TMI Blog2021 (3) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... t a patent, manifest and self-evident error which does not require elaborate discussion of evidence or argument to establish it, can be said to be an error apparent on the face of the record. An error cannot be said to be apparent on the face of the record if one has to travel beyond the record to see whether the judgment is correct or not. In this case, the question on which an advance ruling was sought was whether the supply is a supply of goods or supply of service or a composite supply. Additionally, a ruling was also sought on the rate of tax applicable for the nature of supply. The lower Authority had held that the supply in this case was a composite supply where the principle supply was a supply of goods and the rate of tax applicable is 12%. Before us, this finding by the lower Authority was assailed and it was the argument of the Appellant that the supply is a supply of service and they were eligible for the exemption given to pure services rendered to the municipal authority. This argument did not find favour with us and on a complete examination of the case which included taking into consideration the terms of the Agreement with the Thane Municipal Corporation as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 2. The present matter is an application for rectification of mistake (ROM) filed by M/s Karnataka State Electronics Development Corporation Limited, 2nd Floor, TTMC A Block, BMTC Complex, K H Road, Shanthinagar, Bengaluru - 560 027 (herein after referred to as Applicant) in terms of Section 102 of the CGST Act to rectify errors which apparently have occurred in the appeal order No KAR/AAAR-04/2020-21 passed by us in appeal proceedings on 27th Sept 2020. 3. An appeal was filed under Section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by the Applicant against the advance ruling No. KAR/ADRG 07/2020 dated: 10th March 2020. The said appeal was heard and decided by us vide order KAR/AAAR-04/2020-21 dated 27th Sept 2020 . 4. The Applicant vide the present ROM application has submitted that certain errors / mistakes of facts and law have crept into the order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich monthly billings are being made, which calls for rectification as the criteria of composite supply is not fulfilled as there is no supply of goods in conjunction with services. The non-consideration of this very critical fact has resulted in the erroneous conclusion that is a supply of goods by the Contractor to the Contractee, which calls for rectification. 4.3. The Applicant submits that at para 13 of the impugned order it is erroneously concluded from the submission of the appellant that it is 'impossible to satisfy the 25% criteria' under Entry 3A of the subject notification; that this is factually incorrect and misconstruction of the submissions made by the Appellant; that the Appellant did not make any assertion that it is not in a position to meet the 25% criteria; that the contract revenue in terms of the agreed formula is based on the energy savings which would be billed to TMC; that on this basis the appellant had submitted that its projected revenue of approx. 21 crores, it clearly expects to meet the 25% criteria specified in Entry 3A; that the onus of complying with the 25% criteria has been mistakenly concluded as not having been discharged by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioner prima fade show that there was sale of undivided share of the land, then the authority ought to have taken into consideration of the same and examined as to whether those could have been included in the total value. This undoubtedly is an error apparent on the face of the record. Therefore, the respondent could not have rejected the application for rectification for the reasons assigned in the impugned order. Furthermore, in their application under Section 74, the petitioner has specifically sought for a personal hearing which was also not been offered. 4.5. The Appellant submits that the impugned order has failed to appreciate the Appellate Advance Ruling in the case of Super Wealth Financial Enterprises Pvt. ltd in 2019 (24) G.S.T.L. 771 (App. A.A.R. - GST) and deviated from the conclusion of the concurrent authority on identical contract which held it to 12%; that the Revenue has accepted this order and not under appeal on this matter; that the Appellant in this case cannot be discriminated on the identical contract with a 18% rate; that this is a gross error of law and amenable to rectification on grounds of law and equity. 4.6. In view of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the impugned order has erroneously concluded that the Appellant is not in a position to satisfy the 25% criteria under Entry 3A of the notification; that the Contract does not envisage a supply of goods or a transfer of goods and the factum of a supply of goods (if any) is entirely dependent on the renewal of the contract. Until then, there is no supply of goods and hence the condition of a maximum of 25% supply of goods is complied with; that it has been admitted in para 11 of the AAAR order itself that that Applicant is not being paid for supply of goods and there is no supply of goods during the tenure of the ESCO contract; that when there is no supply of goods during the tenure of the ESCO contract, the 25% criteria stands satisfied. It is submitted that the advance ruling is sought in advance for a transaction which has recently commenced based on estimates of the expected turnover from such contract. Therefore, to make a conclusive statement that criteria of 25% has not been met would render an unjust treatment to the applicant; that the Appellant had submitted that from its projected revenue of approx. 21 crores it clearly expects to meet the 25% criteria specified in E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the said ruling has persuasive value and this principle has been accepted by other AAARs Reliance is placed on the decision in the case of Jabalpur hotels Pvt. Ltd (AAAR-MP) 2020 (40) G.S.T.L. 65 which clearly affirms that Advance Ruling has a persuasive value. Reliance has also been placed on the FAQs on GST (2nd Edition - 31st March, 2017) posted on the CBIC website which reads follows: Q11. Whether the advance ruling have precedent value of a judgment of the High Court or the Supreme Court? Ans. No, the advance ruling is binding only in respect of the matter referred. It has no precedent value. However, even for persons other than applicant, it does have persuasive value. Reliance is also placed on the FAQ on Government Services wherein the scope of pure services mentioned in exemption Notification No 12/2017 CT (R) was answered; that without depicting any intelligible differentia from the facts of the case in Super Wealth Financial Services (supra) FAQ on Government Services coupled with the fact that the revenue has accepted the decision, the applicant cannot be put to a worse of situation than the 12% prescribed in the said Ruling. This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. d) This Authority has not considered the rulings given by the Authority for Advance Ruling in the case of VFS Global Services Pvt Ltd and in the case of Super Wealth Financial Enterprises Pvt. Ltd. 10. The plea that the impugned order has put the Appellant in a worse off situation than before, is preposterous to say the least. In terms of Section 101 of the CGST Act, the Appellate Authority is required to pass such order as it thinks fit, confirming or modifying the ruling appealed against. While examining the appeal which was filed before us, we have examined the issue in its entirety which includes the nature of the supply made by the Appellant as well as the rate of tax which is applicable on the said supply. These were the issues which were part of the original application for advance ruling and which were also before us in appeal. We find that the applicant has invoked the principle of no reformatio in peius in this ROM application. The expression is a principle of procedure according to which, using the remedy of law should not aggravate the situation of the one who exercises it. The applicant has relied on certain decisions of the Supreme Court and High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal passing orders which were beyond the subject matter of the appeal and on which there was no appeal by the Department. In other words, the Courts have held that issues which are not the subject matter of the appeal and where there is no appeal by the Department are considered to have reached finality and, in such cases, the principle of no reformation in peius will come into play. We do not find such a situation in this case. As already mentioned above, the appeal which came before us was on all the issues which was originally present in the application for advance ruling. Before the lower Authority, the Appellant had argued his case as being a supply of service eligible for exemption as a pure service. This argument was not accepted by the lower Authority who held the supply to be a composite supply with the principal supply being supply of goods and the rate of tax was held as 12% being the rate as applicable to the goods. The applicant was aggrieved by this decision and preferred the appeal before us. Even before us, the Appellant maintained the same line of argument. We have held that the supply is a composite supply with the principal supply being a supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by us. The Supreme Court in the case of Travancore Rayons Ltd vs ITO - 1980 (122) ITR 425 (SC) observed that where two interpretations are possible in respect of a provision, taking one such interpretation cannot give rise to a mistake apparent from the record. A decision which has been validly made by us as a duly constituted Authority is not open for review on the alleged ground that, according to the applicant, the decision was erroneous on fact or law. This Authority being a creature of the statute can exercise the powers conferred on it by the statute. This Authority cannot act outside or de hors the statute nor can it exercise powers not expressly and specifically conferred by law. It has no plenary powers as are available with courts established under the Constitution or Codes of Civil Procedure or Criminal Procedure. This Authority under no circumstance can recall an order passed or issued under the guise of rectification of mistake . Once this Authority has passed an order under Section 101 of the CGST Act, it becomes functus officio and will not be able to re-open the discussion on the matter which was before us in appeal. This Authority is not vested with the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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