In Order No. MAHIAAAR/DS-RM/02/2023-24 -AAAR- Movement of equipment from CIPL Karnataka to CIPL Tamil Nadu constitutes supply of lease rental services, GST to be charged based on declared invoice value: AAAR (Maharashtra)
Members Dr. D.K. Srinivas & Rajeev Kumar Mital [05-06-2023]

Read Order: In Re: M/s CHEP India Private Limited

Chahat Varma

New Delhi, June 21, 2023: The Maharashtra bench of the Appellate Authorities for Advance Ruling has modified the advance ruling pronounced by the Maharashtra Authority for Advance Ruling (MAAR), determining that the movement of pallets, crates, and containers (equipment), leased by CHEP India Private Limited (CIPL-appellant), located and registered in Maharashtra, to CIPL Tamil Nadu, as instructed by CIPL Maharashtra, constituted a supply of lease rental services under Section 7 of the Central Goods and Services Tax Act (CGST Act) and the value declared in the invoice issued by the appellant will be considered as the value on which GST had to be charged, in terms of Section 15 of the CGST Act, 2017, read with the second proviso to Rule 28 of the CGST Rules, 2017.

In the present case, the bench of Dr. D.K. Srinivas and Rajeev Kumar Mital ruled that the movement of goods was a result of a lease contract between CIPL Maharashtra and CIPL Tamil Nadu, constituting a supply by CIPL Maharashtra. The transaction involved the return of goods on lease by CIPL Karnataka to CIPL Maharashtra, followed by the leasing of the same goods by CIPL Maharashtra to CIPL Tamil Nadu. The bench concluded that this transaction cannot be considered as a mere movement without supply, and therefore, the supply of goods on a rental or lease basis by CIPL Maharashtra to CIPL Tamil Nadu was subject to tax in the hands of CIPL Maharashtra. Additionally, the services provided by CIPL Karnataka to CIPL Maharashtra for facilitating the transportation of goods to CIPL Tamil Nadu were also subject to GST.