Scope of supply— The present appeal has been filed against the Advance Ruling Order issued by the Authority for Advance Ruling Uttar Pradesh.

The Appellant is engaged in designing, engineering, fabrication and supply of Pneumatic Conveying System (PCS') and its parts and components PCS is a system which is used for transportation of material through pipes from one location to another using air / gas pressure for moving the goods.

the appellant filed an appeal before the Authority for Advance Ruling on 27.10.2021 on following question.-

"Whether supply of components of Pneumatic Conveying System by the applicant to its customers on High Sea Sales basis will be treated neither as supply of goods nor as supply of service by virtue of entry 8 to the Schedule III of CGST Act?"

The Authority for Advance Ruling decided the case wherein the Authority For Advance Ruling ruled that the question of taxability of supply of goods on High Sea Sales requires determination of 'place of supply' which does not come within the purview of section 97(2) of the CGST Act. The Authority also ruled that ‘the question sought by the appellant fell within the domain of Customs' as Circular-33/2017-CUS dated 01.08.2017 clarifies that all taxes, duties etc. on importation of goods are collected under Customs Tariff Act, 1975.

The Appellant has submitted that it never sought any ruling for determination of Place of supply of High Sea Sale transactions instead had expressly stated in the Application that the subject transactions were made on High Sea Sales basis instead a limited question posed by them before the Authority was to seek clarification on the aspect as to whether in terms of the scope of work undertaken by them to their customers, the High Sea Sales transactions would continue to be treated neither as supply of goods nor as supply of services in terms of Entry 8 to Schedule III of the CGST Act.

From a plain reading of entry no. 8 (b) to Schedule III as inserted by Central Goods and Service Tax (Amendment) Act, 2018 with effect from 01.02 2019 it is clear that, only supply of "goods" by the consignee by way of endorsement of documents of title to the goods during their sale on high sea sales basis for delivery in India, is covered therein. However, the supply of "services" is not covered in entry no. 8 (b) to Schedule III of CGST Act, 2017, as amended.

Held that— 

This authority set aside the impugned ruling passed by the Authority for Advance Ruling against the Appellant as the question sought to be answered is squarely covered u/s 97(2) of the CGST ACT.

Supply of imported goods i.e components needed for Pneumatic Conveying System made by the appellant to its customers on High Sea Sales basis will not be treated as supply of "goods" by virtue of entry 8(b) to the Schedule III of CGST Act, 2017 as amended, with effect from 01.02.2019. However, the supply of "services" in relation thereto, if any, will fall under the purview of "supply" as defined under Section 7 of the CGST Act.