Page 110 - GSTL_26th March 2020_Vol 34_Part 4

620 GST LAW TIMES [ Vol. 34
as the ‘Applicant’ or ‘ACTI’) is registered under GST vide GSTIN
33AANFP5828N1ZM. The Applicant has sought Advance Ruling on the follow-
ing questions :
(1) Whether GST will be applicable on the transfer of title in moulds
from applicant to Indian buyer?
(2) If yes, whether the Indian buyer would be eligible to take credit of
the GST paid to the applicant for said purchase?
The Applicant has submitted the copy of application in Form GST ARA-01 and
also submitted copy of Challan evidencing payment of application fees of
Rs. 5000/- each under sub-rule (1) of Rule 104 of CGST Rules, 2017 and also
SGST Rules, 2017.
2.1 The applicant has stated that they are engaged in the supply of au-
tomotive components such as door locks and strikers (in short ‘parts’) for various
sectors of the automotive industry. They supply such parts to a wide range of
customers which inter alia include moulds and tools (in short ‘moulds’). They
propose to enter into the below transaction. They agree to supply certain parts,
including the moulds to an Indian company (in short ‘Indian buyer’), located in
the State of Tamil Nadu. In this regard, they place an order for manufacturing
the said parts and moulds on a Thailand Company (in short ‘Foreign supplier’).
Accordingly, the foreign supplier manufactures the parts and the same are phys-
ically imported into India. However, the moulds developed by the foreign sup-
plier are retained in Thailand and are not physically imported into India. Thus,
there is only a transfer of ownership in the mould from the foreign supplier to
Applicant and the foreign supplier retains the physical possession of the moulds.
With regard to the invoicing, the foreign supplier raises an invoice on the Appli-
cant for the parts and moulds separately. Similarly, the Applicant raises separate
invoices on the Indian buyer i.e., one for the supply of parts and another for
transfer of ownership of the moulds from the Applicant to the Indian buyer. The
applicant has stated that in the present case as well, only the title in moulds are
transferred to the Indian buyer, wherein the moulds physically continue to re-
main in possession of the foreign supplier. Thus, with regard to the moulds,
there are two transactions involved in the present case :
T1 : Transfer of title in moulds from the foreign supplier to the Appli-
cant.
T2 : Transfer of title in moulds from the Applicant to the Indian buyer.
They have also stated that the moulds are never physically imported into India.
The moulds will be disposed as waste in Thailand after its usage for manufactur-
ing the requisite parts. In the above background, with regard to T2 the Applicant
is of the view that the transfer of title in moulds (without physical import of the
same from Thailand) would not make the said transaction liable to GST under
Section 5 of the IGST Act read with Section 7(5)(a) of Integrated Goods and Ser-
vices Tax Act, 2017 and thereby not required to charge IGST on the moulds sold
to the Indian buyer.
2.2 As per the applicant’s interpretation of law, the transaction between
them and the Indian buyer for transfer of title of moulds is not liable to IGST as
the same extends beyond territorial jurisdiction. In the present case, as men-
tioned above, the transaction results in transfer of title in the goods from the for-
eign supplier to ACTI and thereafter from ACTI to the Indian buyer. However
the possession is retained by the foreign supplier which is permissible contractu-
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