Transfer of Fixed Asset Across States for Exempt Clinical Use – GST & Compliance Query

[Pankaj Singh]

Hi,

Please help with the query below:

We have a machine (fixed asset) purchased at HO in Haryana, which needs to be used in Delhi / UP. It will be internally transferred (not sold), and may move multiple times across states. Since the usage is for clinical services (exempt under GST), treating ITC as cost, hence not feasible to invoice every time the machine moves.

So, I’m considering this approach:

1. Enter into a service / usage agreement from Haryana to the other unit(s), with monthly invoicing based on actual usage in that state.
2. For each physical interstate movement, carry a delivery challan / goods movement document (machine details, origin, destination, vehicle, etc.), along with an e-way bill (if required), referencing the contract / invoice.

Please confirm whether this approach is valid? I am particularly concerned about the risk of interception during transport- what documents must be carried to avoid issues in transit?

Thanks,

[Sadanand Bulbule]

Your plan is acceptable. Ensure that Delivery challan + e-way bill accompany every movement in terms of Rule 55 of CGST Rules.

Usage agreement may be kept ready for inspection.

Proper internal records of movement and usage are maintained to avoid any issues during transit or GST audit.

[Shilpi Jain]

Yes you could regard it like a leading of the equipment. Ensure that you initially take the ITC of the GST paid on the purchase of the asset as well which can be used to set off the GST payable on the usage charges.

AI Summary

Interstate movement of fixed asset: require delivery challan and e-way bill while usage invoicing allows ITC set off. Interstate movement of a fixed asset for exempt clinical services should be managed via a usage agreement with periodic state-wise invoicing; each physical transfer must be accompanied by a delivery challan and an e-way bill where applicable, with records and the usage contract available for inspection, and ITC on the asset purchase availed initially and set off against GST on usage charges.