JANUARY 24, 2018

By S Narayanan, Advocate

CIRCULAR NO. 21/21/2017-GST Dated: November 22, 2017 provides " Clarification on Inter-state movement of rigs, tools and spares, and all goods on wheels [like cranes]" stating at Para 2 as – "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.

In order to bring more clarity to the issue, it is desired that an amendment in Schedule – I of CGST Act, 2017 may be made to carve out an exception, so that the above object of the Government to give relief to movement of such goods on Inter-state basis, which is NOT for further supply of the same goods is extended to all the capital goods. Thus, only such transaction between distinct persons, which are by way of Sale of goods as such or to be used as input in further production are covered in the ambit of GST and not otherwise. Which would mean transfer of Other goods / service between two distinct persons/ related persons shall be treated " neither as a supply of goods nor as supply of service".

This will enable the registered persons providing supply of any services like Works Contract services, etc., in different States (where customers are located) to freely make movement of such Capital goods for providing services without payment of IGST. Hence, there is a need for amendment to SCHEDULE I [ See section 7] of CGST Act. 2017.

Suggestion

In clause (2) of SCHEDULE - I [See section 7] which deals with "ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION" clause (2) may be amended to include the underlined words -