Mere deposit of goods to custodian not liable for GST: AAR
Mere deposit of goods to custodian not liable for GST: AAR
Aug 10, 2018

In a ruling that may have implications for gold mortgages, gold bonds and commodities derivative trading, Karnataka Authority for Advance Rulings has held that deposit of goods to a custodian with obligation to return on submission of electronic receipts would not be liable for GST. 

The ruling came in relation to applicability of goods and services tax in case of a derivative contract in diamonds through Indian Commodity Exchange. The authority held that mere deposit of diamonds with safe vaults acknowledged by electronic vault receipts does not constitute a supply for levy of GST. 

It observed that in such a transaction, there is only transfer of possession of diamonds where safe vaults hold them as a bailee with obligation to return them to depositor on submission of EVR. 

Since there is no consideration involved, the transaction would not qualify as a supply, it said. Derivative contract in e-units would constitute as security and accordingly any transaction in them shall remain out of the scope of GST. 

Tax experts said the ruling reinforces the principle that ‘consideration’ is essential for levy of GST. “Karnataka AAR reinforces the principle that presence of a ‘consideration’ is a sine qua non (essential condition) for determining liability under GST,” said Harpreet Singh, partner, indirect tax, at KPMG. 

“It has rightly held that mere deposit of goods to a custodian, without consideration for keeping such deposit, is not liable to GST.” This principle had come into question with tax authorities going beyond consideration and seeking to levy tax in many instances.

Source :  The Economic Times

Top Stories
Revised GST Tax Rates To Go Live On July 27: Several Home Appliances To Be Taxed At 18 Percent
The GST Council entrusted with placing consumer goods and services in multiple tax slabs, removed se...
Jul 25, 2018
GST rate cut: Consumer electronics, kitchen appliances, leather items, footwear get cheaper
In its 28th meeting, the GST Council gave its approval to slash tax rates on over 100 items that wer...
Jul 22, 2018
Income Tax department seeks GST and GAAR details in new audit form
The Income Tax department has changed a form in the tax audit report, seeking details of the goods a...
Jul 25, 2018
GST rate cut to bring renewed interest in beneficiary stocks
The GST council’s monsoon bonanza for consumers in reducing rates on several general use items is li...
Jul 24, 2018
No GST refunds for foreigners
Foreigners coming to India may not get the go­ods and services tax (GST) refunds on goods purchased ...
Aug 7, 2018
Articles on GST