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GST - Case Laws
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2020 (6) TMI 829
Inaction on the part of the respondents so far as return of additional tax to be paid by the petitioner in the light of the introduction of the new tax regime under the GST Law - HELD THAT:- The writ petition stands disposed of with a direction to the respondent No.2 to take a decision on the representation that the petitioner has made for the refund of the additional tax burden suffered by the petitioner.
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2020 (6) TMI 815
Classification of supply - supply of goods or a supply of service - composite supply or mixed supply - rate of tax - supply of pure food items such as sweetmeats, namkeens, cold drink and other edible items from sweetshop which also runs a restaurant - input tax credit - HELD THAT:- The applicant has a sweetshop in the ground floor and a restaurant at the first floor of the same building. In a case where two or more goods or a combination of goods and services are involved or supplied together earlier under the Service Tax regime this mechanism was called bundled service which is rendering of a service or services with another element of service of services, wherein service tax law dealt with pure services and not with goods per se. In the changed regime of GST the concept introduced dealt with goods as well and is linked with the concept of Principal Supply. Under GST law, supplies which are bundled with two or more supplies of goods or services or combination of goods and services are classified, with distinct characteristics, as (i) Composite Supply (ii) Mixed Supply. As already discussed, Composite supply is ore where two or more goods or services or both are together, in a natural bundle and in a normal course of business, provided one of which is a principal supply. However, principal supply will be that supply which is predominant over other supplies - in order to identify -if the particular supply is a Mixed Supply, the first requisite is to rule out that the supply is a composite supply. A supply can be a mixed supply only if it is not a composite supply. As a corollary it can be said that if the transaction consists of supplies not naturally' bundled in the ordinary course of business then it would be a mixed Supply. Once the amenability of the transaction as a composite supply is ruled out, it would be mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax.
The activity of the applicant from their restaurant comes under the purview of "restaurant services", falling under Heading 9963 leviable to GST rates on services as stipulated under Notification No. 11/2017-Central Rate (Tax) dated 28.06.2017 (as amended time to time) - the rate of GST on activity shall be 5% as on date.
Input tax credit - HELD THAT:- The applicant cannot avail credit on the GST paid on the goods and services used in their said activity in terms of notification.
In case where goods are supplied to customers through sweetshop counter having no direct or indirect nexus with restaurant service i.e. any stand alone customer who visit such sweet shop exclusively for purchase of any item of any quantity across the counter without visiting the restaurant, the billings of such sales are also done separately, such exclusive sales to such exclusive stand alone customer across the counter cannot be clubbed with restaurant service, it being an exclusive transaction of supply of goods independent of restaurant service - These sales do not satisfy the basic requirement of a ‘composite supply’ i.e. 'these cannot be treated as' being naturally bundled and supplied in conjunction with each other'. Such across the counter soles [rom sweetshop definitely requires dissimilar treatment, it being completely independent of restaurant activity at such supply would continue unhindered, irrespective of whether the restaurant is dosed or open, either temporarily or permanently. Hence such sales will be treated as supply of goods with applicable GST rates on the items supplied / sold and for only such exclusive supplies input tax credit stands admissible.
In case the goods supplied from the restaurant are billed under restaurant head then in such a situation such transaction will purely depend upon the constituents of each individual supply and as to whether same satisfies the conditions/ingredients of a & composite supply' or 'mixed supply', as defined under section 2(30) and 2(74) of the CGST Act respectively.
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2020 (6) TMI 800
Exemption from GST - provisioning of diagnostic imaging services under the agreement/contract executed by Siemens Healthcare Pvt. Ltd. (SHPL) with its customers - eligible for exemption under Serial Number 74 of the Notification 12/2017-CT(R) dated 28/06/2017 or not - HELD THAT:- The exemption is to Services and not to Technicians or Doctors/ Medical Practitioners or Para-Medics or Ambulance Operators - Clearly, the case of Appellant M/s. Siemens Healthcare Pvt. Ltd. (SHPL) is not covered under ambulance services.
Whether the Appellant’s services meet the dual criteria of being health care services and clinical establishment? - HELD THAT:- Obviously the services under examination are not to be provided by the Appellant as Authorised Medical Practitioner’ or as ‘Para Medics’.
The appellant’s contention is that since the circular 32/6/2018-GST dated 12.02.2018 allows exemption to the technicians hired by hospitals also, the exemption is admissible to SHPL also as its technicians are to operate MRI (Magnetic Resonance Imaging) & CT (Computerized Tomography), X-Ray and Mammography machines installed in the clinical establishments (Customers of SHPL) & are to provide diagnostic images to the clinical establishments - It is observed that there are kinds of Technicians. For the exemption to be admissible, the technician’s role/ activity has to amount to Healthcare Services. Not all the technicians provide healthcare Services. It is observed that services of technicians who are ‘Emergency Medical Technicians’ or the services of technicians who are akin to Para-medics, are healthcare services. Apparently the CBIC’s circular ibid refers to such technicians only.
It is observed that SHPL is providing the input services of provision of installing/operating the MRI, CT scanners etc in the premises of its Customers (clinical establishments) and providing diagnostic images to them (clinical establishments) - providing diagnostic images is not equivalent to providing diagnosis, and the services by SHPL is not an independent establishments for providing diagnostic service.
To avail the benefit of the exemption all the limbs of the notification must be satisfied i.e., the services have to be health care services as defined in clause (Zg) of para 2 of the notification & the services have to be provided by clinical establishment as defined in clause (s) of para 2 of the said notification. Since the appellant is to provide its diagnostic imaging services to the clinical establishment which in turn makes use of these images provided by the appellant & with the advice/opinion of medical practitioner/pathologist/radiologist makes diagnosis & provides it to the patient, the appellant can’t be said to provide diagnosis services to the patient, & hence not eligible to the exemption.
It is therefore clear that the services exempt under the Notification are healthcare services and would include diagnosis where the services are in the line of aiding diagnosis. Also, from the Applicant’s ibid submission itself in the Statement of Facts, it is obvious that the ‘Diagnosis’ is not complete unless the Radiologist gives it on the basis of images prepared by the Applicant. Also the services have not been provided to the patient.
Hon’ble Supreme Court’s judgment in TATA OIL MILLS CO. LTD. VERSUS COLLECTOR OF C. EX. [1989 (8) TMI 79 - SUPREME COURT] is not applicable. In the instant case the Appellant has not pleaded that intent of the legislature is to also exempt the inputs/ input services consumed for providing the Healthcare services; nor is there any notification or clarification providing such exemption viz. to input services. Appellant’s activity remains an Input Service for providing diagnosis.
The AAR has correctly held that the nature of the Applicant’s services is of input services - Appeal dismissed.
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2020 (6) TMI 792
Seeking grant of bail - actual owner of firms - petitioners No.1 and 2 have been alleged to be proprietors of the firms - raid was conducted at the house of accused Naveen Jain and the account books etc relating to these firms were recovered from him - HELD THAT:- It is pointed out that the petitioners were only employees of Naveen Jain and have been indicted falsely who are facing arrest at the hands of the respondent who had issued summons to them under Central Goods and Services Tax Act, 2017 and it is apprehended that as and when they appear, they would be taken into custody in terms of Section 69 of Goods and Service Act, 2017.
Attention of the Court is drawn to the order in TARUN BASSI VERSUS STATE OF PUNJAB & ORS. [2020 (6) TMI 728 - PUNJAB AND HARYANA HIGH COURT] wherein a similar provision regarding power of arrest as contained in Punjab Goods and Services Tax Act is under challenge.
Notice of motion for 18.08.2020.
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2020 (6) TMI 787
Grant of Regular Bail - fake firms - offences under Sections 132(1)(B), (C), (D), (F), (I), (L) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- There are no reason to interfere with the impugned order. The special leave petitions are, accordingly, dismissed.
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2020 (6) TMI 782
Profiteering - benefit of reduction in the CST rate w.e.f. 15.11.2017 not passed to customers but instead increased the base prices of the products by keeping the Maximum Retail Prices (MRP) unchanged - violation of provisions of Section 171 of the CGST Act, 2017 - HELD THAT:- It is revealed that Respondent is engaged in the manufacturing and marketing of Cosmetic, FMCGs and Pharma products through the network of distributors spread all over India. It is also revealed that the Central Government, on the recommendation of the GST Council, had reduced the GST rate on a number of products from 12% to 5% vide Notification No. 34/2017- Central Tax (Rate), dated 1310.2017 with effect from 14.10.2017 and from 28% to 18% vide Notification No. 41/2017-Central Tax (Rate), dated 14.11.2017 with effect from 15.11.2017. This fact has also not been contested by the Respondent. Therefore, there is no dispute that the Respondent is liable to pass on the benefit of tax reductions w.e.f. 14.10.2017 and 15.11.2017 respectively. it is further revealed that a total of 425 items were impacted by the GST rate reductions. Out of these 425 items, 52 items were impacted by the CST rate reduction from 12% to 5% w.e.f. 14.10.2017 and 373 items were impacted by the GST rate reduction from 28% to 18% w.e.f. 15.11 2017.
It is also evident from the record that the Applicant No. 1 who is also General Secretary of All India Chemists & Distributors Federation had filed an application under Rule 128 (1) of the CGST Rules, 2017 on 27.11.2017 before the Standing Committee on Anti-profiteering alleging that the Respondent had not passed on the benefit of reductions in the GST rates to his customers but had instead increased the base prices of his products by keeping the Maximum Retail Prices (MRPs) unchanged.
The profiteered amount has been computed by comparing the average pre rate reduction base prices of the impacted products with the average post rate reduction base prices in respect of both the tax reductions. The above mathematical methodology adopted by the DGAP to compute the profiteered amount is not in consonance with the methodology approved by this Authority in the cases of tax reductions decided by it as the profiteered amount has been determined by comparing the average pre rate reduction base prices with the actual post rate reduction prices - the mathematical methodology adopted by the DGAP is not correct, logical, appropriate and in consonance with the provisions of Section 171 of the CGST Act, 2017. Therefore; the Report dated 22.10.2019 furnished by the DGAP cannot be accepted.
As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was to be passed on or before 22.04.2020 as the investigation Report was received from the DGAP on 23.10 2019 However, due to the COVID-19 pandemic prevailing in the Country the order could not be passed on or before the above date. Hence, the same is being passed today in terms of the Notification No. 35/2020-CentraI Tax dated 03.04.2020 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs under Section 168 A of the Central Goods & Services Tax Act, 2017.
Application disposed off.
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2020 (6) TMI 781
Profiteering - Paints - Varnishes - Putty - Respondent had not passed on the benefit of reduction in the rate of GST - contravention of section 171 of CGST Act - Penalty - HELD THAT:- The record reveals that the Government had reduced the GST rate from 28% to 18% w.e.f. 27.07.2018 vide its Notification No. 18/2018-Central Tax dated 26.07.2018 on “Paints, Varnishes and Putty”. This fact has also not been contested by the Respondent. Therefore, there is no dispute that the Respondent is liable to pass on the benefit of tax reductions w.e.f. 27.07.2018. It is further observed that the Respondent who supplied the above products was impacted with the Notification in the case of 331 products. Out of these 331 products, base prices only in the case of 151 products were increased from 27.07.2018 (post GST rate reduction). Therefore, the Respondent is required to pass on an amount of ₹ 3,76,360/- in respect of these 151 products.
It is also evident from the record that the Applicant No. 1 had filed an application under Rule 128 (1) of the CGST Rules, 2017 before the Standing Committee on Anti-profiteering alleging that the Respondent had not passed on the benefit of reductions in the GST rates to his customers but had instead increased the base prices of his products by keeping the Maximum Retail Prices (MRPs) unchanged. The above Applicant had also submitted invoices showing both the pre and post GST rate reduction prices claiming that the Respondent had not reduced the MRPs.
It is clear from the narration of the facts that the profiteered amount has been computed by comparing the average pre rate reduction base prices of the impacted products with the monthly average post rate reduction base prices in respect of both the tax reductions. The mathematical methodology adopted by the DGAP to compute the profiteered amount is not in line with the methodology adopted by the DGAP himself in similar cases of profiteering wherein the average pre rate reduction base prices have been compared with the actual post rate reduction prices to compute the profiteered amount. Further, in case the mathematical methodology of comparing the average to average base prices employed by the DGAP is adopted it would not be possible to compute the benefit of tax reduction which is due to each customer on each supply. The profiteered amount computed by the DGAP would also not be correct.
The DGAP is directed to compare the average pre rate reduction base prices of the products which were impacted by the tax rate reduction w.e.f. 27.07.2018 with the actual post rate reduction base prices of the impacted products - the DGAP shall reinvestigate the case and submit his Report under Rule 133 (4) of the Rules. The Respondent is directed to extend necessary assistance to the DGAP during the course of the investigation.
Penalty - HELD THAT:- As per the provisions of Rule 133 (1) of the CGST Rules, 2017 this order was required to be passed within a period of 6 months from the date of receipt of the Report from the DGAP under Rule 129 (6) of the above Rules. Since the present Report has been received by this Authority on 10.10.2019 the order was to be passed on or before 09.04.2020. However, due to the prevalent pandemic of COVID-19 in the country, this order could not be passed on or before the above date due to force majeure - this order is being passed today in terms of the Notification No. 35/2020-Central Tax dated 03.04.2020 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes & Customs under Section 168 A of the CGST Act, 2017.
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2020 (6) TMI 779
Refund of amount deposited at the time of filing of appeal - appealable order under Section 112 of the C.G.S.T. Act, 2017 - time limitation for filing appeal - HELD THAT:- The petitioner very fairly admits the legal position and also the fact that the goods have already been released.
The instant petition is disposed of by providing that the petitioner can invoke the remedy of filing appeal before the Tribunal in terms of the provisions of the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019.
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2020 (6) TMI 769
Exemption from GST - amount received for leasing residential hostel rooms - exemption under Sl.No.14 (Heading 9963) or under Sl.No.12 (Heading 9963) of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 as amended upto 25.01.2018 - HELD THAT:- Sl. No. 14 of Heading 9963 describes “Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent” as nil rated' - the applicant, who is the service provider, does not satisfy the above conditionalities. Ile is neither registered under Hotel, Inn, Guest House, Club or Campsite, by whatever name it is called, nor providing services to the students under the style and name of his registered trade name with a declared tariff of a unit of accommodation below one thousand rupees per day or equivalent to avail the exemption under the notification. The service recipient, i.e., the Lessee in this regard, further sublets the property to the Narayana Educational Society, which in return uses the facility to accommodate their students.
Whether amount received for leasing residential hostel rooms is exempt under Sl.No.12 (Heading 9963) of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 as amended upto 25.01.2018? - HELD THAT:- In the instant case, it is evident from the above reading, that the property under question is not a home or residence being used by a family or group of a members maintaining a regular house hold, but used for commercial purposes of accommodating students in bulk numbers. A temporary stay of the students will not merely qualify the purpose “for use as residence” and hence it is not qualified to be listed under heading 9963 or 9972.
The activity under question is non residential property rented out for commercial activity and supply of such services, in the facts and circumstances of the case, are classifiable as “Rental or leasing services involving own or leased non-residential property” under Service Code (Tariff) 997212. It is taxable in the hands of the lessor and is liable for IGST at the rate of 18 percent.
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2020 (6) TMI 744
Grant of Bail - passing of Input Tax Credit (ITC) by issuing sale bills to various parties without supply of goods - Section 132 of the GGST Act, 2017 - HELD THAT:- Notice of motion for 30.07.2020.
The interim bail already granted due to COVID-19 Pandemic till 11.07.2020 shall stand extended till further orders.
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2020 (6) TMI 741
Classification of goods - Debark/Bark Eucalyptus wood waste, debark/Bark Suabool wood waste, Debark/Bark poplar wood waste (lenght about 2 meter and its girth between 15 to 60 centimeter) to be supplied to paper mills for pulping only - HELD THAT:- These goods will not come under wood waste and scrap - Wood waste and scrap would get covered under N/N. 1/2017-Central Tax (Rate) dated 28-06-2017 with KA.NI.-2-836/XI-9(47)/17-U.P Act-1-2017-order-(06)-2017 dated 30-06-2017 vide schedule I, numbered 198 and will be taxable at 5%.
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2020 (6) TMI 729
Vires of Section 69 and 132 of Central Goods and Service Tax Act, 2017 - HELD THAT:- Mr. Satya Pal Jain, Additional Solicitor General of India assisted by Mr. Dheeraj Jain, Advocate accepts notice on behalf of respondent no.1 whereas Mr. Sourabh Goel, Senior Standing Counsel accepts notice on behalf of respondent nos.2 & 3.
The interim bail already granted due to COVID-19 pandemic till 11.07.2020 shall stand extended till further orders.
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2020 (6) TMI 728
Input Tax Credit - issuing sale bills to various parties without supply of goods - Section 132 of the PGST Act, 2017 - It is thus vehemently contended that the criminal trial for the offences under Section 132 of the PGST Act, 2017 as also the arrest under Section 69 are without jurisdiction, having no backing of the constitutional provisions.
HELD THAT:- Notice of motion for 30.07.2020.
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2020 (6) TMI 706
Rectification of mistake - error in the impugned AAAR order - supply of the Electrolnk along with the other consumables comprising of blanket, photo imaging plate, binary ink developer, HP imaging oil, blanket web and other machinery products by the Appellant to its customers - mixed supply or composite supply - HELD THAT:- The Appellant themselves have admitted that there is not any specific element under this bundle of supplies, which is more significant than others, ruling out the possibility of presence of any principal supply. The above submissions and the evidence produced by the Appellant themselves in the form of the Chartered Engineer’s certificate also lead us to conclude further that there are no components in this bundle of supplies, which are ancillary in nature, as all the components are indispensable in nature, and not additional or subordinate in nature. None of the components are subordinate to any one element of the supplies. That is, none are providing additional support to any specific consumable items. All these consumables are being consumed together to achieve the desired output. In absence of any one of these consumables, the entire printing function will be stalled, which clearly shows the importance of each of the components of the bundled supplies. At the same time, it also shows that none of supplies are ancillary in nature.
It is established beyond doubt that the bundled supplies by the Appellant to its customers has no principal supply, which is one of the primary conditions for any supply to be treated as the composite supply as envisaged under section 2(30) of the CGST Act, 2017.
Circular No. 32/06/2018-GST, March 1, 2018 states that value is only the guiding factor, and not the sole factor for determining the principal supply in the bundle of supply. Therefore, the Appellant’s contention based on the consumption pattern of the printing consumables, wherein consumption of Electrolnk is 41% in terms of the volume, thereby asserting the Electrolnk as the Principal supply only on the basis of its highest consumption among all the printing consumables, without establishing the fact that the same (Electrolnk) is imparting the essential nature of the supply is feeble and slight, and clearly not tenable.
We reach the same conclusion as reached earlier in the appellate order, that the supply of the Electrolnk along with other consumables by the Appellant is not a composite supply. Instead the said supply can be construed as mixed supply, as it satisfies all the conditions stipulated for the ‘mixed supply’ under the provision of section 2 (74) of the CGST Act - As is evident from the facts of the case, the supplies, made by the Appellant, squarely satisfy all the conditions prescribed for the mixed supply. Accordingly, it was rightly held by the AAR that the supply of the Electrolnk along with the other consumables comprising of blanket, photo imaging plate, binary ink developer, HP imaging oil, blanket web and other machinery products is ‘mixed supply’ and not the composite supply as being made out by the Appellant.
There are no reason to amend our original order dated 17.02.2019, wherein it was held that the supply of the Electrolnk along with the other consumables comprising of blanket, photo imaging plate, binary ink developer, HP imaging oil, blanket web and other machinery products by the Appellant to its customers is ‘mixed supply’ and not the ‘composite supply’, as being claimed by the Appellant.
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2020 (6) TMI 705
Classification of goods - fusible interlining cloth - whether the item is classifiable in Chapters 50 to 55 of the First Schedule of the Customs Tariff Act, 1975 or under Heading 5903 of the Tariff Act? - challenge to AAR decision - HELD THAT:- It is clear from the sample produced by the appellant as well as the dot printing process that the product namely fusible interlining cloth qualifies the tests to be classified under sub-heading 5903 of the Tariff. It is seen from the sample of the. Fusible interlining cloth that the coating of polyethyIene can be seen with naked eye. can be bent manually around a cylinder and is not completely coated with plastics. The representative of the appellant strongly pleaded that their product is partially coated with plastic and bears design. However, on examination of the sample, it is seen that the pattern of dots that from on the surface of the product is due to the very process of dot printing and the same is visible on the entire surface of the cloth. Thus; it cannot be said that the cloth is partially coated with plastics and that the dotted design resulted from the treatment leading to such coating.
The claim of the appellant’s advocate does not hold good and the exclusion clause (4) of chapter note 2(a) of Chapter 59, which is essential for being excluded from Chapter 59, is not applicable to fusible interlining cloth manufactured by the appellant - thus, it is clear that the subject product merits classification under sub-heading 5903 of the Tariff.
Appeal dismissed.
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2020 (6) TMI 704
Job-Work - minor additions or not - other inputs,e.g. air, water etc., procured by the Appellant, i.e. JEL, which are essentially required for the generation of power - Circular No. 79/53/2018-GST dated 31.12.2018 - violation of principles of natural justice.
Whether steam coal, proposed to be supplied to the Appellant i.e. JEL, constitutes one of the inputs for JSL, which manufactures the steel products? - HELD THAT:- We are inclined to revise our earlier opinion, where we had denied the eligibility of the coal as an input for JSL. Thus, in light of the above submissions, it is adequately clear that coal is an input for JSL, as the same is used for the generation of electricity, which in turn is used for the manufacture of the final product i.e. steel.
On perusal of the Bombay High Court Judgment in the case of COMMISSIONER VERSUS INDORAMA TEXTILES LTD. [2010 (7) TMI 981 - SC ORDER], it is established that electricity can be generated on the Job work basis. It is further inferred that when electricity can be generated on job work basis, it is bound to happen that any inputs sent to the premises for the generation of electricity would not be sent back in the same original form. Instead, the same is destined to be consumed for the generation of electricity, which was actually the facts of the cited case law discussed herein above, wherein the Respondent i.e. lndorama Textiles Ltd. was vying to claim the input tax credit in respect of the furnace oil, which was getting consumed in the premises of their job worker. The Bombay High Court, in this case, decided in the favor of the Respondent, holding that the Respondent was justified in claiming input credit in respect of the furnace oil, being used at the job worker’s premises for the generation of electricity, which was the intermediate goods, being received by the Respondent, in that case the principal - By applying the above case law in the instant case, it is opined that coal, despite being consumed in the process of the generation of electricity, thereby becoming irretrievable, will not preclude the proposed arrangement from being the job work transaction, as understood by the Appellant.
The principal will not be in position to independently bring back the inputs from the premises of the job worker, thereby not satisfying the conditions laid out in section 143 (1)(a) of the CGST Act, 2017 - the proposed arrangement under consideration is satisfying the condition laid down under section 143 (1) (a) of the CGST Act, 2017 in respect of bringing back of the inputs by the principal i.e. JSL from the job worker’s premises i.e. JEL, after the completion of the job work. Thus, the earlier observation in this regard is sought be revised.
Accordingly, no GST will be leviable on this supply.
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2020 (6) TMI 703
Central Government or not - appellant is Ordnance Factory Bhandara - AAR observed that the Appellant cannot be construed as Central Government on the ground that the same had not been created by the Constitution of India as a legislative, executive or judicial authority of the country - HELD THAT:- Where the Appellant is charging some rent/consideration from their employees for providing accommodation facility in the residential colony maintained by it, which renders the said activity of the Appellant as supply of residential services, which is an exempt supply in itself in terms of the provisions made at Sr. 12 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. Further, the education services provided by the factory school to the children of the employees, renting of the recreational halls to the employees for organizing some family functions against certain considerations are exempt supply.
Since, all the aforementioned supplies made by the Appellant are exempt supply, any inputs or input services viz. maintenance, upkeep, repair, providing security, garbage collection, sewage treatment, civil construction, sweeping & cleaning, etc., pertaining to the residential quarters of employees of Ordnance Factory Bhandara & other allied organisations, market area, places for worship of God, gardens, parks, playgrounds, swimming pool, footpaths, street lightings, which are used inside the residential colony will not be available to the Appellant for ITC in accordance with the provision of Section 17(2) of the CGST Act, 2017.
Shops that are given on rental basis for commercial purposes - HELD THAT:- As per the provision of section 16(1) of the CGST Act, 2017, the Appellant is entitled to avail ITC in respect of expenditures incurred on the input services used in the taxable supply of the renting of immovable property for commercial purposes.
Inter-connected roads between various establishments and facto premises - HELD THAT:- It is observed that the construction and maintenance of the roads in the factory estate is mandatory for the Appellant to carry out their business operation. Without the proper road, the transportation of inputs, capital goods, and the finished products of the Appellant will not be able to take place. Thus, as per section 16(1) of the CGST Act, 2017, the expenditures incurred on the construction and maintenance of the road from the factory’s main gate to the factory premises where the manufacturing activities take place is eligible for ITC, since the same is incurred on the input services, which are used in the course or furtherance of business - However, the construction and maintenance of the roads within the residential complex of the factory estate are in relation to the supply of the accommodation facility to the employees in the residential colony maintained by the Appellant, which are an exempt supply as discussed above, therefore, ITC in respect of such expenditures on the construction and maintenance of road inside the residential colony will not be available to the Appellant in accordance with the provision of section 17(2) of the CGST Act, 2017.
Land that is currently not used for any purpose whatsoever - HELD THAT:- The ITC in respect of the health services are available to a registered person subject to the condition that the employer i.e. the registered person, is under obligation to provide such health services to its employees in terms of the provisions of any law for the time being in force. In the present case, it is obligatory for the Appellant to provide the health services to its employees and their dependents as per the Ordnance Factory Medical Regulation. Hence, the ruling pronounced by the AAR in this regard is erroneous, and warrants to be set aside.
ITC - input services pertaining to maintenance and upkeep of guest houses maintained by them - HELD THAT:- As the Appellant is charging rent from the guests availing the guest house facilities, which may be considered as exempt supply in terms of Sr. NC. 6 of the Notification no. 12/2017- Central Tax-(Rate) dated 28.06.2017 as the Appellant, as discussed above, has been held to be the Central Government. Therefore, No ITC is available against the said exempt supply in terms of the provision of section 17(2) of the CGST Act, 2017. Therefore, the ITC in respect of the inputs and input services pertaining to the guest houses will not be available to the Appellant.
Whether they were eligible to avail ITC in respect of the expenditure related to purchase of LPG cylinders used within industrial canteen? - HELD THAT:- Input Tax Credit in relation to LPG cylinders that are re-filled for use in industrial canteen should be allowed as per amended section 17(5) (b) & 16(1) of the CGST Act, 2017.
Whether proportionate Input Tax Credit has to be reversed in cases where lesser payment is made to the supplier due to deduction on account of liquidated damages from supplier’s dues? - HELD THAT:- The transaction related to L.D. is being recorded in separate accounting code. Maintenance of such accounting codes by the Appellant clearly shows that the Appellant is paying the actual taxable amount and GST thereon to its suppliers, as mentioned in the tax invoices raised by its suppliers. Further, the reflection of the illustrated sample invoices in the GSTR -2A of the Appellant further substantiates the Appellant’s claim that the suppliers are also aware of their liability to pay the actual GST and not the lesser amount of GST are being paid by the suppliers, even in the cases where there is deduction of liquidation damages from the payment made to such suppliers - the Appellant was rightful in challenging the ruling pronounced by AAR in this regard, and accordingly, they are not required to reverse the ITC on account of the deduction of L.D. from the payment made to the suppliers.
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2020 (6) TMI 702
Permission to withdraw appeal - appealable order or not - HELD THAT:- It is admitted that the order dated 31.08.2018 is the subject matter of challenge in Writ Tax No.1298 of 2018, which is pending consideration. There are no reason to entertain the writ petition, challenging the consequential order.
The present petition is dismissed as withdrawn.
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2020 (6) TMI 678
Determination of value of second hand goods - Applicability of Rule 32(5) of CGST Rules,2017 - sale of Paintings bought from individual collectors and connoisseur - Antique jewellery, watches and books - Collectibles and Memorabilia - interpretation of statute - scope of phrase 'where no input tax credit has been availed on the purchase of such goods' - challenge to AAR decision - HELD THAT:- The only conclusion we can draw from the order of the AAR is that they seem to have been swayed by the fact that antique watches, painting and jewelry are valuable products which cannot be classified in the category of ‘second-hand or used’. Also the fact that there is a separate tariff heading for ‘Antiques’ in the form of tariff heading code 97060000 covering ‘Antiques exceeding 100 years’ seems to have influenced them. However, we wish to point out that the classification of the goods does not have anything to do with the application of rule 32 (5).
The question of whether the rule will apply has to be decided independently of the fitment of the product. There is nothing in rule 32 (5) which says that it is not applicable to valuable or precious objects or objects having antique value. It is a settled principle of jurisprudence that when the words of a statute are unambiguous and only one reasonable meaning can be given to it, then the courts are bound to give effect to that meaning. Such words have to be interpreted in their natural and ordinary sense. Therefore, the term ‘second-hand and used’ has to be given its ordinary meaning and nothing more is to be attributed to it especially when the legislature has not chosen to expand or contract its meaning. Antique pieces are also second-hand and used by people before they come in the market. The paintings are bought by the appellant from individual art collectors. It presupposes that the art collectors have bought it second-hand or used and then sold it to the appellant. It would be an entirely different thing if the appellant has bought the paintings from the artists themselves. However, this is not the fact before us and we go entirely by the submissions of the appellant that they have bought it from individual art collectors. If such is the case, then there are no grounds to say that they are not second-hand or used. All the categories- valuable paintings, antique watches, antique jewelry, though falling under the category of valuable goods, are at the same time also ‘second hand or used goods’ and therefore they cannot be denied the benefit of rule 32(5). We feel that the term ‘antique books’ is evocative enough to describe what it contains and the appellant can apply Rule 32(E) to it.
The AAR has not given any ruling on collectibles/memorabilia and collectible books; the reason being given is that no specific details of such goods are given. In the grounds of appeal presented before the AAR, the appellant has described such goods as only ‘collectibles’ and ‘memorabilia and collectibles’. They have not dwelt at length as to what commodities are covered in that category. The appellant has stated that ‘collectibles and memorabilia’ encompasses clothing, support equipment, spectacles, accessories etc. The above description is of general nature. The appellant has not given any further description as to whether they are bought from individual art collectors or not. Also, the appellant has asked for separate ruling on collectible books and antique books. It is not known whether they are same or not. Also no specific explanation is given as to what is the difference between collectible books and antique books.
The ruling of AAR has to be upheld.
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2020 (6) TMI 677
Grant of Anticipatory Bail - evasion of tax - HELD THAT:- Taking into consideration the gravity of accusation, there being no criminal antecedents of the applicant and there being no possibility of his fleeing from justice, without expressing any opinion on the merits of the case, the applicant is entitled to be released on anticipatory bail in this case - In the event of arrest of the applicant Shahzad Alam involved in the aforesaid case shall be released on anticipatory bail till the submission of police report if any under section 173 (2) Cr.P.C. before the competent Court on his furnishing a personal bond of ₹ 50,000/- with two sureties each in the like amount to the satisfaction of the Station House Officer of the police station concerned, with conditions imposed.
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