GST Rules for Moving Cranes Between Branch Offices Explained
Moving heavy cranes between state branches to rent them out attracts Integrated GST, but transfers purely for maintenance do not.
- Ruling
- GST-ARA- 43/2017-18/B- 50 dated 15/06/2018
- Dated
- 15 Jun 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Sanghvi Movers asked if inter-state branch crane transfers attract GST.
- Moving cranes to another state branch for hiring attracts Integrated GST.
- Transferring equipment solely for maintenance is not a taxable supply.
- Receiving branches can claim full input tax credit on IGST.
- Declared invoice value is accepted as market value under GST rules.
In short
Sanghvi Movers Limited asked the Maharashtra Authority for Advance Ruling in order GST-ARA- 43/2017-18/B- 50 Mumbai whether moving heavy cranes from its Maharashtra head office to branch offices in other states attracts Goods and Services Tax (GST). The company rents out tyre-mounted and crawler cranes across India. They wanted to know if transferring equipment between branches counts as a taxable supply under GST, how to value such transfers, and whether sending cranes purely for maintenance is exempt.
What has changed
How it worked before
Many equipment hire companies assumed that moving machinery or cranes on wheels between state branches was fully exempt from GST under central government circulars, regardless of whether the equipment was moved for local rental or for repairs.
What has changed
The authority ruled that inter-state movement of both tyre-mounted and crawler cranes to another branch for further hiring is a taxable supply subject to Integrated GST (IGST). However, moving cranes between branches strictly for upkeep and maintenance without further renting is not a taxable supply of goods. Receiving branches can claim full input tax credit (ITC) on the tax charged. Additionally, where full input tax credit is available to the branch, the value stated on the tax invoice is accepted as the open market value under Rule 28 of the CGST Rules.
Who this affects
Businesses that transfer heavy machinery, construction equipment, or commercial vehicles across state lines between their own registered branches.
An example
A machinery hire company in Gujarat sends a crawler crane to its branch office in Karnataka. If the Karnataka branch will rent this crane out to a local builder, the company must issue a GST invoice and pay IGST on the transfer. The Karnataka branch can claim this IGST back in full as input tax credit. However, if the same crane is sent to Karnataka solely to be repaired in their workshop and then returned, no GST is charged on the crane's movement.
What you should do
Check how your business handles inter-state transfers of equipment. If machinery is moved across state lines to be rented to local customers, you must issue a tax invoice and charge IGST. If equipment moves strictly for repair, the equipment transfer itself is not taxable. Remember that an advance ruling legally binds only the company that applied for it and its tax authority, so consult a tax professional before altering your billing practices.
If you do nothing
If you move rental machinery across state lines without paying IGST, tax officers may treat the transfer as an unbilled supply during an audit. This can lead to demands for unpaid tax along with mandatory interest and penalties. Relying on a ruling granted to another company will not protect your business from penalties.
The terms explained
- input tax credit
- A system that allows businesses to deduct the GST they paid on purchases and branch transfers from the GST they collect on sales.
- distinct persons
- Offices or branches of the same company located in different states that hold separate GST registrations and are treated as independent taxpayers.
- open market value
- The fair price that goods or services would normally cost if sold to an unrelated buyer at the same time.
The ruling in detail
Authority for Advance Ruling
Sanghvi Movers Limited
GST-ARA- 43/2017-18/B- 50 dated 15/06/2018 · Maharashtra
Questions before the authority
- Based on the facts and business model adopted by Sanghvi Movers Limited (“SML” or “Applicant” or “the Company”) under the GST regime as discussed below in detail, whether movement of tyre mounted cranes or crawler cranes from one GST registered office of SML to another registered office of SML for further supply on hire charges to customers would be treated as “taxable supply” under GST law or whether GST would not be leviable on the said movement as per the clarification issued by the CBEC vide Circular No. 21/ 21/ 2017 – CGST read with Circular No. 1/ 1/ 2017 – IGST?
- In the present situation and under the given facts, if GST is payable on the aforesaid transaction, whether the recipient office of SML duly registered under GST receiving such cranes for further supply on hire charges would be eligible to avail input tax credit of GST charged?
- In case when a tyre-mounted crane or crawler crane is moved from one GST registered office of SML to another registered office of SML only for upkeepment and maintenance purpose, without any further supply to unrelated customers, whether such movement of crane would be treated as “taxable supply” under GST law or can it be said that it would not tantamount to “supply” as per clarification issued by the CBEC vide Circular No. 21/ 21/ 2017 – CGST read with Circular No. 1/ 1/ 2017 – IGST?
- If the transaction stated above in question 1 is liable to tax, whether GST would be payable only on the movement of tyre-mounted cranes being goods on wheels or GST would also be payable on movement of both types of cranes (i.e. tyre-mounted cranes and crawler cranes)?
- What should be the value under section 15 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the rules made thereunder for discharging applicable GST on movement of cranes from one GST registered office to another registered office in case the said movement is considered to be a taxable supply?
Facts
The applicant, Sanghvi Movers Limited (SML), provides heavy-duty tyre-mounted and crawler cranes on rental/hire basis across India without transferring title. SML's head office in Maharashtra and its various branch offices across different states hold separate GST registrations as distinct persons. Cranes are moved from Maharashtra HO to state branch offices either for further hire to local customers or strictly for upkeep and maintenance purposes.
Ruling
| Question | What the authority ruled |
|---|---|
| Movement of cranes between GST-registered offices for further supply on hire | Answered in the affirmative; treated as taxable supply Circular No. 21/21/2017-CGST exemption does not apply when movement is for further supply |
| Eligibility of recipient branch office to avail ITC of GST charged | Not answered Applicant HO is not the proper person to raise this question on behalf of recipient branch offices |
| Movement of cranes between GST-registered offices solely for upkeep and maintenance | Answered in the negative; not a supply of goods or services Tax is leviable on actual repairs and maintenance service carried out |
| Applicability of GST to both tyre-mounted and crawler cranes | GST is payable on movement of both types of cranes Both types perform similar mechanical functions and are treated alike under the circulars |
| Valuation under Section 15 and CGST Rules for movement between registered offices | Invoice value is accepted as open market value Applicable under the second proviso to Rule 28 where recipient branch is eligible for full input tax credit |
The AAR held that the inter-state movement of both tyre-mounted and crawler cranes from the HO to branch offices for further supply on hire constitutes a **taxable supply** liable to IGST. Movement between distinct persons solely for upkeep and maintenance without further supply is **not a taxable supply**, though tax applies on repairs and maintenance services performed. On valuation, where the recipient branch is eligible for full input tax credit, the invoice value declared by the applicant is accepted as the open market value under Rule 28 of the CGST Rules.
Reasoning
Under Section 25(4) of the CGST Act, separate GST registrations of the same legal entity in different states are treated as distinct persons, making inter-state transactions between them subject to GST under Section 7 read with Schedule I, even without consideration. Circular No. 21/21/2017-CGST read with Circular No. 1/1/2017-IGST explicitly excludes cases where movement of goods on wheels or cranes is for further supply, meaning such movements remain taxable inter-state supplies. Crawler cranes and tyre-mounted cranes are functionally similar and both fall under the scope of the circular's interpretation of goods on wheels. When cranes are moved purely for maintenance, no supply of goods occurs, though repair services provided remain taxable. For valuation, since recipient branch offices are eligible for full ITC, the second proviso to Rule 28 of the CGST Rules permits adopting the invoice value as the open market value.
Provisions relied on
- Section 7 of CGST Act, 2017
- Section 15 of CGST Act, 2017
- Section 24(1)(i) of CGST Act, 2017
- Section 25(4) of CGST Act, 2017
- Schedule I of CGST Act, 2017
- Schedule II of CGST Act, 2017
- Rule 28 of CGST Rules, 2017
- Section 5(1) of IGST Act, 2017
- Section 7(3) of IGST Act, 2017
- Section 12(2) of IGST Act, 2017
- Circular No. 1/1/2017-IGST dated 07.07.2017
- Circular No. 21/21/2017-CGST dated 22.11.2017
For the practitioner
This ruling establishes that inter-state transfer of capital equipment like cranes between distinct GST units of the same company for **further supply on hire** attracts IGST, as relief under Circular 21/21/2017-CGST applies only to non-supply movements like self-use or maintenance. It confirms that businesses can rely on the second proviso to Rule 28 to adopt their invoice value as open market value when the recipient distinct person has full **input tax credit eligibility**.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/mah_aar_43_2017-18_b-50_15.06.2018_sml.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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