TMI Blog2020 (5) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished any documents relevant to the issue, such as copy of agreement, appointment order etc., so as to decide whether the applicant is an employee of the partnership firm or not. In case. if the applicant is a working partner and is getting salary then the said salary is neither supply of goods nor supply of service in terms of clause 1 of Schedule III of CGST Act 2017. Further, in case if the applicant is in receipt of the amount towards his share of profit from the said partnership firm, then also the said income is not under the purview of GST as the share of profit is nothing but application of money and hence the said salary is not required to be included in the aggregate turnover for registration under the provisions of GST Act. Salary received as Director from a Private Limited Company - HELD THAT:- The remuneration received by the applicant as Executive Director is not includable in the aggregate turnover, as it is the value of the services supplied by the applicant being an employee. Further if the applicant receives the remuneration as a Non-Executive Director, such remuneration is liable to tax under reverse charge mechanism under section 9 (3) of the CGST Act 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies. Therefore on completion of the said contract / maturity of the policy, there would not be any service involved between the policy holder and the insurance company. Therefore the amounts received on maturity of the insurance policies are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of GST Act. Thus, the incomes received towards (i) salary/remuneration as a Non-Executive Director of a private limited company, (ii) renting of commercial property and (iii) renting of residential property and (iv) the values of amounts extended as deposits/loans/advances out of which interest is being received are to be included in the aggregate turnover, for registration - the income received from renting of residential property is to be included in the aggregate turnover, though it is an exempted supply. - KAR ADRG 30/2020 - - - Dated:- 4-5-2020 - DR. RAVI PRASAD M.P. AND SRI. MASHHOOD UR REHMAN FAROOQUI, MEMBER Represented by: Sri. Abhimanyu Kumar, CA, Authorised Representative ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER 98(4) OF THE KGST ACT, 2017 1. Mr. Anil K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But it is observed that only one question is covered under Section 97 (2) (f) of the CGST Act 2017, that too in an indirect way, as the question is about aggregate turnover, for registration. Therefore the application is partially admitted. 5. Applicant s interpretation of law : The applicant furnishes his understanding / interpretation of law issue /point wise which is as under: a) The income received towards partner s salary, as a partner, from the partnership firm and also the income received towards salary as Director from a Private Limited Company are not includable in the Aggregate Turnover for the reason that any type of salary is not in the purview of GST as the same needs to be treated neither as supply of goods nor as supply of services. b) The income received towards rent on commercial property is includable in the Aggregate Turnover as renting of immovable commercial property is a taxable service and whenever rent falls due, on the basis of rental agreement, either monthly or quarterly, the supply of service is deemed to have been done. c) The income received towards residential rent is includable in the Aggregate Turnover, for registration, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng same Permanent Account Number, to be computed on All India basis excluding the value of inward supplies on which tax is payable by a person on Reverse Charge basis and also excluding the central tax, State tax, Union territory tax, integrated tax and cess. 7.5 It could be seen from above that the aggregate turnover is sum of different supplies. Therefore any income to be included in the aggregate turnover need to be related to any transaction that amounts to supply in terms of Section 7(1)(a) of the CGST Act 2017. Section 7(1)(a) of the CGST Act 2017 stipulates that any transaction must consist the following three components to get qualify as Supply . i. The transaction must involve a supply, of goods or services or both, such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made. ii. The transaction must be for a consideration by a person iii. The transaction must be in the course or furtherance of business. In view of the above, income received from each source has to be examined as to whether it is in relation to any transaction that amounts to supply or not. Therefore we consider different types of source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The first possibility that the applicant is the employee of the said company (Executive Director), in which case the services of the applicant as an employee to the employer are neither treated as supply of goods nor as supply of services, in terms of Schedule III of CGST Act 2017. The second possibility that the applicant is the nominated director (non Executive Director) of the company and provides the services to the said company. In this case the remuneration paid by the company is exigible to GST in the hands of the company under reverse charge mechanism under section 9(3) of the CGST Act 2017, in the hands of the company, under entry no. 6 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. In the instant case the applicant has not furnished any documentary evidence such as copy of agreement between the applicant and the said private company, copy of appointment order, details of ESI, PF deductions etc., so as to decide whether the applicant is in receipt of salary as an employee or as an independent director. Thus in the absence of any documentary evidence, it is not possible to decide whether the amount received by the applicant is towards his servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sale of shares. The term Securities , which has the same meaning assigned to it in clause 2(h) of Securities Contracts (Regulation) Act 1956, in terms of Section 2 (101) of the CGST Act 2017, includes shares, scrips, stocks, bonds, derivative instruments etc., that have been explicitly excluded from the purview of GST, by virtue of its exclusion from the definition of goods and `services , as contained in Section 2(52) and Section 2(102) of the CGST Act respectively. In the instant case the dividend on shares, capital gains/losses on sale of shares are relevant to the shares (securities) and the income earned in this relation is nothing but application of money. Therefore this income earned out of shares, which are excluded from the definition of goods or services, also gets excluded from the said definition old goods / services. Therefore they are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of GST Act. 7.12 The applicant is also in receipt of income out of maturity proceeds of life insurance policies. The impugned income would be received on maturity of the insurance policies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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