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GST - Advance Ruling Authority - Case Laws
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2020 (9) TMI 1278
Supply or not - service provided by the assessee to its members - applicability of principal of mutuality - assessee and its members are one and same or not - Central/ Jharkhand Goods and Services Tax Act, 2017 - HELD THAT:- The applicant is not a company which provides shareholding to its members rather its liabilities/debts are guaranteed by the members - Now, once it has been established that the applicant is not doing any business in terms of section 2(17) of the CGST Act, 2017, it can be deduced that activities carried out by the applicant would not come under the scope of supply as envisaged under section 7(1) of the CGST Act, 2017.
Principal of mutuality - HELD THAT:- The applicant is giving service to its members but the club is formed on the principle of mutuality and, therefore, any transaction by the club to its member is not a transaction between two parties. However, when the club is dealing with its members, it is not a separate and distinct individual. Further, we find that it is a mutuality which constitutes the club and, therefore, supply by a club to its member and its services rendered to the members, is not a supply or service by club to the members.
Thus, the applicant is governed by the principal of mutuality - the applicant and its members are one and same.
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2020 (9) TMI 1233
Deduction of TDS from the amount due to applicant - deduction permitted to State/-Central govt organizations, Nagar Nigams, any other govt corporations, State/Central PSUs & Educational Institutions registered under Societies Registration Act or not - section 51 of the CGST/SGST Act read with Notification Nos. 50/2018 dated 13.09.2018 & 73/2018 dated 31.12.2018 - HELD THAT:- The Government has authorized following persons, to deduct tax at the rate of two per cent (1% CGST + 1% SGST) from the value of supply excluding the central tax, State tax, Union territory tax, integrated tax and cess, made to the supplier of taxable goods or services or both w.e.f. 01.10.2018, provided that the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees:-
(a) a department or establishment of the Central Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) an authority or a board or any other body,-
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
with fifty-one per cent, or more participation by way of equity or control, to carry out any function;
(e) Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);
(f) public sector undertakings.
Further, there will be no TDS deduction if location and place of supply of supplier is different from the place of registration of recipient. Further vide amendment dated 31.12.2018, the provisions of Section 51 of the Act will not be applicable in respect of such supply of goods or services or both which takes place between persons as mentioned above.
Whether the applicant falls under any of the aforesaid categories notified by the Government? - HELD THAT:- On perusal of Memorandum of Association of the applicant, it is found that the applicant is a Company of Government of Uttarakhand within the meaning of Section 617 of the Companies Act 1956 which define “ Government company” as any company in which not less than fifty- one per cent of the paid up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more state Governments and includes a company which is a subsidiary of a Government company.
The Applicant is a State Government PSU in as much as 100 % Shareholding is with Uttarakhand Government and falls under one of the categories notified by the Government under Section 51 of the Act read with Notification Nos. 50/2018-Central Tax dated 13.09.2018 and 73/2018-Central Tax dated 31.12.2008.
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2020 (9) TMI 1232
Classification of supply - composite supply of construction service to the Forest Department - exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 or any other exemption notification or not - if not exempt, then applicable rate of GST - Whether the Forest Department is correct in not giving GST to the applicant on the composite supply as the said department classified the same as exempted service?
HELD THAT:- The applicant is providing composite supply (works contract) like construction of Machan, laying of foundation, construction of pillars etc as well as supply of labour service of clearing paths & areas in forest, loading & unloading of plants etc directly to the Forest Department.
A works contract is essentially a contract of service which may also involve supply of goods in the execution of the contract. It is basically a composite supply of both services and goods, with the service element being dominant in the contract between parties. On perusal of documents submitted by the applicant, it is found that the contracts has been awarded by the Forest Department to the applicant for construction as well as for repair & maintenance of immovable property wherein transfer of property in goods is involved in the execution of such contracts. Thus the said contracts are duly covered under the definition of "work contract" service and thus it is a composite service. Further, as per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the Act shall be treated as a composite supply of services. Thus, there is a clear demarcation of a works contract as a composite supply of service under the Act.
Taxability of said service provided to Government department - HELD THAT:- There is no exemption is available to the said service provided by the applicant to the Forest Department. However the said service is a taxable event in terms of entry no. 3(vi) (a) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended from time to time) in as much as the services provided by the applicant to the Forest Department is not for commerce, industry or any other business or profession and attract GST 12%.
Whether the Forest Department is correct in not giving GST to the applicant on the composite supply as the said department classified the same as exempted service? - HELD THAT:- The authority cannot pass the ruling on the same in as much the said question do not qualify for ruling in terms of section 97(2) of the Act.
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2020 (9) TMI 1228
Determination of time of supply - upfront payment made by the applicant to the State Government is in the nature of Deposit in terms of Section 2(31) of the MP GST Act, 2017 or is in the nature of advance paid? - section 13(3) of the MP GST - HELD THAT:- Section 2(31) of MP GST Act is in respect of definition of “consideration” and Section 13(3) of MP GST Act is in respect of time of supply of service. The definition of consideration is speaks about the value of service and proviso to section 2(31) of CGST Act, is about the deposit not about advance. The liability to pay GST on services shall arise on the basis of time of supply of service not from the definition of consideration given in Section 2(31) of MP GST Act. In this case, the applicant is liable to pay GST on the amount of revenue share under reverse charge mechanism as applicable in terms Si.No.5 of of Notification No.13/ 20017-CT(rate) DATED 28.06.2017 and there is specific section 13(3) of MP GST Act in respect of time of supply of service for the person who are paying GST under the reverse charge mechanism. Hence, as per Section 13(3) of MP GST, the time of supply is date of payment as entered in the books of account of the recipient i.e. Government or the date on which the payment is debited in his(Applicant) bank account whichever is earlier.
There is a difference between advance money and deposit amount. The advance is received toward goods or services to be supplied in future. On the other hand deposit money is received only as a security. It is generally not used by the supplier in the course of supply of goods or services. The upfront payment made by the applicant is adjusted toward the services to be supplied in future after commencement of excavating minerals which clearly shows that the said payment is and advances against the future payment, hence the section 2(31) of MP GST Act which speaks about the deposit is not applicable in the case of applicant.
In this case the upfront payment is payable in three installments and after payment of third installment, the State Government shall grant the mining lease to the successful bidder - there is no clause of refund of that amount after allotment of mines on lease, hence the payment made to the state government is no more deposit after allotment of mines but is advance which will be adjusted against the future payment of revenue share amount. In this case, the mining lease is granted after the payment of third installment. The upfront payment made to the state government is treated as advance against the revenue share from the date of allotment of mines and the GST is payable on this advance from the date of allotment of mines to the applicant.
As per the proviso to 2(31), a deposit would be consideration if the supplier applies the deposit as consideration. This is not same as application of the deposit towards consideration. Thus, an amount would attain the character of “Deposit not attracting tax” where the amount is not to be adjusted against the consideration unless an event occurs or does not occur. In this case, the upfront payment is to be adjusted against consideration at the first available opportunity. Thus the supplier, i.e. GoMP is applying the deposit as consideration - dominion over an amount of payment or liability to refund back a sum received in case of cancellation of a contract does not alter the nature of the money given. As per the terms of a contract, both the security deposit and advance may have to be paid back. Therefore, dominion over moneys advanced does not change the character of the amount paid upfront.
There is clear provision in law for liability of GST in case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis in case of applicant under the provision of Section 13(3) of MP GST Act, 2017 - the applicant is liable to pay service tax from the date of allotment of mines on lease by the government as the payment made by the Applicant to state Government is an advance.
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2020 (9) TMI 1227
Levy of Entry Tax - Tran-I provision of MPGST - proviso to Section 98 (2) of the GST Act 2017 - HELD THAT:- A plain reading of Section 97(2) of GST Act clearly implies that the any question relating to Input Tax in TRAN-1. which falls under transitional provision, shall be out of purview of Advance Ruling. Admissibility of input tax credit, as given in section 97(2) of GST Act relates to ‘input tax credit’ as defined in Section 2(63) of GST Act 2017 read with Section 2(62) ibid and not the Input Tax in TRAN-1 carried forward in TRAN-1. which categorically pertains to pre-GST regime. Thus, the question placed does not fall within four corners of issues defined for seeking advance ruling under Section 97(2) ibid. Hence the application does not hold ground to be admitted on this count.
It is important to mention here that Deputy Commissioner, Commercial Tax, Sagar Division Madhya Pradesh had already decided the issue of getting credit of Entry Tax in TRAN-1 in his order dated 24.02.2020 in the applicant’s case of Entry Tax Act pertaining to period 01.04.2017-30.06.2017.
Proviso to Section 98 (2) of the GST Act 2017 - HELD THAT:- The applicant had not only raised this particular issue, in respect of which Advance Ruling is sought vide application under consideration, before the jurisdictional officers but also the issue has been already decided in the applicant’s Entry Tax Act case for the period 01.04.2017-30.06.2017.
Application rejected.
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2020 (9) TMI 1226
Input Tax Credit - recovery of expenses from DISCOMs as well as UPPTCL and other power companies by way of book entries - inclusion of incidental expenses in value of supply - recovery against certain expenses such as interest cost, salary, depreciation etc. - transfer of miscellaneous incomes of applicant Corporation to DISCOMs, UPPTCL and other power companies will attract GST - HELD THAT:- The relationship between Applicant Corporation and its subsidiaries is undoubtedly commercial. The fact that subsidiaries i.e. DISCOMs are providing exempt supply is immaterial for the purpose of determination of nature of activity between Corporation and its subsidiaries. The activities which are listed in para 5 of the Application and for which “Operational & Management Expenses” are being incurred and passed on are apparently carrying a 'Consideration.' There is also no denying in the fact that it is for the furtherance of business. Thus, the activities squarely meet the twin test laid down under Section 7(1) of the CGST Act for the purpose of being identified as 'Supply'. The activities for which O & M Expenses are being passed on and collected are 'Supplies' for the purpose of Section 7(1) of CGST Act, the same would be liable to be charged to GST as per the applicable rate laid down under the law and in accordance with the provisions of Section 15 of CGST Act.
Quantum of O & M Expenses chargeable to GST - HELD THAT:- Most of the expenses on individual basis are taxable e.g. expenses passed on for the employees benefit or salary or for re-imbursement purpose are not relatable to normal employer-employee relationship, thereby covered under Schedule III under Section 7 of the CGST Act. The employees recruited by the one office and working in another office does not have any employer-employee relationship with the office where they are actually working. The expenses incurred on such employees claimed from the actual employer would constitute supply and accordingly liable to pay GST. Same is the case with 'Medical Expenses' or 'Recruitment Expenses'. Accordingly, the expenses incurred on account of heads claimed to be exempted are also liable to be charged to GST.
Transfer of miscellaneous income of the Applicant Corporation to DISCOMs - HELD THAT:- The recovery of expenses are classifiable as 'Supply', so would be the 'Income'. The same is also classifiable as 'Supply' and would be chargeable to GST.
Availability and admissibility of Input Tax Credit of GST paid on the supplies - HELD THAT:- The provisions governing Input Tax Credit are separately mentioned under CGST Act. Whether ITC is admissible on any Input Supply of Goods and Services has to be examined with reference to provisions of Section 16 & 17 of the CGST Act read with Rule 36 of CGST Rules. Therefore, at this stage it can only be said that the admissibility of Input Tax Credit of GST paid on supplies mentioned would depend upon meeting on the criteria / conditions specified under Section 16 & 17 read with Rule 36.
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2020 (9) TMI 1225
Classification of goods - solar power generating system - classified under chapter 85 or not - What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT:- As per Rule 2b of General Rules for interpretation of the first schedule (Import Tariff), any reference in a heading to a material / substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. As per Rule 3a of the said Rules of interpretation, the heading which provides the most specific description shall be preferred to heading having more general description. According to Rule 3b of the Rules of interpretation, in case Rule 3a is not applicable, the goods shall be classified as if they consisted of the material/ raw material which give their essential character. In the applicant's case, the essential character to Solar Power Generating System is Solar Panel consisting of multiple solar cells - Chapter Note 9 of Chapter 85 states that for the classification of the articles defined in this Note, headings 8541 and 8542 shall take precedence over any other heading in this Schedule, except in the case of heading 8523. As such, the four digit HSN of Solar Power Generating System is 8541.
What constitutes solar power generating system under chapter 85, what are the various components and technical requirements that together constitutes solar power generating system under chapter 85? - HELD THAT:- The Ministry of New and Renewable Energy (MNRE) in various instances has also approved entire BOQ consisting of various parts e.g. cables, module, monitoring structures, spares etc. as essentials of “Solar Power Generating System” - Solar Panel, Inverter, Controller and Battery are essential components of 'Solar Power Generating System'. But, we also hold that cable & monitoring structures are supplementary components of 'Solar Power Generating System'.
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2020 (9) TMI 1166
Rectification of Mistake - Mistake apparent on the face of record or not - Liability to pay Service Tax / GST proportionate to the services provided before / after 30.06.2017 respectively - section 161 of the CGST/KGST Act 2017 - it was held in the case of IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED [2019 (8) TMI 395 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] that the applicant is liable to pay GST towards work executed under Joint Development Agreement on Land Owner's portion, on the value to be arrived at in terms of para 2 of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, at the time of transfer of possession of the land owner's portion of the flats and that the tax liability arises entirely under the GST Law since possession of land owner's share of flats has not been given to the land owner till the inception of GST Law.
HELD THAT:- The applicant filed the instant application for ROM in the IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED [2019 (8) TMI 395 - AUTHORITY FOR ADVANCE RULING, KARNATAKA], without bringing anything on record to negate the findings in the said order that the possession of land owner's share of flats was not handed over to the land owner till 30.06.2017. Further, the time of supply and point of taxation, for the purpose of valuation, are same in CGST Act 2017 (Notification No.04/2018-Central Tax (Rate) dated 25.01.2018) and Service Tax i.e. Finance Act 1994 (para 2.1 (B) (i) of Circular No.151/2/2012-ST dated 10.02.2012) i.e. liability shall arise at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument (eg. Allotment letter).
It is clearly evident that the authority has considered all the submissions and issued proper orders. Hence there is no error / apparent mistake on the face of the record in the case of IN RE: M/S. DURGA PROJECTS AND INFRA STRUCTURE PRIVATE LIMITED.
The applicant filed the instant application for ROM, under Section 161 of the CGST Act, 2017 whereas Section 102 of the CGST Act 2017 is the relevant one for filing the application for rectification of advance ruling - the instant application is not maintainable and is liable for rejection in terms of Section 98(2) of the CGST/KGST Act 2017 and hence the same is dismissed as inadmissible..
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2020 (9) TMI 1142
Concessional rate of GST - affordable housing project (AHP) - Works Contract - whether Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28/06/2017, as amended time to time, applies to the works contract service received from the contractors? - HELD THAT:- Entry No. 3(v)(da) of the Rate Notification is related to the construction of low-cost apartments. Clause 4(xvi) of the Rate Notification defines an affordable residential apartment. It shall mean a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing project in respect of which the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3, having carpet area not exceeding 60 sqm in metropolitan cities or 90 sqm in cities or towns other than metropolitan cities and for which the gross amount charged is not more than 45 lakh - It is ascertained from the WBHIRA website that the project is under construction and the flats offered on sale are partly booked.
The flats having a carpet area of 60 sqm or less per unit in the RREP qualify as affordable residential apartments, provided the gross amount charged per unit does not exceed ₹ 45 lakh and the promoter has not exercised the option to pay tax at the rate specified in (ie) or (if) of Entry No. 3. It now needs to be ascertained whether the RREP is an affordable housing project, which enjoys infrastructure status vide the AHP Notification - The built-up area for the affordable residential apartments, as identified by the architect, under the RREP is 7885 sqm (the calculation sheet is attached). The relevant FAR, therefore, comes out to be 1.401, which is 50.96% of the FAR for the project. The RREP, therefore, is an affordable housing project in terms of the AHP Notification.
Thus, the works contract service for the construction of those dwelling units in the RREP that are affordable residential apartments in terms of clause 4(xvi) of the Rate Notification are taxable under Entry No. 3(v)(da) of the said notification, provided the applicant does not opt for paying tax at the rate specified in (ie) or (if) of Entry No. 3.
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2020 (9) TMI 784
Renting of immovable property service - Deduction of property taxes and other statutory levies - Valuation of rental income - inclusion of notional interest on the security deposit - exemption of tax under the general exemption of ₹ 20 lakhs - whether the property tax & other statutory levies paid/ payable by the applicant be deducted from the rental income for the purpose of arriving at the value of rental income? - HELD THAT:- It could easily be inferred from Section 15(2) that any taxes, duties, cesses, fees and charges, levied under any law for the time being in force, shall include in the value of taxable supply. In the instant case the property tax is levied, under the Karnataka Municipalities Act 1964, by the BBMP in Bangalore. Further the only exclusions from the value of the taxable supply are the taxes, duties, cesses, fees and charges levied under the CGST Act 2017, SGST (KGST) Act 2017, UTGST Act 2017 & GST (Compensation to States) Act, subject to the condition that they are charged separately by the supplier - It is observed that in the instant case, the supplier (applicant) and the recipient are not related; price is the sole consideration of the supply and monthly rent is the price payable. Thus the monthly rent is the transaction value and the same would be the value of supply of the impugned service of RIS - the property tax is not deductable from the value of taxable supply of “Renting of Immovable Property” service.
Whether notional interest on the security deposit should be taken into consideration for the purposes of arriving at total income from rental? - HELD THAT:- The security deposit is collected normally equivalent to 6 months or 12 months rent. Also it is a known fact that the higher the security deposit lower the monthly rent amount. In the instant case, an amount of ₹ 5 Crore is proposed to be collected as security deposit and a monthly rent of ₹ 1.5 Lacs. However the applicant has not furnished adequate date / information so as to decide whether actually the notional interest influences the monthly rental amount or not - the notional interest has to be considered as part of value of supply of service, if and only if the said notional interest influences the value of supply i.e. value of RIS service / monthly rent and is leviable to GST along with monthly rent at the rate applicable to monthly rent.
Whether the applicant is entitled for exemption of tax under the general exemption of ₹ 20 lakhs? - HELD THAT:- The interest free security deposit does not come under the purview of supply as per Section 7 of CGST Act, 2017 since it is not a consideration. However, the notional interest on security deposit becomes part of consideration along with monthly rent, if it influences the value of the supply - in view of the submission made by the applicant that they have no other business besides what they have submitted to this Authority, it is found that they are entitled for the general exemption for registration purpose, subject to the condition that their annual total turnover which includes monthly rent and notional interest, if it influences the value of supply, does not exceed the threshold limit.
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2020 (9) TMI 783
Levy of GST - Services are in relation to conduction of examination - Bihar School Education Board, educational institution - Whether the services performed by them are exempted by virtue of item (b) of Sr. No. 66 of Notification No. 12/2017-CT (R) dated 28.06.2017? - HELD THAT:- The Notification No. 14/2018-CentaI Tax (Rate) dated 26.07.2018 inserted a clarification in Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017 that the Central and State Educational Boards shall be treated as Educational Institution for the limited purpose of providing services by way of conduct of examination to the students. Thus the BSEB becomes an Educational Institution for the purpose of conduction of examination, in terms of the Notification.
It is observed, from the letter dated 06.12.2018 of BSEB, submitted by the applicant containing reference of work order dated 10.11.2018, that the applicant was given the job to scan the OMR Flying slip, OMR marks Foil with barcode sticker, scanning of OMR attendance sheet and scanning OMR Absentee sheet along with data extraction and finalization of data in all the four categories.
Whether the aforesaid work, allotted to the applicant by the BSEB, covered under the conduction of examination or not? - HELD THAT:- It is an undisputed fact that the process of conducting examination is not limited/ restricted to a test centre. Examination is an incomplete activity without assessment. Scanning of answer sheets and quantifying marks is an essential part albeit main objective of the examination process. Educational institutions or the examinees do not look at these activities in isolation. The stated activity of the applicant is exempted by virtue of Sr. No.66 of Notification No. 12/2017-CT (R) dated 28.06.2017.
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2020 (9) TMI 737
Levy of GST - activity of maintaining the facilities at the layout from the funds collected from the members of the Society - Service or not? - GST for the amount pertaining to the un-expired period - Recovery of cost of water from members on monthly basis - collection of lump-sum amount as endowment fund, the proceeds of which would be utilized for maintenance charges in terms of the maintenance - Exemption in terms of N/N. 12/2017 entry no 77 respect of the value of the maintenance amount collected from the members of the society to the extent of ₹ 7,500/-.
Is the activity of maintaining the facilities at the layout from the funds collected from the members of the Society a service attracting GST Maintenance involves upkeep and maintenance of amenities and due to the length of the period roads, drainages and other UGD facilities need to be re- done/ re-constructed? - HELD THAT:- In the instant case, the applicant is involved in the providing layout maintenance service to its members by supplying goods or services and hence the first condition is satisfied. The applicant has rightly admitted that they are receiving the amount from its members as consideration towards the maintenance of the layout and hence the second condition is also satisfied - the facilities or benefits provided by the applicant to its member for consideration is a business as per section 2(17) of the CGST Act 2017 and hence the third condition is also satisfied. Hence the activity of maintenance of layout by the applicant amounts to supply in terms of Section 7 (1)(a) of the CGST Act 2017 - as applicant has rightly admitted that they are collecting maintenance charges from its member, either annually or once in 10 years and said amount is utilized for the maintenance of the layout. The liability to pay tax on services shall arise at the time of supply as per the provisions of sub section (1) of section 13 of the CGST Act, 2017.
The time of supply of service in this case is earliest of the date of issue of invoice to the applicant or date of receipt of payment by the service provider. It is also seen that the applicant is bound to refund to its members the amount unutilised at the time of transfer of the entire property to the civic authorities. Therefore, going by the nature of the money collected, it is only in the form of deposit and does not take the character of advance for the services provided. Hence, mere collection and deposit of money does not qualify either as supply of goods as per section 2(52) or as supply of service as per section 2(102) of the CGST Act, 2017 and taxability of the goods or services or both arises only at the time of supply of goods or supply of service or both. Thus the extent of amount utilized by the applicant towards the payment at the time of supply of service by the third person, such amount is liable for GST as per subsection (1) of section 9 of the CGST Act, 2017.
Does the Society’s collection of sum towards maintenance charges calculated on yearly basis in one lump-sum for certain length of time say 10 years, should the GST be paid even for the amount pertaining to the un-expired period? - HELD THAT:- The services provided by the unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution up to an amount of seven thousand five hundred per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex is exempted from the levy of GST. Since the applicant being the housing society, this exemption is also applicable to the applicant.
The Society is collecting Water charges from the residents for recovery of charges for water. The entire cost of the water is recovered from the members on monthly basis, does it attract GST? - HELD THAT:- The applicant is collecting water charges from the residents of the layout towards the cost of pumping water from bore wells to overhead tank and also for management and maintenance of water distribution systems to each individual houses. The applicant is collecting water charges on monthly basis. The supply of water is exempted from the GST as per entry no. 99 of the Notification No. 2/2017 -Central Tax (Rate) dated 28th June, 2017 - the supply of water is exempt from GST and the applicant is not liable to pay GST on water charges. However, it is not clear from the submission of the applicant that whether the applicant is collecting water charges separately from its members or it is included in total contribution. If water charges are collected separately, then it falls in entry 99 of the Notification No. 2/2017 -Central Tax (Rate) dated 28th June, 2017 which is exempt from the levy of GST. In case water charges are included in the total contribution of each individual member in each month then it is covered under the entry No.77 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by the Notification No.2/2018-dated 25-01-2018 and the exemption or taxability is determined.
Does the society have to pay GST for collecting lump-sum amount as endowment fund, the proceeds of which would be utilized for maintenance charges in terms of the maintenance as indicated in Appendix A above, of the layout with an express condition that the amount would be returned to the Site owners upon the taking over of the layout by the local body as the Society would be utilizing only accretions to the endowment fund from year to year? - HELD THAT:- In the instant case the applicant is collecting amount from the member who is selling the site and that amount is kept as endowment fund. The applicant utilising the proceeds/ accretions of the endowment fund for sourcing goods or service from the third person for the common use of its members. This amount does not amount to the contribution or reimbursement of amount from its members. The exemption under entry 77 (c) of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended by the Notification No.2/2018-dated 25-01-2018 is available only when the applicant receives the amount from its members as contribution or reimbursement against the amount paid by the applicant for sourcing of goods or services from the third person for common use of its members. Since the applicant utilizing the amount which is collected from the member who are selling their sites, such contribution is not for providing any maintenance services, instead he is providing no-objection certificates and other clearances for the site sellers. Hence this amount when collected amounts to a service and the applicant is liable to pay GST at the rate of 18% as such services are unclassified services covered under entry no. 35 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 - the contributions of the members who are selling the sites and obtaining clearances from the applicant for such sale, are liable to tax under the GST Acts.
In the event that any or all of the items from (1) to (4) is rendered taxable whether the same is exempt under Notification No. 12/2017 entry no 77 respect of the value of the maintenance amount collected from the members of the society to the extent of ₹ 7,500/- (Rupees Seven thousand five hundred) per month? - HELD THAT:- Applicability of exemption under entry No. 77 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended by the Notification No.2/2018- dated 25-01-2018 is discussed in detail in above paras and this entry applicable to the applicant only when the they have provided services to its own members by way of reimbursement of charges or share of contribution up to an amount of seven thousand five hundred per month per member for sourcing of goods or services from a third person for the common use of its members.
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2020 (9) TMI 736
Input tax credit of tax paid or deemed to have been paid - Whether the term “other civil structure” used in the definition of “Plant and Machinery” restricts the Land filling Pit from considering it as Plant & Machinery and thereby restricts ITC to be availed on it? - HELD THAT:- Section 17(5)(d) of the CGST Act, 2017 denies availment of ITC on goods and services when supplied for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services are both are used in the furtherance of business. Here, two aspects are noteworthy. One is that such goods and services should be used for the construction of an immovable property and the other is that the activity is carried on his own account. Applicant does not deny that the land filling pit is an immovable property. However, the applicant contends that the activity is not carried on his own account but is intended for offering services.
The explanation given at the end of Section 17(5) of CGST Act, 2017 defines plant and machinery as apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes Land, building or any other civil structure. We find that land filling pit is a combination- of earth work and other capital goods as given in the brief submitted by the applicant. It can’t solely or in itself be identified as apparatus, equipment and machinery fixed to earth by foundation. It is also not a structural support for anything. Therefore, we do not agree with the applicant’s view that the land filling pit falls under plant and machinery. However, the discussion would be incomplete without deciding the question of Civil Structure, i.e. whether the land filling pit is a civil structure or not.
Inasmuch as the said section is found to be valid by the Hon’ble High Court, we do not find any reason to go beyond the Statutory Provisions. However, since the appeal against the High Court order supra is pending before the Hon’ble Supreme Court, we refrain from commenting on the eligibility of the ITC in the instant case.
The Landfilling pit is not a plant and machinery but a civil structure.
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2020 (9) TMI 689
Classification of supply - supply of services or not - treatment or process of body building by fabrication and other processes carried out on chasis of motor vehicle owned by others - rate of GST - service Code (tariff) for above stated activity of body building carried out on another person’s chasis of motor vehicle - If not supply of services, what will be the nature of this supply, tariff code and rate of GST for such supply?
Whether the applicant’s activity amounts to supply of goods (motor vehicle) that merits classification under HSN 87 (depends upon the type of vehicle supplied) or amounts to Supply of Services classifiable under SAC 9988? - HELD THAT:- In the instant case, the applicant procures various goods such as raw steel etc. as inputs for fabricating the bus body on the chasis supplied by the principal on delivery challan. The applicant uses the said material for mounting/fabricating the body and once the body is built and mounted on the chassis, the vehicle is sent back to principal. At no stage, the ownership of the chassis is transferred by the principal to the applicant. The applicant charged the lump sum charges of fabrication including cost of certain material that was consumed during the process of mounting of Bus Body on the chassis. The applicant supply of complete built vehicle to the principal i.e. owner of chasis would amount to composite supply and the taxability would depend upon the “predominated element” - Accordingly, the activity of mounting/fabrication of body on the chasis supplied by the principal would be supply of service as principal supply and Section 8(a) of CGST Act, 2017 determines tax liability on composite supply
The question raised has been suitably clarified and dealt with Circular No. 52/26/2018-GST issued by Government of India, Ministry of Finance, Department of Revenue dated 9th August, 2018 where it is clarified that in case as mentioned at Para 12.2(a) above, the supply made is that of bus, and accordingly supply would attract GST @ 28%. In the case as mentioned at Para 12.2(b) above, fabrication of body on chassis provided by the principal (not on account of body builder), the supply would merit classification as service, and 18% GST as applicable will be charged accordingly.
It is evident from Para 12.2(b) of the said circular that if the body is built on the chassis provided by the principal/customer and the fabrication charges, has been charged then the activity amounts to Supply of Service and attracts 18% GST - In the instant case, in terms of the process explained by the applicant, the fabrication of body is built on the chassis provided by the owner and as stated fabrication charges are charged from the owner of the chasis. Therefore, the instant question is answered by the provisions of Para 12.2(b) of the said circular and the activity merits classification as supply of service attracting GST @ 18%.
Classification of the said Service provided by the applicant - HELD THAT:- The classification of Service is provided in Annexure attached to the Not. No. 11/2017-CT (Rate) dated 28.06.2017. The applicant is engaged in the manufacturing of body building on the chasis supplied by the owner of the chasis. Therefore, the said service would be classified under Service Accounting Code 9988 “Manufacturing Service on Physical Inputs (Goods) owned by others” - on fabrication of bus body on the chassis supplied by the owner of chasis i.e. Principal on delivery challan, on which body is fabricated on chasis by collecting job work charges including inputs required for such fabrication work and in no case the ownership of the chassis is transferred by principal to the applicant merits classification under SAC 998881 - “Motor vehicle and trailer manufacturing services” and under Entry No. 26(ii) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as “Manufacturing services on physical inputs (goods) owned by other” and it is taxable @ 18% [9% under CGST and 9% under SGST Act]. Whereas, in other situation, supply of complete body built motor vehicle merits classification HSN 8707 and it is taxable @28%.
The nature of service received by the application is covered under the Service Accounting Code 998714. Accordingly, Sr. No. 25 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribing tax rate of 18% on Maintenance, repair and installation (except construction) services.
The contention of the applicant that the said service would be covered under Service Code (Tariff) 998729 that includes “ Maintenance and repair service of other goods nowhere else classified” is not tenable as such Service Accounting Code 998714 defines the maintenance and repairing service of motor vehicles like cars, trucks, vans and buses. Therefore, the repairing service carried out by the applicant on damaged vehicle supplied by the owner is classifiable under SAC 9987 and GST is leviable @ 18 % in terms of Sr. No. 25 of Not. No. 11/2017-CT (Rate) dated 28.06.2017.
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2020 (9) TMI 688
Classification of goods - Maize Bran (cattle feed) - chargeable to CGST @2.5% under Sl. No. 103 A of N/N. 01/2017-CT (Rate) or Chargeable to NIL rate as per Sl. No. 102 of N/N. 02/2017? - HELD THAT:- Maize Bran is used as a major supplement for cattle feed. The word ‘supplement’ is defined in dictionary as “a thing added to something else in order to complete or enhance it.” Therefore, Maize Bran is a product which is added to cattle feed to complete it or enhance it. This literally means that Maize Bran is not a cattle feed in itself but is added to cattle feed to enhance or improve its quality/nutritional value or to complete it. It is also seen from the submission of the applicant that they are time and again stressing on the fact that the maize bran produced by them is cattle feed and should be rightly classified on the basis of its use and be exempted under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. However, they have failed to clarify as to how the said product can be considered as ‘cattle feed’ when the definition itself says that “it is used as a major supplement for cattle feed.
The maize bran supplied by them to the farmers would not be directly fed to cattle but be mixed with the cattle feed before feeding it to the cattle. In view of the above, it can be seen that maize bran in itself is not a cattle feed but is a major ingredient used in the manufacture of cattle feed as submitted by the applicant. Thus, the applicant by themselves have contradicted their contention through their submission.
The applicant has supplied 10.9510 tonnes of Wet Bran to Gopal & Co., Kathwada, Gujarat, India. The applicant is classifying their product “Wet Bran” and not as “cattle feed”. It is also seen that ‘Maize Bran’ is specifically mentioned in Sub-heading No.23021010 of the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) and the word ‘Bran’ is specifically mentioned in Sr.No.103A of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017. In view of the above, the product ‘maize bran’ does not warrant classification under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) as the product does not classify as ‘cattle feed’ and is correctly classifiable as ‘Bran’ under Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 for the reason that it cannot be considered as a ‘cattle feed’ by definition.
The product ‘Maize Bran’ manufactured and supplied by M/s. Sayaji Industries Ltd. is covered under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which rate of GST chargeable is 5%.
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2020 (9) TMI 687
Requirement to take GSTIN - Agents - Requirement to take registration under GST - Supply of goods or services on behalf of other taxable person - Section 22 of CGST Act, 2017 - Section 24 of CGST Act, 2017 - HELD THAT:- The applicant is required to fulfill the requirements of infrastructure and manpower before commencement of operations of the Centre as per the instructions of the Company and will continue to possess it during the whole tenure and it’s renewal of this contract; the applicant shall permit the representatives of the Company to conduct spot checks in order to ensure that the applicant is functioning in compliance to the Company’s instructions rules & regulations and as per the directions of the Company; shall not use any other course material other than those supplied by the company; the applicant undertakes to conduct only the Company’s courses and utilize only the materials provided by the Company at its course center and shall not conduct any unauthorized or similar type of course that Company [Xplore Knowledge Resources LLP] has; the applicant also undertakes not to conduct, run and engage in any other courses or activities else than licensed in this agreement, that the company possess and franchisees; the applicant shall only use the application forms, receipt books, fees lists etc. supplied by the Company and shall not attempt to print its own material. All the payments from the students are collected in name of the applicant on receipts printed by the Company. The applicant also collects Student Registration fee from every student on behalf of the Company and remits the same to the Company.
Thus, the applicant is only authorized to supply the goods and service under the brand name of “ALOHA” and cannot supply the other goods and service. Hence applicant is supplying the goods and service on behalf of the taxable person i.e. Xplore Knowledge Resources LLP - applicant covers under the Sr. No. (vii) of the Section 24 of CGST Act, 2017. Therefore, applicant is liable for taking GST registration. Since applicant is liable for GST registration, he is required to pay GST on supply of goods and services.
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2020 (9) TMI 634
Classification of supply - Composite Supply or Mixed Supply - Benefit of entry No.74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - Applicability of Clinical Establishment Act, 2010 - wellness facilities are provided with the help of highly qualified professionals’ doctors in the field of naturopathy, researchers, and support staff - Pre and Post GST regime - registration under Service Tax - HELD THAT:- The entire package consists of the above 3 components and the packages would not be possible without any one of the 3 components. In other words, the packages offered by the applicant are naturally bundled and would be aptly covered under the definition of Composite Supply. Further, the principal supply would be the accommodation services since the therapy can in no way be administered without accommodation. In fact, there is no option available for the customer to avail the wellness package without opting for the accommodation. Thus, the accommodation service attains the nature of the principal supply and the other two components attain the nature of ancillary services.
Classification - liability of tax - HELD THAT:- In view of Section 8 of the CGST Act, 2017, it can be seen that a composite supply comprising of two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. Therefore, in the instant case, the composite supply of services would be treated as a supply of accommodation service falling under Heading 9963 and specific heading 996311 (Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like) as per Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 - The ‘composite supply’ of service provided by the applicant would be covered under Entry No. 7(vi) and 7(viii) of Notification No.11/2017-Central Tax (Rate). As per Entry No. 7(vi) above, rate of GST would be 18%(9% SGST + 9% CGST) in case of units having declared tariff rates of more than ₹ 2,500/- and less than ₹ 7,500/-, whereas as per Sr.7(viii) above, rate of GST would be 28%(14% SGST + 14% CGST) in case of units having declared tariff rates of ₹ 7,500/- or more. The said notification has been amended a few times vide Notification No.13/2018-Central Tax (Rate) dated 26.07.2018 and Notification No.20/2019-Central Tax (Rate) dated 30.09.2019, where the rates of GST have been altered. These amendments will have to be taken into consideration by the applicant, while discharging their service tax liabilities.
Whether the applicant is eligible to get the benefit of entry No.74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT:- The supply of services mentioned at Sr.No.74 of the aforementioned Notification pertain to: (a) Services by way of-(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. The said services, which are classified under Heading 9993, have been exempt from payment of GST.
Thus, the supply of services provided by the applicant, which is a composite supply, has been classified under Sub-Heading No.996311 under ‘Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like’. The exemption at Entry No.74 of Exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 is applicable to services falling under the Heading 9993. However, the nature of services provided by the applicant is covered under the Sub-Heading 996311 - the exemption available at Entry No.74 of Exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the applicant.
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2020 (9) TMI 633
Exemption form GST - educational assessment examination (ASSET) with its variants) provided by the applicant to school/educational organization - exemption under Sr. No. 66(b)(iv) of the Not. No. 12/2017-CT (rate) dated 28.06.2017 and entry No. 69(b)(iv) of Not. No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 as well as equivalent SGST Notification - HELD THAT:- The applicant has to satisfy following two conditions in order to be eligible for exemption under Sr. No. 66(b)(iv):
(i) The recipient of the services should be ‘Educational Institution’ as defined under the clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate).
(ii) the supply of service should be in relation to the examination conducted by the educational institution.
The applicant has stated that they are supplying “ASSET” multiple question to the Schools for the students of 3rd to 10th Standard. Therefore, such schools are already covered under the definition of ‘Educational Institution’, as provided under sub-clause (i) of clause (y) of Paragraph 2 of the said Notification No. 12/2017-Central Tax (Rate). It is found that schools are providing education to the students up to higher secondary standard and therefore fall under the definition of Educational Institution as defined vide clause (y) of Paragraph 2 of the said Notification.
Whether the conditions mandated by entry 66 (b) (iv) of notification 12/2017-Central Tax as reproduced are fulfilled or not as far as the services relating to conduct of examination by, such institution; up to higher secondary? - HELD THAT:- It comes out that schools taking ASSET will use its results for its examination process and overall assessment of the students. The Schools uses ASSET for the purpose of assessment and diagnostic assessment of its students. ASSET uses multiple–choice question to focus on measuring how well SKILLS and CONCEPTS have been understood by the students. The basic nature of ASSET service is an examination to be conducted by Education Institution (School) but outsourced to the Educational Initiatives (EI). We also find from the submissions of applicant that ASSET is an educational assessment exam taken at school and it does not envisage any kind of coaching and/or training of teachers or administrators - under ASSET, they provide a set of questions on various subjects which are set by them based on the class level, board (like state or CBSE or ICSE etc) and the methodology adapted by the school for teaching. We find from the sample copies of agreements submitted by the applicant that they make contract with the Schools for supply of ASSET multiple questions of various subjects to their students.
Thus, the services have been provided to the schools in relation to conduct of examination of students by such educational Institutes - InUNION OF INDIA VERSUS AHMEDABAD ELECTRICITY CO. LTD. [2003 (10) TMI 47 - SUPREME COURT] Honorable Supreme Court, while interpreting the term ‘relating to’ and ‘in relation to’, has assigned wide and broad view of the term. Therefore, the second condition for availing the exemption has also been satisfied in the instant matter.
Thus, exemption is available in respect of ASSET services provided to educational institution.
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2020 (9) TMI 632
Exemption from GST - selling of residential flats after date of completion certificate of commercial shops or after first occupancy in building - reversal of ITC on expenses incurred up to date of completion certificate shops - ITC on expenses incurred after date of completion certificate of commercial shops.
Whether selling of residential flats after date of completion certificate of commercial shops or after first occupancy in building is exempt supply? - HELD THAT:- during the personal hearing, the applicant himself stated that they didn’t receive Completion Certificate in respect of their residential building (units). They have received only partial Building Use permission in respect of commercial units but not for residential units
The applicant has received part Building Used Permission for the commercial Shops of Ground and First Floor and not for the Residential Flat. Accordingly, since no Building used permission has been issued by the competent authority in respect of residential flat and since no residential unit has been occupied by prospective buyer, supply of residential flats shall be treated as supply of service in terms Para 5(b) of Schedule-II of CGST Act, 2017.
Manner of reversal of ITC on expenses incurred up to date of completion certificate shops - HELD THAT:- It is to rule that the manner of reversal of ITC on expenses incurred up to date of completion certificate shops is provided in Rule 42 and Rule 43 of CGST Act, 2017 read with Notification No. 16/2019-CT dated 29.03.2019.
Manner of claiming ITC on expenses incurred after date of completion certificate of commercial shops - HELD THAT:- The manner of claiming Input Tax Credit has been provided under Sections 16 and 17 of CGST Act, 2017 read with Rules 42 and 43 of CGST Rules, 2017 read with Notification No. 16/2019-CT dated 29.03.2019.
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2020 (9) TMI 590
Classification of goods - Maize Bran (cattle feed) - classifiable under Heading 23021010 of Central Excise Tariff Act, 1985 or otherwise - whether chargeable to CGST @2.5% under Sr.No.103A of Notification No.1/2017 or chargeable to NIL rate as per Sr.No.102 of Notification No.2/2017? - HELD THAT:- The products which were left out from Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 have found mention in Sr.No.102 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017.
The applicant has supplied 19.520 tonnes of Maize Bran Dry to Shri Ramdev Oil Industries, Patan, a manufacturer who is engaged in the manufacture of cattle feed ( as per the data available online). Thus for the above manufacturer, maize bran is just an input/ingredient which is used in the manufacture of their final product i.e.cattle feed. It can therefore be concluded that the maize bran sold by the applicant is used by the above company as in input in the manufacture of cattle feed but is not a cattle feed by itself. It is also seen that ‘Maize Bran’ is specifically mentioned in Sub-heading No.23021010 of the First Schedule to the Custom Tariff Act, 1975 (51 of 1975) and the word ‘Bran’ is specifically mentioned in Sr.No.103A of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017 - thus, the product ‘maize bran’ does not warrant classification under Sr.No.102 of Notification No.2/2017-Central Tax (Rate) as the product does not classify as ‘cattle feed’ and is correctly classifiable as ‘Bran’ under Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017.
The product ‘Maize Bran’ manufactured and supplied by M/s. Gujarat Ambuja Exports ltd. is covered under Entry Sr.No.103A of Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 of the CGST Act, 2017 on which rate of GST chargeable is 5%.
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