GST Ruling: Lease Transactions Intra-Company Taxable as Services. Invoice Value Key. Delivery Note, E-way Bill Required

The court ruled that lease transactions between different GST registrations of the same company are taxable as a supply of services. The value declared in the invoice is considered the value for GST purposes. The movement of goods requires a delivery note and e-way bill. Inter-state movement on instruction constitutes a separate taxable supply transaction based on the nature of the agreement. The necessary documents for inter-state movement depend on the supplying entity, requiring a delivery note and e-way bill from the respective supplier.

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Issues Involved:
1. Taxability of lease transactions between different GST registrations of the same company.
2. Determination of the value on which GST should be charged.
3. Required documentation for the movement of goods.
4. Tax implications of inter-state movement of goods on instruction.
5. Documentation for inter-state movement of goods.

Issue-wise Detailed Analysis:

1. Taxability of Lease Transactions:
The applicant sought clarity on whether the lease of pallets, crates, and containers from its Karnataka registration to other GST registrations across India constitutes a taxable supply of services. The judgment clarified that under Section 7(1) of the CGST Act, 2017, such transactions are deemed supplies between distinct persons as per Section 25(4) of the CGST Act. The transfer of goods on lease without transfer of ownership is considered a supply of services under entry no. 1(b) of Schedule II of the CGST Act.

2. Determination of Value for GST:
The value on which GST should be charged was examined under Section 15 of the CGST Act. Since the transactions are between related persons, Rule 28 of the CGST Rules applies. The value declared in the invoice, where the recipient is eligible for full input tax credit, is deemed to be the open market value. Thus, the invoice value is considered the transaction value for GST purposes.

3. Required Documentation for Movement of Goods:
For the movement of goods from Karnataka to Kerala, the applicant must issue a delivery challan and an e-way bill as per Rule 55 and Rule 138 of the CGST Rules. The tax invoice can be issued either before or after the provision of service within the prescribed time limit.

4. Tax Implications of Inter-state Movement on Instruction:
The movement of goods from Kerala to Tamil Nadu on the instruction of Karnataka constitutes a separate supply transaction. If the goods are moved due to a lease agreement between Karnataka and Tamil Nadu, it is a supply by Karnataka. If Kerala sub-leases the goods to Tamil Nadu, it is a supply by Kerala. In both scenarios, the services provided by Kerala to Karnataka in facilitating the movement are taxable.

5. Documentation for Inter-state Movement:
The required documents for the movement of goods depend on the nature of the supply:
- If the supply is by Karnataka, a delivery note and e-way bill issued by Karnataka are required.
- If the supply is by Kerala, a delivery note and e-way bill issued by Kerala are required.

Ruling:
1. Lease transactions between different GST registrations of the same company are taxable as supply of services.
2. The value declared in the invoice is the value on which GST should be charged.
3. The movement of goods requires a delivery note and e-way bill.
4. Inter-state movement on instruction constitutes a separate supply transaction, taxable as per the nature of the agreement.
5. The documents required for movement depend on the supply agreement, necessitating a delivery note and e-way bill from the respective supplying entity.

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