TMI Blog2019 (3) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by TELSTRA TELECOMMUNICATION PVT.LTD., the applicant, seeking an advance ruling in respect of the following questions :- a) Whether in the facts and circumstances in the case of supply involving leased circuit services where in pan India contract for supply of such services is entered into without any State wise break up for the supply it would be in order for the supplier of such services to charge Integrated Tax (under IGST Act) pursuant to the Explanation to Section which provides that place of supply, where the leased circuit is installed in more than one State and the value for service cannot be determined in absence of a contract, shall be on such other basis as prescribed i.e. the same would be the location of recipient of service. b) In a case where the location of the service provider on pan India basis is Delhi and that of the recipient is M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /zone of the country. Further the Applicant enters into a contract/ agreement with a third party vendor who is providing leased circuit services across the country, such as Tata Teleservices, Bharti Airtel etc. to provide the last mile connectivity service. A flow diagram is attached as Annexure A to explain how the service is rendered to the customer via POP of the Applicant located in a State to the location of customer. 3. Interpretation of Law: At the outset, the Applicant would like to submit that it has Obtained registration in terms of Section 22 (2) of the CGST Act. Consequently, the Applicant shall qualify as a 'registered person' in terms of the CGST Act and the provisions of the CGST Act shall apply accordingly. The interpretation of applicable law with regard to the internet connectivity services provided by the Applicant is as follows: 3.1 Registration requirement: 3.1.1 The Applicant would like to submit that in terms of Section 22 of the CGST Act, a supplier is liable to be registered in the State from where he makes a taxable supply. In other words, the supplier is required to register in all the States which qualify as the location of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier shall be the usual places of residence of supplier, which in the case of company would be the place where the said Company is incorporated or registered. 3.3 Place of Supply: 3.3.1 It is imperative to determine the place of supply in order to charge the correct tax i.e. Central Tax and State Tax in case of intra-state supply or Integrated Tax in case of inter-state supply. 3.3.2 Place of supply in case of telecommunications services including data transfer, broadcasting, cable and D2H television services has been provided under Section 12(11) of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act'). The same is reproduced below: Section 12(11) of Integrated Tax Act, 2017 (a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services; (b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommunication and internet services on post-paid basis. Clause (c) provides for place of supply in case of mobile connection services for telecommunication, internet service and L)2H television services on pre-paid basis. 3.3.4 In the clauses referred above, internet connectivity service provided by Applicant is not covered and therefore the place of supply in case of internet connectivity service shall be determined in accordance with residual clause (d) of the said section. Clause (d) of Section 12(11) states that the place of supply in other cases i.e. in case the place of supply for telecom services cannot be determined in accordance with above clauses (clause a, b and c), shall be the address of recipient as on the records of supplier. Therefore, the place of supply in case of internet connectivity service would be determined on the basis of address of the recipient as per the records of the supplier. In case address of recipient is of a State other than location of supplier, it would be considered as inter-state supply, if it is in the same State then it will be considered as intra-state supply. Scenario 1: Applicant's location is Mumbai (Maharashtra), address on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Bansal Versus Union of India (2016 (43) S.T. R. 3 (Del.)) = 2016 (6) TMI 192 - DELHI HIGH COURT wherein was held that if there is no mechanism to ascertain the value of a particular service, service tax cannot not be levied on the same. The principle which can be derived from this case is that if there is no procedure prescribed under a statue, the same would be considered as outside the levy of that particular statute. Hence, in case where place of supply cannot be determined as the statute has not prescribed a mechanism (explanation to Section 12 (11)(d)) the levy of tax whether CGST and SGST or IGST cannot be determined and therefore the particular service could be considered as outside the levy of tax. Alternatively a view can also be taken that in case there is no prescribed mechanism in law then the residuary rule can be resorted to. 3.3.5.4 Hence considering the alternative view, the residual clause can be referred to determine the place of supply in cases where vendor have leased circuit installed in multiple states and there is no provision in the Agreement or Contract to determine the value of service attributable to each state, the place of supply as per residua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... located in Maharashtra and the customer is also located in Maharashtra therefore the applicant will charge CGST and SGST of Maharashtra. While the vendor providing leased circuit service is based in Haryana. In case the vendor determines place of supply in terms of Explanation to Section 12(11)(d), he may charge IGST (i.e. location of registered person which in the current scenario would be Maharashtra). Hence, the ITC of tax charged by vendor can be availed and utilized by Applicant. Legend: Last Mile - Service has been subscribed from Airtel/Tata to extend the physical connectivity from Service Provider POP to Customer Premises Router - Router is a networking device that forwards data packets between computer networks. A router is connected to two or more data lines from different networks and extended to customer LAN for using internet. Cisco Juniper are major manufactures of network devices especially Routers, Switches Security appliances. Additional submission of applicant on 24.12.2018 Submission on maintainability of Advance ruling application: - 1. As per Section 97(2) of Central Goods and Services Tax Act, 2017, following are the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = 2009 (9) TMI 705 - SUPREME COURT OF INDIA in a criminal appeal. The relevant extract of the decision is as follows: 15.In a plethora of cases, it has been stated that where, the language is clear, the intention of the legislature is to be gathered from the language used. It is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The court cannot add words to a statute or read words into it which are not there. The court cannot, on an assumption that there is a defect or an omission in the words used by the legislature, correct or make up assumed deficiency, when the words are clear and unambiguous. Courts have to decide what the law is and not what it should be. The courts adopt a construction which will carry out the obvious intention of the legislature but cannot set at naught legislative judgment because such course would be subversive of constitutional harmony 5. Further, in case of B. Premanand v. Mohan Koikal (2011) 4 SCC 266 = 2011 (3) TMI 1590 - SUPREME COURT the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying that a provision of statute should have to be read, as it is, in a natural manner plain and straight, without adding, substituting or omitting any words, held as under :- While using the tools of interpretation, the Court should remember that it is not the author of the Statute who is empowered to amend, substitute or delete, so as to change the structure and contents. A Court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is a vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the Legislature intended it to be. 9. Thus, if the interpretation as drawn by the authorities is accepted, it would be a case of adding or deleting something from the provision, which is not permissible. Position under erstwhile regime: 10. Under service tax regime, an application for advance ruling can only made by certain specified applicants as defined under Section 96A(b) of the Finance Act, 1994. Further, the application for advance ruling can be made in rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruling in the said case held that the applicant is liable for payment of IGST under reverse charge on Ocean freight charges for receipt of transportation service. (c) Maharashtra Authority for Advance Ruling in the case of Reliance infrastructure Limited (2018-TIOL-22-AAR-GST) = 2018 (5) TMI 647 - AUTHORITY FOR ADVANCE RULINGS, MAHARASHTRA , has held that in light of the Notification No. 13/2017- Central Tax (Rate), the applicant would be liable to pay tax in respect of the services received from Municipal authorities and therefore the question in the said case for which advance ruling is sought shall be entertained. In the said ruling, authority of advance ruling has evaluated who can make an advance ruling application. However, in the said ruling, it is nowhere stated that the recipient cannot seek an advance ruling. (d) Rajasthan Authority for Advance Ruling in the case of M/s. Umax Packaging (2018-TIOL- 321- AAR-GST) = 2018 (12) TMI 1089 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN , has held that in case of 'Bill-to ship to' model the supplier can charge IGST from the recipient (bill to party) against which the recipient is eligible to claim Input tax cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable since no rules have been prescribed pursuant to Sec 12(11)(d) as aforesaid and therefore whether it would be in order for the recipient to take credit of such Intergrade tax since the said services are used in the course or furtherance of business namely provision of last mile connectivity services to the recipient of services, C. In respect of proposition (b) section 95(a) of MGST Act 2017, may be referred and is as follows (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 ; Thus it is crystal clear from plain reading Of above section that only supplier can apply for advance ruling in relation to the Supply of goods or services or both being undertaken or proposed to be undertaken by applicant. Hence recipient cannot apply for advance being devoid of legal provision. Hence proposition (b) not maintainable before AAR Alternative Submission is as follows In respect of question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. (4) The place of supply of restaurant and catering services, personal grooming, fitness, beauty treatment , health service including cosmetic and plastic surgery shall be the location where the services. are actually preferred. (5) The Place of supply of services in relation to training and performance appraisal to, - 1. a registered person, shall be the location of such person; 2. a person other than a registered person, shall be the location where the services are actually performed. (6) The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located. (7) The place of supply of services provided by way of, -- 1. Organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevision services to any person shall, 1. in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services; 2. in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services ; 3. in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means, moms (i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or (ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold; 4. in other cases, be the address of the recipient as per the records of the supplier of services and where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as may be prescribed. 13. Place or supply of services where location of supplier or location of recipient is outside India. (1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. (2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services : Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. (3) The place of supply of the following services shall be the location where the services are actually performed, namely: 1. services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders; 2. intermediary services; 3. services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month. Explanation .- For the purposes of this sub-section, the expression, 1. account means an account bearing interest to the depositor, and includes a non-resident external account and a non-resident ordinary account; 2. banking company shall have the same meaning as assigned to it under clause (a) of section 45A of the Reserve Bank of India Act, 1934; 3. financial institution shall have the same in eaning as assigned to it in clause (c) of section 45 of the Reserve Bank of India Act, 1934; 4. non-banking financial company means, (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or (iii) such other non-banking institution or class of such institutions, as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tabiraman 94 (AIR 1985 SC 502 = 1985 (1) TMI 306 - SUPREME COURT OF INDIA . (observed as under: The object of an Explanation to a statutory provision is a) To explain the meaning and intendment of the Act itself; b) Where there is any obscurity or vagueness in the main enactment to clarify the same make it consistent with the dominant object which it seems to sub serve; c) to provide an additional support to the dominant object of the Act in order to mak meaningful and purposeful; d) An Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the explanation in order to suppress the mischief and advance the object of the Act it can help or assist the court in interpreting the true purport and intendment of the enactment; and e) It cannot however take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hinderance in the interpretation of the same. Thus explanation to the section of enactment does not acts as charging or levy section it only clarifies meaning of enactment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5 of IGST Act in case supply involving lease services, Circuit services wherein a pan India contract for supply of such services is entered into without any State wise break up for the supply it would be just and proper for the supplier of such services to charge Integrated Tax (under GST Act) pursuant to the Explanation to section 12(11)(d) which provides that place of supply where the leased circuit is installed in more than one state and the value for service cannot be determined in absence of a contract shall be on value of section 15 of CGST Act and on prorate basis as prescribed i.e. the same would be the location of recipient of service. In respect of proposition (b) if answer to proposition (a) is affirmative then it would just and proper for recipient to take credit of GST since the said services are use in the course of furtherance of business namely provision of last mile connectivity services to the recipient of services. 04. HEARING The case was taken up for preliminary hearing on 11.12.2018 with respect to admission or rejection of the application when Sh. Harish Bindumadhavan, Advocate along with Sh. Sagar Shah, Manager, and Sh. Aakash Sarda, C.A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. Before we decide the question raised in this application it is essential that it be first determined whether or not the additives undertaken by the applicant pertains to matters or questions specified in Section 97(2). Applicant has raised following question: 1. Applicant wishes to seek advance ruling in terms Of Section 97(2)(e) of Central Goods and Services Tax Act 2017, Whether the supplier is to charge Integrated Tax on supply of leased circuit facility to the Applicant, where the leased circuit is installed in more than one State or Union territory and the contract or agreement doesn't specifically provide the proportion of service provided in each state? 2. Applicant also wishes to seek advance ruling in terms of Section 97(2)(d) of CGST Act 2017, If the answer to the above question is affirma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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