NAA CASE
2019-TIOL-49-NAA-GST
Director General Of Anti-Profiteering Vs Bhartiya City Developers Pvt Ltd
GST - Anti-Profiteering - s.171 of the CGST Act, 2017 - Applicant alleged that the respondent had increased the price of the flat after the introduction of GST w.e.f 01.07.2017 and had not passed on the benefit of Input Tax Credit by way of commensurate reduction in the price in respect of supply of construction service to him in relation to the purchase of flat in the respondent's project Nikoo Homes II situated in Bhartiya City, Bengaluru, Karnataka - DGAP in its report has stated that the ITC as a percentage of total turnover that was available to the respondent during the pre-GST period from April 2016 to June 2017 was 4.32% and during the post-GST period from July 2017 to August 2018 it was 6.55% which clearly confirmed that post-GST the respondent had benefits from additional ITC to the tune of 2.23% of the turnover; that the profiteered amount came to Rs.5,06,78,069/- including GST on the base profiteered amount of Rs.4,29,47,516/-; that in respect of the applicant the profiteered amount is Rs.58,450/- including GST on the base amount of Rs.49,534/-; that the ITC pertaining to 409 units was outside the scope of the investigation as the selling prices of these units were negotiated between the home buyers and the respondents taking into consideration the benefit of ITC; atet out of the remaining 1304 flats (1713 - 409), 243 customers had booked in pre-GST period and also paid instalments in the pre-GST period but they had not paid any consideration towards construction during the post-GST period from 01.07.2017 to 31.08.2018; that the benefit of ITC in respect of these 243 units should be calculated when the consideration towards construction would be received from home buyers concerned, by taking into account the proportionate ITC in respect of such units; that the profiteered amount of Rs.5,06,19,619/- was required to be returned to the eligible recipients.
Held: On the issue of reduction of tax rate, it is revealed from the DGAP's report that there has been no reduction in the rate of tax as the same was 16.15% in the pre-GST period and 18% in the post-GST period hence the only issue to be examined is as to whether there was any additional benefit of ITC with the introduction of GST - a plain reading of s.171(1) shows that the respondent is legally bound to pass on the benefit of additional ITC which he has availed post coming into force of the GST by commensurate reduction in the prices of the flats - it is relevant to mention that as has been admitted by the respondent himself cost has no bearing on the prices of the flats and hence the same cannot be considered for calculation of the profiteered amount and only the benefit of additional ITC which has accrued to the respondent post-GST is required to be considered, therefore, the credit of ITC is very much relevant while computing the profiteered amount - contention of the respondent that the comparison of the input credits with output taxes should be done covering the entire life span of the project and comparing of the output taxes with input credit for a part of the period would lead to incorrect assessment of profiteering may be correct as s.171(1) mandates passing on of the benefit of additional ITC which has accrued to the respondent during the entire life of the project before occupancy certificate is issued, however, it has to be taken into consideration that the housing projects have a long gestation period whereas the ITC is being availed by respondent every month - Respondent cannot enrich himself at the expense of the flat buyers by denying them the benefit of ITC till completion of the project while he uses the same in his business for discharging his output tax liability every month - respondent has to make periodical assessment of the ITC benefit and pass it on to the eligible flat buyers - respondents can always make adjustments in case more or less benefit is passed on at the final computation and payment of the benefit - flat buyers cannot be forced to wait till completion of the project over a period of 4 to 5 years to claim the benefit of ITC and pay more than what they should pay after commensurate reduction in the prices of the flats and in case the respondent insists on passing on the benefit of ITC to the buyers after completion of the project, he should also claim the benefit of ITC after completion of the same - they cannot apply different yardsticks for availing and passing on of the benefit of ITC - reduction of GST rate from 01.04.2019 to 5% has no effect on the present investigation as the same is carried out w.e.f 01.07.2017 to 31.08.2018 - Authority also clarifies that the claim of the respondent that they had entered into agreements with mutual consent of the parties insofar as the buyers not claiming ITC benefit, shall be subject to well settled principles that no flat buyers can be forced to forfeit his right of claiming benefit of ITC and any agreement executed in violation of the provisions of s.171(1) shall be void - Held that respondent has benefited from the additional benefit of ITC to the extent of 2.23% and profiteered an amount of Rs.5,06,78,069/- including GST from his customers which includes the applicant - Bench directs that the respondent passes on the benefit of Rs.58,450/- to the applicant and Rs.5,06,19,619/- to the rest of 1060 flat buyers along with interest @18% per annum to all the 1061 recipients from the dates from which the above amount was collected by him from them till the date the payment is made in terms of rule 133(3)(b) of the CGST Rules - as respondent has resorted to profiteering in contravention of s.171(1), they are liable for imposition of penalty and a SCN is required to be issued - Commissioner of CGST/SGST Karnataka is directed to monitor the order under the supervision of DGAP by ensuring that the amount profiteered is passed on to all the eligible buyers: NAA
- Application allowed: NAA
AAR CASES
2019-TIOL-376-AAR-GST
West Coast Paper Mills Ltd
GST - Debarked eucalyptus wood, debarked acacia wood, casuarina wood and subabul wood with bark purchased for pulping and use in the manufacture of paper and paperboard is classifiable under heading 4403 [Wood in the rough] and is liable to tax @9% CGST as per Entry no. 134 of Schedule III to 1/2017-CTR: AAR
- Application disposed of: AAR: AAR
2019-TIOL-375-AAR-GST
VTS TF Air Systems Pvt Ltd
GST - Air Handling units are classifiable under HSN 8415 9000 and Air Ventilators under HSN 8414 5910: AAR
Application disposed of: AAR: AAR
2019-TIOL-374-AAR-GST
Vaps Knowledge Services Pvt Ltd
GST - E-campus solutions supplied by applicant is covered under SAC 997329 and is liable to tax @9% CGST under entry no. 17(iii) of 11/2017-CTR read with Schedule III, Entry 453 of 1/2017-CTR: AAR
- Application disposed of: AAR
2019-TIOL-373-AAR-GST
Tata Coffee Ltd
GST - Transaction of depositing timber with the Government timber depot (auctioneer) for disposal as per s.104 of the Karnataka Forest Act amounts to “supply” and GST is chargeable - value would be the open market value or the value as determined u/r 30 or 31 of the Rules: AAR
GST - There is no provision in the GST Act for shifting the tax liability and considering that as a deemed discharge of liability - there are two supplies involved in the chain of transactions, one when the timber is handed over to depot by applicant and the other when the said timber is sold by depot - both are independent supplies and tax needs to be discharged at both stages, time of supply being the time of removal: AAR
GST - activity of providing supervision services is not covered in exceptions in Entry 5 of 13/2017-CTR and is liable to tax under reverse charge - in case the timber depots are not government department, then the depot shall collect GST and issue invoice to applicant: AAR
- Application disposed of: AAR
2019-TIOL-372-AAR-GST
JSW Steel Ltd
GST - The applicant-company manufactures Iron and Steel products - It approached the AAR seeking to know whether the applicant is liable to pay GST under reverse charge for the contribution made towards National Mineral Exploration Trust and District Mineral Fund in light of Sr No 5 of Notfn No 13/2017-CT(R).
Held - The applicant is liable to pay GST under reverse charge for the payment made towards NMET and DMF in light of Sr No 5 of the Notfn No 13/2017-CT(R): AAR
- Application disposed of: AAR
2019-TIOL-371-AAR-GST
International Flower Auction Bangalore Ltd
GST - The applicant company is engaged in the business of auctioning flowers and act as commission agents for flower growers - It approached the AAR seeking to know whether the commission earned from auctioning flowers is covered under Entry No 54(e) and No 54(g) of Notfn No 12/2017-CT(R) and Entry No 54(e) and 54(g) of Notfn No (12/2017) FD 48 CSL 2017.
Held - The commission received by the applicant for facilitating the purchase and sale of cut flowers is covered under Entry 54(g) of Notfn No 12/2017-CT(R) and hence is exempted from CGST - Similarly, the services are covered under Entry No 54(g) of Notfn No (12/2017) No FD 48 CSL 2017 and hence is exempted from tax under the KGST Act 2017: AAR
- Application disposed of: AAR
2019-TIOL-370-AAR-GST
Hatsun Agro Product Ltd
GST - The applicant is a listed company engaged in producing and marketing of dairy products - The applicant approached the AAR seeking answers for certain issues.
Held - The ice creams, chocolates, ice cream cakes and pizza cakes made as per orders of the customers and served in IBACO outset qualifies as composite supply u/s 2(30) of the CGST Act and Section 2(30) of the Karnataka Goods & Services Tax Act - Such composite supply shall be deemed to be supply of service as per Entry 6(b) of Schedule II to the CGST Act and Entry 6(b) of Schedule II to the KGST Act - Such supplies are classifiable under Chapter 9963 and are taxable at 2.5% subject to the conditions under the CGST Act as per Entry No 7(i) of the Notfn No 11/2017-CT(R) and at 2.5% under the KGST Act: AAR
- Application disposed of: AAR
2019-TIOL-369-AAR-GST
Embassy Industrial Park Pvt Ltd
GST - The applicant company is engaged in building and managing industrial warehousing spaces for consumers and industrial centres - It proposed to construct a new warehouse - It approached the AAR seeking to know whether input GST credit can be availed by the applicant on the inputs such as electrical works, pumps, pumping systems and tanks, lighting system, physical security system and fire system.
Held - The Input GST credit cannot be availed by the applicant on inputs such as electrical works, pumps, pumping systems and tanks, lighting system, physical security system and fire system, as it is blocked u/s 17(5) of the CGST Act and u/s 17(5) of the KGST Act - This is because the items do not have independent existence and are part and parcel of the entire building - It is seen from the intent of the applicant that what is given on rent is the space with all infrastructure and once these immovable properties come into existence, they get merged into the common building space with modern infrastructure & facilities and so are excluded from definition of plant and machiney u/s 17(5) of the CGST Act: AAR
- Application disposed of: AAR
2019-TIOL-368-AAR-GST
Datacon Technologies
GST - The applicant company is engaged in offset printing of answer booklets, center pinning and hand numbering - It received an order from the Karnataka State Secondary Education Board for such works - The Board provided the design and format of the answer booklet in soft copy - The applicant approached the AAR stating that their activities were classifies under HSN Code 998912 attracting 12% GST, while other vendors applied the slab rate of 18% - Hence a ruling was sought in this regard.
Held - The supply of printed, centre pinned and hand numbered answer booklet to the Karnataka State Secondary Education Board constitutes supply of goods falling under Heading 4802 of Entry 112 of Schedule II to the Notfn No 01/2017-CT(R) taxable at 6% CGST and 6% SGST: AAR
- Application disposed of: AAR
2019-TIOL-367-AAR-GST
Chrochemie Laboratory Pvt Ltd
GST - The applicant company is a science-based organization which caters to the growing analytical and regulatory requirements of pharmaceutical companies - It approached the AAR seeking to know whether Entry No 80 in Schedule II to the Notfn No 01/2017-IT(R) is applicable for import as well as supply of prepared laboratory re-agents/pharmaceutical reference standards attracting IGST at 12% ior Entry 453 to Schedule III attracting IGST at 18%.
Held - The Prepared Laboratory Reagents or Pharmaceutical Reference Standards (HSN 3822 00 90) which are not diagnostic re-agents are not covered under Entry No 80 of Schedule II of Notfn No 1/2017-IT(R) and are covered under Entry No 453 of Schedule III of Notfn No 01/2017-IT(R) attracting IGST at 18%: AAR
- Application disposed of: AAR
2019-TIOL-366-AAR-GST
Cadmaxx Solutions Education Trust
GST - The applicant is a trust - It approached the AAR seeking advance rulings on issues pertaining to stipend reimbursements, training charges, Group Health Insurance Policy & Workman Compensation Policy, recovery of expenses & on-rolls conversion charges.
Held - The reimbursement of stipend paid to trainees is not taxable under the GST Acts - The additional training to the trainees for which the training fees is paid by the trainer is taxable under Entry No 35 of Notfn No 11/2017-CT(R) and is taxable @ 9% under CGST Act and 9% under the KGST Act - The reimbursement of Group Insurance and Workmen Compensation premium by the trainer company to the applicant is not taxable under GST Acts - The Sourcing fees collected from trainer companies is taxable at 9% CGST under Entry 23(ii) of Notfn No 11/2017-CT(R) and 9% KGST - The on roll conversion charges collected by the applicant from the trainer companies is taxable at 9% CGST under Entry No 23(ii) of the Notfn No 23(ii) of the Notfn and at 9% under KGST: AAR
- Application disposed of: AAR
2019-TIOL-365-AAR-GST
Aquarelle India Pvt Ltd
GST - The applicant company operates out of a corporate office, from which various support departments such as sales, marketing, IT and finance operate - The applicant took such premise on lease till June 30, 2022 with lock in period of first three years - The applicant sought to vacate such premises in the near future and intended to hand over the premises to its owner along with fixtures to the building - It approached the AAR seeking to know whether disposing off assets fastened to the building on delivering possession to the lessor, on which no consideration will be received, shall fall within the ambit of supply u/s 7 of the CGST Act and would be taxable as per CGST, KGST and IGST - If so, whether the value appearing on the books as on date of disposal may be construed as open market value on which GST is payable as per Rule 27 of CGST Rules.
Held - The transfer of assets fastened to the building on delivering possession to the lessor free shall amount to supply within the meaning of supply u/s 7 of the CGST Act and would attract GST - Moreover, the value of such supply of goods would be open market value of such supply, value of supply of goods of like kind and quality and 110% of the book value of such goods in books of accounts - If none of these are possible, then the value be determined as per Rule 31: AAR
- Application disposed of: AAR
