GST AAR CASES
2018-TIOL-280-AAR-GST
Sandvik Asia Pvt Ltd
GST - Applicant intends to execute an agreement for providing maintenance services to prospective customers for equipment located at various sites in the state of Rajasthan - Applicant seeks a ruling as to whether the maintenance services rendered on customers' equipment under the comprehenve maintenance service agreement and supply of parts and services which also includes replacement of spare parts should be classified as 'composite supply' or 'mixed supply'; the tax rate applicable; what would be the relevant place of supply and type of tax that would be required to be discharged.
Held: Activities performed under the 'Comprehensive Maintenance Contract' are to be treated as a composite supply of services, supply of operation & maintenance services being the principal supply and other services as being ancillary to such principal supply and activities performed under 'Equipment Parts Supply and Services Agreement' are to be treated as mixed supply - service code for Maintenance and repair services of commercial and industrial machinery is 998717 and prescribed rate of GST is 18% (CGST + SGST) or IGST @18% - for supply of Mixed services, applicant is liable to pay the highest rate of tax as per s.8(b) of CGST Act, 2017 - query raised regarding 'place of supply' being outside the ambit of s.97(2), no findings are warranted - Application disposed of: AAR
- Application disposed of: AAR
2018-TIOL-279-AAR-GST
NHPC Ltd
GST - Applicant seeks a ruling as to whether they are required to pay GST under reverse charge while making payment to PWD for construction of road; the time of supply when advance payment is released to PWD; whether the amount deposited with Central fund i.e. Uttaranchal CAMPA and reimbursed by MEA considering as part cost of the road is liable for GST. Held: No GST is applicable on the activity since the same falls under exempted services in terms of notification 12/2017-CTR - accordingly the other issues on which ruling is sought are rendered infructuous: AAR - Application disposed of: AAR
2018-TIOL-278-AAR-GST
Naga Ltd
GST - Applicant is an importer of Wheat through various sea ports for carrying out Milling operations in their factory premises and manufacturer of food products like maida, sooji, atta etc. -Applicant seeks a ruling as to whether exemption provided to CH 9986, Sl. No. 54(e) of notification 12/2017-CTR for the service providers who have rendered handling services such as loading, unloading, packing, storage or warehousing of agricultural products is applicable for agricultural products viz. Wheat, when imported through sea ports. Held: Applicant, as per the definition contained in section 95(a) of the CGST Act, 2017 can seek an Advance ruling in relation to supply of goods or services or both undertaken or proposed to be undertaken - since the Applicant is the recipient of services and not supplier of such services, the application is not admitted in terms of s.s (2) of section 98 of the CGST Act, 2017: AAR - Application dismissed: AAR
2018-TIOL-277-AAR-GST
Mali Construction
GST- Applicant is in the process of bidding for tender floated by PHED, a unit of Government of Rajasthan for designing, providing installation, commissioning, operation and maintenance of solar energy based borewell water pumping systems, reverse osmosis plant and operation and maintenance of fluoride control project on ESCO and O&M contract- applicant seeks a ruling on the classification of goods or services and determination of the tax liability. Held: The activities under ESCO model and O&M contract are so closely linked in a manner that they form a single indivisible supply- activities undertaken by the applicant culminate into Works Contract services, which in itself is a composite supply- as the activity is being undertaken for a government department, if the value of supplied goods under this contract is below 25% of the total value of the composite supply, then the rate of tax would be Nil and if otherwise, the rate of tax will shift from Nil to 12% in terms of notification 12/2017-CTR : AAR - Application disposed of: AAR
2018-TIOL-276-AAR-GST
Kundan Misthan Bhandar
GST - Supply of pure foods items such as sweetmeats, namkeens, cold drinks and other edible items by a sweetshop which also runs a restaurant is a supply of service and sweet shop shall by treated as extension of restaurant - rate of GST is @5% on the condition no credit of input tax charged on goods and services is availed - items including takeaway items from the said premises shall also attract @5% subject to non-availment of ITC: AAR - Application disposed of: AAR
2018-TIOL-274-AAR-GST
Borgwarner Morse Systems India Pvt Ltd
GST - "Roller Chains" supplied by applicant are classifiable under CTH 7315 1100 and "Inverted tooth chains or silent chains" are classifiable under CTH 7315 1290 of the Customs Tariff Act, 1975 since, although they form parts of engines under Chapter 8407 or 8408, they are covered under the definition of ‘Parts of General use' which are specifically excluded from chapter heading 8409 - attract GST @18% and not @28%: AAR - Application disposed of: AAR
2018-TIOL-273-AAR-GST
Adventage Agency Pvt Ltd
GST - Applicant is a Del Credere Agent (DCA) of supplier of goods and takes order from customers and places these orders with the principal (actual supplier of goods to customers and receiver of payments) - collection of payments from customers is the responsibility of DCA - DCA gets commission for which DCA raises invoices on the principal along with GST - as per the pricing policy of principal, customers can avail despatches either on cash or credit (10 days) basis - when the payment is directly made by customer before due date (i.e. before 10 days of credit period), early payment incentive is given to customer - when the buyer is not in a position to pay to principal on the due date, he approaches DCA to extend a short term loan and the loan is extended by the DCA by making payment to the principal on behalf of the customer - loan is repaid to DCA by customer along with agreed interest and if the customer makes the payment to DCA earlier than 10 days, then the customer asks for reimbursement towards early payment at a pre-determined rate as is being offered by the Principal - in view of the above, applicant seeks a ruling as to whether any supply arises in the transaction of the amount passed on to the customer by DCA on account of early payment before the credit period allowed by the principal; what would be the classification of such supply and its HSN/SAC code and applicable GST rate; whether the supply is exempted in terms of notification 12/2017-CTR; whether dealer/DCA can take credit of ITC of the GST charged on such supply. Held : Transaction made between DCA and the customer for passing on the specified bonus given by principal is nothing but an additional discount given for early payment made by customer - additional discount relates to supply already made by principal and passing on such bonus to customers by DCA is in the nature of pure agent - further any amount retained by the DCA on account of early payment is in the nature of supply made to the principal as ‘business support services' on which the DCA is already paying GST - Additional bonus passed on by the applicant DCA to the customer is not in nature of supply in accordance with the GST Act, 2017; that since there is no supply to DCA by customer, the DCA is not entitled for ITC: AAR
- Application disposed of: AAR
2018-TIOL-272-AAR-GST
Punjab Small Industries & Export Corporation Ltd
GST - Applicant, M/s Punjab Small Scale Industries and Export Corporation is engaged in providing lease (of 30 years or more) of industrial plots against one time upfront amount called as premium, salami, cost, price, development charges or by any other name to the industrial units and the same is exempted by virtue of point no. 41 of notification 12/2017-CTR - applicant seeks a ruling as to whether the ancillary services relating to the industrial plots of Transfer fees, Extension fees, Conversion fees, Processing fees, Bifurcation fees, Tower Charges are also exempted under the said notification.
Held: The additional services provided by the applicant although are in respect of the same plots but entry no. 41 (even after amendment by notification 32/2017-CTR dated 13.10.2017) does not provide exemption to all services related to plots covered therein as is evident from the description of the entry - Other subsequent services rendered by the appellant are liable for CGST and UTGST, same are classifiable under ‘Other Miscellaneous Services” - Service Code 999799 and chargeable to CGST @9% and UTGST @9% [Sr no. 35 to Notification 11/2017-CTR, 11/2017-UTTR refers] - Application disposed of: AAR
- Application disposed of: AAR
GST HIGH COURT
2018-TIOL-170-HC-KERALA-GST + Case Story
NVK Mohammed Sulthan Rawther And Sons Vs UoI
GST - Section 129 of the CGST Act, 2017 - Process of detention cannot be resorted to when the dispute is bona fide, especially, concerning the exigibility of tax and, more particularly, the rate of that tax: High Court
GST - Classification of Roja Supari - ASTO detained the goods and the lorry alleging that the manufacturer had been trying to evade tax by mis-declaring the goods as falling under HSN 0802 and paying tax @5% whereas the product fits the description under HSN 2106 @18%.
Held: Writ's province of High Court is restricted - the classification or the alleged misbranding of the product - even the alleged tax variation, not evasion though - cannot be considered here - It is, indeed, for the assessing authorities to adjudicate on the issue - in the recent returns filed, the first petitioner declared the HSN Code he has felt his product would attract and paid the tax accordingly - The returns are very much on record before the assessing officer - Therefore, to that extent the first petitioner's conduct cannot be faulted, nor can he be accused of evading the tax - at best the inspecting authority can alert the assessing authority to initiate the proceedings "for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact" - order of detention is arbitrary and unsustainable, same is set aside and the Assistant State Tax Officer is directed to release the goods forthwith - Petition allowed: High Court [para 23, 29, 31, 35, 36, 37]
- Petition allowed : KERALA HIGH COURT
2018-TIOL-168-HC-KERALA-GST
Pioneer Polyleathers Ltd Vs Assistant State Tax Officer
GST - Goods belonging to the Petitioner, a registered dealer, were detained u/s 129(3) and tax demanded of Rs.5,28,834/- - petitioner paid the amount through the portal and obtained payment receipt but the State Tax officer refused to release the goods and he insists that the tax and penalty ought to have been paid through cash or demand draft - Therefore, the present petition is filed - counsel for Revenue submitted that the amount must be apportioned between the Centre and state as the liability is under the head IGST; that it is not within the State's purview to effect the apportionment and that if the Court could have before it the GST Network, the problem would be solved - Counsel for GST Network submitted that they are only an infrastructure provider and have no statutory role to play in apportionment of taxes between Centre and State.
Held: Government both at the Centre and in the State, have ushered in the GST Tax regime to ensure that everything is made online with minimum manual interventions - Yet strangely, the authorities still insist that the payment should be by physical means i.e. either in cash or through Demand Draft - Such insistence seems to be archaic and out of tune with the very spirit of the GST regime - In apportionment, there may be delays and difficulties, but the taxpayer cannot be made to suffer, on that count - applying the ratio of the judgment in Fashion Marbles and Granites Pvt. Ltd. 2018-TIOL-62-HC-KERALA-GST, the Assistant State Tax Officer is directed to release the goods and the vehicle forthwith - Petition disposed of: High Court [para 5, 6]
- Petition disposed of: KERALA HIGH COURT
GST AAAR CASES
2018-TIOL-24-AAAR-GST
Mega Flex Plastics Ltd
GST - Respondent manufactures Polypropylene Leno Bags mainly used for packing of potato, onion, raw mango and other vegetables and citrus fruit in bulk - It also manufactures other woven Polypropylene bags which used for packing of cement, fertiliser and food grain - Respondentsought a ruling from the Authority for Advance Ruling regarding classification of both items under CGST & WB GST - AAR held - 2018-TIOL-89-AAR-GST that 'PP Leno Bags', if specifically made from woven Polypropylene fabric using strips or the like of width not exceeding 5 mm and without any impregnation, coating, covering, or lamination with plastics, are to be classified under Tariff Sub Heading 6305 3300 - Revenue is aggrieved and has filed an appeal before the Appellate Authority for Advance Ruling.
Held: Polypropylene Leno Bags are manufactured by weaving polypropylene strips (tapes) - It is a fact that the respondent assessee declared the polypropylene leno bags voluntarily under Tariff heading 3923 2990 and enjoyed duty drawback and no cogent reasoning could be offered by them as to why and how the Tariff Heading is sought to be changed from 3923 2990 to 6305 3300 - Madhya Pradesh High Court while dealing with the classification of woven sacks made of HDPE Tapes and fabrics in the matter of Raj Pack Well Ltd. [WP 1205 of 1988 dated 19 September 1989] has held that HDPE sacks fall under heading 39.23, sub-heading 3923.90 and which judgment was failed to be taken note of by the AAR - it is also not permissible under the doctrine of equitable estoppel that the Respondent is alowed to take a divergent stand from that taken earlier - Apex Court [AIR 2013 SC 1241] has consistently struck down such self-serving attitude - In view thereof, AAR ruling dated 06.07.2018 is set aside and it is held that Polypropylene Leno Bags (PP Leno Bags) manufactured by the respondent are correctly classifiable under Tariff Heading 3923 2990 - Revenue appeal succeeds: AAAR [para 9 to 12]
- Appeal succeeds: AAAR
2018-TIOL-23-AAAR-GST
Merit Hospitality
GST - Appellant has entered into a contract with a company called, say "B Ltd." and "B Ltd." is having its unit in SEZ area (Special Economic Zone) - Supply of food is done by Appellant to the employees of "B Ltd." and the payment for the same is made by the employees of "B Ltd." to the appellant directly - Appellant had sought a ruling as to whether such supply can be considered as supply to SEZ area and hence no GST would be applicable - The Authority for Advance Ruling had held that the question cannot be answered on the ground that there is lack of clarity on the issue in absence of adequate information or details - appeal before Appellate authority.
Held - From the provisions of section 16(1)(b) of the IGST Act, 2017, it is crystal clear that the supply made by the appellant to the employees of the unit located in SEZ cannot be construed as Zero-rated supply by any stretch of imagination as the employees can neither be treated as SEZ developer nor as SEZ unit - GST will, therefore, be applicable as per the classification of the services determined in terms of the scheme of classification of services as provided under Annexure ‘A' to the notification 11/2017-CTR - appellant is presuming and putting a pre-emptive notion before the Appellate authority that they are running the ‘restaurant' in the SEZ area and then asking the authority to decide upon the GST rate applicable on such activities -it is apparent that the food is being cooked at one place and being distributed to various different locations of the companies with whom they have entered into a contract - Thus, this event is not covered under the definition of ‘Restaurant service' - appellant's claim that it is running ‘Restaurant services' in the SEZ area is not tenable and hence the GST rate of 5% envisaged by appellant is not correct: AAAR
- Appeal disposed of; AAAR
GST NAA CASES
2018-TIOL-13-NAA-GST
Ravi Charaya Vs Hardcastle Restaurants Pvt Ltd
GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 - Applicants through their emails have filed complaints alleging that although the rate of GST on Restaurant services had been reduced from 18% to 5% w.e.f 15.11.2017, the respondent had increased the prices of the products which were being sold by them and had maintained the same price which they were charging before the above reduction.
Held : Respondent's claim that after 15.11.2017 the input tax paid had become a cost which needed to be factored in the price is frivolous as they had no details of the input tax available to them on 15.11.2017 when they had increased the price - since the respondent has been given the benefit of transitional credit they should not have any grievance on this count - amount of profiteering has been assessed on each and every product by the DGAP and the veracity of which cannot be challenged - quantum of denial of benefit due to the reduction in the rate of tax and the benefit of ITC availed by the respondent which was required to be passed on to the customers or the amount of profiteering is determined as Rs.7,49,27,786/- as the respondent had failed to pass on both the above benefits to their customers - above amount is inclusive of extra GST which the respondent had forced the customers to pay due to wrong increase in his basic price - however, depositing of the extra GST in the Government account cannot absolve the respondent of the allegation that they had compelled the customers to pay more price than what they should have paid - Respondent is directed to reduce his prices by way of commensurate reduction keeping in view the reduced rate of tax and the benefit of ITC which has been availed by them, as per rule 133(3)(a) of the CGST Rules, 2017 - since complainants are not identifiable, the respondent is directed to deposit the above amount in the ratio of 50:50 in the Central or State Consumer Welfare Funds of all the 10 States along with interest @18% till the same is deposited, within a period of 3 months - since the investigation is only up to 31.01.2018, DGAP is directed to investigate the quantum of denial of both the above benefits till the respondent reduces/had reduced his prices commensurately - Respondent acted in conscious disregard of the obligation which was cast upon him by law by issuing incorrect invoices in which the base prices were deliberately enhanced exactly equal to the amount of reduced tax and benefit of ITC - respondent has committed an offence u/s 122(1)(i) and, therefore, he is required to explain why penalty should not be imposed: National Anti-Profiteering Authority.
- Application allowed : NATIONAL ANTI-PROFITEERING AUTHORITY
2018-TIOL-12-NAA-GST
Mandalika Sakunthala Vs Fabindia Overseas Pvt Ltd
GST - Anti-Profiteering - Section 171 of the CGST Act, 2017 - Applicant alleging that Respondent had not passed on the benefit of reduction in the rate of tax when she had bought ‘Bathing bar' and ‘Instant Drink Powder 50 gms'; that the products were being sold at MRP of Rs.95/- and Rs.50/- respectively till 30.06.2017 and even after the implementation of the GST w.e.f 01.07.2017 although the rate was fixed at 18%; that the respondent has indulged in profiteering.
Held: It is apparent that the actual pre-GST tax rate on the above products was not 27% (12.5% Cex duty + 14.5% VAT) as mentioned by applicant but it was 14.5% (Nil CE duty + 14.5% VAT) in the case of ‘Bathing bar' and 16.5% (2% CE Duty + 14.5% VAT) in the case of ‘Instant Drink Powder 50 gms'; that the respondent was procuring both the products on inter-state basis from their sole vendors and their tax liability had increased by 3.5% post GST from 14.5% to 18% w.e.f 01.07.2017 and, therefore, they had suffered loss on the supply of both the products in question; that the base price of these products had been in fact reduced by respondent to maintain the same MRP (pre-GST MRP) inspite of the increase in the tax rate of both the above products - Anti-profiteering provisions contained in s.171(1) of the CGST Act, 2017 are, therfore, not attracted - since the reduction in the base prices of these products is more than the additional ITC eligible thereon, allegation of profiteering is not established - Application is dismissed: NAA
- Application dismissed : NATIONAL ANTI-PROFITEERING AUTHORITY
JEST GST
By Vijay Kumar
GST on supply of services by an association of persons to its members
ARTICLES
Adieu to Dr Adhia & Bon Voyage to Dr Pandey!
GST - Agenda for the second year - Part XIII
Who is an 'intermediary' u/s 2(13) of the IGST Act, 2017?
GST - Agenda for the second year - Part XII
Supply in course or furtherance of business - a conundrum
Understanding Anti-profiteering - Part I
