TMI Blog2023 (12) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... loans under the scheme promoted by the State Government of Gujarat. The argument of the appellant therefore that they had provided services only to the person who had availed loan and not to the State Government, fails - the reliance of the appellant on various dictionary meaning to argue that both the words subsidy and incentive, mean the same, is not a plausible contention. Scope of supply u/s 7(2), ibid - Subsidy in the form of an incentive received - HELD THAT:- The appellant has not explained how incentive would fall within the ambit of section 7(2) or Schedule III. The next argument of the appellant is that the scheme is for the benefit of the public and not beneficial to an individual or private commercial enterprise and therefore the amount being paid by the Government over and above reimbursement of 6% interest is nothing but 'subsidy' - HELD THAT:- To equate this subsidy of 6% granted to the loanee, as a part of relief measure announced by the State Government on account of the pandemic situation, with the incentive granted to the Cooperative Banks and Cooperative Credit Societies, which solely depended on the performance in disbursing loans, is not a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hospitality Services Pvt. Ltd. [ 2019 (10) TMI 755 - AUTHORITY FOR ADVANCE RULING, KARNATAKA] - HELD THAT:- The ruling was sought in respect of the said subsidy. However, it is found that the ruling is not applicable to the present dispute primarily since unlike in this case, there was no incentive paid over and above the amount fixed to M/s. Rashmi. Even otherwise, in terms of Section 103 of the CGST Act, 2017, the aforementioned ruling is applicable only to M/s. Rashmi [the applicant] and the jurisdictional officer. Reliance placed on O Ponni Sugars and Chemicals Limited [ 2008 (9) TMI 14 - SUPREME COURT] - HELD THAT:- The appellant has erred in relying on the aforementioned judgement to substantiate his argument, more so since in the said judgement the two questions of law framed by the Hon'ble Apex Court were as follows - the questions on which the ruling was sought from GAAR at paragraph 7 are different. The reliance therefore, on the aforementioned judgement of the Hon'ble Supreme Court, is legally untenable. The appeal filed by appellant M/s Rajkot Nagrik Sahakari Bank Limited against Advance Ruling Authority for Advance Ruling is rejected. - SAMIR VA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether the incentive received under said scheme could be considered as supply of service under the provisions of section 7 under CGST Act? 3. Whether the incentive received under said scheme if considered as supply then would it be covered under section 7(2) of CGST Act? 4. Whether the incentive received under said scheme could be considered as excluded from the value of taxable supply under section 15(2)(e) of CGST Act, 2017. 8. The GAAR vide its order No. GUJ/GAAR/R/44/2021 dated 11.08.2021 , gave the following ruling to the aforementioned questions: We hold the subject incentive amount liable to GST. The said Incentive is not subsidy and does not merit exclusion from valuation under section 15(2)(e) of the CGST Act. The subject supply is covered at section 7(1) (a) CGST Act and not covered at section 7(2) CGST Act. 9. Being aggrieved with the aforementioned Ruling, the appellant has preferred the present appeal on the following grounds: that the subsidy received in the form of incentive cannot be considered as consideration under the provisions of Section 2(31), ibid; the definition of consideration, makes it crystal clear that subsidy g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme, the applicant had accrued his claim for the payment to be sanctioned by the Government; that the amount paid by Government under the said scheme could also be considered as compensation towards the interest since in general terms the banks are charging interest more than 8% but under this scheme were authorized to collect interest @ 8% only; that at the most it can be treated as differential interest, which is not chargeable to GST in terms of notification No. 12/2017-CT (R) dated 28.6.2017, as amended. that they have neither supplied any goods nor services thus the amount cannot be considered as consideration hence is not covered u/s 7(1)(a) of CGST Act; 10. During the course of personal hearing held on 26.07.2023, Shri Paresh Sheth, Advocate appeared on behalf of the appellant. He reiterate the written submissions made in the appeal. Discussions and Findings: 11. Before dwelling on to the issue it would be prudent to reproduce the relevant extracts of the Resolutions issued for Aatma Nirbhar Gujarat Sahay Yojana. Since the documents are in vernacular, a free translation of the relevant clauses is reproduced below for ease of reference viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. SMB/16/2020/253/Yathi dated 16.05.2017 will not be eligible for benefits under this scheme. 7. The maximum rate of interest on credit extended by Co-operative banks to beneficiaries under the scheme will be @ 8% 12. All beneficiaries availing loan under this scheme will be repaid interest @ 4% per annum by the State Government. This interest subsidy amount will be provided in quarterly instalments (including moratorium period). The beneficiary has to pay interest @ of 4% per annum. 13. Gujarat State Co-operative Bank Ltd., District Co- operative Banks Ltd., including all Nagrik Cooperative Banks (including those banks registered under Multi Society Cooperative Societies Act) who have provided loans from the State Government under this scheme, will be provided a one time incentive @ 2% on the total amount lent under the scheme. 23. Gujarat State Co-operative Bank Ltd., District Central Co- operative Banks Ltd. including all Nagrik Cooperative Banks (including those hanks registered under Multi Society Cooperative Societies Act) shall not charge any additional charges such as form fee, processing charge and stamp duty, registration fee. Also, no stamp dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion that both the words mean the same is neither factually correct nor legally tenable. Had the words been same, there was no reason to have mentioned them differently in the Government Resolution. While the 6% interest rebate granted to the beneficiary/loanee who avails the loan is mentioned as......... the amount paid to the Cooperative Banks, Cooperative Credit Society, on achieving a certain amount of disbursement of loan target, is explicitly mentioned in a different and distinct terminology as an incentive. 15. We find that the Banks were provided a base percentage of loan disbursement amount as an incentive. The incentive so granted varied, meaning thereby that the percentage of incentive increased on higher disbursement of loan. At best, the incentive can be termed as a consideration to the Cooperative Banks for providing the service to the beneficiaries/loanees by extending loans under the scheme promoted by the State Government of Gujarat. The argument of the appellant therefore that they had provided services only to the person who had availed loan and not to the State Government, fails. We further find that there is no bar on including the incentive received under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployer in the course of or in relation to his employment. 2. Services by any court or Tribunal established under any law for the time being in force. 3. (a) the functions performed by the Members of Parliament. Members of State Legislature. Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause. 4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule IL sale of building. 6. Actionable claims, other than lottery, betting and gambling. [7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. 8. (a) Supply of warehoused goods to any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882); Now, actionable claim, as defined under section 3 of the Transfer of Property Act, 1882, states as follows viz actionable claim means a claim to any debt, other than a debt secured by mortgage of immoveable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in the possession, either actual or constructive, of the claimant, which the Civil Courts recognise as affording grounds for relief whether such debt or beneficial interest be existent, accruing, conditional or contingent: 20. Actionable claim as defined supra is an intangible movable property, and its transfer is dealt with in Chapter VIII of the Act, ibid. Accordingly, actionable claim means |a] claim to an unsecured debt and [b] beneficial interest in a movable property. 21. Further, we find that the Hon'ble Supreme Court in the case of M /s. Sunrise Associates [CA No. 4552/1998], has held as under Distinct elements are deducible from the definition of 'actionable claim' in Section 3 of the Transfer of Property Act. An actionable claim is of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely on the case of Dilip Kumar Company [2018 (361) ELT 577 (SC)], wherein the Constitution Bench of the Hon'ble SC held as follows: 52. To sum up, we answer the reference holding as under- (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. Thus in terms of the aforementioned judgement any claim for an exemption notification is to be strictly interpreted. The appellants contention of falling within the ambit of notification No. 12/2017-CT(Rate), is not legally tenable in terms of the findings recorded above. 24. The last submission of the appellant is that they have not supplied any goods or services and the am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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