services made for a consideration in the course of business. In this case, the appellant deposits timber at GTD, which issues a Depot Receipt but does not provide immediate consideration. However, the transaction can still be considered a supply under Schedule I, para 3, which includes the supply of goods by a principal to his agent without consideration. The GTD acts as an agent for the appellant, handling the auction and sale of the timber. Therefore, depositing timber at GTD constitutes a supply under GST.

2. Value of Supply:
The value of supply for the timber deposited at GTD should be determined under Rule 29 of the CGST Rules, which states that the value is either the open market value or 90% of the price charged for the supply of goods of like kind and quality by the recipient from his unrelated customers. If these values cannot be determined, the value should be calculated as per Rules 30 or 31. The appellant argued that determining the market value is impractical due to the unique circumstances of the timber market, but the ruling upheld that the value should be determined as per the prescribed rules.

3. Time of Supply:
The time of supply under Section 12 of the CGST Act is the earliest of the date of issue of the invoice, the due date for the issue of the invoice, or the date of receipt of payment. Since the timber is moved to GTD, the invoice must be issued at the time of removal of the goods. Therefore, the time of supply is the date when the timber is removed by the appellant to the depot.

4. GST on Supervision Charges:
The supervision charges collected by GTD are for the service of custody and classification of the timber until it is sold. This service is outside the scope of the principal-agent relationship under Schedule I, para 3, and is considered a separate supply of service. Therefore, the supervision charges are liable to tax, and the appellant must pay GST on these charges under the reverse charge mechanism if GTD is a government department. If GTD is not a government department, the depot must collect GST and issue an invoice to the appellant.

Conclusion:
The appellate authority upheld the advance ruling, confirming that depositing timber at GTD constitutes a supply under GST, the value of supply should be determined as per the CGST Rules, the time of supply is at the time of removal of the timber, and supervision charges are taxable. The appeal filed by the appellant was dismissed on all counts.

---