Recent Advance Rulings

[PRABHAKAR KS]

1. Applicant – M/s. Dagger Die Cutting (I) Pvt. Ltd., Advance Ruling No. - No. 13/AAR/2019 dated 22.03.2019 [2019 (5) TMI 1072 - AUTHORITY FOR ADVANCE RULING, TAMILNADU]

The applicant is a Chennai based manufacturer of Hand-made Cutting Knives used in the shoe industries having domestic as well as overseas customers’ base. Since certain payment for overseas supplies received domestically in foreign currency, the applicant has moved AAR – Tamil Nadu on the following question -

"Whether there should charge Integrated GST? or State GST? & Central GST on such sales?" i.e. to determine the said transaction is an inter-state supply or intra-state supply.

Place of Supply & Jurisdiction of AAR - Sub-section (2) of Section 97 & Sub-Section (1) of Section 100 of the Central GST Act, 2017 deals with certain definite questions which are eligible to raise with the jurisdictional AAR/AAAR. They are: 

1. Whether an applicant is required to be registered or not?
2. Classification of any goods or services or both?
3. Applicability of a Notification issued under the Central GST Act, 2017?
4. Determination of time and value of supply of goods or services or both?
5. Admissibility of Input Tax Credit (ITC) ?
6. Determination of the tax liability on any goods or services or both?
7. Any particular thing done by the applicant amounts to or results in a supply of goods or services?

From the above, it is cleared that the ‘Place of Supply’ is out of the purview of the AAR. Hence, the Authority has rejected the application on the ground of lacking jurisdiction.

2. Applicant – M/s. Udyog Mandir, Advance Ruling No.  RAJ/AAR/2019-20/01 dated 16.04.2019 [2019 (5) TMI 1041 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN]

The applicant is a manufacturer of Khadi garments who buys khadi fabrics from outside, stitches and make own garments in its own establishment. The Central Government vide Notification No. 28/2017- Central Tax (Rate) vide inserting an entry at serial No. 130A in relevant Notification No. 02/2017 to exempt khadi fabrics. The applicant moved the AAR – Rajasthan with two fit questions, they were 

1. Will Khadi readymade garments to be included under the entry of Khadi fabric
   under chapter 50 to 55 of GST classification?
2. If not, then what is the correct classification and rate of tax on Khadi readymade garments?

Upon relying on the aforesaid Notification, the Authority held that the khadi readymade garments are not exempt from the GST purview. To answer its second question, If the sale value of readymade garments manufactured by the applicant is less than ₹ 1,000 hose will attract GST at the rate of 5 percent or else GST at the rate of 12 percent.

3. Applicant – M/s. Vedika Exports Tea Pvt Ltd, Advance Ruling No. 36/WBAAR/2018-19 dated 28.01.2019[2019 (1) TMI 1489 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL] / Order copy of AAAR is awaited.

The applicant is a contract packer of tea bags, entered into an agreement with Hindustan Unilever Ltd., According to the agreement, the applicant shall manufacture and/or process, pack tea bags of Taj Mahal, Lipton and Brook Bond brands at his own plants. HUL shall procure, transport and deliver to the applicant’s manufacturing plants all the raw materials and packing materials required for such activities and provides insurance cover against fire, expulsion, etc. The ownership and property on those materials at all times rests with the HUL. The applicant has no liberty to apply such materials for any purpose other than processing and packing of the products for HUL. HUL also bears the cost of such waste disposal. The applicant seeks a ruling on the classification of the services provided to the HUL. A question raised before the AAAR – West Bengal was –

Whether the applicant’s services to HUL are classifiable as packaging service or manufacturing service or both?

The Authority for Advance Ruling – West Bengal relying on the agreement and Section 2 (72) of the Central GST Act, has classified the aforesaid service under SAC 9988 and taxable at the rate of 5 percent.

The department has filed an appeal with the Appellate Authority for Advance Ruling – (AAAR), West Bengal. One member of AAAR upheld the AAR’s Order while the other member of AAAR held that the service offered by the applicant is classified under SAC 9985 and taxable at the rate of 18 percent.

Since the difference of opinion among AAAR Members, it is presumed that no Advance Ruling issued with respect to the above stated question. On an appeal by the Applicant with jurisdictional High Court, the court has granted a stay on further proceedings against the Order of National Anti-Profiteering Authority.