No GST Payable on Movement Of Goods Between Two Units Under Same GSTIN: AAR

The Authority of Advance Ruling (AAR Rajasthan) has ruled that GST is not payable on the movement of goods between two units working under the same GSTIN.

M/s Mody Education Foundation (applicant) is in the business of manufacturing thermocol, tableware, PET Bottles, kitchenware & tiffin, plastic casseroles, toilet ware, plastic chairs, steel household, and flasks. The applicant has been availing of the Input Tax Credit (ITC) on inputs, input services, and capital goods used to manufacture the final product as per the Central GST (CGST) Act, 2017.

The Question was that, “1. Since our present and new unit (situated within the Rajasthan state) would have same GSTIN therefore sending goods/ raw material/ capital goods from one unit to other would not comprise supply of goods or services. In such circumstance would we require to pay GST on such movement of goods/raw material/ capital goods? 2. If we have to issue challan for transfer of goods from one unit to other what value is to be considered for E-way bills if that is to be issued? 3. In respect of movement of raw material/capital goods/ semi-finished goods for further processing would the provisions of job-work apply or we can send these goods on simple internal challan? 4. In respect of the above situation in question No. 1, would we require to issue Eway bill for such movement of goods from our one unit to other if the value of the goods to be moved is higher than the threshold limit required for issue of E-way bill in normal course. 5. How will would have to deal with the ITC available for each unit? We understand that since the two units would have same GSTIN then in such case we would have to maintain single ITC credit and the same would be used for discharge of our GST liability irrespective of the clearance of goods from either of the factory. Thus, can we use ITC for the goods/raw material/capital goods received in one factory for payment of GST for the clearance made from second unit? 6. For purchase of raw material/ capital good do we have to order and mentioned separate factory’ address? 7. For invoice of clearance of goods does the applicant have to mention both addresses or the address of the concerned unit from which the goods are cleared?”

The Authority ruled out that, “1. Being same GSTIN of both the units (present & new unit), there is no occurrence/constitution of ‘supply’ in respect of movement of raw material, semi-finished, finished, capital goods between these two units within the state. Therefore, no liability of GST would arise for such movement between two units working under same GSTIN. 2. For transfer of the goods between two units, they would have to take a value of such goods as explained in Explanation-2 to SubRule (1) of the Rule 138 of the CGST Rules, 2017 and issue an E-way bill for such transfer (if required depending on value of such transferred goods as notified in Notification issued by the Commissioner, SGST). 3. As the question of the applicant does not fall under the ambit of sub section (2) of the section 97 of the CGST Act, 2017 therefore, we retrain our-self from giving ruling on the question. 4. As the question of the applicant does not fall under the ambit of sub section (2) of the section 97 of the CGST Act, 2017 therefore, we refrain our-self from giving ruling on the question. 5. Since applicant would be have single GST No. for both the units (Present & proposed unit) then as per section 16(1) of the CGST Act, 2017 there would be only one ledger for the ITC credit therefore, they can use ITC for the goods/raw material/capital goods received in one factory for payment of GST for the clearance made from second unit or vice versa? 6. As the question of the applicant does not fall under the ambit of sub section (2) of the section 97 of the CGST Act, 2017 therefore, we refrain our-self from giving ruling on the question. 7. As the question of the applicant does not fall under the ambit of sub section (2) of the section 97 of the CGST Act, 2017 therefore, we refrain our-self from giving ruling on the question.”

The Judgment was made by Vikas Kumar Jeph and M.S. Kavia.

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