TMI Blog2021 (8) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... lant ) established from the aforesaid statutory provision. Therefore, 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 - Further, if there was any doubt regarding 'taxability of service then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. Whether issuance of license and allotment of spectrum as a Regulatory fee attract any levy of tax as per GST law? - HELD THAT:- If no GST is leviable on grant of license then why a service category at HSN Head 9973 38 as Licensing services for right to use other natural resources including telecommunication spectrum has been specified in the GST Act. Thus, it can be concluded that such type of services License Services for right to use other natural resources including Teleservices Spectrum are not regulatory f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ) as mentioned below. As common issue is involved in all these two appeals therefore, I take up the same for decision simultaneously. S. No. Appeal No. Order-in-Original No. date (Impugned order) Period of dispute Order sanctioning/ rejecting refund 1 2 3 4 5 1 APPL/JPR/CGST/JP/55/ VIII/20/ ZW0812190255490, dated 27-12-2019 October, 2017 Refund rejected ₹ 6,89,31,725 /- 2 APPL/JPR/CGST/JP/56/ VIII/20/ ZX0803200127603, dated 9-3-2020 January, 2018 Refund rejected ₹ 6,74.23,604/- 2. Brief facts of the case : 2.1 The appellant having GSTIN No. 08AAACB2100P1ZX is engaged in providing telecommunication services all across India with its offices in different States has filed refund claims under Section 54 of CGST Act, 2017 in respect of tax paid inadvertently to the government exchequer. 2.2 On examination of ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices Tax Act, 2017 (CGST Act) and Rajasthan Goods Services Tax Act, 2017 (RGST Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to any such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under RGST Act. In addition to the above, Integrated Goods and Services Tax Act, 2017 (IGST Act) was also enacted for levy of IGST on inter-State supply. Further to the earlier, henceforth for the purposes of this appeal, a reference to such a similar provision under the CGST Act/RGST Act would be mentioned as being under the GST Act and the tax paid under CGST Act/RGST Act/IGST Act will be referred as GST. that the Appellant prior to merger was registered under GST Act and was having registration No. 08AAACS4457Q1ZQ (GSTIN). After merger, the said GST Number remain inactive and merged with the GST No. of the merged company having registration No. 08AAACB2100P1ZX (Present GSTIN). that as a telecom operator, the Appellant has entered into an agreement with Department of Telecommunication (DoT), Ministry of Communications, Government of India, and pays License Fee (LF) Spectrum Usage Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section wherein the term supply is defined. Section 7 of the CGST Act explains the scope of supply. In this regard, Section 7(1) provides that the expression supply includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration. that it may be noted that clause (d) that included the activities to be treated as supply of goods or supply of services as referred to in Schedule 11 as part of supply has been omitted w.e.f. 1-7-2017 and Section 7(1A) has been introduced which reads as under : where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated cither as supply of goods or supply of services as referred to in Schedule II that from a reading of Section 7 it emerges that GST is leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be considered as an activity under GST Act. It is well settled law that such activity for distribution of a natural resource undertaken by the Government as a custodian of the natural resource and payment received by the Government against the same cannot be treated as consideration. that from a reading of the above definition of supply , it emerges that GST is leviable inter alia on supply of services for consideration in furtherance of business. Business is defined in Section 2(17) to include any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, if it is for a pecuniary benefit or any activity or transaction about or incidental or ancillary to it. The definition of businesses further includes any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. It is submitted that the clause (i) of Section 2(17) of the CGST Act is manifestly arbitrary and beyond Article 246A of the Constitution of India as it includes activities undertaken by the Central Government, State Government or any local authority within the meaning of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based classification system, akin to the system which is adopted to goods in erstwhile indirect tax/negative list regime. Such tariff based rate applicable to provision of services was notified by the Government under the Notification No. 11/2017-GST (Central Tax - Rate), dated 28-6-2017. Relevant portion of such notification is reproduced below. Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 Rate of GST on intra-State supply of specific services with Service Code Tariff (SAC) In exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led basis according to a published time table or with flights so regular or frequent that they constitute a recognisably systematic series, not open to use by passengers. 2.5 Provided that credit of input tax charged on goods used in supplying the service has not been taken [Please refer to Explanation no. (iv)] Leasing or rental services, with or (vi) without operator, other than (i), (ii), (iii), (iv) and (v) above. Same rate of union territory tax as applicable on supply of like goods involving transfer of title in goods .. .. 4 Explanation. - For the purposes of this notification, (i) (ii) Reference to Chapter , Section or Heading , wherever they occur, unless the context otherwise requires, shall mean respectively as Chapter , Section and Heading in the annexed scheme of classification of services (Annexure). (iii) that in addition to that, it is pertinent to note that the Annexure to the said rate notification provides an item code wise detailed list for classification of all services, which must mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Telegraph Act, the Government is not leasing or renting any goods. Therefore, this rate is also not applicable to the transaction in question i.e. regulatory fees payment. that no rate is prescribed for the service codes as contained in the Annexure and as such the charge of tax is not attracted. It is thus submitted that till 31-12-2018 there was no rate prescribed for levy of tax on the License Fees and as such the tax deposited by the Appellant is liable to be refunded. that the Notification No. 11/2017 till 31-12-2018 provided the rate of tax under Heading 9973 (Leasing or rental services, with or without operator, not covered by other entries under 9973) to be equivalent to the rate of tax on supply of goods. The Notification No. 11/2017 was amended by Notification No. 27/2018-C.T. (Rate), dated 31-12-2018 w.e.f. 1-1-2019 to introduce a residuary entry to specifically provide for rate of 9% for leasing or rental services with or without operator, not covered by other entries under 9973. that with effect from 1-1-2019, this newly introduced residuary entry under Heading 9973 - leasing or rental services, with or without operator would also apply in context of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired documents including document (CA Certificate) certifying that the tax burden has not been transferred to any other person and therefore the Appellant will not be unjustly enriched if the tax paid by the Appellant be refunded back. that the Impugned Order is not a speaking order. The Learned respondent has not given any findings as to why the refund is not in accordance with the legal provisions and procedures of refund related to Sec. 54 of RGST Act, 2017. There as on for treating the refund inadmissible is null and void. that the Impugned Order has not discussed the submissions made by the appellant with regards to the GST rate for such supply. The Appellant in its reply submission has categorically submitted that there is no GST rate was prescribed for this transaction. In fact the Learned Respondent has inappropriately mentioned that GST is not exempted on leasing or rental services with/without operator as per Notification No. 11/2017-C.T. (Rate), dated 28 June, 2017. that as mentioned above, the said notification prescribes the rate of GST on provision of services and is nowhere related to granting of exemption from GST. The finding given by the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant are covered in Service Rate Notification and are leviable to tax or not? (e) whether impugned order is non-speaking order? (a) In respect of issue at S. No. (a) I find that :- As per Section 2(83), Section 7 of the CGST Act, 2017, which reads as under :- (83) - outward supply in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business; 7. Supply includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; The term licence is specifically covered under both aforesaid sections of the CGST Act, 2017. Hence, there is no ambiguity that it is a Supply . As per Entry No. 62 of Notification No. 25/2012-S.T., dated 20-5-2012 (as amended) w.e.f. 1-4-2016 services, provided by Government by way of allowing a business entity to operate as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of Section 9 of the CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28 June, 2017. Further, if there was any doubt regarding 'taxability of service then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. (b) In respect of issue at S. No. (b) I find that : With regard the contention of the appellant regarding License Fee (LF) and Spectrum User Charges (SUC) is a kind of regulatory fee and Government parting such fee by exercising sovereign functions, in this context, it is submitted that the appellant is mis-interpreted that fee of LF and SUC, which is a percentage share of revenue (AGR) is a fluctuating charges in the instant case. Therefore, the permission of granting of license by DoT and allotment of spectrum on the basis of SUC for business activities is directly nexed with their revenue, hence, it cannot be held that these charges are regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on aircraft within or above [India], or Indian territorial waters], and (b) of telegraphs other than wireless telegraphs within any part of [India]. [Explanation. - The payments made for the grant of a licence under this sub-section shall include such sum attributable to the Universal Service Obligation as may be determined by the Central Government after considering the recommendation made in this behalf by the Telecom Regulatory Authority of India established under sub-section (1) of section 3 of the Telecom Regulatory Authority of India Act, 1997.] (2) The Central Government may by notification in the Official Gazette, delegate to the telegraph authority all or any of it its powers under the first proviso to sub-section (1). Definition of LF SUC 8. Further, the telecom sector was liberalised under the National Telecom Policy, 1994 after which licenses were issued to companies in return for a fixed license fee. To provide belief from the steep fixed license fee, the Government in 1999 gave an option to the licensees to migrate to the revenue sharing fee model. Under this, mobile telephone operators were required to share a percentage of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btains spectrum, the licensee shall pay spectrum related charges, including payment for allotment and use of spectrum, as per provisions specified in the relevant NIA document of the auction of spectrum or conditions of spectrum allotment/LoI/directions/instructions of the Licensor/WPC Wing in this regard. The spectrum related charges shall be payable in addition to the License Fee. 20. Schedule of payment of ANNUAL LICENSE FEE and other dues : 20.1 License Fee shall be payable in four quarterly installments during each financial year (FY) commencing 1st of April. 9. In view of the above, it is concluded that consideration in the form of LF and SUC paid by the appellant to the Government is consideration as per clause (31) of Section 2 of CGST Act, 2017 which cover all the elements specified under ibid section of the Act. There are service provider as well as service recipient and the element of consideration is also involved in the instant case. Hence, the taxability is fasten on these payments as per GST Act. (c) In respect of issue at S. No. (d) I find that : On perusal of Tax Invoice filed with appeal memo, it reveals that appellant has paid GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this connection, for proper understanding of the issue, I have gone through the Agenda for 31st GST Council Meeting proposals recommended by Fitment Committee and Minutes of the Meeting of the Council available in GST Council website. Sl. No 18 of Annexure-II of Agenda Item 6, which is relevant to the issue is produced below : S. No. Proposal Comments 18 To clarify GST rate applicable on the right use Intellectual Property and similar products other than IPR Recommendation : It is proposed that to bring clarity, the residuary rate entry for Heading 9973 in Notification No. 11/2017-C.T. (Rate), dated 28-8-2017 may be split in two parts as follows. Existing Proposed Description of services Rate % Description of services Rate % Sl. 17 Heading 9973 (Leasing or rental services, with or without operator) Leasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including telecommunication spectrum which is classifiable under SAC 997338 under Group 99733. On a conjoint reading of the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, Minutes/Agenda/Proposal/Discussion of the GST Council, I am of the view that amendments have been carried out vide the aforesaid notification to clarify the legislative intent as well as to resolve the unintended interpretations. It is well settled law that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations. I am also inclined to rely on the decision of the Hon ble Supreme Court of India in the case of W.P.I.L. Ltd. v. Commissioner of Central Excise, Meerut, U.P. [2005 (181) E.L.T. 359 (S.C.)] which is also applicable to the present case, wherein a 31 Judges Bench of the Hon ble Supreme Court while interpreting applicability of exemption notifications have observed in Para 15 as follows : 15. The Learned Counsel for the appellant is also right in relying upon a decision of this Court in Collector of Central Excise. Shillong v. Wood Craft Products Ltd. [(1995) 3 SCC 454]. In that case, this Court held that a Clarificatory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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