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2020 (11) TMI 1056 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Financial Debt - existence of debt and dispute or not - Applicability of section 18 and section 19 of Limitation Act - HELD THAT:- Since, much reliance has been placed by the Ld. Counsel for the petitioner on the reply filed by the Corporate Debtor in pursuant to the legal notice issued under Section 138 of the NI Act, therefore, it is deemed fit to consider this document at first and on going through the reply filed by the Corporate Debtor in response to the legal notice issued under Section 138 of the NI Act and it is noticed that at page 376, it is mentioned that Corporate Debtor had proposed for settlement of the account and on the basis of that Ld. counsel for the petitioner submitted that the Corporate Debtor has acknowledged the debt by sending the reply to the Legal Notice issued under Section 138 of the NI Act and it is also noticed that in its reply to the Legal Notice issued under Section 138 of the NI Act, in para 6 of the reply, which is at page 374 of paper book, it is mentioned that undated cheques were handed over to the petitioner and that is the reasons the date, when the cheques were handed over to the petitioner are not disclosed in the notice.
Apart from that, in the case of Yogesh Kumar Jaswantlal Thakkar Vs. India Overseas Bank and Ors [2020 (9) TMI 582 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] passed by Hon’ble NCLAT, where it was held that Section 19 of the Limitation Act is not applicable so far the IBC is concerned.
Applicability of Section 18 of the Limitation Act - it is mentioned in the reply dated 18.03.2017 that he is ready to settle the statement of accounts, which amounts to the acknowledgement of debt - HELD THAT:- In part-IV, the date of default is not mentioned. Since the last agreement was executed on 30.06.2013, therefore, the payments on the basis of that agreement must be made within 3 years from the date of last agreement, which was executed on 30.06.2013 and acknowledgement also must have been made within that period.
Even if the contention of the petitioner is accepted that reply which was given in response to the legal notice under Section 138 of NI Act will be treated as as an acknowledgement of debt, the same has also been made after three years from the date of execution of last ‘agreement, whereas in view of Section 18 of the Limitation Act, the acknowledgement must be made within the period of limitation. hence, the contention of the Ld. Counsel for the petitioner that the present application is within time, cannot be accepted.
Since the present application is barred by limitation, therefore, the notice need not be issued upon the respondent rather same is liable to be Dismissed - application dismissed.
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2020 (11) TMI 1055 - APPELLATE AUTHORITY FOR ADVANCE RULING, HARYANA
Levy of GST - transportation facility provided by the employer (Applicant) to its employees for travel between predefined location to its the office, free of cost - recovery of nominal amount on account of air conditioning facility for transportation facility provided by the employer (Applicant) to its employees for travel between predefined location - taxable value of the transaction - HELD THAT:- It is observed that the Press Release dated 10.07.2017 very lucidly clarifies that transactions in the course of contractual obligation between employer and the employee are beyond the scope of GST. The same is very well reliable where employer-employee relation is in place and any service by the employer needs to be examined for leviability under GST. The same aptly provides that since service by an employee to the employer is outside the purview of GST, it follows that so will be the supply by the employer to the employee made in terms of the contract of employment.
Thus, the transportation facility is exclusive of the contractual obligation of the employer in the course of employment - Also, the circular mentioning that services of providing membership of a 'club1 or of a 'health or fitness centre' to employees is not subject to GST when provided free of charge to 'all' the employees, indicates that provisioning has to be under contractual agreement of employment.
The provisioning of transport facility provided by the Appellant is exclusive of the contractual obligation of the employer in the course of employment. The same shall be liable to GST, on a value that exceeds the total gift value up to ₹ 50000/- given by the Appellant to an employee availing this facility in a financial year.
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2020 (11) TMI 1054 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI
Rectification of Error - HELD THAT:- In exercise of the powers conferred under Rule 154 of the NCLT Rules 2016, the order is rectified to the extent of the name of the Company by replacing “Ahuja Aangan Creators Private Limited” with “Pooja Aangan Creators Private Limited.”
The order dated 21° October 2020 stands modified - application is allowed.
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2020 (11) TMI 1052 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
Input tax credit - purchase of Paver Blocks, laid on the land which are being used by them in the course of providing their taxable output supply to their customers - Laying of the Paver Blocks on the land amounts to construction of immovable property under Section 17(5)(d) of the CGST Act, 2017 or not - capitalization of expenses on the Paver blocks - HELD THAT:- The immovable property inter-alia includes the things which are attached to the earth. Now, in the present case, it has been submitted that the 'Paver Blocks' are laid on the surface of the automobiles stock yard with the aid of the filling material, i.e. sand and the outer wall, constructed at the automobiles stock yard. Here, it is amply clear that the filling materials, i.e. sands and the outer walls helps the 'Paver Blocks” to remain attached and fixed to the Earth - Once it has been established that the 'Paver Blocks' are attached to the land/surface, the same is considered as an immovable property in terms of its definition provided under the General Clauses Act, 1897.
The Appellant has contended that the MAAR did not appreciate the technical nature, mobility and characteristics of the 'Paver Blocks' before holding the laid out 'Paver Blocks' as an immovable property. It has further been contended that the subject 'Paver Blocks' can easily be moved from one place to another without being damaged and re-erected there, thereby, conforming to the inherent nature of movable property. In this regard, it is observed that the 'Paver Blocks', once laid over the surface to comprise the parking system, cannot be moved “as it is” to another place as the same is also supported by the edge restraints provided by the outer wall constructed along the perimeter of the parking area of the said stock yard, which causes the paver blocks to get fastened or embedded to the earth permanently - The fact that it would clearly not be intention of the Appellant to move these 'Paver Blocks' from one place to another, lends certain degree of permanency to the 'Paver Blocks' laid over the surfaces, which is the essential characteristics of the immovable property.
The issue which is important here is whether it was the intention of the Appellant to dismantle the paver blocks. It is seen that the Appellant has taken over the land on lease for a period of 5 years. It can be deduced from it that the paver blocks are intended to be a permanent structure and there is no intention to dismantle it frequently and take it to any other place.
On perusal of Section 17(5)(d) of the CGST Act, 2017, it is observed that the clause “to the extent of capitalization, to the said immovable property” is applicable only with respect to the reconstruction, renovation, additions or alterations or repairs of the said immovable property, and not with respect to the original construction work of an immovable property. In the present case, the laying of 'Paver Blocks' over the surface of the stock yard would not come under the ambit of the aforesaid explanation as the same cannot be categorized as reconstruction, renovation, additions or alterations or repairs of an immovable property. The laying of 'Paver Blocks' will rather be construed as original construction work of immovable property which in the present case is 'parking system'.
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2020 (11) TMI 1051 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
Maintainability of Advance Ruling application - Classification of goods - proposed product to be manufactured by the Appellant would be considered/categorized as Glass-fiber Reinforced Gypsum or not - applicability of Sl. No.92 of the Notification No.1/2017-C.T. (Rate), dated 28.6.2017 - whether the Advance Ruling application filed by the Appellant is maintainable in terms of Section 95(a) read with Section 97(2) of the CGST Act, 2017 or not?
HELD THAT:- As per Section 95 of the CGST Act, 2017 (a) 'advance ruling' means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100, in relation to the supply of goods or services or both, being undertaken or proposed to be undertaken by the applicant. The section, therefore, envisages that an Advance Ruling can be asked for a transaction undertaken or proposed to be undertaken. Any transaction of supply of goods or services or both, proposed to be undertaken, can be a subject of an application of Advance Ruling. However, the meaning of the expression `proposed to be undertaken' cannot be expanded to include manufacturing, proposed to be undertaken.
It is one of the fundamental rules of interpretation that if the words of a statute are in themselves precise and unambiguous, then no more is necessary than to expound those in their natural and ordinary sense as the words themselves in such a case best declare the intention of the legislature. There is no need for an artificial expansion of the expression as a result of which the interpretation may well go beyond the intention of the Legislature. The application is therefore barred under Section 95 of the CGST Act, 2017 - there is nothing in the provisions of the CGST Act, 2017, which prevents the Appellant from approaching the Advance Ruling Authority with a fresh application along with the sample/reports of the products and seek ruling under Section 97 of the CGST Act, 2017.
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2020 (11) TMI 1050 - APPELLATE AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
Maintainability of Advance Ruling application - Levy of tax - reverse charge mechanism - procurement of domestic services like “renting of immovable property services” from SEEPZ SEZ - applicability of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, amended by Notification No. 03/2018- Central Tax (Rate) dated 25.01.2018 - whether the Advance Ruling application filed by the Appellant is maintainable in terms of Section 95 (a) read with Section 97(2) of the CGST Act, 2017 or not? - HELD THAT:- On plain reading of the texts of Section 95(a) of the CGST Act, 2017, it is amply clear that the Advance Ruling can be sought only in respect of such supplies, which have been undertaken or proposed to be undertaken by the applicant. In other words, it can be said that only “supplier- of goods or services or both, can seek the Advance Ruling and not the “recipient- of such supplies. Thus, we agree with the observations made by the Maharashtra Advance Ruling Authority to the extent that it is only the supplier of goods or services or both, who is eligible to file the application for Advance Ruling in respect of the questions specified under Section 97(2) of the CGST Act, 2017.
Section 9 of the CGST Act, 2017 is the section dealing with 'levy and collection'. It provides for the levy of CGST on all intra-state supplies of goods or services or both. Section 9(3) of the CGST Act, 2017 in keeping with the tenor of the Section also speaks about the 'liability to pay tax' - all the provisions of the CGST Act, 2017, including the provisions related to the Advance Ruling, as laid down under Chapter XVII of the CGST Act, 2017, will be applicable to such recipients. Also, Section 31 (3)(f) of the CGST Act, which deals with 'Tax Invoice', requires a registered person, who is liable to pay tax under section 9(3) to issue a tax invoice in respect of goods or services received by him. As per Rule 36 (1)(b), the recipient is also eligible to take input tax credit on the basis of the tax invoice. This makes it clear that the recipient deemed to be liable to pay tax, he is well, within his rights to make an application for Advance Ruling to know whether he is liable to pay tax.
Liability to pay tax on the receipt of “renting of immovable property” services from the SEEPZ SEZ Authority as well as on the other services procured - HELD THAT:- The said questions, asked by the Appellant, can aptly be construed to be covered under the clause (e) of Section 97(2) of the CGST Act, 2017, which provides for the determination of the liability to pay tax on any goods or services or both. The aforesaid observation also finds support from the Kerala High Court Judgment in the case of SUTHERLAND MORTGAGE SERVICES INC VERSUS THE PRINCIPAL COMMISSIONER OFFICE OF THE PRINCIPAL COMMISSIONER OF CUSTOMS, CENTRAL GST AND CENTRAL EXCISE, KOCHI, THE COMMISSIONER OF STATE TAX, ASSISTANT COMMISSIONER, KAKKANAD RANGE-4 [2020 (3) TMI 186 - KERALA HIGH COURT] wherein the High Court during the course of the judicial review of the Advance Ruling pronounced by the Kerala Advance Ruling Authority inter-alia observed that the provision as per clause (e) of sub-section (2) of Section 97 of the CGST Act, 2017 is in wide terms and the Advance Ruling Authority is obliged to provide the Advance Ruling in all the matters pertaining to the determination of the liability to pay tax on any goods or services or both so that the applicant could get due clarity and precision about various aspects of taxation in the transactions undertaken by them.
Thus, it is evident from the aforesaid High Court Judgment that the clause (e) of Section 97(2) of the CGST Act, 2017 has got a very wide connotation and would cover all sorts of transactions, where the Advance Ruling on the questions related to the determination of the liability to pay tax including the liability under RCM (Reverse Charge Mechanism) can be sought by the Applicant in terms of the provisions related to the Advance Ruling as provided under Chapter XVII of the CGST Act, 2017.
The Appellant is eligible to file the subject Advance Ruling application, wherein they have sought the Advance Ruling as to whether they are liable to pay tax under RCM on the services of “renting of immovable property- received from the SEZ Authority and also on any other services liable for payment of GST under RCM in terms of the Notification No. 13/2017-C.T. (Rate). dated 28.06.2017 as amended.
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2020 (11) TMI 1049 - ITAT DELHI
Income deemed to accrue or arise in India - Royalty receipts - India US DTAA - HELD THAT:- As formed a belief that on the basis of granting of rights, the assessee got the exclusive rights with regard to Microsoft Products in exchange of stocks to MS Corp. Due to this, the intellectual property rights owner is Gracemac Corp. and any payments arising in India in light of provisions of Paragraph 7(b), Article 12 of the India-US tax treaty, are taxable as royalties. Forming this belief, the Assessing Officer held that not only 35% or 40% of the amount but total amount of USD 155,646,892 is taxable as royalty @ 15% as provided in Article 12 of India US DTAA.
Before us,the assessee, at the very outset, stated that the entire action by the Assessing Officer has been decided in favour of the assessee and against the revenue by the Tribunal in the case of Mocrosoft Corporation for AY.s 1997-98 to 1999-2000 in the case of MOL Corporation for A.Y 2011-12 [2018 (10) TMI 1939 - ITAT DELHI] and further in the case of MOL Corporation for A.Ys 2007-08 to 2010-11 [2022 (3) TMI 447 - ITAT DELHI]. Copies of the orders of the Tribunal have been supplied to us.
Per contra, the ld. DR, relying upon the orders of the lower authorities, however conceded that the impugned dispute has been decided in favour of the assessee by the Tribunal in the earlier years. - Decided in favour of assessee.
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2020 (11) TMI 1048 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI
Seeking direction to the suspended Board of Directors for providing the record and other information of the Corporate Debtor - application filed under Section 19(2) of Companies Act - HELD THAT:- On one pretext or the other, there is no compliance with the order of this court which makes it clear that the Suspended Board of Directors have not maintained the record of the CD. In other words, they have failed to perform their fiduciary duties in maintaining the record of the Corporate Debtor. Whereas they are duty bound to maintain the record of the CD for a period of not less than 8 years as mandated under the provisions of Section 128 (5) of the Companies Act, 2013. The Directors namely Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor have grossly violated the provisions of Section 128 (5) of the Companies Act, 2013 for which the punishment is provided under Section 128 (6) of Companies Act, 2013. The only option before this Authority/Tribunal is to invoke the provision of Section 128 (6) of the Companies Act, 2013 and impose penalty as prescribed.
Looking to the conduct of the Suspended Board of Directors, penalty of ₹ 5 Lakhs on each viz., Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor is levied - total ten lakhs shall be deposited to the Accounts of the Government of India, Ministry of Corporate Affairs, within a period of four weeks from the date of passing of this order and thereafter compliance reports shall be submitted by the counsel for Respondent No. 1 and 2 to the Registry - application disposed off.
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2020 (11) TMI 1047 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI
Whether the money i.e. ₹ 32 lakhs has been withdrawn from the account of the Corporate Debtor viz., M/S. A to Z Barter Private Limited, maintained at I-IDFC Bank, Branch Mayapuri? - HELD THAT:- In spite of the present application for depositing the amount withdrawn to the accounts of the CD, the respondents have not bothered to deposit an amount of ₹ 32 lakhs approximately.
The respondents are directed to deposit an amount of ₹ 32 lakhs along with interest @ 12 % per annum from the date of the withdrawal and deposit the total amount to the accounts of the Corporate Debtor being maintained by the Resolution Professional within a period of 21 days from the date of this order - application disposed off.
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2020 (11) TMI 1046 - NATIONAL COMPANY LAW TRIBUNAL NEW DELHI
Seeking dismissal of approved Resolution Plan, which was approved on 5th October, 2020 - HELD THAT:- It is noted that after the approval of the Resolution Plan, this Authority has no power to dismiss the approved Resolution Plan. The only course open to the Applicant is to file an Appeal under Section 61 of the Code.
Application dismissed.
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2020 (11) TMI 1045 - RAJASTHAN HIGH COURT
Seeking grant of bail - triable and compoundable offences or not - huge tax evasion - HELD THAT:- Taking into consideration the arguments advanced by learned counsel for the parties and the fact that the offence is triable by Magistrate and there is no allegation of any criminal antecedent against the applicant and the offence is compoundable, without expressing any opinion on the merits of the case, the bail application filed by the applicant deserves to be accepted.
It is ordered that the accused – applicant shall be released on bail provided he furnishes a personal bond of ₹ 50,000/- with two sureties of ₹ 25,000/- each to the satisfaction of the learned trial court/link court with the stipulation to appear before that Court on all dates of hearing and as & when called upon to do so - The bail application is allowed.
The bail application is allowed.
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2020 (11) TMI 1044 - CESTAT CHENNAI
Revocation of Customs Broker License - forfeiture of security deposit - it is alleged that customs broker had filed the said documents without identifying the importer on record - consignments imported were, upon examination, found to contain ‘imitation raw material glass beads weighing 28,490 kgs.’ and ‘crystal bowl valued at ₹ 81,000’ without corresponding declarations - proper opportunity of being heard not provided - principles of natural justice - HELD THAT:- The plea of the customs broker to the effect that the importer on record, having appeared before the investigating authorities, could not be non-existent is tenable. There are merits in the contention that, with the existence of the importer thus being without doubt, the obligation devolving on the broker could not be alleged to have been breached in substance. The objective of the said obligation could only be established the antecedents of the said persons. Had the customs broker carried out necessary checks as warranted by the Regulations, the facts would not alter in any manner and nor would the importability of goods.
The non-consideration of the first aspect and the insinuation of the second do not advance the propriety of detriment visited upon the appellant by the Commissioner of Customs. This is more so, as the inquiry was conducted ex parte even if that be the fault of the appellant. We cannot also but take note that the intimation letters sent by inquiry authority are dated 23rd October, 2017, 1st November, 2017 and 7th November, 2017 with just a week elapsing between the said communications and the dates, scheduled for hearing, not separated by even the same lapse of time. The notice for adjournments were, therefore, not appropriately phased as to facilitate a proper hearing but merely for technical compliance.
The process initiated cannot be brought to a conclusion in favour of the appellant without proper evidence being placed - matter remanded back to the Commissioner of Customs for conduct of a fresh inquiry and for arriving at conclusion thereto without being influenced by extraneous facts and circumstances - appeal allowed by way of remand.
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2020 (11) TMI 1043 - SC ORDER
Maintainability of application - initiation of CIRP - barred by time limitation under Section 7 - default enclosed in terms of Section 7(3)(b) or not - HELD THAT:- There are no merit in the appeal.
The appeal is dismissed.
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2020 (11) TMI 1042 - NATIONAL COMPANY LAW TRIBUNAL AHMEDABAD
Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - issuance of demand notice - pre-requisite under section 8 of the Insolvency & Bankruptcy Code, 2016 for filing the petition under section 9 - HELD THAT:- The demand notice which is a pre-requisite under section 8 of the Insolvency & Bankruptcy Code, 2016 for filing the petition under section 9, issued by the applicant on 07.10.2019 is signed and issued by an unidentified person on behalf of the applicant company without mentioning designation or full name of the person who has signed it.
On perusal of the records it is found that vide Board Resolution dated 15.11.2019 one Mr. Sudeep Pramanik, Director - Human Resource has been given authority to initiate CIRP proceedings against the corporate debtor. On perusal of the records it is also found that the authority letter/Board Resolution empowering Mr. Sudeep Pramanik (page 13) to initiate action under section 9 of the I & B Code, is dated 15.11.2019. While comparing with the signature appearing in the demand notice and the petition (form 5) it is found that the signatory in both the documents are different. Even assuming that the said demand notice dated 07.10.2019 was signed and issued by Mr. Sudeep Pramanik, it is evident from the records that at the time of issuing the demand notice dated 07.10.2019, Mr. Sudeep Pramanik, Director of the company had no authority to issue demand notice and the person who has signed the demand notice is somebody else who had no authority to issue such notice.
The petition is bad in the eye of law and not maintainable on the very reason that the demand notice is/was issued by an unidentified person who had no authority to issue demand notice and initiate CIRP proceedings against the corporate debtor.
Petition dismissed.
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2020 (11) TMI 1041 - APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
Classification of supply - reimbursement of LIH Damaged beyond repair goods/equipment - supply of drilling services and reimbursement of LIH are composite supply or not - rate of GST applicable to supply of drilling services, being the principal supply, should apply to all the supplies made under the contract with ONGC - challenge to AAR decision - HELD THAT:- In the instant case, the appellant uses certain specialized equipment / tools for drilling oil and gas wells in offshore and onshore environment to pre-defined bottom hole targets which are carried out beneath the surface of the earth. There is a probability that the equipment / tools used for drilling services might get stuck or lost due to uncontrollable or unforeseen down hole environmental situations in the Oil and gas well and might not be retrievable. When such equipment / tools are lost in hole or damaged beyond repair, drilling services cannot be performed until new equipment / tools are made available by the Applicant. This leads to disruption of services due to such LIH equipment. The payment made in the form of reimbursement for the damages /replacement of the Lost in Hole (LIH) equipment necessitates the appellant to replace the tools / equipment instantly in order to continue the drilling services. Hence, the reimbursement of LIH is meant to buy and replace the lost goods.
The reimbursement of LIH tools/equipment is nothing but the consideration received for the procurement of damaged goods i.e., the damaged tools/ lost in hole equipment, in the course of its business of drilling operations.
Whether the supply of drilling services and reimbursement of LIH are composite supplies or not? - HELD THAT:- Following are the parameters for determining the supplies as composite supplies
a. There should be a taxable person and a recipient.
b. Transaction should consist of two or more taxable supplies of goods or services or both; and
c. The two or more taxable supplies should be naturally bundled and supplied in conjunction with each other in the ordinary course of business.
It is need to be examined whether all the above parameters are meted out by the present transaction in discussion. The taxable person, being the appellant makes the taxable supplies to the recipient, being ONGC. The supply of bundled services in relation to the drilling/mining services undertaken by the appellant comprise of supply of certain goods and services. While the LIH reimbursement is another supply comprising of the cost in case of damage of equipment or toolsat an agreed depreciated value of the original FOB price of the equipment in case of the damages of equipment /tools beyond repair or loss. In context of the conditions of (a) and (b)cited, being satisfied, it now needs to be scrutinized whether the drilling services and LIH reimbursement are ‘naturally bundled’ and ‘supplied in conjunction with each other’ in the ordinary course of business.
In the instant case the contract agreement expressly provides that there is no single price or at no point of time, the customer pays the same amount for both the supplies in discussion. Besides, the two supplies i.e., the drilling services and LIH reimbursement are nowhere expressly advertised as a package - in terms of the clauses under the Contract, reimbursement towards LIH equipment does not find mention under the scope of work at Annexure II to the General Conditions of the Contract, but is a separate clause under the Special Conditions of the Contract contemplating a potential event that may or may not occur during the tenure of the Contract. Thus, the said supplies are not made in conjunction with each other, which implies that they are not meant to be made together or in combination in the normal course of business as a single package of composite supplies.
It is clarified beyond doubt that the supply of drilling services and reimbursement of LIH are not composite supplies. Therefore, the rate of GST applicable to supply of drilling services shall not be applicable to all the supplies made under the contract with ONGC, Basing on the nature of actual goods involved in the subject activity, and their HSN classification notified for the goods, the provisions relating to chargeability and levy of GST under the CGST Act and the Rules made there under are applicable to the supply of goods.
The Ruling of Authority for Advance Ruling is upheld.
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2020 (11) TMI 1040 - APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
Exemption form GST - activity of renting out a residential building to a company for the purpose of long- term residential accommodation - monthly rentals received on lease of the residential building at Telangana - benefit of exemption under SI.No.13 of Notification No.9/2017 - Integrated Tax (Rate) dated 28.06.2017 - HELD THAT:- There is no dispute that this transaction is a taxable GST supply. However, what is in question is whether this transaction is exempted from GST in terms of SI. No. 13 of Heading 9963 or Heading 9972 of Notification No. 9/2017-(IT) Rate dated 28-06-2017.
The Lease Deed dated 31.07.2019 stands testimony to the fact that the lessor (The Appellant) and the Lessee (M/s. D-Twelve Spaces) have entered into an agreement to let out and to take the property mentioned above on lease. As per Clause 2 (b) of Schedule II to the CGST Act, 2017 “(b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.” - there is no doubt that the service rendered by the appellant is that of renting of immovable property.
Whether the property being let out is a residential dwelling? - HELD THAT:- The property under question is not a home or residence being used by a family in a conventional sense or a group of members maintaining a regular house hold, but used for commercial purposes of accommodating students or working professionals in bulk numbers for a temporary period of stay. The appellant has referred to a series of definitions, and has pointed out the existence of the words “residential” or “residence” in various licenses, agreements, etc., in their grounds of appeal. But the mere existence of the word or words “residential” or “residence” does not change the character of the property under lease.
Whether leased premises is used for purpose of residence only or not? - HELD THAT:- For availing the exemption from GST, SI.No. 13 of the Notification No.9/2017-IT (Rate), requires that the “Services by way of renting of residential dwelling for use as residence”. However, as seen from the Lease Deed dated 31.07.2019, the Lessee (D-Twelve Spaces Private Limited) was engaged in the business of sub-leasing property and had no intention of using the property as residence. The Notification cited, requires that the lessee use the property as “residence” in order to extend the exemption therein - But for extending the exemption from GST to the appellant, the subsequent Commercial / business activity of the lessee is of no consequence as the Notification requires the recipient of service to use such residential dwelling as residence.
Even assuming, though not admitting, that the property could be treated as a residential dwelling, the fact that the Lessee (recipient of service) is not using the same as residence negates the availability of the exemption under SI. No. 13 of Notification No.9/2017-(IT) Rate - It is therefore evident that the property under lease is not a “residential dwelling” and further the said property, even though not “residential dwelling”, has not been used as “residence” by the recipient of service of renting viz the Lessee - M/s. D-Twelve Spaces Private Limited but instead actually used for the commercial interest and business of the Lessee, and hence, the exemption under SI. No. 13 of Notification No/9/2017 IT (Rate) dated 28.06.2017 would not be available to the Appellant.
Thus, the activity proposed / undertaken by M/s. D-Twelve Spaces Private Limited is commercial in nature and it was advised by the Legal Experts to get the Property tax of the said area assessed under commercial head from the date of commencement of the definitive Lease Agreement - the Lease Property in question is not a “residential dwelling” and has not been “used as residence” by the recipient (the Lessee).
The order of the Ld. AAR, Andhra Pradesh is hereby upheld - the supply under consideration is classifiable under 'Rental or leasing services involving own or leased non-residential property'. Such “Rental or leasing services involving own or leased non-residential property” is classified under the heading (SAC) 997212 under entry no.16 of Notification No.8/2017 Integrated Tax (Rate), Dt: 28.06.2017, and liable to IGST @ 18%. The exemption under SI. No.13 of Notification No.9/2017-IT (Rate) is not available to the Appellant.
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2020 (11) TMI 1039 - APPELLATE AUTHORITY FOR ADVANCE RULING ANDHRA PRADESH
Classification of supply - supply of goods or supply of services or supply of Goods & Services? - transaction would cover SI.No.2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.6.2017 or not? - permissibility to file GST ITC-02 return and transfer unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit? - In the instant case, whether transaction is qualified to be business being transferred as a going concern to 'another person' or not? - HELD THAT:- The concept of distinct person has been newly introduced under GST law. In brief, the establishments of a person with separate registrations whether within the same State/UT or in different States/UTs are considered as 'distinct person. 'A supplier is required to obtain registration in every State/ UT from where he makes taxable supply provided his aggregate turnover exceeds a specified threshold limit.
The case at hand doesn't qualify to be a 'going concern to another person', as M/s. Shilpa Medicare Limited, Vizianagaram, A.P and M/s. Shilpa Medicare Limited, Bangalore unit are holders of the same PAN and they are distinct persons. Hence,the provisions of Para 4 (c) of Schedule II of CGST Act, 2017 do not apply in this case. Hence, it is treated as deemed supply of goods. The subsequent questions of applicability of SI.No.2 of the Notification No.12/2017- Central Tax (Rate) dated 28.6.2017 and the transfer of unutilised ITCdon't arise as the transaction is classified as 'supply of goods' between distinct persons.
Can ITC-02 be filed for transfer of ITC from the Vizianagaram Unit to the Karnataka Unit? - HELD THAT:- There is no supply of service but a supply of goods (assets of the Vizianagaram Unit to the Unit in Karnataka State). Therefore, the question of transfer of ITC would not arise - In the instant case, there is no evidence of “change in the constitution of the registered person”. A change in the constitution would envisage a change from say a proprietorship entity to a Partnership or a Company, or from a Partnership to a Company; or change in the constitution of the Shareholders, etc. There is no such thing happening in this case. M/s. Shilpa Medicare Limited, Vizianagaram is one and the same entity as M/s. Shilpa Medicare Limited, Bangalore, Karnataka. There is no change in the constitution of the entity as required under Section 18 (3) of the CGST Act and therefore the provisions for transfer of ITC under Section 18 (3) would not be permissible in this case.
Further, the GST law comprising of the Central GST Act, the Integrated GST Act and State / UT GST Acts, does not envisage the transfer of ITC in the form of CGST and SGST / UTGST accumulated in one State to another State. The scope of the AP GST Act cannot extend beyond the territory of the State of Andhra Pradesh. Similarly, the KSGST Act cannot extend beyond the borders of the State of Karnataka. Credit (ITC) accumulated under a particular State GST Act cannot be utilized in another State as there is no such provision under the extant law. Therefore, due to the exclusivity of ITC earned in a State, M/s. Shilpa Medicare Limited, Vizianagaram are not entitled to transfer the ITC earned in the State of Andhra Pradesh to themselves in the State of Karnataka. Hence, the facility of transfer of Credit using Form ITC-02 is not available in this case.
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2020 (11) TMI 1038 - APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
Classification of supply - composite supply or not - naturally bundles services or not - supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the applicant under the Contract - supplies made under the Contract merits classification under Entry 9986 (ii) - Service of exploration, mining or drilling of petroleum crude or natural gas or both and subject to GST at the rate of 12%/18% as the case may be? - supply of mud chemicals and additives on consumption basis at OIL India's location in India provided under the Contract qualify for concessional GST rate of 5% against an Essentiality Certificate ('EC') under Notification No. 50/2017-Customs dated 30th June 2017.
HELD THAT:- The supply of Mud Engineering Services and supply of chemicals and additives are undoubtedly two specialized and distinct supplies. Now it requires to be examined whether both the said supplies of chemicals and additives and rendering the mud engineering services constitute a 'composite supply' or not - the two taxable supplies under discussion are to be examined in light of the two primary conditions i.e., whether they are 'naturally bundled' and are 'supplied in conjunction' with each other. In the absence of the clear cut explanation in the Act, regarding the concept of 'naturally bundled' the reliance is placed on Education Guide issued by CBEC (now CBIC) in the year 2012.
Thus, it is observed that both the supplies are not supplied or provided as a complete package 'at a single price'. The tax invoices filed by the appellant reveal that different invoices are raised for both the supplies separately and individually. With reference to the parameter (b) mentioned above, the supplies of chemicals and additives and mud engineering services are two different supplies and separately available. Section 3 of the contract no.6205290 projects the schedule of rates distinctly for both the supplies. Moreover, in the instant case the supply of chemical and additives and mud engineering services can be procured in a piecemeal approach up to the satisfaction of the service recipient. It is a fact, as admitted by the appellant that it is a clause inserted in the contract to protect the interest of OIL, the right to seek replacement of the personnel/ goods independently if they are not as per satisfaction of OIL. It clearly indicates that both the supplies are not naturally bundled.
The said supplies of the mud engineering services and supply of chemicals and additives are different supplies liable to tax under the CGST/APGST Act. Thus, in view of the discussions the observation made by the Advance Ruling Authority is upheld, rejecting the interpretation of the appellant.
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2020 (11) TMI 1037 - ITAT INDORE
Addition for Short Term Capital Gain - capital gain u/s 45 - relinquishment of rights in property as in the nature of gift - whether in case of transfer of property by way of gift, the provision of section 50C can be invoked? - HELD THAT:- AO while examining this transaction was of the view that this is a valid transfer as per provision of section 2(47)(i) of the Act and provision of section 50C of the Act are applicable as the consideration received is less than the value adopted by the Stamp Valuation Authorities. On the other hand, it has been contended by for the assessee that section 47(iii) clearly provides that “nothing contained in section 45 shall apply to transfer of a capital asset under a gift or will or an irrecoverable trust”. Therefore, the provisions to section 50C of the Act are not applicable.
We have given our thoughtful consideration and observe that relinquishment of rights are referred to as the surrender of ownership rights and claims in a property in favour of another person. Through a relinquishment deed one person releases or transfers his legal right in the property to the other person, while a gift deed is a deed by which one person gifts his legal right in a property to any person.
Relinquishment may or may not be for consideration but a gift does not require any consideration. In the instant case also all 4 co-owners have relinquished their rights in the said property without receiving any consideration. The said relinquishment of rights in the said property are in the nature of gift only as no consideration have been received and genuineness of the relinquishment deed has not been disputed by the authorities below.
Section 47 provides for the transactions which are not regarded as transfer. If the case of a person does not fall u/s 47 of the Act then only all the remaining provisions of section 45 to 55A come into operation, which also includes substantial provision for full consideration in certain cases i.e. section 50C of the Act.
As far as, the case in hand is concerned as we have held above that the alleged transaction is in the nature of gift/relinquishment of rights. There is no doubt that there is a transfer of the immovable property as provided in section 2(47)(i) of the Act but this being a definition of ‘transfer’ is applicable to whole of the income tax wherever the word ‘transfer’ is mentioned. However for the purpose of computing capital gain the hurdle of section 47 needs to be cleared before computing capital gain.
Section 47(iii) states that nothing contained in section 45 shall apply to any transfer of a capital asset under a gift or will or an irrevocable trust. Assessee’s case is covered in section 47(iii) of the Act as the transfer/relinquishment of rights/gift is out of the purview of the provisions of section 45 of the Act. It is also judicially settled that section 50C of the Act is part of the chapter (IV)(E) of the Act and can be applied only if the case of assessee primarily falls u/s 45 of the Act. Since in the case of assessee transaction is not falling in section 45 of the Act, there is no room available for the revenue authorities to invoke the provisions of section 50C of the Act which in itself requires that firstly consideration should be received and secondly consideration so received is less than valuation adopted or assessed or assessable by the Stamp Valuation Authority but in case of assessee NIL consideration is received.
We the relinquishment of rights in the said property made by the assessee is in the nature of gift along with other co-owners for which no consideration was received and since this transaction of gift, it is out of the purview of section 45 and also provisions of section 50C are not applicable on the transaction referred in the instant appeal. - Decided in favour of assessee.
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2020 (11) TMI 1036 - AUTHORITY FOR ADVANCE RULING, GOA
Classification of supply - zero rated supply/Export of services or not - activity of technical testing services carried out by the appellant - place of supply of services - liability of appellant to pay IGST on the said 'supply' - HELD THAT:- The statutory provisions vide Section 13 of the IGST Act, 2017 are very clearly worded. That is, sub-Section (2) states that place of supply of services, except the services specified in sub-Sections (3) to (13) shall be the location of the recipient of services. Sub-Section (3)(a) is specific with regard to 'services supplied in respect of goods which are required to be made physically available by the recipient to the supplier in order to provide the services'. The appellant has not disputed the applicability of the said sub-Section (3)(a) to their transactions, in any manner. They have not disputed that the 'services in respect of the goods provided by the recipient' are actually performed in India i.e., Goa. The outcome of the services being reports which are sent to the recipient abroad or that the service recipient is concerned only with the test-report, can have no bearing or relevance, once the statutory provision is clearly, plainly and unambiguously worded, as above and it is impermissible to expand the laid down criterion or to interpolate and insert words/phrases which are not used in such provisions.
As the catena of decisions relied upon by the appellant relate to the service tax regime, it does not find statutory support in the GST era. The ratio of the said decisions does not apply to the factual matrix of the extant GST statute. Hence, the same do not support the case of the appellant.
Whether appellant is liable to pay IGST on the supply of services? - HELD THAT:- Since the supplier of service is in Goa, India and place of supply of service as determined under Section 13(3)(a) of the CGST Act, 2017 is also in Goa, India, the same falls under “Intra-State” supply of services as per Section 8(2) of the IGST Act, 2017 whereby the provisions under Section 7(5)(c) claimed by the appellant would not be applicable. Consequently, the appellant is liable to pay CGST and SGST on the aforesaid supply of service, as held by the lower authority.
The Ruling given by AAR, Goa is maintained. The appeal filed by the appellant is rejected.
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