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GST - Advance Ruling Authority - Case Laws
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2022 (11) TMI 481
Territorial Jurisdiction of Advance Ruling Authority - Requirement to obtain temporary GST Registration at various locations/States for each location to claim GST tax installation, testing & commissioning of antennas - applicability of Section 22 of the CGST Act - HELD THAT:- The applicant is having his place of business in the state of Telangana and is seeking a ruling on his liability to obtain a registration in other states where he is executing to contracts including installation, testing and commissioning of antennas. In this connection it is inform that under section 96 of the CGST Act, the authority for advance ruling constituted under the provisions of a state goods and services Act shall be deemed to be the authority for advance ruling of that state. As seen from this provision there is a territorial nexus between the authority for advance ruling of a state and its geographical boundary. Therefore, this advance ruling authority constituted under the Telangana State Goods and Services Act cannot give a ruling on the liability arising under the CGST Act or SGST Act in a different state.
Application dismissed.
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2022 (11) TMI 260
Input Tax Credit - applicant is under Marginal Scheme - credit on expenses like Rent, Advertisement expenses, commission, Professional expenses and other like expenses - credit on Capital Goods for the Applicant under Marginal Scheme - HELD THAT:- Rule 32(5) says that, a taxable supply provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price. If the value of such supply is negative, then it shall be ignored - rule 32(5) clearly bars availment of input tax credit on the purchase of those second hand goods which he is supplying, however there is no restriction on the availment of input tax credit in respect of input services or capital goods.
After going through section 16 of CGST Act 2017 i.e Eligibility and conditions for taking input tax credit we can see that there is no bar on the registered tax payer to claim input tax credit on input services and corresponding expenses like Rent, Advertisement expenses, commission, Professional expenses, other like expenses and capital Goods while being under Margin Scheme (Rule 32(5) of CGST Rules) - the Applicant can claim input tax credit on the expenses in respect of input services and capital goods subjected to section 16 to 21 and rules 36-45 of CGST Act and Rules 2017.
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2022 (11) TMI 259
Levy of GST - Pure services or not - reimbursement of tree cut compensation and land compensation amount paid to farmers and land owners during the course of execution of work - HELD THAT:- Since all the 4 conditions to be a pure agent are satisfied, the Applicant is acting as a pure agent only to the extent of reimbursement of tree cut compensation. But the Applicant is not acting as pure agent to the extent of reimbursement of land compensation as para 1.4 of Special conditions of contract does not mention land compensation i.e there is no contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of services to the extent of land compensation. However, in case if Special conditions of contract is not a part of the main agreement, then Advance Ruling issued in this case does not apply.
Reimbursement of tree cut compensation amount paid to farmers and land owners during the course of execution of work is not chargeable to GST as the Applicant qualifies to be a Pure Agent and Reimbursement of land compensation amount paid to farmers and land owners during the course of execution of work is chargeable to GST as the Applicant does not qualifies to be a Pure Agent.
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2022 (11) TMI 258
Maintainability of advance ruling application - application filed by the recipient of service - Classification of supply - build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - reimbursement of manpower service provided as a part of Operation and Maintenance in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - pure services provided to KUIDFC in relation to works contract service to build, design, operate and transfer bulk supply, distribution systems of the existing water supply systems in Belagavi City, Karnataka - applicability of Sl.No.3 of Notification No.11/ 2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No.22/2021 dated 31.12.2021.
Whether the applicant, is the proper person to file the instant application or not, being the recipient of the impugned services to which the questions are related?
HELD THAT:- Section 95(a) of the CGST Act 2017, while defining the term 'advance ruling', stipulates that an applicant can seek advance ruling on the questions specified under Section 97(2) of the CGST Act 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant - In the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to the service/s being received by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.
The application filed by the Applicant for advance ruling is rejected, in terms of Section 98(2) of the CGST Act 2017.
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2022 (11) TMI 257
Levy of GST - services procured from the respective service providers being the manufacturer and supplier of exempted goods falling under HSN 23099020 - Reverse Charge Mechanism - HELD THAT:- The applicant, admittedly is a registered person under GST Act and located in the taxable territory. They are the recipients of the services of the Goods Transport Agency and Security services, which are squarely covered under the category of supplies attracting GST liabilities on reverse charge basis, in terms of the Notification. Further Section 9(3) of the CGST Act 2017 stipulates that all the provisions of the CGST Act 2017 shall apply to the recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both, where the tax shall be paid on reverse charge basis by the recipient. Thus the recipient of service is liable to pay GST in respect of the services notified under Section 9(3) of the Act, ibid read with Notification 13/2017-Central Tax(Rate).
It is pertinent to mention that GST is levied on the supply of service and liability is fastened independently for each of the supplies. Levy of tax or otherwise on a particular supply does not have a bearing on the taxability of other supplies received or provided by a taxpayer. Thus the exemption provided to the outward supplies of the applicant does not have a bearing on the GST liabilities under reverse charge basis on the supplies received by the applicant.
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2022 (11) TMI 256
Classification of supply - nature of supply - e-commerce operator - Section 9(5) of CGST Act 2017 r/w notification No. 17/2017 dated 28.06.2017 - supply or not - supply by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application - supply of goods or services supplied by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application.
Whether the applicant qualifies to be an e-commerce operator or not and whether they are liable to discharge tax liability in terms of Section 9(5) of the CGST Act 2017?
HELD THAT:- Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce i.e. for the supply of goods or services or both, including digital products over digital or electronic network. In the instant case the applicant owns digital platform (APP MYn), for the supply of goods or services or both. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator.
The word through in the phrase services supplied through electronic commerce operator, in Section 9(5) ibid, gives the meaning that the services are to be supplied by means of / by the agency of / from beginning to the end / during entire period by e-commerce operator. In the instant case, it is observed that the applicant, because of their unique business model, merely connects the driver and passenger and their role ends on such connection; they do not collect the consideration; they have no control over actual provision of service by service provider; they do not have the details of the ride; they do not have control room/call centre etc. The supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn't take responsibility for the operational and completion of the ride. Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. Thus the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017.
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2022 (11) TMI 207
Classification of supply - rate of GST - Composite supply - works contract services related to modification/construction, renovation & maintenance of roads & highway projects and works connected with and incidental thereto - does the activity carried out by the applicant falls under Heading 9954: Entry No. 3(iv)(a) of Notification No. 11/2017-CT(R) and liable to tax @ 12%? - HELD THAT:- In the instant case, contract for construction of National Highway pertaining to Nadia District in the state of West Bengal has been awarded to M/s KCC Buildcon Private Limited on Engineering, Procurement, Construction (EPC) mode. The main contractor i.e., M/s KCC Buildcon Private Limited thereafter, has entered into a sub-contract with the applicant for shifting of electrical utilities in respect of the said project.
The applicant, therefore, has been awarded a sub-contract from the main contractor for shifting of electrical utilities which requires removing of old materials from the project site along with erection of materials/lines. The applicant thus has been awarded to carry out a specific part of the work as specified in the agreement made between NHAI and M/s KCC Buildcon Private Limited. From the documents produced by the applicant, it is noticed that all the provisions of Articles 9.0 of EPC Agreement, Letter of Award dated 15th October, 2019 and relevant clauses of scope of work mentioned in the EPC Agreement shall apply on back to back basis to the applicant. In the said article, as it is found, that the contractor shall undertake the work of shifting of any utility (including electric lines, water pipes, gas pipelines and telephone cables) to an appropriate location or alignment and the cost of such shifting, as per estimates prepared by the entity owning the utility and approved by the Authority, shall be reimbursed by the Authority to the contractor.
In the instant case, the applicant has entered into the agreement with M/s KCC Buildcon Pvt Ltd i.e., the main contractor for shifting of electrical utilities and for this work, the main contractor is liable to pay the consideration to the applicant. So, in terms of sub-clause (a) of clause 93 of section 2, there can be no dispute that the applicant is supplying the services to M/s KCC Buildcon Pvt Ltd and not to NHAI.
Whether the work of such shifting of electrical utilities can be regarded as services provided by way of construction of road or not? - HELD THAT:- Admittedly the ‘Scope of Project’ in respect of the main contractor means and includes construction of Project Highway which demands shifting of obstructing utilities as and where required and for that purpose, such shifting work can be considered as an ancillary to the main work. However, when the sub-contractor, on being awarded, provides services of shifting of electrical utilities only, can it be said that the sub-contractor is supplying services by way of construction of road - in the instant case, the services provided by the applicant, for its very limited scope towards shifting of electrical utilities, cannot be regarded as supply by way of construction of road. The terms and condition of the agreement made between NHAI and the contractor stipulates that the cost of such shifting shall be reimbursed by the Authority to the Contractor which also indicates the independent nature of the work.
In the case of Gaurish Sharma [2020 (5) TMI 412 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN], the Rajasthan AAR has observed that the proposed activity carried out by the applicant is of shifting/erection of 11 KV & LT lines only and the same cannot be categorised as construction of road as classified under Entry number 3(iv)(a) of the Notification No. 11/2017-CT (Rate) dated 28-6-2017, as amended. The AAR also observed that since such cost of the aforesaid activity will be borne by the Authority or by the entity owning such utility, therefore such payment of above mentioned activity is not the part of the main contract i.e. construction of road as awarded to main contractor by NHAI. Thus, there establish no nexus between the main contract awarded for construction of road by the NHAI and the work proposed to be undertaken by the applicant.
The activities carried out by the applicant in the instant case is identical with the case of Gaurish Sharma before the Rajasthan AAR. Further, providing services of shifting of electrical utilities only cannot be regarded as services by way of construction of road - the work being undertaken by the applicant fails to get covered under serial number 3(iv)(a) of the Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017, as amended.
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2022 (11) TMI 206
Classification of goods - Geomembranes - whether Geomembranes merits classification under Heading 5911, Sub Heading 59111000 or Sub Heading 59119090, as Textile products, coated, covered or laminated with plastic, used for technical purposes? - HELD THAT:- The width of such tapes/strips is below 5 mm, and they are wound on metal pipes bobbin. These tapes/strips of below 5 mm are then loaded on circular looms or flat looms and by employing weft and warp method of weaving, woven fabrics are produced - Rolls of uncoated fabrics loaded on extrusion lamination machine are drawn for feeding into the laminating unit. Mix of Low Density Polythene (LDPE), LLDPE and colour/black master batch is fed into the extruder through a Hopper, and melted by applying heat and friction, for forming a thin film in a molten state.
Uncoated fabric is thus coated /laminated on one side by this molten mix, and passed over a chill roll containing chilled water. Edges of coated/laminated fabrics are trimmed and then wound on steel pipes on a winder. Same way, the other side of the fabric is also coated /laminated to form a waterproof fabric. For increasing thickness of such fabric, one side coated/laminated fabrics are sandwiched laminated with a film and then laminated again with one more layer of fabric to form a coated/laminated fabric of higher thickness. Thereafter overlap sealing is done to increase the width of the coated/laminated fabric, and they are cut in required length to obtain required size of Geomembranes.
Woven Fabrics from HDPE Strips and Tapes of less than 5 mm of Heading 5404 shall be covered under Heading 5407 20 of the HSN. The above Woven Fabric is subjected to sandwich lamination of plastics and brings into existence a new product viz. Geomembranes pond lining fabrics. The said Geomembranes pond lining fabrics are supplied in piece form or are in cut to length as per the specification of customer.
In view of technical uses of Geomembrane, Geomembrane passing the test of Section note XI( 1 )(g) to Section XI, Geomembrane satisfying the test of Chapter 59 Note 7(1 )(a); it is concluded that 'Geomembrane' is a textile article. The view that Geomembrane is a textile article is in compliance to the Hon'ble Apex Court view held in PORRITTS & SPENCER (ASIA) LTD. VERSUS STATE OF HARYANA [1978 (9) TMI 72 - SUPREME COURT].
Thus, the product viz. Geomembrane merits classification under HSN 59111000.
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2022 (11) TMI 140
Exemption from GST - pure services or not - Composite supply or not - providing conservancy/solid waste management services - HELD THAT:- In the instant case, the work order issued by the Conservancy Department of Howrah Municipal Corporation describes the nature of the work for annual operation and maintenance of capacity portable compactor and hook loader. Further, from the copies of invoices as furnished by the authorized representative in course of personal hearing, it is noticed that the applicant has issued invoices describing particulars as ‘annual operation and maintenance of Compactor Machine for lifting and removal of garbage’.
The term ‘pure services’ has not been defined under the Act. However, a bare reading of the description of services as specified in serial number 3 of the Exemption Notification denotes supply of services which does not involve any supply of goods can be regarded as pure services. In the present case, the work order has been issued for operation and maintenance of compactor and hook loader. Annual maintenance of compactor and hook loader involves supply of goods like spare parts. The instant supply cannot be held to be pure services.
The instant supply for annual operation and maintenance of compactor and hook loader is a composite supply of goods and services and such supply can qualify for exemption vide serial 3A of the Exemption Notification only when the value of goods involved in such composite supply does not exceed 25% of the value of supply and the same is provided to the Central Government, State Government or Union territory or local authority 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 - the functions entrusted to a municipality as listed in the Twelfth Schedule include the functions like sanitation conservancy and solid waste management. The applicant's services to HMC may be exempted under serial number 3A of the Exemption Notification if the value of goods involved in such composite supply does not exceed 25% of the value of supply.
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2022 (11) TMI 139
Classification of goods - rate of GST - HSN Code - manufacturing of Industrial Safety belt and Harness - to be classified under HSN code 6307 or not - HELD THAT:- It is found that there is no specific heading in the tariff for classification of industrial safety belt manufactured by the applicant.
It appears that the item industrial safety belt made of nylon, which may be termed as life belt, can be covered under Tariff item 6307 20 90. Further, serial number 224 of Schedule I and serial number 171 of Schedule-II respectively of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017, as amended from time to time, [corresponding State Tax Notification No. 1125-F.T. dated 28.06.2017, as amended].
The item industrial safety belt manufactured by the applicant would be classified under chapter sub-heading 6307 20 90 and tax would be levied @ 5% of item sale value not exceeding Rs.1000/- per piece and @ 12% in case where sale value exceeds Rs.1000/- per piece.
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2022 (10) TMI 1217
Levy of GST - prepayment premium to be charged by PFC, New Delhi for prepayment of loans - HELD THAT:- The Central Board of Indirect Taxes and Customs (CBIC) has issued two Circulars - one Circular No. 102/21/2019-GST dated 28.06.2019 clarifying the “issue of applicability of additional/penal interest” and other Circular No. 178/10/2022-GST dated 03.08.2022 regarding 'GST applicability of liquidation damages, compensation and penalty arising out of breach of contract or other provisions of law”.
The Circular No. 102/21/2019-GST dated 28.06.2019 clarifies doubts regarding admissibility of GST on additional/penal interest on the overdue loan i.e. whether it would be exempt from GST in terms of SI. No. 27 of notification No. 12/2017-Ccntral Tax (Rate) dated 28th June 2017 or such penal interest would be treated as consideration for liquidated damages [amounting to a separate taxable supply of services under GST covered under entry 5(e) of Schedule II of the Central Goods and Services Tax Act, 2017.
On the other hand, the Circular No. 102/21/2019-GST dated 28.06.2019 in para 7.1.6. has analysed the situation where some banks charge pre-payment penalty if the borrower wishes to repay the loan before the maturity of the loan period and clarified that, such amounts paid for acceptance of late payment, early termination of lease or for pre-payment of loan or the amounts forfeited on cancellation of service by the customer as contemplated by the contract as part of commercial terms agreed to by the parties, constitute consideration for the supply of a facility, namely, of acceptance of late payment, early termination of a lease agreement, of prepayment of loan. Therefore, such payments, even though they may be referred to as fine or penalty, are actually payments that amount to consideration for supply, and are subject to GST, in cases where such supply is taxable.
In the present case of the applicant the applicant has simply stated that the PFC has raised the demand of prepayment premium of Rs. 16,85,71,429/-. It is not clear as to whether the prepayment premium includes “additional/penal interest” or “pre-payment penalty”. As the “additional/penal interest” is in the nature of Interest whereas the “prepayment penalty” is in the nature of fine/penalty - in case the consideration is represented by penal interest for prepayment of loan amount the same shall be exempted from payment of GST in terms of SI. No. 27 of notification No. 12/2017-Central Tax (Rate) dated the 28.06.2017.
Hence, it can be seen that, in both the conditions i.e. whether the prepayment premium includes “additional/penal interest or pre payment penalty”, there shall not be any GST on the prepayment premium to charged by PFC, New Delhi for pre-payment of loan under CGST Act, 2017.
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2022 (10) TMI 949
Supply or not - Levy of GST - rate of GST - amount collected by the Applicant company as Notice Pay Recovery from the outgoing employee - amount of Surety Bond forfeited/encashed by the Applicant company from the outgoing contractual employee - nominal & subsidized recoveries made by the Applicant from its employees towards provision of canteen facility by 3rd party service provider to Applicant's employees - amount collected by the Applicant company from its employees in lieu of providing a new identity card (ID Card) - amount collected by the Applicant as liquidated damages for non performance/short-performance/delay in performance - amount forfeited by the Applicant company pertaining to Earnes Money, Security Deposit & Bank Guarantee - amount of Creditors balance unclaimed/untraceable and written off by the Applicant by way of crediting P&L Account.
Notice pay recovery - surety bond forfeiture - HELD THAT:- The amount received as notice pay recovery by the applicant from the employees who leave the applicant company without serving mandatory notice period mentioned in the employment contract is not a consideration for any supply or services. Similarly, the action of surety bond forfeiture by the applicant (which is furnished by the contractual employee at the time of joining) of the employees who leave the company without serving minimum contract period as per the employment contract is also not a consideration per se. These amounts are covered under Schedule HIM and not clause 5(e) of schedule II appended with the CGST Act, 2017. So, it is outside the scope of supply because the said amount recovered by the applicant is in lieu of un-served notice period/non serving the contract period by the employees. It cannot be regarded as a consideration which has been defined in the section 2(31) of the Act - both are excluded from the definition of Supply under the GST Act.
Provision of the canteen facility at its premises by the applicant company for its employees - HELD THAT:- The facility of canteen is being provided by the companies to its employees under the Factory Act, 1948 wherein it is mandatory to the applicant to make provisions of the canteen facility to its employees. There is no independent contract between the applicant and the employees for setting up the canteen facility at the company's premises. It is being undertaken on account of the legal obligation case upon the applicant. So, it is concluded that the said transaction of recovering the part payment of the meals from the staff by the applicant is outside the purview of scope of supply.
Whether the charges for re-issuance of ID card to the employees by the applicant company is an taxable event under the GST Act? - HELD THAT:- It is noticed that the applicant uses the in-house printing facility for the services i.e. re-issuance of identity cards to the employees. Fee of Rs. 100 per card is charged for re-issuance by the applicant form its respective employee for issuance the new identity card. No third party contractor is availed for the printing of Id-cards. The Id-card is reissued in case of loss of the same or the card is in non serviceable condition - the authority is of view that this transaction does not fall under the taxable event under the GST as it's covered under the schedule III(1) appended with the CGST Act, 2017.
Taxability - transaction of liquidated damage charged due to delay in completion of work and forfeiture of Earnest Money/ Bank Guarantee /Security Deposit - HELD THAT:- The authority is of view that the matter stands clarified in the circular dated 03.08.2022 of the Board - the amount received as a compensation due to delay in completion of work will not be taxable due to the reason that it is not recovered on account of any services rendered to another person and instead, is claimed towards damages incurred on account of delay/any other reason as stipulated in the agreement.
Amount forfeited by the Applicant company pertaining to Earnest Money, Security Deposit & Bank Guarantee - HELD THAT:- The forfeiture of amount received as Earnest Money/Security Deposit or release/forfeiture of Bank Guarantee cannot be chargeable - The nature of Earnest Money is equivalent to penalty charged by the tenderer which is similar to the nature of 'liquidated damages' and therefore, cannot be treated to be 'consideration' - The Security Deposit is collected by the Applicant for the reason that if there is any break, deface, injure or destroy any part of building in which they may be working, or any building, road, road kerb, fence, enclosure, water pipe, cables, drains, electric or telephone post or wires, trees, grass or grassland. etc, the same may be adjusted and the balance shall be refunded back to the contractor - Bank Guarantee is also forfeited for the same reasons as Security Deposit is forfeited - thus not taxable.
Taxability - amount written off in the books of account of the applicant as creditors balance - HELD THAT:- The authority is of view that there are no services received or provided by the applicant company in this situations/transactions. So, this transaction of writing off unclaimed amount of the contractors/other creditors is basically an income and not a supply, hence outside the purview of scope of supply under the GST Act - not taxable.
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2022 (10) TMI 911
Levy of GST - valuation of Supply - transport of goods - inclusion of value of free diesel filled by service recipient under the accepted terms of contractual agreement in the fleet(s) placed by GTA service provider - HELD THAT:- Section 15 of the CGST Act, 2017 provides that the value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply - Section 15 of the CGST Act, 2017 mandates that the value of supply shall include among other things, any other amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both.
In the instant case although the supplier i.e. the applicant in the course of normal business transaction was required to include the cost of fuel, but for the wordings (read terms and conditions which apparently suites themselves) inserted in the agreement that too between two private entities, are trying to circumvent the statute, which appears was not the intent of the Parliament - It is observed that without the fuel the vehicle does not operate (run) and without running i.e. moving from one place to another, the act of transportation of goods by road does not happen. The goods transport service has the integral component of moving of goods from one place to another and for this to undertake a vehicle in running condition, an operator etc. are required. The running condition of a vehicle cannot be achieved without the fuel, as in absence of fuel the vehicle cannot move from one place to another to transport the goods.
The input i.e. fuel, to run and operate the vehicle, provided free of cost by the recipient of the service, for transportation of goods, shall form part of value of supply in view of Section 15 of the CGST Act, 2017, as the cost of this input has to be paid by supplier of services but incurred by the recipient (as per the terms and condition of the agreement) as for the purpose of levy of GST, cost of all the inputs, whether provided free of cost or not, has to be included in the value of supply - the value of free diesel filled by service recipient will be subjected to the charge of GST by adding the free value diesel in the value of GTA service, under the Central Goods and Services Tax Act, 2017 & Uttarakhand Goods and Service Tax Act, 2017.
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2022 (10) TMI 910
Levy of GST - payments made by PTCUL to UK CAMPA as Compensatory Afforestation Value - Net Present Value and recovery made towards dwarf species cost - payments made by PTCUL to Divisional Forest Officer (DFO) towards lease rent - scope of Government as laid under section 2(53) of the Central Goods & Service Tax (CGST) Act, 2017 - supply of services or not - section 12AA registered entity of The Income Tax Act 1961 or not - reverse charge mechanism or not - GST on compensation paid by PTCUL to DFO, the Government of Uttarakhand - heading of the GST tariff.
Whether UK CAMPA, falls under the ambit of the definition of “Government” as laid under section 2(53) of the Central Goods & Service Tax (CGST) Act, 2017? - HELD THAT:- There is no doubt that Forest (Conservation) Act, 1980 in the state of Uttarakhand is also implement and regulated by the Forest Department of State Government of Uttarakhand and the UK CAMPA is under the aegis of Forest Department of State Government of Uttarakhand, as they administer, manage and regulate the said act - in the calculation sheet and on the body of the said letters, 18% GST has been calculated, this clearly and evidently shows that GST is leviable on such demands raised for UK CAMPA by the Forest Department of State Government of Uttarakhand and that the applicant has been sanctioning the requisite funds - UK CAMPA falls under the category of State Government as defined in Section 2(103) of the CGST Act, 2017 which specifies that “State” includes a Union Territory with Legislature.
Whether services rendered by UK CAMPA for which compensation is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017? - HELD THAT:- If grants are given freely in which the grantor does not receive any benefit in return, then they are not consideration for any supply and are therefore outside the scope of GST but if the grantor receives a benefit in return, then the grant is treated as a consideration for the supply and in the instant case the applicant has admitted that the amount paid is to compensate for loss of land by land' and 'trees by trees', which imply that although the assignment of the value has to be calculated for loss of land by land' and 'trees by trees', but the said “assignment of the value” also includes consideration for various other activities viz. assisted natural regeneration, conservation and protection of forests, infrastructure development, wildlife conservation and protection and other related activities and for matters connected therewith or incidental thereto - both of the two major elements i.e. Supply is done for a consideration and Supply is done in course of furtherance of business are fulfilled as the services rendered are through the Forest Department of State Government of Uttarakhand, for which compensation is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017.
Whether services supplied by UK CAMPA, which is a section 12AA registered entity of The Income Tax Act 1961, be covered under Serial No 1 (Chapter 99) of Notification No 12/2017-Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017? - HELD THAT:- It is opined that charity means generosity and helpfulness especially toward the needy or suffering that is to say aid given to those in need. The list of activities given in the above said notification are the activities which are eligible for exemption but for the exemption to come into picture the act of charity has to be fulfilled and in the instant case, the money is being charged and collected for specific purposes, which evidently does not constitute “charity' and hence services rendered through the Forest Department of State Government of Uttarakhand, is not covered under Entry No 1 (Chapter 99) of Notification No 12/2017 - Central Tax (Rate) dated 28th June 2017 read with section 11 of the CGST Act 2017.
Under which heading of the GST tariff shall the said supply of service be covered? - HELD THAT:- The services provided through the Forest Department of state Government of Uttarakhand falls under the Heading 999799 - “Other services nowhere else classified” in the “Group 99979- other miscellaneous services” and hence not covered under Serial No 6 of the Notification No 12/ 2017 and it is observed that the above services under Heading 999799 does not figure in the Notification No. 12/ 2017 and hence is liable to tax.
Identification of person liable to deposit such GST with the Government authorities i.e. is such payment covered under the Reverse Charge mechanism or normal forward charge rules? - HELD THAT:- The applicant being a business entity is liable and mandated to follow the provisions of the Notification No. 13/2017-Central Tax (Rate) dated 28th June, 2017 and is liable to pay due tax under reverse charge mechanism on the total assigned value for which demand is raised by the Forest Department of State Government of Uttarakhand, as per the provisions of the CAMPA Act.
Whether compensation paid by PTCUL to DFO, the Government of Uttarakhand, is subject to levy of GST? - HELD THAT:- In the Section 7 of the CGST Act, 2017 it has been mandated that “the expression - supply includes - all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business”, and the consideration (although termed as “compensation” by the applicant) is actually “Premium or Annual Lease” as evident from the demand letters of the DFO, submitted by the applicant on 08.08.2022 - both of the two major elements i.e. Supply is done for a consideration and Supply is done in course of furtherance of business are fulfilled by the DFO of the Forest Department of State Government of Uttarakhand and hence services rendered for which “Premium or Annual Lease” is paid by PTCUL, qualifies as a 'supply of services' as per section 7 of CGST Act, 2017.
Under which heading of the GST tariff shall the said supply of service be covered? - HELD THAT:- It is found that at Heading 997212 under the head of “Description of Service”, “Rental or leasing services involving own land or leased non-residential property”, have been kept, and it is opined that the services provided by the DFO of the Forest Department of State Government of Uttarakhand falls under the above Heading and hence not covered under Serial No 6 of the Notification No 12/ 2017 and it is observed that the above services under Heading 997212, does not figure in the Notification No. 12/ 2017 and hence is liable to tax.
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2022 (10) TMI 909
Taxability - coal rejects whose invoice is raised by Applicant upon washery/job-workerInput Tax Credit (ITC) of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning - admissible proportion of Input Tax Credit.
Whether the “coal reject” whose invoice is raised by Applicant upon washery job-worker, is taxable under GST Act and Compensation Act in the hands of Applicant? - HELD THAT:- The coal rejects generated during the process of Coal washing are nothing but Coal with higher percentage of Ash content. HSN 2701 covers “Coal; briquettes, avoids and similar solid fuels manufactured from coal”. Therefore. Coal rejects are rightly classifiable under HSN 2701 and as per Notification No. 01/2017- Central Tax (Rate) dated 28.06.2017. 2.5% Central GST is also leviable for the same heading i.e. 2701 under schedule-I, further, as per Notification No. 01/2017- compensation cess (Rate) dated 28.06.2017. Rs. 400 per tonne is leviable as compensation cess under Chapter Heading Sub-heading 2701 - Coal rejects are to be classified under HSN 2701 and are taxable at 5% GS T Rate + Rs. 400 PMT Compensation Cess.
Whether Applicant is eligible to avail Input tax Credit of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery job worker for cleaning? - HELD THAT:- Where the goods are being received in lots or installments. the registered person shall be entitled to take credit upon receipt of the last lot or installment. Thus, if the applicant fulfils the eligibility conditions as prescribed under Section 16 of CGST Act, 2017 & PGST Act, 2017 and if the type of ITC do not fall under the categories prescribed under Section 17 of CGST Act, 2017 & PGST Act, 2017. the applicant is eligible to avail Input Tax Credit of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning. Further, the “principal” shall be entitled to avail ITC in relation to goods sent directly to the premises of job-worker.
If the answer to above question is yes and ITC is admissible, what is the admissible proportion of Input Tax Credit? - HELD THAT:- The formula prescribed under Rule 42 of CGST & PGST Rules, 2017 for manner of determination of input tax credit in respect of inputs or input services and reversal thereof will be applicable in both cases i.e. GST and Compensation Cess. Therefore, the provisions prescribed under Rule 42 of CGST & PGST Rules, 2017 should be followed by the applicant and they have to make reversal in the proportion of exempt/taxable turnover.
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2022 (10) TMI 908
Classification of services - Bio-Mining and Scientific Closure of Legacy wastes at the dumpsite in Kureepuzha, Kollarn - services to be provided by the Applicant to the Superintending Engineer, Kollarn Municipal Corporation - eligibility for exemption under SI.No.3 of Notification No. 12/2017 dated 28.06.2017 as amended - HELD THAT:- The activities undertaken by the applicant are containment of waste, temporary storage of hazardous and non-hazardous waste, treating and disposing of the waste by processing in a facility that meets the legal standards. The ultimate goal of the activity is the reclamation of the land after clearing the waste and the activity undertaken by the applicant is the removal of waste as per the norms of Solid Waste Management Rules 2016. The activity of the applicant merits classification under SAC 9994 - Sewage and waste collection, treatment and disposal and other environmental protection services - Group - 99943 - Waste treatment and disposal services as per Annexure to Notification No. 11/2017 CT (Rate) dated 28.6.2017.
Whether the services rendered by the applicant are eligible for exemption as per entry at SL.No. 3 of the Notification No, 12/2017 CT (Rate) dated 28.6.2017? - HELD THAT:- In order to qualify for the exemption under the above entry, the following conditions are to be satisfied:-
a. The services must be pure services
b. It must be provided to the Central Government, State Government, Union Territory or local authority
c. The pure services must be by way of any activity in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution or in relation to any function entrusted to Municipality under article 243 W of the Constitution.
As revealed from the records produced before this authority, the services rendered by the applicant are devoid of any incorporation of goods in the process of supply. Thereby the same is eligible to be classified as pure services excluding works contract service and other composite supplies involving the supply of any goods. Thereby the first condition is satisfied - the second condition is also satisfied - The Twelfth Schedule to the Constitution deals with the provisions that specify the powers, authority and responsibilities of Municipalities; it includes 18 matters. SI.No. 6 of the Twelfth Schedule to the Constitution under article 243W deals with Public health, sanitation conservancy and solid waste management. The services proposed to be extended by the applicant to the Kollam municipal corporation are Biomining and Scientific closure of existing waste at the dumpsite Kureepuzha, Kollam which is covered under this item. Thereby the 3rd condition is also satisfied.
Thus, the services provided by the applicant are exempted under Si.No. 3 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as amended.
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2022 (10) TMI 866
Classification of supply - supply of goods or supply of services - activity of commercial vehicles body-building on a job-work basis, on the chassis supplied by the customer - applicable rate of GST - HELD THAT:- The applicant is fabricating the body on the chassis belonging to the customer. The ownership of the chassis remains with the customer and at no stage of the process of fabrication of the body, the title in the chassis is transferred to the applicant. Therefore, the applicant is fabricating the body on the chassis belonging to another person and hence the activity is squarely covered under Para 3 of Schedule II of the CGST Act, 2017 as a treatment or process which is applied to another person's goods and accordingly is a supply of services.
Classification of the activity and the rate of GST applicable - HELD THAT:- As per the Scheme of Classification of Services notified as Annexure to Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 the Heading [Service Accounting Code] - 9988 pertains to manufacturing services on physical inputs (goods) owned by others. The Explanatory Notes to the Scheme of Classification of Services states that the services included in the Heading 9988 -Manufacturing services on physical inputs owned by others - are services performed on physical inputs owned by units other than the units providing the service. As such, they are characterized as outsourced portions of a manufacturing process or a complete outsourced manufacturing process - the value of the services in this Heading is based on the service fee paid, not the value of the goods manufactured. SAC - 99888 under Heading 9988 pertains to Transport equipment manufacturing services and Sub - Heading 998881 pertains to Motor vehicle and trailer manufacturing services. Therefore, the activity of the applicant is appropriately classifiable under Service Accounting Code 998881.
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2022 (10) TMI 865
Exemption from GST - education services to student's through its own online platform - transaction between applicant and individual student on a one to one basis - providing education up to Higher Secondary School - exemption under SI.No.66(a) of Notification No.12/2017 - Central Tax (Rate).
HELD THAT:- The first kind of educational institution defined in clause (y) of Para 2 of Notification. No. 12/2017 CT (Rate) dated 28.06.2017 is an institution providing services by way of pre-school education and education up to higher secondary school or equivalent. "Education" is not defined in the CGST Act but as per Apex Court decision in SOLE TRUSTEE, LOKA SHIKSHANA TRUST VERSUS COMMISSIONER OF INCOME-TAX, MYSORE [1975 (8) TMI 1 - SUPREME COURT], education is process of training and developing knowledge, skill and character of students by normal schooling.
The entry exempts educational institutions from pre-school to higher secondary school or an educational institution which is equivalent to a 'school'. Admittedly, the applicant is not a formal school, but an institution providing special training / coaching to students who are enrolled in formal schools for education up to higher secondary or equivalent. Even though the activity; training and coaching undertaken by the applicant can be claimed to be education services in layman's understanding, those activities do not qualify to be classified under any of the Groups; 99921 - Pre-primary education services; 99922 - Primary education services or 99923 - Secondary education services as core educational services provided by schools up to higher secondary or equivalent - institutions providing services by way of education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force and those engaged in providing education as a part of an approved vocational education course are covered by the definition of "educational institution" in sub-clauses (ii) and (iii) respectively of clause (y) of Para 2 of the said notification. The training provided by the applicant neither leads to grant of any qualification recognised by any law for the time being in force nor is part of an approved vocational education course. Therefore the applicant is not covered under the scope of definition of "educational institution" in Para 2 (y) of Notification No. 12/2017 CT (Rate) dated 28.06.2017.
Accordingly, the applicant is not eligible for the exemption as per the entry at SI. No. 66 of the said notification.
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2022 (10) TMI 864
Territorial limit - What is the geographical limit of the city of Hyderabad, Telangana as per Notification No.3 of 2019 – GST Rate? - HELD THAT:- It is to inform that under Section 97 of the CGST Act, 2017 the questions on which the advance ruling is sought shall be in respect of (7) specified items only - The applicant’s question does not fall under any of the 7 category.
Application rejected.
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2022 (10) TMI 863
Rate of GST - Affordable Residential Apartment in a Residential Real Estate Project - whether the rate of 0.75% under Item No. (i) of Entry No. 3 of Notification No. 03/2019 Central Tax (Rate) can be availed when the project consists of both “Affordable Residential Apartments” as well as apartments other than Affordable Residential Apartments?
HELD THAT:- A new tax structure for the real estate sector was introduced with effect from 01.04.2019 onwards by amendment of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 by Notification No. 03/2019 - Central Tax (Rate) dated 29.03.2019. Admittedly, the services of construction of apartments are being rendered by the applicant after 01.04.2019 and hence the rate as notified under the new tax structure is applicable in respect of the construction services rendered by the applicant.
The project to be undertaken by the applicant falls within the definition of a real estate project and the applicant falls within the definition of “promoter”. Further, on a conjoint reading of the provisions of law, the facts as stated in the application and the terms and conditions in the draft agreement produced as Annexure 1 it is seen that the services of construction of apartments provided by the applicant in the residential real estate project squarely fall within the description of services specified in Item (i) and (ia) of SI. No. 3 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 and accordingly the tax rates as prescribed in the said entries shall apply to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 1.5% in respect of the services of construction of affordable residential apartments as per entry at Item (i) and the rate of 7.5% in respect of the services of construction of residential apartments other than affordable residential apartments in the project as per entry at Item No. (ia) of SI No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 subject to the conditions prescribed under the respective entries.
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