Schedule III of CGST Act
Case Title | Coperion Ideal Private Limited |
Court | Uttar Pradesh AAAR |
Honorable Judges | Member Ashish Varma |
Citation | 2022 (10) GSTPanacea 373 HC Uttar Pradesh 04/AAAR/14/10/2022 |
Judgement Date | 14-October-2022 |
Council for Petitioner | Dharendra Kumar Rana |
Council for Respondent | NA |
Section | Section 101,100,97(2),7,7(2)(a) |
In Favour of | In Favour of Appellant |
The Uttar Pradesh Bench of Member Ashish Varma & Member Ministry has held that the impugned ruling UP ADRG – 01/2022 dated 25.04.2022 passed by the Authority for Advance Ruling against the Appellant set aside as the question sought to be answered is squarely covered u/s 97(2) of the CGST ACT.
Bench hold that supply of imported goods i.e components needed for Pneumatic Conveying System made by the appellant to its customers on High Sea Sales basis will not be treated as supply of “goods” by virtue of entry 8(b) to the Schedule III of CGST Act, 2017 as amended, with effect from 01.02.2019.
FACTS OF THE CASE
Appellant are engaged in designing, engineering, fabrication and supply of Pneumatic Conveying System (‘PCS’) and its parts and components. PCS is a system which is used for transportation of material through pipes from one location to another using air / gas pressure for moving the goods. Depending upon customers’ requirements, some of the components are manufactured by the Appellant or sourced from other domestic sources and then supplied to customers, while some components are imported from outside India
As regards the components imported from outside India, Appellant supplies the imported components to customers in India claimed to be on High Sea Sale basis under a High Sea Sales contract which is executed while the goods are on high seas i.e., in transit before crossing the customs frontiers of India.
The appellant filed an appeal before the Authority for Advance Ruling on 27.10.2021 on following question.-
“Whether supply of components of Pneumatic Conveying System by the applicant to its customers on High Sea Sales basis will be treated neither as supply of goods nor as supply of service by virtue of entry 8 to the Schedule III of CGST Act?
The Authority has held that the said question does not fall within the purview of Section 97(2) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) for the reason that taxability of supply of goods on High Sea Sales is determined on the basis of ‘place of supply’ which does not come within the purview of section 97(2) of the CGST Act; rather the same fall within the domain of Customs authorities
Being aggrieved by the aforesaid ruling, the Appellant has preferred instant appeal passed by the Authority for Advance Ruling
The question raised by the Appellant in the application for advance ruling falls under the purview of Section 97(2)(e) and (g) of the CGST Act and therefore the Authority had jurisdiction to pass a ruling on the same
The Appellant has submitted that it never sought any ruling for determination of Place of supply of High Sea Sale transactions instead had expressly stated in the Application that the subject transactions were made on High Sea Sales basis instead a limited question posed by them before the Authority was to seek clarification on the aspect as to whether in terms of the scope of work undertaken by them to their customers, the High Sea Sales transactions would continue to be treated neither as supply of goods nor as supply of services in terms of Entry 8 to Schedule III of the CGST Act
The Appellant has submitted that in terms of Section 97 of the CGST Act, an application to obtain advance ruling can be sought by a desirous applicant stating the question on which the advance ruling is to be sought. Section 97(2) of the CGST Act enumerates aspects on which an advance ruling can be sought by any applicant vide the Impugned Ruling, the Authority has held that the question sought to be answered by the Appellant requires determination of ‘place of supply’ which does not find a place under Section 97(2) of the CGST Act.
Schedule III of CGST Act
COURT HELD
Considering the facts as recorded, held that from a plain reading of entry no. 8 (b) to Schedule III as inserted by Central Goods and Service Tax (Amendment) Act, 2018 with effect from 01.02 2019 it is clear that, only supply of “goods” by the consignee by way of endorsement of documents of title to the goods during their sale on high sea sales basis for delivery in India, is covered therein. However, the supply of “services” is not covered in entry no. 8 (b) to Schedule Ill of CGST Act, 2017, as amended.
Accordingly, Bench rule as under
Bench set aside the impugned ruling UP ADRG – 01/2022 dated 25.04.2022 passed by the Authority for Advance Ruling against the Appellant as the question sought to be answered is squarely covered u/s 97(2) of the CGST ACT.
Bench hold that supply of imported goods i.e components needed for Pneumatic Conveying System made by the appellant to its customers on High Sea Sales basis will not be treated as supply of “goods” by virtue of entry 8(b) to the Schedule III of CGST Act, 2017 as amended, with effect from 01.02.2019. However, the supply of “services” in relation thereto, if any, will fall under the purview of “supply” as defined under Section 7 of the CGST Act.
The Ruling given herein above applies to the unique facts and circumstances of the appellants’ matter in appeal and is based upon the submissions and evidences made available in this regard.
This ruling is valid only within the jurisdiction of Authority for Advance Ruling, Uttar Pradesh in terms of the provisions of The Central Goods and Services Tax act, 2017 and Uttar Pradesh Goods and Services Tax Act, 2017.
Schedule III of CGST Act
ANALYSIS OF THE JUDGEMENT
Bench find that Section 7 of the CGST Act defines the term ‘supply’ in an inclusive manner to inter alia include all forms of supply of goods or services or both made or agreed to be made for a consideration by a person in the course or furtherance of business. Further, Section 7(2)(a) of the CGST Act refers to Schedule III of the CGST Act which specifies certain activities or transaction that shall be treated neither as supply of goods nor a supply of services for the. purposes of CST law.
Bench also find that central Goods and Services Tax (Amendment) Act, 2018 inserted two new entries under the said Schedule Ill. The extract of the relevant entry is reproduced below: “
8.(a)………
8.(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have dispatched from the port of origin located outside India but before clearance for home consumption.”
From a plain reading of entry no. 8 (b) to Schedule III as inserted by Central Goods and Service Tax (Amendment) Act, 2018 with effect from 01.02 2019 it is clear that, only supply of “goods” by the consignee by way of endorsement of documents of title to the goods during their sale on high sea sales basis for delivery in India, is covered therein. However, the supply of “services” is not covered in entry no. 8 (b) to Schedule Ill of CGST Act, 2017, as amended..
Download PDF:
Coperion Ideal Private Limited
For Reference Visit: