Latest Developers Advisory Ltd (Dated: February 10, 2020)

GST - For the purpose of maintenance services, applicant will enter into an agreement (Contract-I) with society/owners' Association/individual customers - such maintenance services embodies services for common area maintenance (CAM) and applicant levies GST for providing such services - in another area which lacks proper water supply, applicant would be entering into a contract (Contract-II) with individual members for supply of water for personal use and for which purpose they would be sourcing the same through tanker water suppliers and in the absence of any meters, water charges may be collected based on square feet area occupied by such customer and an invoice would be issued accordingly - applicant seeks to know as to whether they would be required to pay GST on water charges so collected from the customers under Contract-II; whether exemption available as prescribed in Sr. no. 99 [Water - Heading 2201] of 02/2017-CTR.

Held: Applicant is involved in two agreements where Contract-I is for maintenance services provided to Resident Welfare Association (RWA) and Contract-II is for supply of water to individuals residing in the RWA - GST on services provided by RWA to its resident members is @18% when each unit household in the society pays more than Rs.7500/- per month for the said services and the supplier of services RWA is registered by way of crossing over of threshold limit of Rs.20 lakhs - it is observed that the applicant seems to have bifurcated the services provided to the society RWA in order to escape the condition of Rs.7500/- per month per members or it might be crossing the GST registration threshold limit of Rs.20 lakhs - as a general practice, the maintenance services are inclusive of supply of water and hence supply of eater provided by applicant through separate agreement raises a suspicion - even though applicant may have separate agreement for supply of water and for receiving charges on basis of per square feet, it is not possible to supply water to each apartment separately as mentioned in Contract-II because the apartments do not have their own separate water storage tanks - applicant appears to be trying to split the contract into Contract-I and Contract-II to avoid the GST and to facilitate the society (RWA) in order to keep the maintenance charges paid by residents below Rs.7500/- - Both contracts, Contract-I and Contract-II, appear to be directly linked to each other as there is no case of direct supply of water by applicant to individual residents of the society and, therefore, applicant is required to pay GST as applicable on Contract-I: AAR

- Application disposed of: AAR

2020-TIOL-65-AAR-GST

Cosme Costa And Sons

GST - Royalty paid by applicant in respect of Mining lease is classifiable under SAC 997337 and is subject to levy of GST @5% till 31.12.2018 and thereafter @18% under Reverse charge basis: AAR

GST - Contributions made to District Mineral Foundation (DMF), the National Mineral Exploration Trust (NMET) and the Goa Mineral Ore Permanent Fund Trust (GMOPFT) are classifiable under SAC 997337 and is subject to levy of GST @5% till 31.12.2018 and thereafter @18% under Reverse charge basis: AAR

- Application disposed of: AAR

2020-TIOL-64-AAR-GST

Clay Craft India Pvt Ltd

GST - Applicant informs that its Board of Directors consists of six Directors and who are performing all the duties and responsibilities as required under the laws; that along with these responsibilities all these Directors are also working in the company at different levels of management and each one of them is holding charge of procurement of raw material, production, quality checks, dispatch, accounting etc.; that they are working as employees for which they are being compensated by way of regular salary and other allowances as per company policy and as per their employment contract; that the company is deducting TDS on their salary and PF laws are also applicable; that, therefore, they seek a ruling on the following questions viz. (a) whether GST is payable under RCM in respect of the salary paid to the Director of the company who is paid salary as per contract; that (b) whether the situation would change from above if the Director is also a part-time Director in other company also.

Held: Applicant is already paying GST by way of reverse charge mechanism on the commission paid to the Directors treating such amount as being pertaining to the service provided by them in the capacity of a Director - insofar as consideration paid in the form of salary to Directors is concerned, the same is specifically covered under Sr. no.6 of notification 13/2017-CTR which states that ‘on categories of supply of services mentioned in col. (2) of Table, supplied by a person as specified in col. (3) of Table, the whole of central tax leviable u/s 9 shall be paid on reverse charge basis by the recipient of such services as specified in col. (4) - moreover, consideration paid to the Directors is against the supply of services provided by them to the applicant company and are not covered under clause (1) of Schedule III of the CGST Act, 2017 as Directors are not employees of the company - It is very clear that the services rendered by the Director to the company for which consideration is paid to them under "any head" is liable to GST under reverse charge mechanism - Applicant company is located in the taxable territory and the Director's consideration is paid for the supply of services by Directors to the applicant company and hence same is liable to GST under RCM as provided under Entry No. 6 of 13/2017-CTR issued u/s 9(3) of the Act, 2017 - situation remains the same in circumstances made in query (b) also inasmuch as it will attract GST under RCM: AAR

- Application disposed of: AAR

Chirakekkaran Glass House Pvt Ltd Vs State Tax Officer

Whether dismissal of writ petition filed in contest of an SCN is premature, where the assessee also has option of appeal available with it & all contentions against the SCN can be raised before the appellate authority - YES: HC

- Assessee's writ appeal dismissed: KERALA HIGH COURT

2020-TIOL-751-HC-KERALA-VAT

Jewel Homes Pvt Ltd Vs State Tax Officer

Whether assessee's claims of contravention of principles of natural justice hold much water, where the assessee was issued notices, given personal hearings & also opportunity to file objections - NO: HC

- Assessee's writ petition dismissed: KERALA HIGH COURT

SERVICE TAX

CENTRAL EXCISE

2020-TIOL-753-HC-P&H-CX

CGST Vs Gawar Construction Ltd

CX - The assessee was engaged in executing a project which otherwise fell within the exemption notification bearing No.108/95, dated 28.08.1995 which gives exemption from excise duty to the goods supplied to UN or an International Organization subject to certain conditions - The assessee purchased Bitumen from different manufacturers and since those manufacturers did not know the purpose for which Bitumen was to be used, they charged excise duty which the assessee paid and subsequently moved an application for refund - Such claim was denied on grounds that the notification provided only for exemption and not for refund; that the claim was time barred and that claim was hit by the doctrine of unjust enrichment - Subsequently, the Tribunal observed that merely because the notification is termed as exemption notification, it does not bar any person who may have wrongly paid duty to seek refund - In respect of the plea of bar of jurisdiction and incompetent authority, the Tribunal found that firstly assessee moved an application to the Director General of Foreign Trade which was a wrong forum to seek this refund but it did show that assessee was not acquiescent about its claim - Regarding the issue of unjust enrichment, it observed that the assessee had appended a CA's certificate attesting to the fact that the incidence of duty was borne by the assessee and not passed on - Hence the refund claim was allowed - Thus the present appeal.

Held - The Revenue claimed that the ground of unjust enrichment for rejecting refund claim was wrongly discarded - However in the face of evidence of the assesee and lack of any evidence led in this behalf by the Revenue, this was a purely presumptive finding - Hence no substantial question of law arises in the present appeal: HC

- Revenue's appeal dismissed: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-547-CESTAT-DEL

MD Sales Corporation Vs CCE & CGST

CX - Cenvat credit has been denied alleging that the supplier manufacturers are non-existent and, therefore, no goods have been received by the appellant - appeal to CESTAT.

Held: Commissioner (Appeals) has recorded the fact that M/s Shree Mahalaxmi Scrap Trading Co. used to place order for supply of scrap to the appellants directly through Shri Mahesh Naredi and scrap was directly going to the appellant's premises and invoices were issued in the name of Shree Mahalaxmi Scrap Trading Co. who in turn issued the invoices to the appellant - These facts have not been controverted by the Revenue with cogent evidence - No investigation has been conducted with the transporters to ascertain the fact whether the transporter has directly supplied the goods to the appellant or not - Moreover, cross-examination of the witnesses whose statements have been relied upon by the Revenue was sought by the appellant but same was denied - Appellant has purchased the goods from M/s Shree Mahalaxmi Scrap Trading Co,. a dealer, who has issued the proper invoice which accompanied the goods - buyer appellant was not required to ascertain the fact whether the manufacturer is existent or not - If the particulars of manufacturer and second stage dealer are mentioned correctly and the goods have been transported to the buyer's premises, in that circumstances, the buyer is entitled to avail Cenvat credit - Cenvat credit cannot be denied merely on the basis of the presumption that it might be a paper transaction as manufacturers of the scrap are non-existent - impugned order is set aside and appeals allowed with consequential relief: CESTAT [para7 to 9]

- Appeals allowed: DELHI CESTAT

2020-TIOL-546-CESTAT-DEL

Texmo Pipes And Products Ltd Vs CCGST & CE

CX - It is an admitted fact that the appellant has kept separate records as required under Rule 6(2) of "inputs and capital goods” w.e.f. 1.7.2014/1.4.2015 - Further, the admitted fact is that the appellant has kept common records of only few “common input services", which is of negligible amount and further, the turnover of exempted goods is also negligible as compared to dutiable goods - Appellant has reversed cenvat credit, on being so advised by the Department, of the credit attributable to the exempted goods, under intimation to the Department and this amounts to not taking of cenvat credit at all with respect to the exempted goods as held by the Supreme Court in the case Chandrapur Magnet Wires - 2002-TIOL-41-SC-CX - Insofar as denial of the CENVAT credit of Rs.7,52,318/- is concerned, admittedly, the same has been taken by the appellant on the strength of original documents in their possession, but it appeared that the same have been mis-placed and could not be produced by the appellant during investigation - Cenvat credit cannot be denied as it is held that the substantial benefit should not be denied for small procedural lapse - impugned order is set aside and appeal allowed with consequential relief: CESTAT [para 10]

- Appeal allowed: DELHI CESTAT

TII

I-T - Recovery of duty demand merits being stayed where duty demanded can be adjusted against refunds payable to assessee, which negates need for any coercive actions: ITAT

I-T - Inland Haulage Charges earned by company can be treated as business income and taxed as such: ITAT

TIOL CORPLAWS

Companies Act - Petition for voluntary winding up can be allowed considering compliance of entire process of winding up with all statutory conditions and NOCs from relevant authorities and declaration of solvency: HC

IBC - Statutory due de hors of invoice of goods or services cannot be claimed 'operational debt' from party, where party is not statutory authority : NCLAT