01 June 2018
Case- Capital good purchased in delhi and we got hiring/work contract in up. Therefore Capital Goods shift from Delhi branch to UP branch for providing hiring services in UP for 1 month. We will raise a hiring bill to client. Should we are suppose to treat this movement as stock transfer? What will be gst implication on capital goods movement/shift? (assumed capital goods have not been sold to client, it has just sent to client to provide work contract or hiring)
01 June 2018
Transfer of right to use goods without transfer of title shall be considered as supply of service. if the Delhi branch is issuing tax invoice directly in the name of customer as supply of service then there is no question of supply by Delhi branch to UP branch. If the tax invoice for supply of such service is issued by UP branch in the name of customer. Then Delhi branch has to issue tax invoice in the name of UP for supply of service(supply between distinct persons). There is no supply of capital goods hence no need to issue tax invoice as supply of goods for full value. capital goods can be moved under delivery challan and E-way bill based on that delivery challan.
02 June 2018
From your query, you have given to understand that the Company has its Branches in Delhi as well in UP and I presume that both are registered under GST. Transfer of Capital goods from Delhi branch to UP branch is a transfer of Goods as no hiring service is being provided to the UP branch. In view of this the IGST @ rate applicable to CG is to be charged. In this case hiring bill shall be raised by UP branch
04 June 2018
Thanks for your views. But I would like to draw your attention towards circular issued for capital movement. As per circular no-21/21/2017-GST dtd 22 Nov 2017:
The issue pertaining to inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes] was discussed in GST Council’s meeting held on 10th November, 2017 and the Council recommended that the circular 1/1/2017-IGST shall mutatis mutandis apply to inter-state movement of such goods, and except in cases where movement of such goods is for further supply of the same goods, such inter-state movement shall be treated ‘neither as a supply of goods or supply of service,’ and consequently no IGST would be applicable on such movements.
UP branch is providing work contract/hiring services and billing directly to client. And if delhi branch move capital goods to up branch for this work contract/hiring. Should movement from delhi to up treated as supply?? As clear from circular that it will not be exempted because UP branch is giving FURTHER SUPPLY.
In other words if the machinery is supplied by one branch to another with an intent that the other branch is going to further supply the same to some other person by way of sale, lease etc than the first transaction between branch 1 and branch 2 will be out of the purview of this circular and will be taxable being a Supply.
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