Taxation - Income TaxQuestion 5649 of 146
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Question 6 (a) M/s. T is a registered dealer of Andhra Pradesh trading in different types of machinery and its related different types of services. Their aggregate turnover for the preceding financial year 2022-23 for sale of machinery was ` 1.32 crores, it was first year so they had not started for providing service related to machinery. From FY 2023-24 they are planning to provide repair and maintenance service of ` 6.25 lakh for which they have to purchase some raw material of ` 5 lakh from the other State (till date they are purchasing within State only). From the information given above, examine whether M/s. T can opt for composition scheme under Section 10(1), 10(2A) or 10(2) of the CGST Act, 2017 for FY 2023-24? (5 Marks) (b) (i) Garima having its permanent residence in Bhavnagar, Gujarat purchased car from Kiara Motors of Jaipur, Rajasthan to take the advantage of lower registration charges and road tax. Garima took the delivery of the car from Jaipur and returned with car to her residence in Bhavnagar, Gujarat. Address of Garima recorded in the invoice issued by Kiara Motors mentions only the name of the State i.e. Gujarat. Garima is an unregistered person whereas Kiara Motors is a registered person under GST. Determine the place of supply for supply made by Kiara Motors to Garima. (2 Marks) (ii) Aakar Advertisement Agency, a registered person in Nagpur, Maharashtra, wants to display the products of its client's at most prominent places in different States. It took on rights to use the space on hoardings mounted on fixed surface attached to earth, situated in Udaipur, Rajasthan and in Gwalior, Madhya Pradesh from G.N. Enterprise registered in State of Chhattisgarh. Aakar Advertisement Agency has an exclusive right to use the space and also to manage the advertisements on the hoardings. What will be the place of supply of services provided by the G.N. Enterprise to the Aakar Advertisement Agency? (3 Marks)

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Detailed Solution & Explanation

(a) Eligibility of M/s. T for Composition Scheme \u2013 Analysis

Facts:
- M/s. T is a registered dealer in Andhra Pradesh.
- Aggregate turnover (goods only) in preceding FY 2022-23 = \u20b91.32 crores.
- In FY 2023-24, plans to provide repair & maintenance services = \u20b96.25 lakh and purchase raw material from another State (inter-State inward supply) = \u20b95 lakh.

Section 10(1) and 10(2) \u2013 Composition Scheme for Goods:

A registered person can opt for composition scheme u/s 10(1)/(2) if aggregate turnover in preceding FY does not exceed \u20b91.50 crore (for States other than specified Special Category States).
M/s. T\u2019s turnover = \u20b91.32 crore < \u20b91.50 crore. Hence, M/s. T is eligible for composition scheme u/s 10(1) and 10(2) for FY 2023-24.

Under the composition scheme (goods), a supplier can also supply services (other than restaurant services) up to a value not exceeding the higher of:
(a) 10% of turnover in preceding FY = 10% \u00d7 \u20b91.32 crores = \u20b913,20,000, OR
(b) \u20b95 lakh
Whichever is higher = \u20b913,20,000.
Since planned services = \u20b96.25 lakh < \u20b913.20 lakh, M/s. T can also provide the repair services within the composition scheme.

Further, there is no restriction on a composition supplier from receiving inter-State inward supplies of goods or services. Hence, purchase of \u20b95 lakh from another State is permissible.
Conclusion: M/s. T can opt for composition scheme u/s 10(1) and 10(2) for FY 2023-24.

Section 10(2A) \u2013 Composition Scheme for Service Suppliers:

This scheme is available to a registered person eligible to pay tax u/s 10(1)/(2) who is engaged in supply of services, with aggregate turnover in preceding FY not exceeding \u20b950 lakh.
However, as per section 10(2A), a person eligible for section 10(1)/(2) cannot opt for section 10(2A). Also, M/s. T is primarily a goods trader (not exclusively services), and its turnover (\u20b91.32 crores) exceeds \u20b950 lakh.
Conclusion: M/s. T cannot opt for section 10(2A).


(b)(i) Place of Supply \u2013 Kiara Motors to Garima (Unregistered Person)

Garima is an unregistered person. When supply is made to an unregistered person, the place of supply of goods shall be determined as the location of such person as per the address on the invoice.
The invoice records only the name of the State as \u201cGujarat\u201d. As per GST law, recording the name of the State of the unregistered recipient in the invoice is deemed to be recording the address.
Place of Supply = Gujarat (Bhavnagar).
Hence, even though delivery was taken in Jaipur (Rajasthan), the supply is treated as Inter-State supply subject to IGST.


(b)(ii) Place of Supply \u2013 G.N. Enterprise to Aakar Advertisement Agency (Hoardings)

Hoardings mounted on fixed surfaces attached to earth are immovable property (fixtures).
The service provided is sale/grant of rights to use space on hoardings \u2013 this falls under services related to immovable property.
As per section 12(3) of IGST Act, the place of supply of services relating to immovable property (including grant of rights to use) shall be the location of the immovable property.

- For hoarding in Udaipur, Rajasthan \u2192 Place of supply = Udaipur, Rajasthan
- For hoarding in Gwalior, Madhya Pradesh \u2192 Place of supply = Gwalior, Madhya Pradesh

Since G.N. Enterprise is registered in Chhattisgarh, both supplies are Inter-State (subject to IGST) as the hoardings are in different States from the supplier's location.

Key Concepts to Understand

Supply

Total amount of a good available to consumers.

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