9911796707
TMI Blog2021 (8) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected Rs. 8,21,17,976/- (CGST) + Rs. 8,21,17,976/- (SGST) Total Rs. 16,42,35,952/- 2 APPL/JPR/ CGST/JP/19/ 111/2020/ ZO0812190239578, dated 24-12-2019 October, 2017 Refund rejected Rs. 7,01,22,423/- (CGST) + Rs. 7,01,22,423/- (SGST) Total Rs. 14.02,44,846/- 3 C. No. APPL/ JPR/CGST/JP/28/VI/2020/ ZQ0803200171492, dated 11-3-2020 January, 2018 Refund rejected Rs. 4,17,10,946/- (CGST) + Rs. 4,17,10,946/- (SGST) Total Rs. 8,34,21,892/- 4 C. No. APPL/ JPR/CGST/JP/62/VIII/2020/ ZY0806200005451, dated 1-6-2020 April, 2018 Refund rejected Rs. 1,18,49,147/- (CGST) + Rs. 1,18,49,147/- (SGST) Total Rs. 2,36,98,294/- 5 C. No. APPL/ JPR/CGST/JP/63/VIII/2020/ ZT0806200005406, dated 1-6-2020 March, 2018 Refund rejected Rs. 3,65,98,608/- (CGST) + Rs. 3,65,98,608/- (SGST) Total Rs. 7,31,97,216/- 2. Brief facts of the case : 2.1 The appellant having GSTIN No. 08AAACHI766P1Z5 in State of Rajasthan is engaged in the business of providing telecommunication services in India having their principal place of business at K-21, Sunny House, Malviya Marg, C-Scheme, Jaipur, Rajasthan, 302001 has filed refund claims under Section 54 of CGST Act, 2017 in respect of CGST and SG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appear for the personal hearing. 3. The Adjudicating Authority further intimated to the appellant vide Letter C. No. V(18)Div-H/Ref/BHL/21/2019, dated 16-12-2019 and stated therein "that as per your request a personal hearing has been fixed on 19-12-2019 you are requested to attend the hearing personally or send your authorized representative, along with all the documents and evidences, which you wish to produce in support of your defence and also intimated that if you or your representative does not appear for hearing, the matter will be decided ex parte on the basis of documents, facts and evidences available on the record. 4. Further, the adjudicating authority vide impugned Orders-in-Original in Form RFD-06, dated 6-11-2019, 24-12-2019, 11-3-2020, 1-6-2020, and 1-6-2020 respectively has passed the orders-in-original and rejected the refund claims for the period and amount mentioned at above in Para-1 in column No. (4) and (5) filed by the appellant. 5. Being aggrieved with the impugned orders dated 6-11-2019, 24-12-2019, 11-3-2020, 1-6-2020, and 1-6-2020, the appellant has filed these appeals on the following grounds which are summarized as under :- * that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant paid CGST and SGST under the category of telecommunication service falling under HSN Heading 9984 on reverse charge basis on the LF and SUC paid to the Government as a matter of abundant caution and availed input tax credit of the GST so paid. It is further submitted that the Heading 9984 pertains to provision of telecommunication services and per se does not apply to the grant of license and allocation of spectrum. * that the Appellant believes that no GST is leviable on LF and SUC charges paid to the Government and accordingly, the Appellant had filed a refund of tax paid on LF and SUC paid in the return for the month of July, 2017. The Appellant has also filed a writ before the Delhi High Court in this regard. * that the Appellant accordingly had filed a refund claim under Section 54 of the CGST Act, 2017 read with Rule 89 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as 'CGST Rules, 2017') to seek refund of CGST and SGST wrongly paid on LF and SUC for the month of July, 2017, amounting to Rs. 16,42,35,952/- vide Refund ARN No. AA080819019895H, dated 15th August, 2019. * that a copy of application along with relevant documents was phys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges are supply under Section 7 of CGST Act and services provided by the Central Government to a business entity is taxable in terms of Sl. No. 5 of the Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 GST. * that in this regard, at the outset, the Appellant humbly submits that Section 9 of the CGST Act provides that GST is leviable on supply of goods or services at the rates to be notified by the Government. Thus, for the charge to be attracted it is essential that the following conditions are cumulatively satisfied : (a) there is a supply (b) supply is of goods or service (c) supply is for consideration and in course or furtherance of business (d) the rate has been notified for levy of tax * that in absence of any of the aforesaid requirements, the charge of tax under the CGST Act would not be attracted. It is submitted that there is neither any supply of goods nor supply of services in the present case. * that there is no supply of goods or services * that it is submitted that the grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it allocates spectrum so as to be subjected to levy of GST. The regulation of telecommunication service and right of use of radio frequencies/spectrum by the DoT is in discharge of its statutory functions. The Government is not engaged in activity of buying and selling in grant of license and allocation of spectrum for provision of telecommunication service. Moreover, the functions of a Government are only constitutional and statutory in nature which cannot be deemed to be a business. * that Under Section 4 of the Telegraph Act, the DoT regulates the provision of telecommunication service and grant of license and allocation of spectrum cannot be construed as any 'business' carried out by the Government. The grant of license by the DoT is not akin to providing any goods or services and no business is carried out by the Government when it grants license or allocates spectrum under Section 4 of the Telegraph Act so as to be subjected to levy of GST. In view of the above submissions, it is clear that there is no supply of goods or service which is in course or furtherance of business. Accordingly, Section 9 of the CGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st five decades that a license fee may either be regulatory or compensatory, and that the element of quid pro quo is not sine qua non for a fee. For instance, in the case of Secunderabad Hyderabad Hotel Owners' Assn. v. Hyderabad Municipal Corpn., AIR 1999 SC 635, the Hon'ble Supreme Court held as under : "A license fee may be either regulatory or compensatory. When a fee is charged for rendering specific services, a certain element of quid pro quo must be there between the service rendered and the fee charged so that the license fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. License fees can also be regulatory when the activities for which a license is given require to be regulated or controlled. The fee which is charged for regulation for such activity would be validly classifiable as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only for the specific services covered under the Heading at 4 digits level and not for all the services mentioned at 6 digits level. Consequently, only if a classification of a particular service is prescribed in the description/types of services mentioned against the 4 digits Heading under the Service Rate Notification there will be a GST levy. * that there is a specific 4 digits classification for "leasing and rental services" which includes within its ambit licensing services, prescribed at 6 digits level. It is therefore, humbly submitted that if at all there could be a classification for licensing arrangements in question, it could only be Heading 9973 and not Heading 9991 as inter alia observed in the Impugned Order. The Heading 9991 merely covers public administration services provided to community as whole. In this regard, the grand of license to use spectrum is not a service provided to community as whole but is a mere contract entered into between DoT and the Appellant. Accordingly, the grant of license is not covered by the Service Codes under Heading 9991 in Annexure to the Service Rate Notification and can at best be covered under Heading 9973. * that for ease o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of spectrum by any stretch of imagination cannot be construed as goods and would not get covered under the purview of entries (iii) to (vii) of Sr. No. 17. Accordingly, the transaction in question cannot be subject to tax under (iii) to (vii) of Sr. No. 17 of the Service Rate Notification. The submission in the following paragraphs will clarify that the transactions in question were outside the scope of this entry, (c) Entry (viii) of Sr. No. 17 of the Service Rate Notification provides residual rate for HSN 9973 pertaining to leasing or rental services, with or without operator, which are not covered under any other specific entries provided therein [Entry (i) to (vii)]. The scope of services covered under Entry (viii) is limited to those situations for which GST of goods has been defined under goods notification. * that it is submitted that all the services falling under entry (viii) of Sl. No. 17 of the Service Rate Notification shall be taxable at the rate of tax which is applicable on supply of like goods underlying such services. Thus the "residuary entry (viii)" covers within its ambit only those services which are provided in relation to "goods" which are prescribed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company is not covered under 'Any other category'. Section 54 of the CGST Act, 2017 allows any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may any application in such form and manner as may be prescribed. Further Rule 89 of the CGST Rules, 2017, prescribe the procedure for filing the application for refund tax, interest and penalty, fees or any other amount through GST RFD-01 on the common portal. * that the Impugned Order passed by the respondent is in violation of the 'Principles of Natural Justice' It is humbly submitted that the respondent did not provide any opportunity of being heard to the Appellant and the refund application was rejected without seeking any explanation from the Appellant. The Appellant had submitted a letter on 30 September, 2019 for Adjournment of Personal Hearing scheduled by the respondent on 30 September, 2019 to any date after 15 October, 2019 and seeking additional time to furnish reply to the SCN. Thereafter, the respondent proceeded to reject the application without giving an opportunity of being heard to the Appellant and gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) whether payment, in the form of License Fee (LF) for issuance of License and Spectrum Usage Charges (SUC) for use of spectrum, as a percentage of the 'Adjusted Gross Revenue' (AGR) to 'Department of Telecommunications' (DoT) is a 'Supply' under GST law or not? (b) whether issuance of license and allotment of spectrum as a 'Statutory fee' attract any levy of tax as per GST law. (c) whether LF and SUC charges are 'consideration' for supply as per GST law or not? (d) whether Refund claim is covered under any other category specified under Section 54 of the CGST Act, 2017 read with Rule 89 of CGST Rules, 2017? (e) whether License fee and Spectrum usage charges paid by the Appellant are covered in Service Rate Notification and are leviable to tax or not? (f) whether clarifications or circulars can bring a levy or exempt a levy? (g) whether issue can be decided where the issue is under litigation (writ petition filed by the appellant in the Hon'ble High Court, Delhi), whether it would be appropriate to gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and working telegraphs and allocation of spectrum is a service which falls under HSN Head 9973 38 which specifically defines "Licensing services for right to use other natural resources including telecommunication spectrum". In the instant case, consideration in the form of LF and SUC is also available. In view of the above, it is construed that there is a supply of service as per aforesaid statutory provisions. Further, the supply of service in lieu of "License and Spectrum" are basically for furtherance of the business of the appellant since purpose for attaining license and for allotment of spectrum is purely to do business with various buyers through telecommunication services. The appellant vide para A9, A10 and A11 has mis-interpreted the fact of "furtherance of business" as per the Government lateral whereas it was for the person who is running a business, here the appellant. Accordingly the levy of GST is appropriately applicable on the appellant as per sub-section (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; As per Section 4 of the Indian Telegraph Act, 1885 "power to grant licences" has been specified as :- "4. Exclusive privilege in respect of telegraphs, and power to grant licenses. (1) Within [India], the Central Government shall have exclusive privilege of establishing, maintaining and working telegraphs : Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India] : [Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AGR, inclusive of USO Levy which is presently 5% of AGR : Provided that from Second Year of the effective date of respective authorization, the License fee shall be subject to a minimum of 10% of the Entry Fee of the respective authorized service and service area as in Annexure-II. 18.2.2 In case the Licensee obtains access spectrum for operation of any authorized service in a service area, a 'presumptive AGR' for that authorized service and service area shall be arrived at in accordance with the relevant provisions of the Notice Inviting Application (NIA) document of the auction of spectrum or conditions of spectrum allotment/LoI as the case may be. The License Fee based on presumptive AGR shall be applicable from the date of issue of Letter of Intent earmarking such spectrum or the effective date of the license/authorization, whichever is later. The Licensee shall, in such cases, pay the license fee on the presumptive AGR or actual AGR or the minimum license fee referred in condition 18.2.1, whichever is higher. In case, the Licensee obtains spectrum for any service and service area in different bids, the total presumptive AGR shall be the sum of the presumptive AGRs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of GST under Reverse Charge Mechanism for 'Grant of License' and 'Allocation of Spectrum' is 9973 meant for 'Leasing and Rental services with or without operator'. As per Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 rate of GST is defined at S. No. 17 against clause (vi). HSN sub-heading 9973 38, meant for "Licensing services for right to use other natural resources including telecommunication spectrum" is the proper classification of the nature of service in question. Service tax codes is specified for the service under question as tabulated below : Sl. No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description 232 Heading 9973 Leasing or rental services with or without operator 250 Group 99733 Licensing services for the right to use intellectual property and similar products 258 997338 Licensing services for right to use other natural resources including telecommunication spectrum Besides above, it is stated that GST rates are prescribed under the Service Rate Notification at 4 digits level (HSN Heading) whereas service desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Further, Levy of GST is also notified vide Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017 wherein at Sr. No. 5 it is mentioned that services provided by the Central Government to a business entity is taxable under Reverse Charge in terms of Section 9(3) of the CGST Act, 2017. In view of the above, it is implied that statutory liability to pay GST on the Services of 'Grant of License' and 'Allocation of Spectrum' by the appellant was there. Historically, LC and SUC was taxable under Service Tax regime, it clearly shows that this activities falls under the ambit of 'Service'. Quoting the circular of Service Tax regime was only for the sake of defining these activities as 'Service'. However, in the instant case ample statutory provisions are available to fasten liability to pay GST on the appellant. (g) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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