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GST - Case Laws
Showing 81 to 100 of 218 Records
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2021 (1) TMI 700 - AUTHORITY FOR ADVANCE RULING, TAMILNADU
Classification of goods - Wheel Side Protection Control Unit (WSP) and Pantograph - to be classified as “parts of railway or tramway locomotives or rolling stock, and parts thereof’ (Viz under Heading 8607) for the purposes of levy of GST or otherwise - Section 9(1) of Central Goods and Services Act 2017 read with notification no.01/2017-Central Tax (Rate) dated 28.06.2017.
Admissibility of the application under Section 97/98 of the CGST Act - HELD THAT:- The question raised is on the classification of the product supplied by the applicant and therefore covered under Section 97 (2) of the Act. Section 98 of the CGST Act 2017/TNGST Act 2017 provides the procedure to be followed on receipt of the application and the first proviso to Section 98(2) states that the application is not to be admitted when the question raised in the application is already pending or decided in any proceedings in the applicant’s case - In the case at hand, it is found that DGGSTI has submitted that the classification of the products supplied by the applicant to railways are under investigations and the investigations have been initiated through the summon dated 10.10.2018. It is the submission of DGGSTI, HRU Hosur that the question raised before this authority is part of the investigation and therefore the application do not merit admission.
The first proviso to Section 98(2) makes an application ineligible for admission if the Authority finds that the question raised in the application is already pending or decided in any proceedings’ in the case of the applicant under any provisions of this Act. Issuance of summon under Section 70 of the CGST Act 2017 and calling for definite particulars happens in the course of investigation. We find that the only contention of the applicant is the summon is generic in nature and the subject goods whose classification is sought before us was never part of the proceedings.
The applicant has classified `Pantograph’ under CTH 8607 and continues to do so while in respect of certain other products, they have re-classified and paid the differential taxes. The month-wise value in respect of ‘Pantograph’ has been furnished by the applicant to DGGSTI Hosur. Show Cause Notice No.02/2020 dated 18.06.2020, Corrigendum issued to the SCN dated 27.10.2020 seek the differential excise duty payable and the proceedings for the period from 01.07.2017 remains pending. DGGSTI, Hosur letter dated 23.11.2020 has categorically stated that the investigation is specific for the classification of goods for railways and covers all goods supplied by the applicant to railways under Chapter Heading 8607 and in respect of subject goods, it is stated that WSP was not in the list of products prior to GST and the spares for WSP was re-classified by the applicant from CETH 8607 to CETH 9032; while in respect of ‘Pantograph’, the investigation included the same and re-classification of the same for pre-GST period is issued through corrigendum dated 27.10.2020 - it is clear that DGGSTI has taken up investigations on the classifications adopted by the applicant on their supplies to Indian Railways and classified under CTH 8607. The subject goods are supplied to `Indian Railways’ and the applicant classify the same under CTH 8607. The application is filed on 20.01.2020 while the proceedings on the ‘Classification of the goods supplied to Indian Railways’ and the ‘rate adopted for payment of GST’ were initiated through summon dated 10.10.2018. Also from the list of parts given to the DGGSTI by the applicant, it is seen that details relating to ‘Pantograph and Parts’ is also furnished. The applicant claims that the DGGSTI did not contend the classification of ‘Pantograph’ and therefore the said goods were never a part of the investigation. The first proviso to Section 98(2) of the Act, states that where the question raised is pending or decided in any proceedings under this Act, the same is not eligible for admission before this authority.
The investigation initiated by DGGSTI in the case of applicant is on the classification and rate of GST adopted by the applicant on the supplies to Indian Railways, classifying under CTH 8607. It is without doubt that the applicant has been classifying the subject goods under CTH 8607 and the supplies are made to ‘Indian Railways’ and therefore we are unable to agree the contention that the investigation is ‘generic’, while we find the investigation is on the ‘class of products’ classified under CTH 8607 and supplied to ‘Indian Railways’.
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2021 (1) TMI 699 - AUTHORITY FOR ADVANCE RULING, TAMILNADU
Classification of supply of services - services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce - Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing - Letting out of compressors for pumping of water from the borewells to the agricultural fields - whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017?
HELD THAT:- The applicant carries on borewell drilling. From the documents furnished, it is seen that they raise invoice as ‘Exempted sales’ when the drilling is made for ‘Agriculture’ and in such cases, the invoice is raised classifying the services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as ‘Tax Invoice’, classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the ‘drilling and hire service for agriculture’, which the applicant classifies under SAC 9986 as ‘Support services for agriculture’. The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a ‘Support service for agriculture’.
‘Provision of agricultural machinery with crew and operators’ and ‘operation of irrigation systems for agricultural purposes’ are listed as ‘Support services to crop production’. In the case at hand the applicant does not undertake the ‘operation of irrigation system for agricultural purposes’ and also ‘compressors’ are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable under SAC 9986 - In the case at hand, the applicant undertakes only drilling of bore wells in the agricultural land and are letting out compressors. The applicant are classifying the same under SAC 995434, when the said activity is undertaken in places other than agricultural land and under SAC 995434 when the drilling is done in other than agricultural land.
Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as ‘Support service for agriculture’. Therefore, letting out of the Compressor is also not a ‘Support service for agriculture’ classifiable under SAC 9986 and the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
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2021 (1) TMI 698 - AUTHORITY FOR ADVANCE RULLNG, TAMILNADU
Classification of supply of services - services provided by the applicant are in relation to agricultural operations directly in connection with raising of agricultural produce - Drilling of Borewells for supply of water for agricultural operations like cultivation including seeding, planting and ploughing - Letting out of compressors for pumping of water from the borewells to the agricultural fields - whether the said services are covered by the entry SI.No54 of Notification 12/2017 CT(Rate) dated 28.06.2017?
HELD THAT:- The applicant carries on borewell drilling. From the documents furnished, it is seen that they raise invoice as ‘Exempted sales’ when the drilling is made for ‘Agriculture’ and in such cases, the invoice is raised classifying the services under SAC 9986 and no tax is charged. When the drilling is undertaken for Industries (other than agriculture), the invoice is raised as ‘Tax Invoice’, classifying the service under SAC 995434 and appropriate tax (CGST 8s SGST) is collected. The issue raised before us pertains to the ‘drilling and hire service for agriculture’, which the applicant classifies under SAC 9986 as ‘Support services for agriculture’. The contention of the applicant is that the borewells drilled provides the required quantity of water for cultivation of agricultural crops and the entry Sl.No.54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017 covers agricultural operations directly related to raising of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; the borewells drilled provides the required quantity of water for cultivation of agricultural crops.; the supply of compressors which becomes a part of the motor that pumps water is inseparable from the activity of cultivation and therefore is a ‘Support service for agriculture’.
‘Provision of agricultural machinery with crew and operators’ and ‘operation of irrigation systems for agricultural purposes’ are listed as ‘Support services to crop production’. In the case at hand the applicant does not undertake the ‘operation of irrigation system for agricultural purposes’ and also ‘compressors’ are not agricultural machinery. They undertake the activity of drilling of borewells in the agricultural land and let out compressors. The said activity is not classifiable under SAC 9986 - In the case at hand, the applicant undertakes only drilling of bore wells in the agricultural land and are letting out compressors. The applicant are classifying the same under SAC 995434, when the said activity is undertaken in places other than agricultural land and under SAC 995434 when the drilling is done in other than agricultural land.
Water-well drilling services are specifically covered under 995434 and the said category includes all Water-well drilling services without any exceptions. Therefore, it is evident that the drilling of borewell without exceptions (even in the agricultural land) is a construction service involving drilling water well and not a support service for agriculture. As the activity do not merit classification under SAC 9986, the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
Compressor is not an agricultural machinery and is a General-Purpose Machinery. Also, only provision of agricultural machinery with crew and operators are stated as ‘Support service for agriculture’. Therefore, letting out of the Compressor is also not a ‘Support service for agriculture’ classifiable under SAC 9986 and the applicant is not eligible for exemption as per Sl. No. 54 of Notification No. 12/2017-C.T.(Rate) dated 28.06.2017.
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2021 (1) TMI 697 - AUTHORITY FOR ADVANCE RULING, TAMILNADU
Valuation of transfer - transfer to branches located outside the state - whether the value of such supplies can be determined in terms of the second provision to rule 28 in respect of supplies made to distinct units in accordance with clause (4) & (5) of section 25 of the CGST rules, 2017? - HELD THAT:- The applicant has stated that the distinct units have excess accumulated credits owing to various reasons and therefore they propose to change their valuation being adopted presently, which is the 'Open Market Value' as per Rule 28(a) of the CGST Rules 2017 to that provided under the second proviso to Rule 28 of the CGST Rules 2017. The question before us is to decide whether the method of valuation prescribed under the Second proviso is applicable to the supply to distinct persons of the applicant. We do not comment/give any opinion on the submissions of the applicant on the available excess ITC at their distinct units for want of jurisdiction and also considering that the issue raised before us is only on the value to be adopted for the supply which do not have any relation to the credit accumulation at the recipient end but for the fact that the recipient is eligible to avail the entire credit of tax paid by the applicant.
In the case at hand, the applicant and the distinct persons outside the state of Tamil Nadu are different legal persons hence, both are said to be related as per the explanation to Section 15. Therefore the value to be adopted is governed by rules prescribed as per Section 15(4) of CGST Act. Rule 28 of CGST Rules, 2017 provides the value to be adopted when the supply is between distinct persons - In the case at hand, the applicant supplies to their distinct persons, for which presently they adopt the approximate sale value of the distinct person. The distinct person undertakes supply to their ultimate-unrelated customer 'as such' and the value adopted is that on the Purchase Order issued to such distinct persons by the ultimate customer. Also, the distinct units are eligible to avail full Input Tax credit of the tax paid by the applicant. Therefore, following the judicial discipline, we hold that the value to be adopted by the applicant can be arrived at following the methodology of either of the three methods.
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2021 (1) TMI 696 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL
Classification of supply - supply of goods and onsite services in SEZ area to SEZ units or SEZ developers - zero-rated supply or not - section 16 of the IGST Act,2017 - levy of GST for the supply of goods or services to SEZ units or SEZ developers - documentation required for the supply of goods or service to SEZ unit - HELD THAT:- The questions are admissible under section 97(2)(e) of the Goods And Services Tax Act, 2017(hereinafter called the GST Act). But, this authority answered both the questions by a IN RE : GARUDA POWER PRIVATE LIMITED [2018 (8) TMI 212 - AUTHORITY FOR ADVANCE RULINGS, WEST BENGAL] while disposing of an application dated 22/06/2018 by the same applicant. The questions raised have, therefore, been already decided in a proceeding under the GST Act. A fresh application on those two questions cannot be admitted in terms of the 1st proviso to section 98(2) of the GST Act.
Documentation is required for the supply of goods or service to SEZ units - HELD THAT:- An Advance ruling can be sought on the issues specified in section 97(2) of the GST Act. The issue raised in the third questions does not fall within the ambit of any of the clauses under section 97(2) of the GST Act.
This authority, therefore, rejects the application under section 98(2) of the GST Act.
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2021 (1) TMI 695 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Classification of goods - pondliner - vermibed - weed mat - azolla bed - grow bags - agro shade net - classificable under sub-heading 54072090 or otherwise - liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- Applicant are manufacturing and supplying HDPE woven fabrics falling under Chapter 39(Plastics and articles thereof) and Tariff items 3926 (other articles of plastics and articles of other materials of heading 3901 to 3914) and sub tariff item 39269099; that the manufacturing process involves manufacturing of HDPE tapes, which are weaved into a piece of fabric and the HDPE granules are mixed with additives and passed through an HDPE tape line plant to obtain HDPE tapes(mono-axially oriented HDPE tapes); that the HDPE tapes wound into spools, are passed through power looms for weaving HDPE woven fabric.
None of the (except ‘grow bags’) is covered under the Headings 3901 to 3925 of Chapter 39 as there is no specific mention of any of these products under any of the aforementioned headings. Since heading 3926 reads as ‘Other articles of plastics and articles of other materials of headings 3901 to 3914’, it implies that articles of plastics or articles of other materials not covered in any of the headings from 3901 to 3925 would be covered under heading 3926 which is a residuary entry. As per the explanatory notes to HSN with regard to heading 3926, the heading 3926 covers articles, not elsewhere specified or included, of plastics or of other materials of headings 39.01 to 39.14 - thus, the products namely HDPE Tarpaulin, PE laminated fabric PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would invariably be covered under heading 3926 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). Further, looking to the use of ‘Grow bags’, we find that they would be rightly classifiable under Heading 3923.
Grow Bags - HELD THAT:- ‘Grow bags’ is classifiable under Sub-heading No.39232990. The other products namely HDPE Tarpaulin, PE laminated fabric, PP ropes, pondliner, vermibed, weed mat, wagon cover, fumigation cover, azolla bed, agro shade net, HDPE woven laminated fabrics and PP/HDPE woven fabric would be classifiable under Sub-heading No.39269099 of Chapter 39 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) as we do not find the specific mention of any of these products in any of the other sub-headings of Heading 3926.
Liability of GST - N/N. 01/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- The classification of the products manufactured and supplied by the applicant M/s. Gujarat Raffia Industries ltd., Ahmedabad (as per the First Schedule to the Customs Tariff Act, 1975(51 of 1975)) as well as the corresponding rate of GST(as per Notification No.01/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time)) is as detailed in the table below:
- HDPE Tarpaulin - Heading 39269099 - rate of GST 18%(9% SGST + 9% CGST).
- PE laminated fabric - PP Ropes - Pondliner - Vermibed - Weed mat - Wagon cover - Fumigation Cover - Azolla Bed - Heading 39269099 - rate of tax 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards.
- Grow Bags - Heading - 39232990 - rate of GST 18%(9% SGST + 9% CGST).
- Agro shade net - HDPE woven laminated fabrics - PP/HDPE woven fabric - Heading 39269099 - rate of GST 28%(14% SGST + 14% CGST) upto 14.11.2017 and 18%(9% SGST + 9% CGST) from 15.11.2017 onwards.
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2021 (1) TMI 694 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH
Effective date of Change in rate of tax / GST - composite supply of works contract - clause (119) of Section 2 of Central Goods and Services Act, 2017 - whether it would be in order for the applicant (supplier) to charge GST at the rate of 12% or is the GST rate 18% applicable to the nature of works contract undertaken by the applicant? - HELD THAT:- Regarding the rate of GST on the Composite Supply of Works Contract, it may be noted that the rate applicable is dependent' on the nature of the supply. The amendments made by Notification Nos 20/2017 - Central Tax (Rate) and 24/2017-Central Tax (Rate) have notified different rates for different nature of works .In Notification Nos 20/2017 - Central Tax (Rate) Entry No. (iii) of the Notification has specified the recipient of the supply for which the rate is applicable. Entry No. (iv) and (v) are for specific type of supply within the four corners of a Composite Supply of Works Contract - in Entry No. (vi) in Notification Nos 24/2017 - Central Tax (Rate). service as well as the recipient has been specified - the notifications clearly state the rate applicable on satisfaction of twin condition of the nature of the supply and the recipient.
The applicant has neither given the particulars of the specific nature of the work done by the applicant nor the particulars of the recipient of the supply. Copies of Work Orders are also not on record. Therefore, in the absence of the relevant and necessary information, we are unable to answer the first query of the applicant relating to the rate of tax applicable to the Composite Supply of Works Contract provided by the applicant.
In case of a notification in the body of which the effective date is not written, the effect of the amending notification thus shall be the date on which the amending notification is published in the Official Gazette. Therefore, the effective date for the levy of the amended rate of tax as per amended Notification No. 11/2017 - Central Tax (Rate) shall be the date on which Notification No 20/2017 - Central Tax (Rate) and Notification No. 24/2017 - Central Tax (Rate) were published in the Official Gazette.
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2021 (1) TMI 693 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Classification of goods - Mix flour - classified under Tariff item 1106 vide Entry No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 or otherwise? - Chutney Powder - classified under Tariff item 2106 vide Entry No.100A of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 and Notification No.01/2017-State Tax (Rate) dated 30.06.2017, Notification No.01/2017-Integrated Tax (Rate) dated 28.06.2017 or otherwise? - Chutney powder when supplied with Gota Mix flour and Bhajiya Mix flour - Composite supply or not having HSN of principal supply i.e. 1106 and 5% GST?
Manufacturing and selling of varied types of mixed flour under the ‘Talod’ brand name that are used to prepare instant Farsan and other similar dishes - HELD THAT:- On going through the break-up (percentage-wise) of the flours involved in the above products, it is seen that there are a few products, in which the content of rice flour, wheat flour, wheat granules is very high and thereby falling under either of headings 1101, 1102 or 1103 instead of heading 1106. Hence all these sub-headings alongwith their chapter notes as well as explanatory notes to HSN will have to be looked into. In order to determine the classification of the above 18 items, we will be first required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods, which are covered under 6 schedules.
Recently, the Government has issued Circular No.80 dated 31.12.2018 containing clarification regarding GST rate and classification of some goods in which clarification has been issued with respect to classification of Chhatua or Sattu, which is a mixture of flour of ground pulses and cereals. The purpose of this circular being discussed here is that the said circular appears to be squarely applicable in the instant case. The issue regarding classification of Chhatua or Sattu as appearing in the said Circular - it can be seen from the above that HSN code1106 includes the flour, meal and powder made from peas, beans or lentils (dried leguminous vegetables falling under 0713) and such flour improved by the addition of very small amounts of additives continues to be classified under HSN code 1106.
It is seen that products obtained from milling of dried leguminous vegetable including peas, lentils are covered under heading 11.06 and by milling of cereals (in the instant case) fall under headings 11.01, 11.02 or 1103. The applicant submitted that the product at hand is manufactured by grinding of pulses, mixing of flours and addition of a small quantity of spices and the finished product is ready and packed. The flours of grams, moong dal, rice, wheat and urad dal etc. are mixed in various proportions and packed. There is a small addition of spices etc. but no further processing of the flours is done. As seen in the explanatory notes to Chapter 11 above, flours of cereals and flours of dried leguminous vegetable and lentils are classified under Chapter 11 if they are obtained only by the milling of these raw materials and no further processing has taken place and no addition of other substances with a view for their use as food preparations has been done. If that was the case, they would be classified under heading 19.01 and such products are excluded from Chapter 11. Explanatory notes to Chapter 19.01 also states that it covers food preparations with a basis of flour or meal or starch or malt extract where other substances may be added to main ingredients such as milk, sugar, eggs, fat, oil etc. Unprocessed flour obtained only by the milling and sieving of cereals, leguminous vegetable including peas, lentils etc. are to be classified under Chapter 11 alone. In the instant case, the product has a mixture of various flours such that multiple tariffs are involved i.e. headings 11.01, 11.02, 11.03 and 11.06.
Dhokla mix flour containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - Idli mix flour Containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - Dosa mix flour containing 45% leguminous flour, 45% of rice flour and 10% spices and other ingredients - HELD THAT:- In this case, Rule 3(c) is applicable i.e. when goods cannot be classified by reference to Rule 3(a) or 3(b) of the Rules of interpretation of the Customs Tariff, they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. Rice flour is classifiable under heading 1102 whereas leguminous flour is classifiable under heading 1106 and specific sub-heading 11061000. Hence the aforementioned products would be rightly classified under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). The same will fall at Sr.No.59 of Schedule-I of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 (as amended vide Notification No.27/2017-Central Tax (Rate) dated 22.09.2017 on which GST payable is 5%.
Percentage-wise break of the flours of the ingredients involved in the branded products manufactured by the applicant - HELD THAT:- The products Upma mix flour and Rava mix flour each contain 70% of Suji flour (wheat granules), 20% of leguminous flours and 10% of spices and other ingredients. Similarly, Muthiya mix flour which appears at Sr.No.16 contains 90% of wheat flour and 10% of spices and other ingredients, whereas the product mentioned at Sr.No.17 i.e. Khichu mix flour contains 95% of rice flour, 2% of Sabu dana flour and 3% of spices and other ingredients. As per Rule 3(b), mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as the criterion is applicable. Accordingly, (i) Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices and other ingredients, have the essential characters of suji flour (wheat granules) and would be classifiable under heading 1103 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975). (ii) Muthiya mix flour containing 90% wheat flour and 10% spices and other ingredients have the essential characters of wheat flour and would be classifiable under heading 1101 of the First Schedule to the Customs Tariff Act,1975. (iii) Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients shows the essential characteristics of rice flour and would be classifiable under heading 1102 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) - Since the details in respect of ash content/starch content/rate of passage through a sieve etc. in respect of the products mentioned in para 13.2 above have not been furnished by the applicant, it would not be possible for us to decide whether these products fulfil the criteria or otherwise. In view of the above, we are left with no option but to conclude that the above products do not fulfil the aforementioned criteria and would therefore be classifiable under Heading 2302 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975) - Upma mix flour and Rava idli mix flour each containing 70% of suji flour(wheat granules) and 20% of leguminous flour and 10% spices as well as Muthiya mix flour containing 90% wheat flour and 10% spices are classifiable under sub-heading 23023000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) whereas Khichu mix flour containing 95% rice flour, 2% Sabu dana flour and 3% spices and other ingredients would be classifiable under sub-heading 23024000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
Chutney powder - HELD THAT:- Chutney powder is classifiable under Sub-heading 21069099 of the First Schedule to the Customs Tariff Act, 1975(51 of 1975) on which GST rate was 18% upto 14.11.2017 and 5% with effect from 15.11.2017.
Whether chutney powder when supplied with Gota mix flour and Bhajiya mix flour, should be considered as Composite supply as stated by the applicant? - HELD THAT:- Chutney powder and Gota mix flour or Chutney powder and Bhajiya mix flour are not naturally bundled and are not supplied in conjunction with each other in the ordinary course of business as they can be supplied separately or independently in the ordinary course of business. We therefore conclude that Chutney powder supplied with Gota mix flour or Bhajiya mix flour cannot be considered a ‘composite supply’ - applicant has submitted that he provides Chutney powder in a pouch along with Gota Mix and Bhajiya Mix and no extra amount is collected for such Chutney powder and that he is charging a single price for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder. Further, as discussed earlier, since the aforementioned supply is not a composite supply of goods and a single price is being charged for the combined supply of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder, it will be considered as a ‘Mixed supply’ of goods.
Thus, it can be seen that a mixed supply comprising of two or more supplies, shall be treated as a supply of that particular supply which attracts the highest rate of tax. However, in the instant case, we find that the rate of tax of all the three products i.e. Gota mix, Bhajiya mix and Chutney powder is the same i.e. 5% GST, that a single price is being charged by the applicant for the ‘mixed supply’ of Gota Mix and Chutney powder or Bhajiya Mix and Chutney powder and no extra charge is collected for the Chutney powder. Hence, we conclude that the mixed supply of Gota Mix and Chutney powder will be considered as a supply of Gota Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%. Similarly, the mixed supply of Bhajiya Mix and Chutney powder, will be considered as a supply of Bhajiya Mix (falling under Sub-heading 11061000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975)) on which the GST liability will be 5%.
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2021 (1) TMI 692 - AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH
Input tax credit (ITC) - Demo vehicle purchased - whether credit can be availed as the same will he capitalized in books - HELD THAT:- The Applicant has submitted that the firm will not claim depreciation on the tax component of Demo Vehicles which are capitalized in the books of accounts. We find that not charging depreciation on the tax component, is as per other relevant provisions of the GST Act. But. that can not affect the applicability of provisions of Section 17(5)(a) of GST Act according to which the applicant is not eligible for Input tax credit on Demo Vehicles. as the same arc not covered by any of the exceptions given clause (A). (B) or (C) of Sec. 17(5)(a) - It is found that the eligibility for inputs tax credit on Demo Vehicles can not he decided on the basis of their capitalisation. or payment of GST at the time of their sale in the subsequent year.
There is clear provision in law for admissibility of Input tax credit on motor vehicles in any of' the three conditions prescribed in clause (A), (B) and (C) of Section 17(5)(a) of GST Act. As the applicant's Demo vehicles do not comply any of the said conditions. therefore. the applicant is not eligible for Input tax credit on Demo vehicles in view of provisions of Section 17(5)(a) of GST Act in spite of the filet that the Demo Vehicles are used by the applicant for furtherance of their business.
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2021 (1) TMI 691 - AUTHORITY FOR ADVANCE RULING, HARYANA
Classification of services - Outdoor catering services or not - catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) - N/N. 20/2019 Dated 30th September 2019 - Eligibility to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn & restaurant of M/s Jewel Classic Hotels Pvt. Ltd.) - treatment of pure agent services - additional arrangements (in addition to foods, beverages & renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, to be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them - levy of tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism - whether extra bed forms part of the room tariff and liable to be charged as per various rates as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019?
Whether catering of food, banquet facilities and combination of both (as per requirement of the customer) in self owned marriage and party halls by Hotel Jewels (having all rooms below ₹ 7,500/1, Kunjpura Road, Karnal (A unit of Jewel Classic Hotels Pvt Ltd) is covered in Outdoor Catering taxable @ 5 % as per Notification No. 20/2019 Dated 30th September 2019? - HELD THAT:- The hotel Jewels is the principal place of business and Noor Mahal is the additional place of business and both are owned by the same owner i.e. M/s Hotel Jewel Classic Pvt. Ltd. under the same registration number - There is a condition in column 3 of (i)(a)(iv) in the Notification No. 20/2019 Central Tax (Rate) dated 30.09.2019 amending the serial No. 7 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017, that the supply of outdoor catering should not be provided by such suppliers who are providing ‘hotel accommodation’ at ‘specified premises’. In the present case, the applicant is providing hotel accommodation at Noor Mahal which is a specified premise. Thus, the applicant does not fulfill the condition - thus, outdoor catering activity carried by M/s Jewels Classic Hotels Pvt. Ltd, at its own Marriage Hall and Party Hall including outdoor lawns on the same registered premises of principal place or additional declared place does not fall in the ambit of GST (5%).
Whether Hotel Jewels is eligible to charge 5 % tax (as per Notification No. 20/2019 Central Tax (Rate) for providing outdoor catering at Hazuri Bagh (A party lawn & restaurant of M/s Jewel Classic Hotels Pvt. Ltd.)? - HELD THAT:- As Hazuri Bagh is situated in precincts of Hotel Noor Mahal, so it the clear that the taxpayer is not satisfying the condition (i) mentioned above. Therefore, the taxpayer is not entitled to supply @ 5% from the business premises of Hotel Noor Mahal/Hazuri Bagh.
Whether the additional arrangements (in addition to foods, beverages & renting of premises) such as flower decoration, DJ, Dance Floor, Special cutlery, Electric/electronics items, arranging food/beverages of specific vendors, provided as ‘pure agent’ will be excluded from value of supply as given in Rule 33 of CGST Rules and thus no tax is required to be charge on them? - HELD THAT:- As per valuation rule provision of GST Act, 2017, the taxpayer does not satisfy the condition of the pure agent which is to recover from recipient only such amount as has been paid by him to the third party. Facilitation charges collected shall disqualify taxpayer from being pure agent.
Further, to arrange these supplies, some supplies are procured from Unregistered Persons having no GST Registration. Whether there is any tax on the supplies arranged from these unregistered people to be paid by the applicant under the Reverse Charge mechanism or any other provisions of the HGST Act/CGST Act? - HELD THAT:- The provisions of Section 9 (4) of the CGST Act are not applicable to all registered persons, goods and services. It is applicable only to selected categories of registered persons & goods and services which have to be notified by the government - the N/N. 07/2019-Central Tax (Rate) dated 29.03.2019 and N/N. 24/2019-Central Tax (Rate) dated 30.09.2019, it is clear that presently reverse charge mechanism under section 9(4) is not applicable on the applicant.
Whether the extra bed forms part of the room tariff and liable to be charged as per various rates prescribed as per slabs given under Notification No. 11/2017-Central Tax (Rate), No. 13/2018-Central Tax (Rate) Dated 26th July 2018 and 20/2019 -Central Tax (Rate) Dated 30th September 2019? - HELD THAT:- The charges of extra bedding if exceeds the room tariff as per the N/N. 20/2019-Central Tax (Rate) dated 30th September 2019 amending Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, the same shall be treated as gross value of supply and the tax shall be charged as per the amount including the extra bedding charges as it is a part of room tariff.
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2021 (1) TMI 690 - AUTHORITY FOR ADVANCE RULING, HARYANA
Classification of supply - supply of services or not - expenses and salary paid by Wilhelm Fricke SE, Germany to the liaison office established in India - no consideration is charged/ paid - requirement of registration of Liaison Office or not - levy of CGST/SGST/IGST on reimbursement received from HO - HELD THAT:- The HO in Germany reimburses the expenses incurred by the applicant for their operations in India which are in the nature of salary, rent, security, electricity, travelling etc. The applicant does not have any other source of income and it is solely dependent on the HO for all the expenses incurred by the applicant, which are subsequently reimbursed by the HO. Therefore the HO and Liaison Office cannot be treated as separate persons. Since, HO and Liaison Office cannot be treated as separate persons, there cannot be any flow of services between them as one cannot provide service to self and therefore, the reimbursement of expenses made by the HO cannot be treated as a consideration towards any service.
The amount received from HO are the funds for payment of salary, reimbursement of expenses like rent, security, electricity, travelling, etc. No consideration is being charged by the applicant from the HO for such services - Further the liaison office is strictly prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. As there are no taxable supplies made by the Liaison office, they are not required to get registered.
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2021 (1) TMI 648 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Classification of services - services of Electroplating surface coating and Electroless nickel plating provided by the applicant - service supplied by the applicant would fall under (id) or (ii) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended or otherwise? - rate of GST.
HELD THAT:- The processes results in the formation of a coating on the materials/metals on which it is carried out. Also, as per the submission of the applicant, the coating done by carrying out the aforementioned processes enhances the durability of the materials/metals to some extent. However, as per the data available online, electroplating changes the chemical, physical, and mechanical properties of the workpiece. An example of a chemical change is when nickel plating improves corrosion resistance. An example of a physical change is a change in the outward appearance. An example of a mechanical change is a change in tensile strength or surface hardness which is a required attribute in tooling industry. Electroplating of acid gold on underlying copper- or nickel-plated circuits reduces contact resistance as well as surface hardness. Copper-plated areas of mild steel act as a mask if case hardening of such areas are not desired. Tin-plated steel is chromium-plated to prevent dulling of the surface due to oxidation of tin. The inside of a steel food can is electroplated with tin, a less reactive metal than iron which provides a physical barrier to oxygen and water, stopping the can from rusting. Compared to the electroplating process, a major advantage of electroless nickel plating is that it creates an even coating of a desired thickness and volume, even in parts with complex shape, recesses, and blind holes. Because of this property, it may often be the only option. Another major advantage of electroless nickel plating is that it does not require electrical power, electrical apparatuses, or sophisticated jigs and racks. Electroless nickel plating can have a matte, semi-bright, or bright finish.
The manufacturing services’ is not akin to ‘manufacture’ but are services which are related to the process of manufacture or assist in the process of manufacture of goods. It also appears that the process of Electroplating surface coating and Electroless nickel plating are, perhaps, the last of the processes to be carried out on goods/products during the course of manufacture, akin to coating goods/products with paint or spray painting, and completing of this process would result in the emergence of a finished product. We therefore find that the very purpose of the manufacturer of sending these goods/products for Electroplating surface coating/electroless nickel plating is that they are a very essential or indispensible part of the process of manufacture towards making the product a finished product i.e. without this process, the goods/products in question would not be finished products. It is found that although the procedure followed by the applicant is that of jobwork, we find that the process of Electroplating surface coating and Electroless nickel plating are essential services connected to the process of manufacture of the goods which results in the emergence of the finished product and would therefore be rightly covered under ‘manufacturing services’ or services related to the manufacture of goods.
Entry at item(iv) of Sr.No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended) provides the most specific description to the services provided by the applicant as compared to the general description provided at item(id) of the said entry. It is therefore concluded that the services of electroplating surface coating and electroless nickel plating provided by the applicant are classifiable under item(iv) of Sr.No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended).
The services of Electroplating surface coating and Electroless nickel plating provided by the applicant are classifiable under Heading 9988 (Manufacturing services on physical inputs(goods) owned by others) which appears at item(iv) of Entry No.26 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 (as amended). The GST liability on the above would be 18% upto 21.11.2019.
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2021 (1) TMI 647 - SC ORDER
Constitutional validity of levy of IGST on Ocean Freight - Ultra Vires provisions - Reverse charge - Levy tax twice - once levy of customs duty on imported goods, second IGST on ocean freight - estimated component of the Ocean Freight paid for the transportation of the goods by the foreign seller - N/N. 8 of 2017-Integrated Tax (Rate) dated 28th June 2017 - it was held by High Court that No tax is leviable under the Integrated Goods and Services Tax Act, 2007, on the ocean freight for the services provided by a person located in a non-taxable territory by way of transportation of goods by a vessel from a place outside India upto the customs station of clearance in India and the levy and collection of tax of such ocean freight under the impugned Notifications is not permissible in law.
HELD THAT:- Issue notice, returnable in eight weeks.
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2021 (1) TMI 646 - PUNJAB & HARYANA HIGH COURT
Validity of provisional attachment order - Section 83 of the Central GST Act, 2017 - HELD THAT:- In compliance to the order, learned counsel for the respondents has placed on record order dated 05.01.2021 passed by respondent No.1, whereby Loan Account of petitioner bearing No.34410423938 maintained in State Bank of India has been released and objections raised by the petitioner stand rejected - In compliance to the aforesaid reproduced order, learned counsel for the respondents has placed on record order dated 05.01.2021 passed by respondent No.1, whereby Loan Account of petitioner bearing No.34410423938 maintained in State Bank of India has been released and objections raised by the petitioner stand rejected another petition.
The petition is disposed of as having been rendered infructuous.
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2021 (1) TMI 645 - KERALA HIGH COURT
Principles of Natural Justice - petitioner has demonstrated that the petitioner was noticed on wrong address - HELD THAT:- Noticing the petitioner on the wrong address is against principles of natural justice. The order inviting adverse civil consequences was passed without hearing the petitioner herein because of issuance of notice on wrong address.
The matter is remitted back to the 1st respondent for fresh hearing - Petition allowed by way of remand.
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2021 (1) TMI 644 - GUJARAT HIGH COURT
Seeking direction directing the respondents for the extension of the last date of filing the GSTR & GSTR 9C - direction to respondents to grant relief of waiver of late fees or penalty for filing the GSTR & GSTR 9C beyond the last date as prescribed under the section 47 of the CGST Act, 2017 - Constitutional right of Natural justice - HELD THAT:- In our opinion, no case worth the name is made out.
Application rejected.
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2021 (1) TMI 599 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Classification of goods - fusible interlining cloth used in cotton fabrics - classifiable under HSN code 5903 or under Chapter 52/55 (depending upon the weightage of Cotton)? - HELD THAT:- The dispute regarding classification of fusible interlining cloth, which is partially coated with plastic by the dot printing process i.e. whether it is covered under Chapter 52 to 55 or Chapter 59, has repeatedly come up before different authorities. In it’s Circular No.24/Coated Fabric/88-CX.1 dated 02.09.1988, CBEC has referred to the production process. The finished woven fabric passed over preheated rolls having a high surface temperature and the heated substance was then pressed to a printing roll having fine dots engraved on it. High-density polyethylene powder was taken in a hopper that sat on the engraved printing roll, filling the dots. As a result, the pre-heated fabric got printed with plastic dots. The powder in between the engraved dots was scrapped by a doctor blade provided in the hopper. The dot printed cloth then passed through a heated chamber where the plastic melted and fused with the piece of cloth. CBEC concluded that the fusible interlining merited classification under Heading 5903 if the above printing process covered one side of the fabric with a continuous and adherent film or layer of plastic that made the fabric impervious.
The applicant’s product ‘fusible interlining cloth of cotton fabric’ would undoubtedly be classifiable under Heading 5903 only. We, therefore, conclude that the product ‘fusible interlining cloth of cotton fabric’ of the applicant is classifiable under Heading 5903 of the First Schedule to the Customs Tariff Act, 1975 - On going through the headings, chapter note of Chapter 52 as well as the explanatory notes to HSN with respect of the headings 5208 to 5212, we find that it does not cover laminated fabrics or fabrics coated with plastics. Hence, it can be safely concluded that ‘Fusible Interlining cloth for cotton fabrics’ will not be covered under Chapter 52 of the First Schedule to the Customs Tariff Act, 1975.
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2021 (1) TMI 598 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Classification of goods - marine-pressure tight and non-pressure tight cables manufactured and designed by the applicant, for use by the Ministry of Defence in their warship as parts of warship - taxable at the concessional rate of GST@5% as per Entries No.250 and 252 of Schedule-I of the Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 or otherwise? - HELD THAT:- Items like Anchor, Bow, Bowsprit, Bow Thrusters, Fore and Aft, Ship’s Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propellor, Funnel, Navigation Bridge, Deck, Deck Crane, Forecastle etc. are very essential parts of a ship or vessel and are quite clearly parts of a vessel/ship and a ship cannot be imagined to be in existence without these parts i.e. the ship/vessel would not be complete without these parts.
The essential items that are essential parts of a ship/vessel are such essential components/parts of a vessel/ship without which the ship/vessel would not be complete and without which the ship would not exist. While referring to the definition of the word ‘part’, we find that it is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly, the second definition of part also defines ‘part’ as one of the pieces that together forms a machine or some type of equipment.
It is required to find out whether the marine pressure tight cables and marine non-pressure tight cables manufactured and supplied by the applicant can be considered as parts of a warship. The classification of these goods under Entry No.252 of Schedule-I of Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017 is solely dependent on the nature of use to which these goods are put to in order to be able to decide as to whether these goods are integral parts of the ships without which the ship would not be complete or would not exist.
In order to avail of the benefit of reduced rate of GST as mentioned hereinabove, the applicant has to prove that the goods manufactured and supplied by them to the Navy are an integral part of the warship and are goods without which the warship would not come into being, or would not be complete or would not come into existence. The applicant has claimed that the marine pressure tight and marine non-pressure tight cables manufactured and supplied by them are very essential and integral part of the warship, without which warship cannot function and cannot be completed and at the same time the said goods supplied and used in the warship are capable of being separated as such for the purpose of repairs and replacement. However, they have not submitted any details with regard to these goods, which are essential to prove that the subject goods are integral parts of the warship such as: (i) the definition of marine pressure tight cables and non-pressure tight cables (ii) in which part of the warship they are used. (iii) do they constitute parts which can be used solely in warships? (iv) what are the uses of these cables i.e. what is the purpose they serve. (v) the reason why these cables can be considered to be so essential or so integral a part of a warship, without which the warship would not come into existence or would not be complete. -In the absence of these details, it would not be possible for us to decide whether the subject goods are parts of warship or otherwise. In fact, we will be left with no option but to make a decision based on the records available with us as well as on the merits of the case.
The applicant has failed to prove their claim that the marine pressure tight cables and marine non-pressure tight cables manufactured and supplied by them are integral parts of warship without which the warship would not come into existence or would not be complete. It is therefore concluded that the marine pressure tight cables and the marine non-pressure tight cables manufactured and supplied by the applicant to the Navy are not parts of the warship and hence the benefit of reduced rate of GST of 5% is not available to the applicant as per Notification No.01/2017-Integrated Tax(Rate) dated 28.06.2017.
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2021 (1) TMI 597 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Government entity or not - Rajkot Urban Development Authority (Accredited Department of Gujarat State Government) - whether the said authority falls under the definition of Government Authority or a Government entity as defined under para 2(zf) & 2(zfa) of the Notification No.12/2017-Central Tax(Rate) dated 28.06.2017? - Pure Service or not - exemption by virtue of Notification No.12/2017 - HELD THAT:- Entry No.3 of aforementioned Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 exempts Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental Authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Hence, three conditions are required to be satisfied for a service to be covered under subject entry of the notification which is as below:
(1) It must be pure service not involving any supply of goods.
(2) It must be provided to the Central Government or State Government or Union Territory or Local Authority or a Governmental Authority or a Government Entity.
(3) It must be an activity in relation to any function entrusted to a
(i) Panchayat under Article 243G of the Constitution; or
(ii) Municipality under Article 243W of the Constitution.
The first condition to be verified is as to whether the services supplied by the applicant are pure services or otherwise. We, therefore, are of the opinion that if and only if, the first condition is satisfied, only then we will be required to look into the applicability of the other two conditions i.e. whether the other two conditions are also satisfied as per the current contract/agreement made by the applicant with Rajkot Urban Development Authority. So, the first condition to be discussed is as to what is meant by pure service? Since ‘pure service’ has not been defined under GST, the same can be construed in general terms as any supply which is either deemed as services under Schedule II of CGST Act or which are not covered under the definition of goods shall be categorized as pure services. However, as per the notification, works contract services or other composite supplies involving supply of any goods are not covered in entry no.3 of aforementioned notification. In other words, if a person provides only service to any person without involvement of supply of goods along with supply of services, then the same would be termed as supply of pure service. Although the applicant has submitted that they are providing Professional and Technical service and have been allotted work of providing Project Management Consultancy Service(Heading 998339) in Relation to PM Awas Yojana by Rajkot Urban Development Authority and the service is Pure service and that Serial No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017, as amended from time to time exempts the Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union Territory or local authority or a Governmental Authority (or a Government Entity) by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under Article 243W of the Constitution, they have only submitted the letter of acceptance dated 19.02.2019 issued to them by the Rajkot Urban Development Authority.
The primary condition for an applicant to be eligible for the exemption by virtue of Entry No.3 of Notification No.12/2017-Central Tax(Rate) dated 28.06.2017 (as amended from time to time) is that the services supplied by them are pure i.e. services supplied/provided without any supply of goods and excluding Works Contract service or other composite supplies involving supply of any goods, and only if it is proved or established that the services provided by them are pure, will the applicability of the other conditions i.e. whether the recipient of the services is a Governmental Authority or Government Entity, whether the services supplied are in relation to functions entrusted to a municipality or a panchayat under Articles 243G or 243W of the Constitution etc. will be looked into. However, under the above circumstances, it would not be possible for us to decide whether the services supplied by the applicant are pure or otherwise merely on the basis of the letter of acceptance submitted by them. Further, in absence of the aforementioned agreement, and without going through the terms and conditions of the agreement, it would not be possible for us to decide whether the Services provided by the applicant are Pure or are a supply of services along with supply of goods since the work is connected to the project of Affordable Housing and could also involve Works Contract service.
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2021 (1) TMI 596 - AUTHORITY FOR ADVANCE RULING, GUJARAT
Liability of GST - landlord charges electricity or incidental charges in additional to rent as per Lease Agreement for immovable property rented to the tenant - Is landlord liable to pay and recover GST from tenant on electricity or incidental charges charged by it? - electricity charges paid by landlord to Torrent Power Ltd. (the supplier of electricity) for electricity connection in the name of landlord and recovered based on sub meters from different tenants (the legal liability to pay electricity bill to Torrent Power Ltd. is that of landlord) - Pure services of the tenant or not.
Scope of Advance Ruling - HELD THAT:- The latter part of the first question raised by the applicant to the effect whether they are liable to recover GST from the tenant on the electricity or incidental charges charged by it is outside the purview of the scheme of advance ruling. The Advance Ruling authorities can only give a decision whether the applicant are liable to pay GST on such charges or otherwise. Whether such GST (if paid) can be recovered from the tenant or otherwise is a civil matter which has to be decided in terms of the agreement entered into by the two parties and the Advance Ruling authority is not empowered to comment on such issues - The Advance Ruling is restricted to following questions:
a. When landlord charges electricity or incidental charges in addition to rent as per Lease Agreement for immovable property rented to the tenant, is landlord liable to pay GST on electricity or incidental charges charged by it?
b. Can electricity charges paid by landlord to Torrent Power Ltd. (the supplier of electricity) for electricity connection in the name of landlord and recovered based on sub meters from different tenants be considered as amount recovered as pure agent of the tenant when the legal liability to pay electricity bill to Torrent Power Ltd. is that of landlord?
In the instant case, there is no charge towards commission and packing and as such the same is ruled out. Thus, the only two possible inclusions are the incidental expenses and amount charged for anything done by the supplier. The includible charges are to be examined in terms of the language employed in the statute vis-à-vis the terms and conditions of the agreement and would depend on case to case basis. Thus, the question to the effect whether incidental charges are includible in the value of supply is not answerable in general terms. The facts of each case would be different and such decision would be applicable based on the facts of each case. Therefore, we are discussing the matter only in respect of the specific case in terms of the agreement entered into by the applicant with the CGST department and the discussions and decision would not apply to other agreements.
The charges towards electricity is covered under clause 9 of the agreement which is independent of clause 3 and the same stipulates that “the Govt. of India” shall pay all charges in respect of electric power, Air-conditioning charges, light and water used along with the applicable taxes thereon. Careful scrutiny of the clause indicates that the supplier of the service has made it mandatory that the Govt. of India is required to pay all the charges in respect of electric power used - In view of such an agreement, it cannot be said that the electricity charges would be covered by Sec. 15(2)(c) of the CGST Act, 2017 for the sole reason that the rate for renting of premises has been fixed at an amount and the electricity charges are to be borne by the lessee as per the actual usage of electric power by them in terms of the agreement. Accordingly, the said amount would not be includible in the value of supply. It is reiterated here that the decision would apply to this specific agreement in as much as the clauses of the agreement are specific to the effect that the lessee would.
The second question to the effect whether such expenses incurred by the applicant would be considered as charges taken in the capacity of a pure agent or otherwise. This question gains importance owing to the fact that the applicant has not provided a separate electric meter to the lessee in the instant case and as such the lessee cannot make the payment of electric charges directly to the electric company. In such circumstances the applicant makes the payment to the electric company and in-turn collects such charges from the lessee. To make the system work, the applicant have installed sub-meters and they collect the charges of the electric power used by the lessee as per the usage of power ascertained from such sub-meter - the lessee was supposed to pay the electricity charges directly to the electric company as per the actual usage in terms of the agreement. However, for the failure of the lessor to obtain a separate electric meter for the premises rented to the lessee, they have mutually agreed to collect the electric charges on the basis of actual usage based on the sub-meters and onward payment to the electric company. At this juncture, it is noteworthy to mention that the lessee is Govt. of India and as such would by no means pay any amount in excess or lower than the actual electric power used by them. With a purpose to ensure such actual payment, the lessor i.e. the applicant has installed a sub-meter for the lessee. Thus, it is purely a reimbursable expense made by the lessee which is collected on actual usage of the electric power. Secondly, if at all the amount was not be charged on actual usage basis, it would have been all the more easier for both the parties to fix a certain amount towards electricity charges in the agreement itself. However, this has not been done which clarifies the intent of both the parties that the charges towards electric power usage would be on actual basis.
It is clear that the agreement contains an inbuilt clause of actual payment of electric charges by the lessee directly to the electric company. However, due to lack of infrastructure on the part of the lessor, there is a silent agreement between both the parties that the applicant will collect the actual usage charges on the basis of the reading of the sub-meter and in-turn pay the same to the electric company. Since this arrangement has been on-going since such a long time, it can be clearly said that there is a mutual understanding between both the parties and such mutual understanding is also an called an ‘agreement’ in terms of the provisions of the Indian Contract Act, 1852. Thus, the conditions of Rule 33 of the CGST Rules, 2017 also stand satisfied in the instant case and as such it is concluded that the electricity expenses incurred by the applicant on behalf of the lessee have been incurred in the capacity of a pure agent.
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