9911796707
TMI Blog2024 (10) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. RAJASTHAN TOURISM DEVELOPMENT CORPORATION LIMITED, Third Floor, Paryatan Bhawan, Khasha Kothi, Jaipur-302001, Rajasthan (hereinafter "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a) given as under: (e) Determination of the liability to pay tax on any goods or services or both; A. SUBMISSION OF THE APPLICANT (in brief):- M/s. Rajasthan Tourism Development Corporation Limited (hear in after called as RTDC) is fully owned by Government of Rajasthan had run a Palace on Wheels (hear in after called as POW) a luxury tourist train in collaborated with Indian Railways as per agreement dated 23-11-2021. In the matter, M/s. Rajasthan Tourism Development Corporation Limited (hereinafter referred to as "RTDC"), a wholly Rajasthan government-owned entity operating the Palace on Wheels (POW) luxury tourist train in collaboration with Indian Railways, certain complexities have arisen in relation to the Operation and Maintenance Service Agreement with M/S Cube Construction Engg. LTD in Consortium with M/S Easy Toll Solutions Pvt. Ltd (hereinafter collectively referred to as the "Operator"). Pursuant to the said agreement dated 28.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred to the Operator and the Operator shall be liable to accommodate such booking starting from the first trip/ tour of POW after signing of Agreement between the parties. 7.3,3 Operator shall develop website/ mobile app for online booking of tours. All tours shall be booked online only. Authority shall be given access to website/ mobile app to view the bookings, cancelled bookings, guests travelled on the train, guest details, etc. Operator, upon expiry/prior termination of the Agreement, shall handover the POW booking portal and its title/ownership to RTDC without any fee/charges. 7.3,4 Website/mobile app for POW shall be allowed to set-up a link on RTDC portal through which user can navigate to the separate POW website (operated & managed by Operator). 7.3.5 Operator shall be responsible for bearing business risk related to booking of tours and subsequent travel on POW. Authority shall not be responsible for ensuring the minimum number guaranteed guests on POW." 3) OBLIGATIONS OF THE RAILWAY ADMINISTRATION/RAILWAY ADMINISTRATION(Point no 8 agreement) 8. Obligations of the Railway Administration/Railway Administration "8.1.1 Subject to payment of applicable charges t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Operator and shall entitle the RTDC to recover such payments by revoking the Performance Security which shall be replenished to its original amount within 30 days of such revocation, 9.2.1 In casa any penalties/damages/interests are imposed by the Railway Administration on RTDC due to non-payment of the Haulage and other Charges by the Operator, the same shall be recovered from the Operator. 9.2.3 In case the Operator does not the clear all outstanding dues to Railway Administration and/or the replenish the Performance Security to its original amount within the stipulated timeframe intimated by the RTDC and/or the Railway Administration then it shall be considered as Event of Default of the Operator and shall entitle the RTDC to initiate termination of the Agreement." 9.3 Statement of Applicable Charges (Point no 9.3 agreement) 9.3.1 A communication received from the Railway Administration with respect to the Applicable Charges for operation & maintenance of the POW under the BGT Policy and amendments thereof is enclosed at Schedule-2. 5) REVENUE SHARE TO RTDC (Point no 10.1.1 agreement) "10.1.1 In lieu of rights provided for operation of Palace of Wheels (POW), the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes, such charges are essentially in the nature of leasing of wagons/rental charges and thus, is a supply of services and shall be eligible to GST under reverse charge mechanism i.e., Service Provider shall be liable to discharge GST owing to supplier, namely MoR being Central Government. With respect to the GST rate, vide S. No. 17 of the Notification No. 11/2017-Central Tax (Rate), GST rate as applicable on supply of the rakes/coaches being given (18% GST in case of the supply of Chapter 86 goods) shall be applicable. Stabling Charges (Para 8.7) SAC 997311 The instant service which is similar to that of RU charges supply i.e.., supply of services by way of leasing of wagons/rental charges and thus, is a supply of services and shall be liable to GST under reverse charge mechanism at the GST rate as applicable on supply of rakes/coaches. 18% GST in case of supply of Chapter 86 goods). User Fee for Redeveloped Stations (Para 8.8) SAC 996512 Such user fee is in the nature of entry fee payable by Service Provider for allowing admission to redeveloped railway station to the tourists boarding/ de-boarding BGT. Since, these are in relation to the transportation services provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailways. RTDC shall act as the liaison only between the operator and the Indian Railways and overall responsibility of making such payments shall lie to the operator only." Therefore, RTDC is working as a pure agent, for these expenses which is be incurred by operator. Separate Disclosure on Invoice: Further, it was proposed that RTDC will clearly indicate the expenses incurred as a pure agent separately on the invoice. The amount paid to the Railway will be shown as reimbursement, and RTDC should not be included in the value of taxable supply. No Mark-up or Profit or Input Tax credit (ITC): On these Charges RTDC will not make any mark-up or profit and did not take the Input Tax credit (ITC) on the expenses incurred on behalf of the operator therefore reimbursement will be a pass-through without any additional cost. Actual and Incidental Expenses: The expenses paid to Railway were in the capacity of a pure agent, i.e., further Without payment of expenses the POW cannot be operated by the operator. Documentation and Record-Keeping: The RTDC is maintaining the proper documentation and records of the transactions, including agreements, invoices, and evidence of acting as a pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arma (RTDC AAO) and Mr. Nitin C.A. Authorized Representative appeared for personal hearing. They reiterated the submission already made by them and stated to submit the agreement of Railway and RTDC within 7 days. E. COMMENTS OF THE JURISDICTIONAL OFFICER:- Comments received from the office of the Joint Commissioner, State Tax, Circle-H, Zone-I, Jaipur, Rajasthan vide letter NO. 1156 dated-08.02.2024 are as under: Questions and Answers for which present AAR has been filed:- 1. The application for advance ruling has been filed by M/s. Rajasthan Tourism Development Corporation Limited seeking advance ruling on the following questions: - i. Whether GST was required to be paid on the charged paid to the Railways on behalf of the operator and those charges were to be recovered from the operator? ii. Why not the said charges come under the scope of pure agent? iii. If charges paid to the Railways on behalf of the operator do not come under the scope of pure agent and liable to be taxed, what will be the rate of tax? 2. In this regard, it is to be noted that M/S Rajasthan Tourism Development Corporation Limited is fully owned by the Government of Rajasthan, holding the GSTN08AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Illustration. - Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A ' s recovery of such expenses is a disbursement and not part of the value of supply made by A to B. 7. A pure agent concept is an important one for businesses as it has direct implications on the value of taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDC doesn't fulfill the mandatory condition of being a pure agent, which is, getting into an agreement with the recipient of the service. Hence, charges that RTDC pays to Indian Railways on behalf of M/s. Cube Constructions Engg. LTD does not come under the scope of pure agent. Question 3- If charges paid to the Railways on behalf of the operator do not come under the scope of pure agent and liable to be taxed, what will be the rate of tax? Answer- The rate of GST shall be in accordance with services provided by RTDC to Indian Railways as clarified by Railway Board in its order dated 29.11.2021. F. FINDINGS ANALYSIS & CONCLUSION: 1) We have carefully examined the statement of facts, supporting documents filed by the Applicant along with application, oral and written submissions made at the time of hearing and the comments of the Jurisdictional Tax Authority. We have also considered the issues involved, on which advance ruling is sought by the applicant and relevant facts. We would like to discuss the submission made by applicant and will take up the above question for discussion one by one. 2) M/S Rajasthan Tourism Development Corporation Limited, fully owned by Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways. The Bharat Gaurav Trains will be at par with the mail/exp trains of Indian Railways for the purpose of train operations and punctuality. Accordingly, the Bharat Gaurav Trains will be controlled through COA, monitored through ICMS. The running of the Bharat Gaurav Trains shall be monitored by Divisional controls of the Railway Administration and its punctuality will be accorded priority accordingly. (d) Applicable charges payable to the Railways administration: The Service provider (RTDC) hereby acknowledges and agrees to pay to the Railway Administration, exclusive of any and all taxes (including any GST/service tax), other charges and duties, charges for hauling the Bharat Gaurav Trains by the Railway Administration at such charges as prescribed by the Railway Administration from time to time and applicable uniformly on a non-discriminatory basis( "Haulage Charges"). Which are summarized as under:- 8.1. Haulage Charges 8.2 Composition of Haulage Charges 8.2.1. Fixed Haulage Charge 8.2.2. Variable Haulage Charge 8.3. Empty Haulage Charges 8.5. Right to Use (RU) Charge 8.7. Stabling Charges 8.8. Station User Fee 8.9 Cancellation Charges (e) Assignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the "Operator") and entered an agreement dated 28.06.2023 with operator the details of which are as under- (a) Scope of the Agreement: 3.1.1. Subject to the provisions contained in this Agreement, the Authority hereby grants to the Operator, throughout the duration of this Agreement, a right to operate, maintain and manage the Palace on Wheels (POW) and carrying tourists on the Railway Administration Rail Network in accordance with the provisions of Bharat Gaurav Trains Policy issued by Railway Administration and amendments thereof, agreement signed between the Authority and the Railway Administration as well as the provisions of this Agreement. 3.1.2. Subject to the provisions contained in this Agreement, Operator shall be responsible for all the services for operation & maintenance of the POW which shall include but not limited to the following: a) Online booking of tours on the Palace on Wheels (POW) and sale of tickets. b) Marketing, publicity and advertisement of POW in India and outside across multiple media channels in order to facilitate ticket sales and increasing POW occupancy; c) Decide the tariff/price/charges for tours on the POW tours and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cars for operational requirements during run, telecommunication, maintenance staff, access to and from platforms, halts/stabling facilities at stations, watering, and maintenance facilities. b) Safety, maintenance, and periodical overhauling of the coaches, including air-conditioners and power cars at a suitable railway workshop at a mutually suitable location on a programmed schedule to be agreed upon with RTDC. c) Suitable space for stabling of rake, water, electricity, and workspace for carrying out internal repair will be provided free of charge by the Railway Administration subject to availability. d) Any other activity as mentioned in the Agreement signed between the RTDC and the Railway Administration (C) Obligations of the Authority (the applicant 'RTDC'): 6.1. Obligations of the Authority 6.1.1. The Authority, in addition to and without prejudice to its obligations specified in the other provisions of this Agreement, shall, without qualification, during the Agreement Period observe and comply with the following obligations: a) Handover the Palace on Wheels (POW) on as-is-where-is basis with all associated Infrastructures and facilities (22 coaches eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and facilitate the Operator implementation and operation of the Project in accordance with the provisions of this Agreement; (d) Obligation of the Railway Administration: 8.1.1. Subject to payment of applicable charges to Railway Administration by the Operator in timely manner for operation of the POW, the Railway Administration shall fulfill its obligations for operation & maintenance of the POW as mentioned in the Agreement signed between the RTDC and the Railway Administration. (e) Applicable charges payable to the Railway Administration: 9.1. Composition of Applicable Charges 9.1.1 The Operator shall be responsible for payment of all applicable charges (detailed herein below) to the Railway Administration for Railway Administration's role (access to rail network, periodic maintenance of coaches, hauling of train, etc.) in running of POW in accordance with Agreement signed between the RTDC and Railway Administration (Schedule-3), BGT Policy and amendments thereof. 9.1.2. Composition of Applicable Charges to the Railway Administration for operation of the POW under the BGT Policy and amendment thereof is given below: a) Rake Security Deposit b) Right to Use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has quoted the (18.5%) of Annual Gross Revenue from POW Operations (not Lesser than 10% of Annual Gross Revenue or Rs. 5.00 Crore annually, whichever is higher) which is to be paid to the RTDC as per the payment schedule given subsequently. Revenue Share quoted by the Bidder(s) shall be exclusive of GST, all applicable taxes, duties, cess, surcharges, levies, etc. which shall be paid additionally by the Selected Bidder/ Operator to the RTDC. 10.1.2. Payment of Fixed Revenue Share: 10.1.3. Fixed Revenue Share (i.e. Rs. 5.00 Crore + GST and other applicable taxes) shall be paid in 4 equal installments on quarterly basis in advance, to RTDC, latest by 25th of the preceding month of applicable quarter without waiting for formal invoice from RTDC. For example, Fixed Revenue Share of April to June quarter shall be payable latest by previous 25th March." 10.1.4. For quarterly payments, Operator shall follow standards calendar quarters only i.e. April June, July-Sept, Oct-Dec and Jan-March. Fixed Revenue Share to be paid for first or second quarters shall be adjusted/calculated on pro-rata basis in a manner that next billing can be done on standard calendar quarterly basis. 10.1.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [****] [(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule ll.] (3) Subject to the provisions of 6[sub-sections (1), (1A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as - (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. The definition of "Supplier" in term of Section 2 (105) of CGST Rule,2017 is as under- "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. The definition of "recipient" of supply of goods or services or both in term of Section 2 (93) of CGST Rule,2017 means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure on behalf Of his client. As per the explanation mentioned in Rule 33 of CGST Rule, 2017, "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. Illustration: Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A's recovery of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant is that If charges paid to the Railways on behalf of Operator does not come under the scope of the Pure Agent or liable to be tax then what will be the tax Rate 14) In this regard we find that as per the Agreement dated 04.10.2022 entered between Indian Railways and the Applicant, the following charges are being charged by Indian Railways from Applicant for operation of Palace on Wheels (POW) as under- (i) Registration Fee (ii) Haulage Charge (iii) Right to Use (RU) Charge (iv) Stabling Charges (v) Station User Fee (vi) Cancellation Charges (vii) Security Deposit 15) The rate of GST for the aforesaid charges is as prescribed below- S.No Type of Charges SAC Rate of GST Remark 1 Registration Fee 999799 18% 2 Haulage Charges 996512 5% 3 Right to Use (RU) 997311 18% 4 Stabling Charges 997311 18% 5 Station User Fee 996512 5% 6 Cancellation Charges 996512 5% 7 Security Deposit Though no GST is leviable on this amount but if it is adjusted against any aforesaid charge, then GST will be charged according to that charges. In view of the above discussion, we rule as u ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
