Advance Ruling on Aircraft Manufacturing Contract Rejected as Premature Due to Jurisdictional Issues Under Section 25(5)

The Gujarat AAR rejected the applicant's request to determine the nature, classification, value, and time of supply for an aircraft manufacturing contract with Airbus. The application was deemed premature and non-maintainable due to jurisdictional issues. Though the applicant claimed manufacturing would occur in Gujarat, the contract specified Bengaluru as the execution address, with no formal notification of change. The AAR emphasized that GST registrations in different states create distinct legal entities under Section 25(5) of the CGST Act, making the Gujarat-registered entity ineligible to seek ruling on activities potentially occurring in Karnataka.

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Issues:
1. Nature of supply under the contract between the Applicant and Airbus.
2. Appropriate classification and rate of tax of the said supply.
3. Value for the purpose of payment of GST.
4. Time of supply for payment of GST.

Nature of Supply:
The Applicant sought an Advance Ruling to determine the nature of supply under a contract with Airbus for manufacturing and supplying aircraft. The Applicant questioned whether the supply qualifies as 'supply of goods' or 'supply of service.' However, the Revenue did not provide any submission or appear for the hearing. The Applicant, Tata Advanced Systems Limited, submitted additional information stating that the proposed manufacturing operations would be undertaken in the State of Gujarat.

Classification and Tax Rate:
The Applicant also sought clarification on the appropriate classification and tax rate for the supply under the contract. They emphasized that the manufacturing activities would take place in Gujarat and provided details regarding discussions with local authorities and site surveys conducted in the state. The Applicant highlighted the importance of final assembly of aircraft at a location co-located with an airport for delivery to the Ministry of Defence in a fly-away condition.

Value for GST Payment and Time of Supply:
The Advance Ruling Authority noted that the Applicant, registered in Gujarat, had entered into a contract with Airbus and Tata Consultancy Services. The Authority found the application premature due to discrepancies in the contract regarding the project execution address. The contract specified a project execution address in Bengaluru, Karnataka, and no formal intimation of a change in project execution location was provided by the Applicant. Consequently, the Authority rejected the application on grounds of lack of locus standi and non-maintainability under the CGST Act.

Distinct Persons under GST:
The Authority emphasized the distinct legal entities created by different GST registrations held by the Applicant in Ahmedabad, Bengaluru, and Hyderabad. Referring to Section 25(5) of the CGST Act, the Authority highlighted that establishments in different states or union territories are treated as distinct persons for GST purposes. This legal distinction further supported the rejection of the application as non-maintainable under Section 95(a) of the CGST Act.

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