TMI Blog2021 (8) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 LF and SUC charges are consideration for supply as per GST law or not? - HELD THAT:- 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 regulatory fee - Further, as per Section 4 of the Telegraph Act The Government merely grants/delegates permission of carrying out the establishing, maintaining and working telegraphs . Granting permission for carry out the establishing, maintaining and working telegraphs and allocation of spectrum is a service which falls under HSN Head 997338 which specifically defines Licensing services for right to use other natural resources including telecommunication spectrum - If no GST is leviable on grant of license then why a service category at HSN Head 997338 as Licensing services for right to use other natural resources including telecommunicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 5th Floor, Plot No. 1, Indira Palace, Malviya Nagar, Jaipur-302017 (hereinafter also referred to as the appellant ) against the Orders-in-Original (hereinafter as the impugned orders ) passed by the Deputy Commissioner, Central Goods Service Tax Division-E, Jaipur (hereinafter called as the adjudicating authority ) as mentioned below. As common issue is involved in all these three 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 rejecting refund 1 2 3 4 5 1 APPL/JPR/CGST/JP/ 84/IX/20/ ZY0805200179261, dated 20-5-2020 March, 2018 Refund rejected ₹ 4,98,41,700/- 2 APPL/JPR/CGST/JP/ 85/IX/20/ ZZ0805200179249, dated 20-5-2020 April, 2018 Refund rejected ₹ 1,54,52,949/- 3 APPL/JPR/CGST/JP/ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for right to use other natural resources including telecommunication spectrum . Relevant rates for GST for services classified under Heading 9973 is prescribed under Sr. No. 17 of the said notification. As per the notice, these services have been covered under the Entry No. 17(vi) which is residuary entry for the group Leasing and Rental Services with or without Operator under Chapter Heading 9973. In this regard we respectfully submit that rate prescribed for Sr. No. 17(vi) in column (4) is Same rate of central tax as applicable on supply of like goods involving transfer of title in goods . We further submit that Licensing services for right to use other natural resources including telecommunication spectrum are not goods and hence there cannot be any rate prescribed in the GST tariff for goods. Consequently, no GST is payable on this. Hence it cannot be considered as supply of goods or services. 3. Further, the adjudicating authority vide impugned Orders-in-Original in Form RFD-06, dated 20-5-2020, 20-5-2020 and 20-9-2020 respectively has passed the orders-in-original and rejected the refund claims as inadmissible as Service is not exempted from GST for the period and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public authorities : that Section 4 of the Indian Telegraph Act, 1885, gives the Government exclusive privilege in respect of telegraphs, and power to grant licenses - (1) Within India, the Central Government shall have the exclusive privilege of establishing, maintaining and working telegraphs : Provided that the Central Government may grant a licence, 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, maintenance and working that Section 4 of Indian Telegraph Act is precisely clear while mentioning that the exclusive privilege of establishing, maintaining and working telegraphs is with the Central Government and it is just that the Government is sharing its privilege to private entities such as Appellant. that by issuing telecom license, DoT, Ministry of Communication, Government of India, is parting with it exclusive privilege and regulates the telec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that such regulatory fees collected by the DoT are a compulsory exaction of money by a public authority for public purposes enforceable by law and is therefore, in the nature of a tax. It is respectfully submitted that such regulatory fees charged by the Government exchequer forms part of the Consolidated Fund of India and subjected to audit by the CAG. They are a compulsory exaction of money by the Government from the Appellant for public purposes and as taxes, cesses or duties levied are not consideration for any service, the levy of GST on regulatory fees chargeable by the DoT is arbitrary and contrary to the GST Acts. that to summarize, the provisions of Section 2(17) clause (i) to the extent they treat all government activities as business and thereby creating charge of GST on activities of the government are manifestly arbitrary, unreasonable and in contravention of Articles 14, 19(1)(g), 246A and 265 of the Constitution of India. that the Respondent contends that the refund is rejected as the service is not exempted from GST. It is submitted that an activity can be exempted from the levy of GST only if such a transaction falls under the meaning of supply under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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), subject to the conditions as specified in the corresponding entry in column (5) of the said Table TABLE Sl. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cargo or mail on a scheduled 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. 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 mandatorily be referred and relied upon, in terms of Explanation (ii) to the rate notification, for all issues aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 immoveable property/goods. The term lease or rent has not been defined anywhere in GST Act. We may refer to the Transfer of Property Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 treating the refund as inadmissible is null and void in law. However, the Learned Respondent have not paid heed to such submission of the Appellant and gave such a finding which does not hold legally correct and the very fundamental and elementary understanding of the law is violated. This makes the impugned order a non-speaking order wherein no ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 20-6-2012 (as amended) w.e.f. 1-4-2016 services, provided by Government by way of allowing a business entity to operate as a telecom service provider or use radiofrequency spectrum on payment of licence fee or spectrum user charges, as the case may be, was taxable. Further, with regard to taxability of assignment of spectrum CBIC has issued a Circular No. 192/02/2016-Service T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g (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 regulatory fee. Further, as per Section 4 of the Telegraph Act The Government merely grants/delegates permission of carrying out the establishing, maintaining and working telegraphs . Granting permission for carry out the establishing, maintaining and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 relief 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 their AGR with the government as annual License Fee (LF) and Spectrum Usage Charges (SUC). License agreements between the Department of Telecommunications (DoT) and the telecom companies define the gross revenues of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (d) 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 under the HSN Head 9973, under Reverse Charge Mechanism, meant for Leasing or rental services with or without operator which is proper head for the services of Grant of License and Allocation of Spectrum . As per Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-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. (R), dated 28-6-2017 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) (viii) Leasing or rental services, with or without Same rate of Central Tax as on (viia) Leasing or renting of goods Same rate of Central Tax as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources 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 C 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, where in 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 Clarificator ..... X X X X Extracts X X X X X X X X Extracts X X X X
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