GST on transfer of goods from one state to another state

[N Balachandran]

Sir,

We have plant machinery imported from china and kept in Orissa for setting up of Ammonia Plant. Due to non availability of Land in Orissa, we are planning to shift the entire equipment to West Bengal for setting up of Ammonia Plant. whether GST is applicable when we are moving from Orissa to West Bengal? If so,

The production of ammonia will start only after 5 years, what will happened to Credit of GST paid on these equipments?

Pl clarify

Regards

N.Balachandran

[KASTURI SETHI]

In my view GST is not applicable in this situation. Regarding Credit , you can avail credit within one year but there is no restriction of using the same. Restriction is for taking only and that is one year. You can use after five years, if taken within stipulated period.

[Nash Industries I Pvt Ltd]

Dear Querist.

Why was it imported even before the land is identified?

Presume there is no other plant in Orissa or West Bengal.

If so, what's the address to which the Plant and Machinery was imported.What is the address stated in other statutes.

IGST is payable on stock transfer from one state to another. The recipient state can avail the ITC of the IGST paid by the supplied unit and can be utilised for payment for outward supplies.

Regards

S.Ramaswamy

[KASTURI SETHI]

There is a difference between shifting plant and machinery and stock transfer.

[Nash Industries I Pvt Ltd]

yes there is a difference.However, from the point of levy of GST, the shifting of plant and machinery from one state to another is a supply and shall attract IGST.

Regards

S.Ramaswamy

[KASTURI SETHI]

It is not the intention of Govt. to tax the activity of shifting plant and machinery. Anyhow, if such activity is "trapped" in the definition of Supply, it is mischief of law and the issue is worth making representation to GST Council.

AI Summary

IGST on interstate movement: whether shifting plant and machinery is a taxable supply or a non taxable relocation depends on characterization. Inter state shifting of plant and machinery may be treated either as a taxable supply attracting IGST (with recipient eligible for Input Tax Credit) or as a non taxable movement not intended to be taxed; factual factors such as import entry address and characterization as stock transfer versus relocation for installation affect the levy. Credit on GST paid can be taken within the statutory period and, once lawfully availed, may be utilised later when production begins.