Goods supplied in Sale-in-Transit transaction is a ‘Supply’ and will be taxable under GST: AAR

Case Details: Authority for Advance Rulings, Tamilnadu Andritz Hydro (P.) Ltd., In re - [2021] 131 taxmann.com 336 (AAR - TAMILNADU)

Judiciary and Counsel Details

• • Senthilvelavan B. and T.M.T. Padmavathi T., Member

Facts of the Case

The applicant entered into a contract with Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) to supply new components, tool, tackles, spares and such other materials. For the purpose, the applicant, inter alia, purchased components from various vendors located outside the State of Tamil Nadu and transferred the title of the components to TANGEDCO while the goods were in transit as per contract conditions and the goods were delivered at the project site by the vendors of the applicant. It filed an application for advance ruling to determine whether supply of goods undertaken in course of Sale-in-Transit, i.e., supply undertaken when the goods are in movement from one State to another is exempt under the GST regime.

AAR Held

The Authority for Advance Ruling observed that the applicant purchased the components which would be a ‘supply’; wherein the applicant was the recipient and thereupon it transferred the title to TANGEDCO, i.e., made the supply of the components to TANGEDCO as per the contract conditions. The goods were delivered at the project site by the vendors of the applicant. In the GST regime, every limb of supply with/between a supplier and receiver would be considered as a supply. However, in the pre-GST regime, such transactions, inter-State, were exempted subjected to certain conditions as per Central Act. Therefore, the components which were supplied in Sale-in-Transit transaction by the applicant to its customer (TANGEDCO) in Tamil Nadu would a ‘supply’ as per section 7 of the GST Act and would attract levy of GST.

List of Cases Referred to

• • Abbott Healthcare (P.) Ltd. v. CCT 2020 (34) GSTL 579 (Ker.) (para 3.4)
  • Sutherland Mortgage Services Inc. v. Pr. Commissioner [2020] 115 taxmann.com 82 (Ker.) (para 3.4)
  • Bank of Nova Scotia, In re [2019] 102 taxmann.com 38/72 GST 607 (AAR – Tamilnadu) (para 3.4).