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Recent Advance Rulings

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Recent Advance Rulings
September 13, 2019
All Articles by: PRABHAKAR KS       View Profile
  • Contents
  1. Whether the supply of pump sets with installation Composite Supply or Works Contract?

United Engineering Works (AAR – Karnataka) Advance Ruling No. KAR ADRG 15/2019 Dated 25.07.2019 [2019 (8) TMI 412 - AUTHORITY FOR ADVANCE RULING, KARNATAKA]

The applicant is manufacturing and supplying pump sets, has sought an Advance Ruling to determine the applicable GST Rate on supply of pump sets with its installation, electrification and energisation. Also, it has submitted that its supply as a composite with GST at 12 per cent. Upon deliberations, the AAR has found that composite supply means two or more taxable supplies of goods or services or both which are supplied as principal supply. Since installation service is in conjunction with the supply of pump sets, supplying of pump sets can be held as a Principal supply. Further, as per the agreement entered with the Government, the applicant is not involved in the drilling of bore wells, hence the AAR has held that supply of pump sets along with installation as composite supply rather than as works contract.   

  1. Whether GST leviable on construction work continued under Joint Development Agreement (JDA) post GST Implementation?

Durga Projects & Infrastructure Private Ltd.  (AAR – Karnataka) Advance Ruling No. KAR ADRG 17/2019 dated 25.07.2019 [2019 (8) TMI 395 - AUTHORITY FOR ADVANCE RULING, KARNATAKA]

The applicant is engaged in the construction and sale of residential apartments and complexes under JDA. In the above case, construction was commenced prior to the implementation of GST but work continued post-implementation. The applicant sought an advance ruling whether he is liable for GST towards work executed under JDA on land owner’s portion where work commenced during pre-GST and continued under GST Law.  If tax is applicable the valuation for payment of tax?  Incidence of tax arises when a supplier of construction services at the time when it transfers the possession. Since possession happened under the GST regime, liable for tax. Accordingly, the AAR held that GST is leviable on construction work executed under JDA. 

  1. Whether contributions received from members to meet administrative expenses are supply under GST?

Rotary Club of Mumbai Nariman Point (AAR – Maharashtra) Advance Ruling No. GST-ARA-142/2018-19/B-88 dated 30.04.2019 [2019 (7) TMI 616 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA]

The applicant is a club engaged in charitable activities, sought an advance ruling on two questions - Whether the amount collected as membership subscription and admission fees from members is liable to GST as a supply of services? and if the above receipts are liable to GST, can the Club claim ITC of the tax paid on banquet and catering services for holding members meetings and various events?

Upon deliberations, the AAR found that contribution in the form of membership fees collected from members is not only meant for meeting administrative expenses but also to set up high ethical standards in the business, which satisfy eh definition of business  and same can be held as consideration. Accordingly, AAR held that contributions for the supply of services and liable for GST and for the second issue, answered in negative.

  1. Whether input tax credit can be availed on undiscounted supply?

MRF Ltd. (AAAR - Tamil Nadu) Advance Ruling No. 5/AAR/2019 dated 22.01.2019 [2019 (3) TMI 928 - AUTHORITY FOR ADVANCE RULING, TAMILNADU]

The applicant has intended to enter into an arrangement with M/s. C2F0 India LLP for setting up an interactive automated data exchange which can be installed for data interaction relating to sale & purchase of goods and services between a Buyer (the Applicant) and a Supplier (any supplier of goods or input services of the Applicant) in compliance to various ethical, accounting and business standards and sought an advance ruling whether the company can avail the ITC of the full GST charged on the supply of invoice or a proportionate reversal of the sarne is required in case of post purchase discount given by the supplier of the goods or services. The AAR held that applicant can avail ITC only to the extent of the invoice raised by the supplier less the discount as per C2FO.

Upon appeal, AAAR relying on Section 16 of the Central GST Act, 2017 opined that value of supply shall not include any discount as such. In the case of discount is given after the supply where such discount is established as per the agreement entered into on or before such supply and ITC attributable to the discount has been reversed. Since non-compliance of these conditions, the transaction value shall be the value on which GST charged. Accordingly, AAAR has set-aside the order of AAR and held that applicant can avail the ITC and also proportionate reversal of the credit is not required in the case of a post purchase discount is given by the supplier through C2FO.

  1. Whether input tax credit available on cranes given on hire from Head Office to Branch and payments are netted off against receivables? 

Sanghvi Movers Ltd. (AAR - Tamil Nadu) Order No. 26/AAR/2019 dated 21.06.2019 [2019 (8) TMI 1009 - AUTHORITY FOR ADVANCE RULING, TAMILNADU]

The applicant provides Cranes on lease to clients without transferring its rights. Its head office situated in Maharashtra owns the said cranes and provides it to to its Branch Office in Chennai on monthly rental basis which further given on lease.  The applicant has sought an advance ruling, whether Integrated GST payable on such inter-state inward supply of leasing service from head office for providing further supply on lease or hire charges would be admissible as Input Tax Credit? Since separate registrations for the head office and branch office, they can be treated as separate or distinct persons.  It is further evidence that head office raises tax invoice to provide crane services and branch office instead of paying full consideration to head office netted against receivables in the books of account of the branch office, i.e. deemed payment. Since payments are netted off against receivables, the AAR held that ITC is not available on cranes given on lease. 

To be continued….


By: PRABHAKAR KS - September 13, 2019


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Useful write-up Sir.

By: Ganeshan Kalyani
Dated: 13/09/2019


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