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TMI Blog2023 (8) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... stances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of Section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. 1.1 The applicant M/s State Industries Promotion Corporation of Tamilnadu Limited (hereinafter referred to as Applicant) is registered under the GST Act, 2017 with GSTIN 33AAACS4643J1ZF. The Applicant has sought A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the Allottee(s) and allot the earmarked area as laid down in the allotment order. c) The conditions/charges as available in the allotment order are as under: Sr.No Nature Description 1. Initial Plot Deposit The Allottee(s) shall be required to make payment of pre-determined interest free Initial Plot Deposit while making an application for Land Allotment. Further, if the Allottee(s) fails to complete the payment obligations indicated in the Allotment order, the initial plot deposit amount shall be forfeited, and land allotment will be cancelled. 2. Upfront lease payment The allottee(s) shall be required to make an upfront lease payment (inclusive of Plot Cost & Pre-determined interest free caution deposit) to obtain the earmarked area for a pre-determined lease payment (99 years in general). Caution Deposit will be refunded upon the implementation of the project by the allottee within stipulated time. 3. Penalty for delay in executing the lease deed The Allottee(s), if fails to execute the lease deed within stipulated time, shall be required to make a payment as per the prevailing policy. 4. Differential lease premium The said premium (as per prevailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification grants exemption from CGST to water (except to water which has undergone specified treatment, or the water sold in sealed container). iii. The issue that needs to be examined is whether the exemption under the aforesaid entry is applicable in cases where raw water supplied by the Applicant via pipelines to the Allottee(s) (Tenants) from the infiltration wells/bore wells/open wells/storage reservoir without any process is covered under the said category. iv. A bare reading of the aforesaid entry would reveal that all types of water is exempt under GST other than two categories of water:- 1. aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized water and 2. water sold in sealed container v. The terms 'aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized', imply some amount of processing/treatment on the water. However, in the present case, the water is supplied as it is without any treatment or processing being carried out on the water and hence, the exception from exemption will not be applicable. Likewise, the second category ' sold in sealed containers' is also not applicable as in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cost collected is only a reimbursement of actual cost towards maintaining the industrial parks in a usable condition and hence shall not be liable to tax under GST laws. IV. Interest for delayed payment for the Lease premium:- i. The Applicant collects Upfront lease payment (inclusive of plot cost & predetermined interest free caution deposits) to obtain the earmarked area for a predetermined lease term (99 years in general). ii. They also collect differential lease premium as per prevailing policy from Allottee(s) upon transfer of remaining Leasehold rights/change in Management of Shareholding Pattern. iii. The Applicant is a person and, in the course, or in furtherance of its business, disposes of lands by leasing them out for a consideration as one-time premium. iv. The taxable event in GST is 'supply' of goods or services or both. The transaction to become taxable it must be covered within the meaning & scope of 'supply'. As per Section 7 of the CGST Act, the expression supply includes all forms of 'supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment Scheme (PIDP) scheme and that taxability of the same will depend on levy of GST on main supply. Referring to Section 15(2) clause (c) of the CGST Act, which states that any incidental expenses charged by the supplier to the recipient and any other amount charged for anything done during the supply until the time of delivery of the goods or supply of the services shall be included in the value of the supply, the Applicant has stated that any charges collected as stated above shall be subjected to tax only when the services supplied is taxable under CGST, Act. Considering this, the Applicant is seeking ruling on the taxability of the main supplies as stated in the above paras to contemplate on the taxability of the incidental interest charges. VI. The Applicant has stated that during business, they are levying penalty for the delayed execution of contractual obligation to ensure effective implementation of project which is not taxable as the main supply is exempted vide entry no.41 of Notification No. 12/2017- CT (Rate) dt. 28.06.2017. Referring to Section 15(2) clause (c) of the CGST Act, which states that any incidental expenses charged by the supplier to the recipient and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which SIPCOT it has been opined that the said maintenance cost collected is taxable at 18% under Chapter Head 9987 as per SI.No.25 of Notification No. 11/2017-CT(Rate) dt. 28.06.2017 as amended. iii. With regard to taxability of infrastructure works, the Central Authorities have quoted Circular No. 61/2020 dt. 21.08.2020 issued by SIPCOT from which it is noticed that work undertaken by the Applicant i.e upgradation of roads, street lights, drains and others on request, appears to be construction service. Further, the definition of Works Contract has been restricted to any work undertaken for an Immovable Property as Works Contract and defined Works Contract has been defined in Section 2(119) of the CGST Act, 2017 as 'works contract' means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. As per para 6(a) of Schedule II to the CGST Act, 2017, it is clear that works contract as defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant, referring to Notification No. 02/2017-CT(Rate) dt. 28.06.2017, Entry at 99, has stated that the Notification grants exemption from CGST to water (except to water which has undergone specified treatment, or the water sold in sealed container) and that the issue that needs to be examined is whether the exemption under the aforesaid entry is applicable in cases where raw water supplied by the Applicant via pipelines to the Allottee (s) (Tenants) from the infiltration wells/bore wells/open wells/storage reservoir or from water supplies received from local body or water board, without any process is covered under the said category. The Applicant has also stated in additional information submitted that the term "Incidental charges" collected for supply of Raw water to Industrial units situated in SIPCOT would include Interest for delay in payment obligations (Water Charges), Penalty for delay in payment obligations (Water Charges) and Reconnection charges for water supply. b) The entry no. 99 of exemption notification No. 02/2017-CT(Rate) dt. 28.06.2017 which provides for exemption to water is reproduced as under: S.No. Chapter / Heading / Sub-heading / Tariff item Descrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation. - For the purposes of this rule, the expression "pure agent" means a person who - (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply; (c) does not use for his own interest such goods or services so procured; and (d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account. (e) In this regard, we find that in as much as the Applicant has not submitted any documents as required in the Rule/definition of pure agent discussed above, i.e any document such as agreement entered into with the Allotee(s) to act as Pure agent, to incur expenditure or costs, in the course of supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure or costs in the course of supply of goods or services or both, it is immaterial whether the cost incurred is actual in nature or not. c) Hence, the provisions of sections 7(1) (a) of CGST Act, 2017 read with clause (b) of section 2(17) of CGST Act, 2017 indicates that the activities of the appellant would fall under the definition of supply hence chargeable to GST. d) It is observed that the activity of rendering infrastructure works as described above, whether on request from the allottee(s) on their own, there may be transfer of property in goods and/or services in the course of upgradation/renovation or reconstruction of the aforesaid structures/ buildings which is made against a consideration. Therefore, these activities fall under the scope of supply envisaged under Section 7 of the GST Act and hence liable for GST @ 18% under Group 99859 (other support services) vide SI. No. 23(iii) of Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017. IV) Whether the interest collected towards delayed payment for Upfront lease premium and Differential lease premium are liable to be taxed under the prevailing GST Laws. a) As stated by the Applicant, the allotte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lot cost & pre-determined interest free caution deposit) to allot earmarked area for a pre-determined lease payment (99 years in general). Caution deposit is refunded upon implementation of the project by the allottee within stipulated time. And that they are levying penalty for the delayed execution of contractual obligation to ensure effective implementation of project. (b) Since the main supply i.e the upfront fee collected is exempted as per entry no. 41 of Notification No. 12/2017- CT (Rate) dt. 28.06.2017, penalty for delay in execution of the project and delay in execution of lease deed are not liable to be taxed under the prevailing GST Laws 8. In view of the above, we rule as under: RULING 1. Whether the Supply of raw water and its incidental charges are liable to be taxed under the prevailing GST Laws. As discussed in Para 7(I) supra, the Supply of raw water and its incidental charges are not liable to be taxed under the prevailing GST Laws. 2. Whether the Maintenance charges for usage of common facilities are liable to be taxed under the prevailing GST Laws. As discussed at para 7(II) supra, Maintenance charges for usage of common facilities are liable to be taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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