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GST - Advance Ruling Authority - Case Laws
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2020 (10) TMI 1351
Classification of services - rate of tax - composite supply of works contract - N/N. 11/2017-Central Tax (Rate) dated 28th June 2017 - HELD THAT:- In response to the कमांक/ राकआ / अविप्रा /03/2020/24 नवा रायपुर अटल नगर, दिनांक 03.09.2020 issued to the Assistant Commissioner, State Tax, Korba Circle-2, Chhattisgarh, the jurisdictional office vide कमांक/ रा.क. – 2/ एफ/2020/460 कोरवा दिनांक 06/अक्टूबर/2020 Opined that since there is no other mention, the date of issue of Notification No. 20/2017-Central lax (Rate), dated 22nd August, 2017 and Notification No. 24/2017-Central Tax (Rate), dated 21st September 2017 would be the effective date of the said Notification.
The GST Rate on composite supply of works contract as defined in clause (119) of Section 2 of the Central Goods and Services tax Act, 2017 is 18% (9% CGST+9% SGST) till 21/08/2017 as stipulated under serial no. 3, Heading 9954 of Notification No. 11/2017-Central Tax (Rate) dated -28/06/2017. Thereafter, the GST Rate on composite supply of works contract as defined in Clause (119) of Section 2 of the Central Goods Services tax Act, 2017 is 12% (6% CGST+6% SGST) from 22/08/2017 as per serial no. 3, Heading 9954 of Notification No. 20/2017-Central Tax (Rate) dated-22nd August, 2017 - The applicant has wrongly interpreted that the tax liability is @ 12% (CGST 6% and SGST 6%) from 01st July, 2017 itself whereas the effective date of the said Notification is the Notification date itself. Notification No. 11/2017-Central Tax (Rate) dated-28/06/2017 is applicable with effect from the notification date viz. 28/06/2017. Similarly Notification No. 20/2017-Central Tax (Rate) dated-22nd August, 2017 is applicable with effect from the notification date viz. 22/08/2017 and Notification No. 24/2017-Central Tax (Rate) dated 21st September, 2017 is applicable with effect from 21/09/2017.
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2020 (10) TMI 1350
Taxability under GST - classification of Services - services taken by the applicant from the owner of the Goods transportation vehicle - reverse charge mechanism as per Sec 9(3) of Central Goods and Services Tax, 2017 - rate of GST - claim of ITC for the GST paid on the supply - HELD THAT:- As per Section 65B (26) of the Finance Act, 1994, Goods Transport Agency means any person who provides service in relation to transport of goods by road and issues consignment no e, by whatever name called. Therefore, in the Service Tax regime, issuance of Consignment Note (C/N) was integral and mandatory requirement before any road transporter could be brought within the ambit of GTA - it can be seen that issuance of a consignment note is an indispensable condition and is a must for a supplier of service to be considered as a Goods Transport Agency. If consignment note is not issued by the transporter, the service provider will not come within the ambit of goods transport agency.
The legal position prevailing under Service Tax is being continued under the GST regime. The services of transportation of goods by road (except services of GTA) continue to be exempt even under the GST regime. In so far as he services of CTA are concerned, if the services (of Goods Transportation) are provided (by the GTA) to specified classes of persons, the tax liability falls upon such recipients under the reverse charge mechanism.
If the GTA hires a means of transportation of goods, GST payable would be Nil on such transaction. We thus come to the considered conclusion that the service by way of giving on hire a means of transportation of goods to the applicant GTA, is exigible to Nil rate of GST as stipulated under Notification number 12/2017-CentraI Tax (Rate) dated 28th June 2017. Further when no tax is payable, the question of taking any input tax credit does not arise.
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2020 (10) TMI 1325
Levy of GST - activity of development and sale of land - Classification of the activity - taxable value of the supply - admissibility of ITC - HELD THAT:- In the present case, it is found that the applicant has proposed to undertake the required project and therefore has filed the application for clarification on the questions under the Act. Therefore, the application is covered under Section 95(a) of the Act.
The issue is sale of developed land for which no testing is required. Further we find support of admitting the present application in the judgment of Hon'ble Supreme Court given in the case of NATIONAL CO-OPERATIVE DEVELOPMENT CORPORATION VERSUS COMMISSIONER OF INCOME TAX, DELHI-V [2020 (9) TMI 496 - SUPREME COURT]. The Court was of the opinion that a vibrant system of Advance Ruling can go a long way in reducing taxation litigation. This is not only true of these kinds of disputes but even disputes between the taxation department and private persons, who are more than willing to comply with the law of the land but find some ambiguity - thus, in terms of Section 97(2) of the Act, the present application is admitted.
Whether the activity of development and sale of land is taxable under GST or otherwise?
Ruling as per Amit Gupta, Member:-
HELD THAT:- In the present case since there is no construction of any civil structure on the developed plot by the applicant there is no need of completion certificate by the applicant. For the area as a whole there will be development activities as per local bye laws but the same is not a part of sale to the end customer. There is absolutely no provision of completion certificate by any competent authority in respect of sale of land - there is no contractual relationship between the applicant and the end customer. In paragraph 5 (b) of schedule H there is intention for sale to buyer and therefore there is agreement between the parties. In the present case the entire consideration is to be received at the time of sale deed for the sale of land upon payment of applicable stamp duty. So, the sale of developed plot cannot fall under paragraph 5(b) of schedule II - since the sale of developed plot does not constitute supply of goods or services, there is no question of tax (CGST/SGST) on the sale of land. All other questions are not required to be answered since there is no tax on the sale of land.
Ruling as per Shri Anurag Mishra, Member:-
HELD THAT:- The applicant is going to undertake substantial development of the land before giving it out for sale to the end customers. Since these development activities are covered in clause (b) of paragraph 5 of schedule II therefore the sale of developed land will be treated as supply of service in terms of paragraph 5 of schedule II and thus, taxable in the eye of law.
Since both the members have different views on the taxability of 'sale of developed land/plot', the other issues related to it becomes irrelevant and hence, the ruling cannot be given to such related issues.
Since there are different views, a reference is made to the Appellate Authority for hearing and decision on said issue in terms of Section 98 (5) of the Act ibid which provide that where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question.
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2020 (10) TMI 1301
Classification of services - rate of GST - selling of Space for advertisement in print media - Advertising services and provision of advertising space or time - Advertising Services - Purchase or sale of advertising space or time, on commission - Sale of advertising space in print media (except on commission) - Sale of television and radio advertising time - Sale of internet advertising space - Sale of other advertising space or time (except on commission) - Value of supply in case trade discount/additional discount/agency commission is deducted in the invoices or not - designing/fabrication/production shall formed part of Composite supply or not - HELD THAT:- In case the designing/fabrication/production is bundled with the services mentioned, then the same falls under 'composite supply' in as much as services of 'selling of space for advertisement' constitutes the predominant element and therefore becomes the "principal supply" and the designing/fabrication/production shall form the part of that composite supply as ancillary in as much as 'selling of space for advertisement' cannot be effectively accomplished without designing/fabrication/production. Thus such ancillary activities having a direct and proximal nexus with 'selling of space for advertisement'.
Value of supply in case trade discount/additional discount/agency commission is deducted in the invoices raised in the name of the advertising agency by the TV / Radio/ Outdoor Company/ company - HELD THAT:- In view of the legal provisions, the commission shall form the part of taxable value and discount of any kind is excluded from the taxable value subject to the fulfillment of the conditions laid down in the said legal provisions. Hence in-bills discounts and discount established vide agreement before the time of supply subject to the reversal of ITC by the recipient is allowable deduction from the value of the supply.
Taxability on value/volume based discounts in form of credit notes after the date of invoice - HELD THAT:- The registered person who had issued a credit note, can adjust his tax liability by following the procedure, subject to the condition that incidence of tax on such supply, has not been passed on to any other person, Thus, it is observed that when a supplier requires to decrease the taxable value of a supply, he has to issue a credit note to the recipient and accordingly can reduce his tax liability for the concerned period provided that he has neither charged or collected tax on such supply.
Benefit of Notification No, 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) in respect of the supply made by the advertising agency - HELD THAT:- Technical Officer (TRU) vide letter F.NO. 254/90/2018-TRU dated 03.05.2018 addressed to Joint Commissioner, CCO, Delhi Zone, New Delhi has clarified that the services provided by the DAVP approved agencies on campaign for creating awareness for prevention of diseases to the Health Department is covered under the said notification in as much as 'Public Health' is a function entrusted to local authority under Article 243W read with the Twelfth Schedule S.No. 6 - the advertising agency providing services to the Central Government, State Government, Union territory or Local Authority or a Government Authority in relation to any function entrusted to a panchayat under article 243G of the Constitution or in relation any function entrusted to a Municipality under article 243 W of the Constitute are exempted from payment of GST subject to the fulfilment of the conditions.
Supply made by the Radio/TV/outdoor/Internet/Telecom/any other advertiser to the advertising agency - HELD THAT:- The supply is also exempt from GST in terms of Notification No. 12/2017-Central Tax(Rate) dated 28-06-2017(as amended from time to time) - such exemption is also extended to Radio/TV/outdoor/Internet/Telecom/any other advertise, if such specified services has been provided in terms of S.No. 3A under Chapter-99 issued vide notification No. 2/2018 Central Tax (Rate) dated 25.01.2018.
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2020 (10) TMI 1300
Classification of services - services provided by LLP under PPP contract to UK Government Nodal Agency - applicability of serial no. 3, 73 & 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) on LLP - HELD THAT:- The society had permitted the applicant to operate and maintain the healthcare facilities in the districts and to provide the healthcare services to the people of Uttarakhand. On perusal of Schedule-B of the contract, the applicant has to provide minimum healthcare services ( clinical & curative services, Diagnostic & other para clinical services, Ancillary services including ambulance services, laundry services, security services etc), commission, operate & maintain website for healthcare facilities, infrastructure, personnel & equipments requirement to meet the goal of the Govt i.e. to resolve & enhance health infrastructure facilities to the remote population in the state of Uttarakhand.
Whether other ancillary services viz laundry services, security services, commission, operate & maintain of website for healthcare facilities etc & infrastructure provided along with minimum healthcare services are taxable or otherwise? - HELD THAT:- In the instant case other said ancillary services rendered along with infrastructure during the course of 'healthcare service' is covered under composite service in as much as the 'healthcare services' constitutes the predominant element and therefore becomes the "principal supply" and other ancillary services & infrastructure shall form the part Of that composite supply as ancillary in as much as 'healthcare services' cannot be effectively accomplished without rendering other ancillary services & infrastructures - the services provided in relation to 'healthcare services' are exempted from the liability to GST in as much as all such ancillary activities having a proximal nexus with 'healthcare services' and thus, shall covered under 'healthcare services'.
All the healthcare services by a clinical establishment or authorized medical practitioner or para medics by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy and services by way of transportation of the patient to and from a clinical establishment are exempt from GST. However, hair transplant or cosmetic or plastic surgery does not get exemption and is taxed. Thus, all treatments excluding cosmetic treatments have been covered by this definition - the applicant is engaged in providing 'healthcare services' to the people of Uttarakhand and the same is classified under service code 9993. It is also found that the said services are exempted from payment of GST as provided vide entry no, 74 of Notification No. 12/2017-Central Tax (Rate) dated (as amended from time to time).
Whether serial no. 3, 73 & 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) are applicable on LLP? - HELD THAT:- The intra-state supply of services mentioned therein, are exempted from payment of GST subject to the relevant conditions as mentioned against the corresponding services. Thus, the said notification deals with exemption to the category of service rendered and not to the category of person engaged in supply of services. Accordingly it is observed that the supply of services, irrespective of person involved therein, mentioned in the said notification, are in exempted category.
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2020 (10) TMI 1292
Classification of goods - rate of tax - Topical Antiseptic Solution/Topical Antiseptic Hand Sanitiser - classifiable under HSN code 3004 90 87 (medicament) or 3808 94 00 (disinfectant)? - HELD THAT:- Heading “3808” under the Customs Tariff Act, 1975 also covers the goods of the same description as provided under entry no. 87 except with the condition that such goods shall be put up in forms or packings for retail sale or as preparations or articles. Further Rule 1 of rules for the interpretation provides that the classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes - although the term “disinfectants” appears to be limited to agents which are generally applied on inanimate objects, it also includes “sanitizers” expressly. Therefore the ambit of the terms used in the heading 3808 extends to even those goods such as sanitizers which are applied on the human hands and not just on an inanimate objects.
The Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, HYDERABAD VERSUS M/S SARVOTHAM CARE LTD. [2015 (8) TMI 250 - SUPREME COURT] has held that suggestion that shampoo should be used once a week and on other days, normal shampoos may be used, showed it was to be used like medicine, unlike other normal Shampoos. It was more so as it was not used for cleaning hair. Hence, shampoo was classifiable as medicine under sub-heading 3003.10 of Central Excise Tariff and not under sub-heading 3305.99 ibid as ‘preparation for use on hair'.
Even sanitizers are manufactured based on formulations Ethanol 70% (v/v) or Isopropyl alcohol 75% (v/v), Chlorhexidine Gluconate Solutuion Ip 2.5% v/v and Sanitizers can aid in the prevention of the human ailment in the form of COVID-19 disease; it does not qualify as medicaments because for the goods in question to be treated as “medicament”, it should cure or prevent a specific ailment. Goods which are meant for general hygiene or well-being of a person which may incidentally lead to the prevention of a host of illnesses or ailments cannot be considered as a medicament. It is for this reason that goods like soaps, ordinary shampoos, etc. are not treated as medicaments. The World Customs Organization has also classified the Hand Sanitizer under HSN 3808.94.
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2020 (10) TMI 1268
Intermediary or not - Overseas Commission Agent - section 2(13) of the IGST Act, 2017 - services received by applicant from the Overseas Commission Agent - import of services or not - requirement to pay GST on RCM basis under section 5(3) of the IGST Act, 2017 on commission paid to the Overseas Commission Agent or not - HELD THAT:- Any person who enables the supply of goods/services between two persons, is considered as intermediary. However, where a person is providing services or supplies goods on his own account to his customers, it cannot be termed as an intermediary. As per the agreement dated 31.03.2019, Mr. Bobby Kapoor has to arrange or facilitate the supply of goods of the applicant to international market and in return he shall get the commission on agreed terms - the services received by applicant from the Overseas Commission Agent falls within the meaning of the term 'import of services' as provided under section 2(11) of the IGST Act, 2017.
Import of services - HELD THAT:- The section 13 of the IGST Act, 2017 specifically deals with place of supply of a service as to whether a service can be termed as import of service or otherwise. On perusal of section 13 of the IGST Act, 2017, we find that the section 13(8) (b) of IGST Act, 2017 is relevant to the issue in hand which provides that the place of supply for the intermediary services would be the location of the supplier of such services (i.e. location of intermediary service provider). Thus the condition (iii) is not satisfied as the place of supply of service is not in India.
Levy of GST on RCM basis under section 5(3) of the IGST Act, 2017 - commission paid to the Overseas Commission Agent - HELD THAT:- The said section deals with levy and collection of tax i.e IGST and section 5(3) of the IGST Act, 2017 provides that the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
The 'import of services' shall be treated as inter-state supply of services and the same is chargeable to IGST under reverse charge i.e service recipient located within Indian territory has to pay the tax. Since the transaction is related to an intermediary service which is out of the ambit of 'import of services' as discussed in foregoing paras, accordingly we observe that GST under reverse charge is not payable on the same.
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2020 (10) TMI 853
Classification of goods - rate of tax - supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant - rate of GST if these items alone are supplied and not along with food as Composite supply to the guest - supply of liquor - exempt supply or not - proportionate reversal of ITC as per Rule 42 of CGST rules 2017 - reversal of ITC on free supply of food.
What is the rate of tax applicable on the supply of Soft Beverages (Aerated Water) and Tobacco (Smokes) when these items are supplied independently and not as composite supply in the restaurant? In other words what is the rate of GST if these items alone are supplied and not along with food as Composite supply to the guest? - HELD THAT:- In the instant case, the hotel being a 5 star hotel has a declared tariff of above seven thousand and the restaurant in question has license to serve alcohol (relevant for the notification before amendment. From the above notification and amendments, it is seen that supply of soft beverages/aerated water, whether in person or room service, by the restaurant located in the premises of the hotel is taxable to GST at the rate of 18%.
In the instant case, supply of tobacco products by the restaurant is not a composite supply but involves supply of two individual supplies of goods (tobacco products) and supply of services of serving by the restaurant. Such a supply is a mixed supply - In the instant case, the applicable rate of tax for cigarettes classifiable as CTH 2402 is 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T. (Rate) dated 28.06.2017 and Notification No. II (2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended. Apart from this GST Compensation Cess is applicable at specified rates for different kinds of cigarette product as per Notification No.1/2017-Compensation Cess (Rate) DT 28.6.2017 as amended. Hence, in the case of the mixed supply of cigarettes by the restaurant, in person or room service, the applicable rate is the rate applicable to supply of cigarettes which 14% CGST and 14% SGST as per Sl.no 14 of Schedule IV of Notification No. 1/2017-C.T.(Rate) dated 28.06.2017 and Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017 as amended and the applicable GST Compensation Cess is applicable at specified rates for different kinds of cigarette product as per Notification No.1/2017-Compensation Cess (Rate) dt 28.6.2017 as amended.
Whether supply of liquor is deemed to be the “exempt supply” under GST Act as per Section 2 (47) of CGST Act for the purpose of proportionate reversal of ITC as per Rule 42 of CGST rules 2017? - HELD THAT:- As per Section 9(1) of CGST/TNGST Act, the supply of alcoholic liquor for human consumption, is a non-taxable supply. Hence, supply of alcoholic liquor for human consumption by a restaurant will not be taxable under CGST/TNGST Act.
It is obligatory on the part of employer to supply free food to the employees. Whether such free supply of food is liable to reverse ITC on inputs as per Rule 42 of CGST Rules 2017? - HELD THAT:- In the case at hand, the applicant provides food through a separate canteen to their employees, who are related persons as a part of the employment contract, i.e., in the course or furtherance of business. Therefore, as per Para 2 to Schedule I of the CGST/TNGST Act, supply of free food to the employees is a supply of service under the Act. Supply of food in a specified place, such as canteen as in the present case is a supply of service with SAC 996333 as given in the Annexure to Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 which provides the Scheme of Classification of services - Therefore, supply of food in the specified canteen by the applicant to their employees without consideration is ‘supply’ under GST and taxable on the value of such supply as determined by Rule 28 of CGST Rules, 2017 - rate applicable is GST @ of 18%.
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2020 (10) TMI 852
Supply or not - supply of educational aids to students such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater to government and government aided schools - supply of Rain Coats, Ankle Boots and Socks to students without consideration to Government/Government Aided schools located in Hilly areas - eligibility to avail input tax credit - exemption from payment of GST in respect of services received from printers engaged by them for printing of text books - levy of GST on Penalty and Liquidated damages levied by them on suppliers due to violation of the contract terms for supply - rate of GST.
Whether the supply of educational aids to students such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater to government and government aided schools based on the State Government educational policy for which the consideration is paid to Tami Nadu Text Book and Educational Services Corporation by the State Government by means of a budgetary allocation constitutes a supply? - HELD THAT:- In the instant case, the applicant is a society registered under Societies Registration Act, 1860 and hence is a 'person' as per Section 2(84) of CGST/TNGST Act - In the instant case, the applicant was formed as a society by the State government for procuring and supplying textbooks and other items. The applicant is supplying the kits for a consideration which includes cost of the goods plus various administrative charges which is claimed by the applicant. Therefore, the supply of educational aids such as school bags, footwear, geometry box, wooden colour pencils, crayons, woollen sweater by the applicant to the State government for a consideration is a 'supply of goods' in the course of its business as per Section 7 of the Act - the supply of educational kit as above is a 'Supply' and the same is squarely covered as supply of goods specified under Sl.No. 150 of Notification no. 2/2017-C.T. (Rate) dated 28.06.2017 as amended by Notification No.35/2017-C.T. (Rate) dated 13th October 2017 and hence is an exempted supply. As such a supply is exempt.
Whether Tamil Nadu Text Book and Educational Services Corporation is entitled to avail of corresponding input tax Credit on the procurement made? - HELD THAT:- As it is seen that the supply of 'Educational Kit' is fully exempted, the applicant is not eligible to the Credit of Input Tax paid on the procurement of such goods.
Whether the supply of Rain Coats, Ankle Boots and Socks to students without consideration to Government/Government Aided schools located in Hilly areas is a supply - If the answer to the above is in the affirmative then is Tamil Nadu Text Book and Educational Services Corporation is entitled to discharge its tax liability on such outward supplies at Cost +10% and avail of corresponding Input Tat Credit on the procurement made - HELD THAT:- As per Order No. 204 dated 15.11.2016, it is ordered that based on the announcement of the Chief Minister during the allocation of grants for the year 2016-2017, decision to supply raincoat, boots and socks with expected expenses of ₹ 8 Crores stands announced, accordingly, sanction has been accorded to meet the expenses from the funds already available with the applicant and no separate sanction is accorded. It is evident that separate grant is not allocated but the funds of the applicant have been ordered to be used for the supply. It is seen from the balance sheet of the applicant that all their income comes from the reimbursement from the State Government with any balances let over after expenses of procurement of the various goods as directed by the government. As seen from the Order No. 204 dated 15.11.2016 for supply of these goods, the Government has directed to use the funds already granted and lying unspent with the applicant. Thus, it is to be construed that the grant for the procurement was already given and part of the previous grants left unspent with the applicant. The entry at Sl.No. 150 of the Notification no. 2/2017 -C.T.(Rate) dated 28.06.2017 as amended exempts supply of goods to Government by a Government entity, the consideration of which is in the form of grants. From the Order of the Chief Secretary furnished by the applicant [G.O. No. 204 dated 15.11.2016], it is evident that these supplies have been considered and sanction for these expenses accorded to be used from the funds of the applicant. Therefore, these supplies also are exempt vide the said entry - In as much as the supply of these goods to the Government are held to be exempted, the valuation to be adopted for taxation purposes do not arise and therefore not dealt with. Also, the applicant will not be eligible to avail any input tax paid on these procurements as credit, since the procurement is exclusively towards the exempt supply.
Whether Tamil Nadu Text Book and Educational Services Corporation is eligible for exemption from payment of GST in respect of services it receive from printers engaged by them for printing of text books? - HELD THAT:- The ruling can be sought in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant - this question relates to receipt of service and not supply of service by the applicant, therefore the said question is not taken up for consideration for the reason that it is not covered under the purview of this Authority.
Whether the Tamil Nadu Text Book and Educational Services Corporation is required to pay GST on Penalty and Liquidated damages levied by them on suppliers due to violation of the contract terms for supply and if so the rate at which such GST is payable? - HELD THAT:- In this case, the applicant has sought a ruling on a supply to be received by the applicant. However, as per Section 95 (a) of CGST/TNGST Act, the ruling can be sought in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and not received by the applicant. Therefore, the said question is not taken up for consideration for the reason that it is not covered under the purview of this Authority.
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2020 (10) TMI 812
Taxable supply or not - transaction of supplying Kharif Arhar (Tur) Crops and Green Gram crops from farmers to NAFED - rate of tax to be charged for sale of Agricultural produce to NAFED - Input tax credit on GST paid on purchase of Gunny bags by KSCMFL - deduction of TDS - applicability of Section 51 and Notification 50/2018 - Central Tax dated 13th September 2018.
HELD THAT:- In the instant case, the applicant is involved in the supply of the Kharif Arhar (Tur) and Kharif Green Gram to NAFED procured from the farmers for which applicant receives consideration in the course or furtherance of business. Hence the supply of Kharif Arhar (Tur) and Kharif Green Gram to NAFED by the applicant amounts to supply in terms of Section 7(l)(a) of the CGST Act 2017.
Exempted supply or not - HELD THAT:- The tariff item 0713 relating to Dried Leguminous Vegetables, shelled, whether or not skinned or split listed under the entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017. Hence the supply of tur dal and green gram without any brand name by the applicant to NAFED is an exempted supply as per entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017.
Input tax credit - HELD THAT:- The applicant purchasing gunny bags from third parties to pack the procured Kharif Arhar (Tur) and Kharif Green Gram from the farmers, by paying GST @ 5%. Since the supply of tur dal and green gram is an exempted supply as per entry No.45 of the Notification No.2/2017- Central Tax(Rate) dated 28th June, 2017 the input paid on purchase of gunny bags is ineligible to claim as input tax credit as per subsection 2 of section 17 of the CGST Act, 2017. The subsection 2 of section 17 of the CGST Act 2017 clearly says that, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies - hence, input tax paid on the purchase of gunny bags shall not be claimed as input tax credit as per subsection 2 of section 17 of the CGST Act 2017 as the applicant used the said gunny bags for packing and supplying exempted goods.
Deduction of TDS - HELD THAT:- The applicant is neither established by any Government with 51% or more participation by way of equity or control, to carry out its function nor is a Society established by the Central Government or the State Government or a local authority under the Society Registration Act, 1860. Hence the applicant is not covered under the list provided either in the Notification 50/2018 - Central Tax dated 13/09/2018or under the list prescribed under Section 51 of CGST/KGST Act,2017.Therefore the provisions of TDS as prescribed under section 51 of CGST/KGST Act, 2017 are not applicable to the applicant.
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2020 (10) TMI 811
Exemption from GST - benefit of N/N. 12/2017-Central tax (Rate) dated 28.06.2017 - pure consultancy services provided to the Municipalities and Corporations - taxability of pure consultancy services provided to the private individuals - rate of tax - input tax paid on the purchase of capital goods like furniture, computer, lab equipments, drone cameras, total station, auto level instruments, etc., and on certain services.
HELD THAT:- The applicant is involved in the rendering pure consultancy services like project management consultancy services including construction, supervision, quality control, rejuvenation and development of lakes. The applicant is also involved in the preparation of detailed project report for pumping treated water, scientific landfill at Bengaluru quarries, construction of Raja Nala and Other development civil works etc. The applicant provides these services mainly to the Municipalities, Corporations (i.e. local bodies) and to Government Departments and only in a few cases, a pure consultancy service is being provided to private parties - the work undertaken by the applicant reveals that he is providing majority of his services to the BBMP and Government Departments and to the smaller extent to the private individuals.
The ‘pure services’ provided to Central Government or State Government or to a local authority or Governmental authority in relation to any function entrusted to a Municipality under Article 243W of the Constitution is exempt from payment of tax - the BBMP and Sindhanur Municipality come under the definition of local authority and the service provided by the applicant to BBMP and Sindhanur Municipality is the service rendered to the local authority.
The applicant providing pure services (without supply of goods) to the Local bodies and to the Department of the State Government. The services provided by the applicant are in relation to the function entrusted to the Municipality under article 243W of the constitution. Hence the applicant is entitled to the benefit of Sl. No. 3 of Notification No.12/2017-Central Tax (Rate), dated 28th June 2017.
Benefit of Input Tax Credit - HELD THAT:- Sub-section 2 of section 17 of the CGST Act 2017 clearly says that, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies - Since the applicant providing both taxable and exempted supplies, applicant has to restrict the input tax paid on the capital goods to the extent of taxable supply of services.
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2020 (10) TMI 810
Input Tax Credit - medicines supplied to patients admitted in hospital - medicines supplied to patients treated as out-patients - medicines supplied to other than inpatients and out-patients - supply of food and beverages to the patients admitted in hospital.
Input tax credit - medicines supplied to patients admitted in hospital - restriction of credit on such supply - HELD THAT:- The treatment services for diseases are “health care services” as defined under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and supply of health care services provided by a clinical establishment is exempt from the levy of tax as per entry No. 74 of the said notification supra. Since the output supplies are exempt, the applicant is not eligible to claim the input tax paid on the inward supplies of medicines that are used for providing “health care services” to the inpatients.
Input tax credit - Supply of medicines to the out-patients - restriction on credit - HELD THAT:- The applicant, while providing treatment to the outpatients, uses certain consumables such as medicines, bandages, cotton, etc. Hence the medicines, cotton and bandages are consumed in the provision of health care services and the output is only health care services. Hence there is no separate / distinct supply of medicines, bandages, cotton etc., and since they are used in the supply of exempt health care services, the impugned supply can't be a composite supply. Therefore the applicant is not eligible to claim input tax credit on the taxes paid by the applicant on the inward supplies of such goods.
Input tax credit - supply of medicine to the customers - restrictions on such credit - HELD THAT:- The applicant, with regard to the supply of medicines & other goods to the customers, is selling the medicines as a trader and hence they are liable to collect and pay the applicable tax on the goods sold and also is eligible to claim input tax credit like any supplier of taxable goods, subject to any restrictions in Section 17 of the GST Act.
Input tax credit - Supply of food & beverages to the inpatients - restriction on such credit - HELD THAT:- It is pertinent to mention here that the Authorised Representative during the personal hearing has confirmed that the applicant do not allow the inpatients to consume outside food. Thus it is inevitable that the impugned supply becomes naturally bundled with the treatment service i.e. health care service and the supply becomes composite supply, which is an exempted supply, under entry No.74 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. Thus the applicant can't claim the input tax credit - The input tax credit is to be restricted on supply of food & beverages supplied to inpatients and is part of the health care services.
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2020 (10) TMI 809
Classification of supply - supply of services or not - Activities of a liaison office - requirement of registration under CGST Act, 2017 - liability of liaison office to pay GST - HELD THAT:- The Applicant’s HO is incorporated in Germany and is engaged in the business of promoting applied research. The HO has established their LO in Bangalore, India which is acting as an extended arm of the HO to carry out activities that are permitted by RBI. The RBI has stipulated certain conditions for the establishment of liaison office in India, which includes among other things, that LO will not generate income in India and will not engage in any trade/commercial activity, will represent in India the Parent Company, will promote technical/ financial collaborations and act as communication channel between the Parent Company and the Indian Company, the entire expenses of the office in India will be met exclusively out of the funds received from abroad through normal banking channels and it will not have any signing / commitment powers, except than those which are required for normal functioning of the office, on behalf of the HO/ Parent Company - The term ‘Liaison Office’ is not defined under the CGST Act 2017. However it is defined under Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 and as per the said definition, primarily it is a place of business.
The applicant has claimed that they are not “person” as per Section 2 (84) of CGST Act, 2017. However we find that the definition is very wide in scope and covers every artificial juridical person, not falling within any of the above; (Section 2 (84) (n) of CGST Act, 201’7. A juridical person is a non human legal entity recognized by law with duties and rights - the applicant falls under the definition of “person” in terms of Section 2 (84) of CGST Act, 2017. Further, Section 2(17)(a) of the CGST Act 2017 stipulates that “business” includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit. Further “business” also includes any activity or transaction in connection with or incidental or ancillary to sub-clause (a), in terms of Section 2(17)(b) of the CGST Act 2017.
The activities performed by the applicant falls under the scope of supply under Section 7 of CGST Act, 2017 read with schedule I of CGST Act, 2017 as it is in relation to furtherance of business. The applicant is involved in business and promotes the business, in India, of their HO situated outside India, in the course of business. Thus the activities of the applicant squarely fit to be treated as supply in terms of Section 7(1)(c) of the of CGST Act 2017, even in the absence of consideration.
In the instant case the applicant has representational office i.e. LO in Bangalore, India and hence the applicant has an establishment in India. Further the applicant’s head office is outside India and hence the applicant’s head office has an establishment outside India. Thus the applicant (LO) and their head office (HO) shall be treated as establishments of distinct persons, in terms of Section 8. Therefore the applicant (LO) and their head office (HO) are distinct persons and the activities performed by them can’t be called export of services.
There is no doubt that the applicant is facilitating supply between the HO and Indian customers. They have a mandate from RBI for this purpose. Further, they are not making any supply on their own, which anyway is a restriction placed upon them by RBI. Their contention that they are not “person” has already been dealt in the above para. We find that they are a distinct legal entity and are aptly covered under the definition of intermediary as per Section 2 (13) of IGST Act, 2017. Lastly, in regard to the submissions made by the applicant in respect of valuation, we observe that Rule 28 to Rule 31 of the CGST Rules, 2017 have to be resorted for the purpose of determining tax liability.
Need to take registration - HELD THAT:- The supply of services by the applicant amount to inter-state supply of services in terms of Section 7(5) of the IGST Act 2017. Further persons making any inter-state taxable supply shall be required to be registered compulsorily in terms of Section 24 of the CGST Act 2017 - applicant (LO) is required to be registered under CGST Act 2017 - applicant (LO) are liable to pay GST if the place of supply of services is India.
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2020 (10) TMI 808
Input tax credit - proportionate claim - procurement of Inputs/Capital Goods and ‘Input services’ for for setting up the Solar PV system and installation of the same - whether the goods/services procured can be considered as ‘Capital goods’? - what should be considered as total Turnover for arriving at the attributable credit?
HELD THAT:- As per Section 16 (1), it is evident that a registered person is entitled to take credit of Input Tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Section 16 (2) provides that such person will be eligible for such credit only when he is in possession of a tax invoice, has received the goods or services, paid the tax charged on such supply and has furnished the returns. Section 16 (3) provides that if depreciation is claimed the ITC on the said tax component is not available. The plain reading of the above statute and applying to the case at hand, prima facie, it indicates that the credit of Input tax on the inputs/inputs services used in setting up of the ‘Renewable Energy Generator’ in the furtherance of their business, is permitted under these provisions. The applicant has stated that they are in receipt of the goods/services, possess the invoices and paid the taxes and thus fulfills the conditions stipulated under Section 16(2) and have not claimed depreciation under Income-tax provisions, thus have fulfilled provisions of Section 16(3) of the Act.
The taxes paid on Inputs/capital goods and Input services used in the course or furtherance of business are permitted to be availed as per Section 16 of the Act. Section 17 (2) provides for apportionment of credits pertaining to supply of taxable supply when the said Inputs, Capital Goods and Input services are used to make both exempted and taxable supply - the RE power generator is used in the business by the applicant and the output of such RE Power Generator is Electricity and Renewable Energy Certificate - the proportionate claim of Input Tax Credit is available for the applicant and the provisions of Section 17(2) applies to the case at hand.
Whether they could consider the solar panels and its installation cost as ‘Capital Goods used for both taxable and exempt purpose and claim the Input Tax as Prescribed in Rule 43 of the Act? - HELD THAT:- The applicant has furnished only the list(Statement) with the particulars as detailed above, Invoice No., Taxable Value, Tax Rate, Type of Tax and Total Tax Value. The said statement consists of both ‘Goods’ and ‘Services’. While ‘Goods’ if capitalised may be termed as ‘Capital Goods’, the services are in no way ‘Capital Goods’ but are ‘Input Services’ consumed by the applicant - the applicant has just furnished the list and has not furnished any documentary proof to establish that the goods listed in the statement furnished have been capitalised in their books of accounts - thus, subject to the goods being capitalised in their books of account, the applicant is eligible to claim Input tax on such goods as ‘Capital Goods’ and the Provisions of Rule 43 of the GST Rules is applicable to determine the eligible credit in respect of the taxable supplies made by them. In respect of Inputs and Input services, the attributable credit is to be arrived at by applying Rule 42 of the GST Rules.
The applicant has further sought to clarify as to whether they could apportion the common credit using total turnover of the registered person for the tax period, i.e., Turnover of the tax period of existing business + Turnover of the tax period of the new Power Generation business - it sis found that both under Rule 42 and Rule 43, the ‘F’ in the Formula denotes the ‘Total Turnover[in the State] of the registered person during the tax period’. It is clear that the rule wants the ‘total turnover’ to be considered against ‘F’ in the formulae under Rule 42 & Rule 43 of the GST Rules. In the applicant’s case at hand, therefore, we clarify that the ‘Total Turnover of the Registered Person’ should include the ‘Turnover of Edible Oil Business’ and ‘Total Turnover of Power Generation Business’.
Thus, the applicant is eligible for Proportionate claim of Input Tax Credit as per Section 17 (2) of the CGST/TNGST Act read with Rule 42/Rule 43 of CGST/TNGST Rules 2017 on the Goods/Services used in installation of Renewable Power Generation Plant under the ‘REC Scheme’.
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2020 (10) TMI 807
Classification of services - rate of tax - sub-contractor - composite supply of services - works contract provided by way of construction, erection, commissioning, or installation of original works pertaining to Metro - applicability of N/N. 11/2017 amended vide Notification No.1/2018- Central Tax(rate) dated 25th January 2018.
HELD THAT:- In the case at hand, it is seen that Siemens has secured the contract- the Signalling, Platform Screen Doors and Telecommunications works for Chennai Metro Rail Project Phase I from CMRL and has sub-contracted certain portion to the applicant. SAC 995421 covers ‘General Construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels’ which are Civil engineering related works which is not the work awarded to Siemens and therefore not undertaken by the applicant in the case at hand. SAC 995461 covers installation services of telecommunication wiring, telecommunication equipment, electrical installation services of illumination and signaling system for railways - the applicant undertakes Design, manufacture, supply, installation, testing and commission of Integrated Control and Management System, Public Address and Voice Alarm System, Driver Only Operation (DOO) CCTV System, Closed Circuit Television (CCTV) System, Access Control and Intruder Detection System, Passenger Information Display(PID) System, Office Telephone System, Operational Telephone System and Master Clock System. The works are supply and Installation of lines and equipments meant for telecommunication, signaling in the CMRL project and not related to any civil engineering work - thus, the supply of the applicant to Siemens is covered under SAC 9954, more specifically under 995461 and the first requirement of the entry stands satisfied.
Composite Supply or not - HELD THAT:- In the case at hand from the Purchase Order furnished by the applicant it is seen that there is supply of goods (equipments, goods, etc)) and services (installation, testing, etc) for a particular cost center/Line and the work is considered to be done on that basis. Thus, there is a natural bundle of goods and services per cost center/Line and the supply is construed to be made when the entire supply of the line/cost center is made. Hence, the supply of the applicant is a composite supply and this criterion is satisfied.
Works Contract or not - HELD THAT:- A work shall be treated as Works Contract if that work is done for land or earth or for immovable property and there is transfer of property in goods involved in the execution of such contract. Immovable property cannot be moved. It cannot be separated from the land or earth. If it is detached it shall have to destroy. In the case at hand, the ‘Employer’s Requirements, Particular Specifications-4B Telecommunication General Specification’- Volume 4B Section 3 and 4 (furnished on 26.02.2020), gives the outline summary of the various systems and sub-systems which are applicable to the Telecommunication scope and Para 3.1.2 to 3.1.10 gives the outline description of the works said to be the works of the applicant. On going through these sections it is observed that the work involves installation of the individual systems at platforms, stations, other select locations along the corridor and is integrated at the Operation Control Corridor(OCC) at Koyambedu and the Telecommunications Infrastructure implementation is to be synchronized with the civil construction phases.
The applicant has stated that in the Pre-GST regime, under Service Tax, the applicant being a supplier of Works Contract Service relating to infrastructure project of railways, in the capacity of Sub-contractor was exempted from service tax and had claimed the benefit of entry 3 (v) of Notification 11/2017-C.T.(Rate) dated 28.06.2017 as above. The definition of Works Contract’ as it existed in the ‘Service Tax’ law is different from that defined under Section 2(119) of GST Act. Under GST, only those defined works carried out on any immovable property is covered under Works Contract’. Thus without documentary proof of the works contracted/undertaken like related diagrams /plans /schedules/ Pictures/detailed write-up on the works, etc in the absence of submission of the entire sub-contract agreement, it is not possible for this authority to conclude that the works are done on the immovable property and once installed, the goods/equipments cannot be dismantled without damage so as to hold that the work undertaken is Works Contract’ as per Section 2 (119) of the Act.
As the applicant has stated that it will not be possible for them to furnish the entire sub-contract agreement which contains the requisite details, we record that in the absence of the documentation we are not in a position to hold the works as Works Contract’ as per Section 2 (119) of the Act.
Whether supply should be by way of ‘construction, erection, commissioning, or installation of original works’ pertaining to railways, including monorail and metro? - HELD THAT:- The work of the applicant includes Installation of the various systems on designing, manufacture and supply and therefore is ‘Original work’ as defined in the notification - The work of the applicant is on the lines, stations and locations of land appurtenant and therefore this criterion is satisfied.
In the case at hand, the applicant is entrusted with certain works of design, manufacture, installation and commissioning of the Telecommunication systems including signaling system by Siemens who has been awarded the entire work relating to signaling and Telecommunication under CMRL project Phase-1 and from the preceding paragraphs it is seen that the works are composite supply of original work pertaining to railways and the only leg of the entry No. 3(v) of the Notification which has not been established is whether the works satisfies the definition of ‘Works Contract’ under Section 2 (119) of the GST Act for which sufficient documentary proof is not furnished - considering all the submissions and that the application is pending before this authority for long, we find it appropriate to hold that the benefit of the entry at Sl.No. 3 (v) will be applicable to the applicant subject to the works undertaken by them being ‘Works Contract’ as per Section 2 (119) of the Act and the applicable GST is @, 12% effective from 25.01.2018.
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2020 (10) TMI 806
Scoep of Advance Ruling application - Exempt from GST or not - upfront lease amount paid to M/s. RLDA for the development of Multi-functional complex (Operational building) at Erode railway Junction for Long term lease for 45 years - HELD THAT:- It is evident that ‘advance ruling’ are decisions on questions specified in sub-section 97 (2) of the Act in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant seeking the same. Hence, supplies undertaken or proposed to be undertaken by the applicant alone are covered under the advance ruling as per Section 95(a) of the Act. In the instant case the applicant is not making the supply but RLDA. Accordingly, the application is not admitted and rejected without going into merits.
The applicant has also contented that one of the questions permitted as per Section 97 (2) on admissibility of Input Tax Credit means that the recipient can seek a ruling on the admissibility of ITC for the supply -
Section 95(a) by definition ‘advance ruling’ has specified that the applicant can only be seek a ruling about the supplies undertaken or proposed to be undertaken by the applicant i.e. the applicant is the supplier in the supply in question. Accordingly, all the question the applicant can ask as specified in Section 97 pertain only to him. Specifically, Section 97 (2) (d) pertains to the admissibility of Input Tax Credit of tax paid of deemed to have been paid by the applicant (i.e. applicant as per the Act). This question would deal with the admissibility of ITC on all the inputs/input services/ capital goods etc. used by the applicant (i.e. applicant as per the Act) to make or propose to make the supply in question. Therefore, the question does not pertain to the recipient of the supply in question as contended by M/s Erode Infrastructures nor is there any dichotomy in stating that that as per the Act recipient of the supply in question cannot seek advance ruling under the Act. Accordingly, the application is not admitted and rejected without going into merits.
Application dismissed being not admitted.
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2020 (10) TMI 805
Supply or not - money collected by IITMAA from its members and receiving donations/grants/subsidies/budgetary support from IIT, Madras to defray expenses incurred towards administering the association and other expenses related to its engagement activities initiated by members - existence of any liability to comply with GST law including registration and payment of tax or not?
HELD THAT:- In the instant case, the applicant is a society registered under Tamilnadu Society Registration Act 1975 and is in effect an association with the alumni of IIT Madras as members and hence, the applicant is a ‘person’ under CGST/TNGST Act as per Section 2(84) of the Act. The applicant has contended that the ‘Principle of Mutuality applies in the case at hand and the applicant and its members are not distinct persons and therefore levy do not apply on the consideration. For the purposes of GST Law, the applicant being an unincorporated association or body of persons is a person under Section 2(84) (f) and their members being ‘Individuals’ are also ‘person’ as per Section 2(84) (a). Hence, there are two different ‘persons’, one of whom is the supplier and other the recipient.
From the MOA of the applicant, the mission of the applicant is to provide a forum for its members, to facilitate professional networking for mutual benefit in academic, professional, and/or business areas. This shows that the applicant provides a forum for useful knowledge exchange which definitely for the benefit for the members. The alumni subscribe to become a member of the association and also contributes/makes payment for the events conducted by the applicant with a membership fees of ₹ 1000 for lifetime as per the Byelaws. The Byelaws of the applicant clearly states that members can use the services of the applicant, receive publications/newsletters, and attend alumni meetings and events, facilities at IIT Madras. In this case, the provision by the applicant of the benefits as above for a membership fees to the its members constitute “business” as per Section 2(17) of the Act.
The applicant collects membership fee from the members and also collects charges for various events, activities which include conducting seminars, holding meetings, organizing events, publishing magazines and newsletters, maintaining websites, and technology infrastructure for the benefit of its members. Thus, the supply of the services of these activities by the applicant to its members for consideration either in form of membership fee or additional charges collected for specific activities constitute a ‘supply of service’ under Section 7(1)(a) of CGST/TNGST Act as it is in the course of furtherance of business of the applicant as per Section 2(17) of the Act.
The applicant provides supply of services under GST/TNGST ACT and their annual turnover is above the prescribed threshold as per Section 22 of CGST/SGST Act, they are liable to be registered under the Act.
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2020 (10) TMI 768
Classification of supply - supply of goods or supply of services - activity of building and mounting of the body on the chassis made available by the customers - HELD THAT:- In the instant case the applicant is entrusted with the work of building the load body using own material for fabricating the bus body besides fabrication services - Once the bus body is built and mounted on the chassis, the vehicle is sent back to the Customers after raising tax invoice towards body building charges on which GST is charged separately. At no stage the ownership of the chassis is transferred to the applicant. The consideration received by the applicant is towards the manufacturing of the bus body on the chassis supplied by the principal. Thus, it is evident that the activity undertaken by the applicant for body building on the chassis provided by customer is to be classified as Job work under CGST/TNGST Act 2017 and as per Schedule II of CGST Act 2017, the said activity of building body on the chassis of the customer by the applicant is supply of services.
The activity of body building undertaken on a truck chassis made available by a customer to the applicant amounts to supply of services as per Schedule II clause 3 of CGST Act 2017.
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2020 (10) TMI 767
Classification of services - Levy of GST - leasing of pathway to a person to her/his dwelling unit by CMRL - exemption granted under Notification 12/2017-CT(R) - HELD THAT:- In this case, the pathway is owned by the applicant and both the applicant and the individual have the right to use pathway. In the case of renting or leasing of the property, the owner(applicant in this case) will not have the right to use the the land/pathway involved as leasing’ involves transfer of the right to enjoy the property to the lessee and the lessor does not retain right to enjoy the property during the lease period. In the instant case, it is not a lease of the pathway but only Easement rights are granted to the individual by the applicant. Therefore the classification of the service supplied is not covered under SAC 9972 which covers renting or leasing of property.
In the case at hand, the applicant owns the pathway but has agreed through an MOU with the individual to permit her to use the pathway to access the main road from her residential property which is adjacent to the pathway. This is an easement right given by the applicant to the individual to enjoy her residential property for a period of time for a consideration. The applicant has agreed through a MOU to tolerate her use of this pathway for a period of time for consideration. Hence, this service of agreeing to grant easement rights is a service of agreeing to tolerate an act and is classifiable under SAC 999794 under ‘other miscellaneous services’/ ‘Agreeing to tolerate an act’.
Thus, the act of agreeing to grant easement rights of the pathway by the applicant to Dr.K.Prema by way of shared access is classifiable under SAC 999794 and taxable under @18%.
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2020 (10) TMI 766
Classification of supply - “inspection and testing services” on fresh table grapes - classifiable under entry 9986 of Notification no. 11/2017-Central Tax Rate) dated June 28 2017- “Support services to agriculture, forestry, fishing, animal husbandry” chargeable to NIL rate of tax or otherwise? - Entry 54 (a) of exemption notification no.12/2017-Central Tax (rate) dated June 28,2017.
HELD THAT:- The applicant has stated to be primarily engaged in the business of providing various support services including sampling, inspection, verification, testing and certification services on fresh table grapes and other agricultural produce - The applicant has stated that the scope of service in relation to agricultural produce has been widened under the CGST Act and is unsure to continue the above tax position and has classified its services under the Heading 9983 - ‘Other professional, technical and business services’ and discharged GST at the rate of 18%. As a result of such change in tax position, the exporter-customers of the Applicant have expressed protest that the services provided by the Applicant continue to remain exempt in view of its coverage under Entry 54(a) of Exemption Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017.
When NRL has authorized certain laboratories to undertake testing of soil, water, from the plot/farm along with the grown grapes in such plot, DMI has authorized laboratories for the Grading and marking of fruits. APEDA ensures registration of all the stake holders and traces the events in the ‘Grape Net’. In the case at hand, the applicant Laboratory is an approved laboratory by the Directorate of Marketing & Inspection (DMI) and undertakes testing for Agmark Grading’ and ‘Final Inspection’. The applicant is not authorized to undertake testing of soil, water, farm/plot where the cultivation is undertaken but is authorized to sample and grade the cultivated grapes based on physical attributes for issuance of ‘Certificate of Agmark grading’. It is seen from the test reports submitted by the applicant, they conduct test to detect residue of various chemicals, pesticides etc. The recommended chemicals for which testing is to be done is specified in Annexure -9 of APEDA trade Notice. Thus the ‘testing’ undertaken by the applicant is to detect residue of various chemicals in the cultivated grapes and can also be to grade the cultivated grapes as per the ‘Criteria for Grade designation’ given in Schedule-II of ‘Fruits and Vegetables Grading and Marking Rules, 2004’.
It is clear that, grading of fresh table grapes undertaken by the applicant is in accordance with the guidelines/provisions stipulated in the mentioned Trade notice of APEDA and the Fruits and Vegetables Grading and Marketing Rules and testing for residue of various chemicals/pesticides is as per ‘Procedures for Export of Fresh Table Grapes to the European Union’ of APEDA.
998611 covers support services to crop production which includes grading of seeds to be marketed, Post-harvest crop services limited to preparation for primary markets, other support services like tilling of fields preparatory to planting, planting, cultivation and fertilization of crops, spraying, including from the air, pest control for agriculture, etc. In short, 99861 i covers support services necessary for Crop Production and includes activities of Post-harvest services of crop for preparation for Primary markets. Preparation of crops for primary market in, jives activities which are essential for selling the produce. Without these activities by the farmers, the produce would not be sold in primary market - this SAC covers only services necessary for agricultural production. i.e. without these services the production of the crop would not be complete - SAC 998619 includes other support services related to agriculture, not elsewhere classified. To be classified under this sub-group, the activity is to be a support service related to agriculture and not classified elsewhere. The activity undertaken by the applicant is testing for chemical residue/grading/ certification of the ‘Fresh Table grapes’ for Marketing/ Export as per the procedure of APEDA, the Export Development Authority for Agricultural and Processed food products and the applicant lab is an authorized lab of Directorate of Marketing 86 Inspection which establishes that the activity of the applicant is a support service to the exporter-client of the applicant for marketing/export and is not a support service related to agriculture but is related ensure the agriculture produce has access to certain markets to earn a higher price. Even without these activities of the applicant, the crop is produced. Hence, the supply by the applicant is not classifiable under SAC 998619 also.
The testing for chemical residue, grading based on physical attributes of table grapes is classifiable under SAC 998346 - it is seen that supply of services classifiable under SAC 9986 and which are agricultural operations directly related to production of any agricultural produce are eligible for this exemption. For the case in hand, the activities of testing for chemical residue, grading based on physical attributes of table grapes are not classifiable under SAC 9986 as they are not meant for preparation of crops for primary market and not necessary for production of the grapes. Hence, they are not directly related to the production of the table grapes - the activities of the applicant are not eligible for the exemption under therefore the applicant is not eligible for exemption at Entry No. 54 (a) of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 as amended and Notification No.II(2)/CTR/532(d-15)/2017 vide G.O. (Ms) 73 dated 28.06.2017.
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