2021-TIOL-241-HC-AHM-GST
Munjaal Manishbhai Bhatt Vs UoI
GST - Construction of Bungalow - Writ applicant challenges Entry No. 3(if) of the Notification No. 11/2017 -Central Tax (Rate) dated 28th June, 217 read with Para-2 of the said notification - The notification is being challenged as the writ applicant is liable to pay tax at the rate of 9% CGST plus 9% SGST under the GST on the entire consideration payable for land as well as construction of bungalow after payment of 1/3rd value towards the land - Contention is that because of the impugned notification, the entire consideration towards the sale of land has not been excluded for the purpose of computing the tax liability under the GST Act - In other words, only 1/3rd of the total consideration has been deemed to be the value of the land as per para-2 of the impugned notification; that the referred entry in the notification is ultra vires section 7(2) of the GST Act read with Entry no. 5 of the Schedule II to the GST Act; that the deeming fiction introduced under para-2 of the impugned notification is contrary to Section 15 of the GST Act.
Held: Bench is of the view that the writ applicant has been able to make out a strong prima facie case to have an interim order in his favour in terms of para-27(F) of the writ application - Bench, accordingly, grants such relief - Bench permits the writ applicant to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions as raised in this writ application - Notice to be issued to respondents, returnable on 10th February 2021: High Court [para 3, 4]
- Notice issued/Interim relief granted: GUJARAT HIGH COURT
2021-TIOL-240-HC-ALL-GST
Anandeshwar Traders Vs State of UP
GST - Allegation of re-use of e-way bills - Tax demand was confirmed along with penalty - at the stage of the appeal, certain additional evidence has been entertained by the appeal authority in the shape of receipt of toll plaza indicating (according to the revenue authority) that the goods had moved on 24.11.2019 itself, at 7.31 PM. Relying on that, the penalty appeal was also dismissed - Appellate authority opined that since the e-way bills were not cancelled and the transportation of the goods commenced four days thereafter, it has been inferred that the said e-way bills had been reused - Petitioner submits that merely because transportation of the goods did not commence for four days thereafter, it may not itself lead to any adverse inference of second use of that e-way bills; that reasoning given in the original order could not be supplemented or supplanted at the stage of appeal; that in view of Rule 112 of the CGST Rules, 2017, the right to lead additional evidence at the stage of appeal has been granted to the appellant only, therefore, the appellate authority has wrongly allowed the application of the revenue authority who was the respondent in the appeal. Held: The Rule 138 does not prescribe that the dealer must necessarily cancel the e-way bill if no transportation of the goods is made within 24 hours of its generation - It certainly does not provide any consequence that may follow if such cancellation does not take place - On the contrary, the Rule permits a dealer to cancel the e-way bill only if the transportation does not take place and the dealer choses to cancel such e-way bill within 24 hours of its generation - Even if the dealer does not cancel the e-way bill within 24 hours of its generation, it would remain a matter of inquiry to determine on evidence whether an actual transaction had taken place or not - Since the petitioner-assessee had pleaded a negative fact, the initial onus was on the assessing authority to lead positive evidence to establish that the goods had been transported on an earlier occasion - Neither any inquiry appears to have been made at that stage from the purchasing dealer or any toll plaza or other source, nor the petitioner was confronted with any adverse material as may have shifted the onus on the assessee to establish non-transportation of goods on an earlier occasion - Mere assertion made at the end of the seizure order that it was clearly established that the assessee had made double use of the e-way bills is merely a conclusion drawn bereft of material on record - Insofar as the power of the appellate authority to entertain additional evidence, again, there can be no doubt that Rule 112 of the Rules does not allow for additional evidence to be led at the instance of the respondent in the appeal - In the case of penalty or assessment, where the appeal may be filed by the assessee alone, the correctness of the order is to be tested on the strength of the reasons given in that order and not on the basis of any supplementary or other material that may be brought on record by the revenue authority during the appeal proceedings - To do that, would be to allow the order impugned in an appeal proceeding to be tested and affirmed on fresh reasons, existing outside the assessment or penalty order - Clearly, that is impermissible and against the principle laid down by the Supreme Court in Mohinder Singh Gill (AIR 1978 SC 851) - In absence of specific Rule of procedure allowing the appellate authority to admit additional evidence at the behest of the respondent, it never became open to it to confront the petitioner with that evidence and draw it's independent conclusions based thereon - O rder passed by the appellate authority is erroneous, being contrary to the provisions of law - Appellate authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order - No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case that too after being aware of the defense set out by the assessee in the first leg of the proceedings - The order dated 03.12.2019 passed by the proper authority under Section 129(3) of the Act is found to be perverse and is set aside - Petition is allowed: High Court [para 9, 10, 11, 12, 14, 15]
- Petition allowed: ALLAHABAD HIGH COURT
2021-TIOL-62-AAR-GST
Pinnacles Lighting Project Pvt Ltd
GST - A pplicant is engaged in the business of executing street lighting project - The Government of Odisha, through the Housing and Urban Development Department, the Urban Infrastructure Development Fund and the Directorate of Municipal Administration has decided to develop an energy efficient street lighting system covering new and upcoming road stretches in Greenfield areas across 113 Urban Local Bodies (ULBs), including in the cities of Cuttack, Berhampur, Rourkela, Sambalpur & Bhubaneshwar, on a Public Private Partnership basis - The Applicant has made a successful bid for the said tender and has consequently entered into an agreement on 29.12.2018 for design, supply, installation, operation, maintenance and transfer of the energy efficient Greenfield Public Street Lighting System [GPSLS] and the Centralized Control & Monitoring System with the Government of Odisha represented by the Directorate of Municipal Administration and the ULBs - Under the Agreement, the Applicant undertakes to supply and install equipment such as LED Luminaire, feeder panels, poles, outreach arms, cables/wires with holding arrangement for overhead supply cables, in respect of both, the Greenfield Public Street Lighting System as well as the Centralized Control & Monitoring System - It was submitted that for such installation, the Applicant is entitled to receive a consideration, in the form of Capital Subsidy, being 90% of the total capital expenditure incurred by the Applicant in supplying, installing and commissioning of the equipment - The balance 10% of the total capital expenditure along-with O&M fees is receivable as 'Annuity fees', and is recovered by the Applicant by raising quarterly invoices on the ULBs - After the Greenfield Public Street Lighting System has been commissioned, the Applicant is required to undertake the Operation and Maintenance of the system till the end of the term of the Agreement - applicant has submitted that the entire contract shall he treated as a contract for the composite supply of works contract involving a supply of goods and services; that the activity that will be undertaken by the Applicant will fulfil all the conditions and, therefore, the supply would fall under Entry 3 (vi) of the Notification No. 11/2017-CT(Rate) dated 28 June 2017 - a ruling is requested in this regard.
Held: In the agreement submitted by the applicant, the major part of the contract is supply of goods - The price of these goods that are supplied to the client by the applicant constitutes 98.58% of total contract price - Further, the goods that are supplied are used by the applicant to provide services like installation, commissioning and maintenance etc. - Without these goods, the services cannot be supplied by the applicant and, therefore, the goods and services are supplied as a combination and in conjunction and in the course of their business where the principal supply is supply of goods - Therefore, the instant supply squarely falls under the definition of "composite supply" - Thus, there is a composite supply in the subject case since there is no building, construction, fabrication, completion, erection etc. of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of the contract - As per Para 1(c) of Schedule II of the CGST/OGST Act, any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods and not a service - Not a Works Contract Service - Provisions of Notification No. 11/2017-CT (Rate) are not applicable to the noticee's case - The principal supply is a 'supply of goods' and, therefore, the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading: AAR
GST - Applicant further seeks to know as to whether in facts and circumstances of the case, the capital subsidy received/ receivable by the applicant for the subject transaction is liable to be included in the Transaction Value for the purpose of calculation of GST payable in terms of Section 15 of the CGST Act, 2017? - It is the contention of the applicant that the 'Authority' from whom the subsidy is received/receivable is an extension of the State Government and, therefore, the capital subsidy should not be included in the Transaction Value for the purpose of calculation of GST.
Held: On perusal of the agreement/contract, it is seen that the capital subsidy received/receivable by the applicant in the instant case is the actual cost incurred by the project SPV (the applicant in the instant case) in the project as approved by the Authority & ULBs - It is not a subsidy which generally means grant/grant-in-aid or a benefit given to an individual, business or institution, usually by the government - It is also not a subsidy which is typically given to remove some type of burden and to promote a social good or an economic policy for overall interest of the public - The so called 'capital subsidy' cannot be a 'subsidy' by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and, therefore, the said 'capital subsidy' shall certainly be liable to be included in the Transaction Value for the purpose of calculation of GST - Applicant is, therefore, liable to pay GST on 'Capital Subsidy' (90% of the total capital expenditure): AAR
- Application disposed of: AAR
2021-TIOL-61-AAR-GST
Surya Roshni Led Lighting Project Ltd
GST - Applicant seeks to know as to whether Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government /ULBs for the Green Field Public Street Lighting System in the State of Odisha is not liable to GST and if liable to GST, then at what rate of GST. Held: Supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of 'composite supply' in terms of definition under Section 2(119) of the Central Goods and Services Tax Act, 2017, where the principal supply is ' supply of goods' not 'supply of service' - Therefore, question of the applicability of concessional rate of tax in terms of Notification No. 11/2017- Central Tax (Rate) , dated 28-6-2017 and as amended does not arise - Notification No.11/2017-Central Tax(Rate) dated 28.6.2017 as amended is applicable for 'supply of service' - In the instant case, the supply being undertaken or proposed to be undertaken by the applicant would qualify to be a supply of 'composite supply' in terms of definition under Section 2 (119) of the Central Goods and Services Tax Act, 2017, where the principal supply is supply of goods and not 'supply of service' - Therefore, the said notification is not applicable to the applicant: AAR GST - GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading - Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant is liable to GST - The GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading: AAR GST - Applicant seeks to know as to what shall be the time for raising GST Invoices for Capital Subsidy and Annuity Fee (consisting of 10% of Project Capital Expenditure and O&M Fee) payable in 7 years? Held: Since in the subject case there is a 'composite supply' where the predominant supply/principal supply is 'supply of goods', Authority is of the opinion that the applicant should raise invoice as per the provisions of Section 31 of the CGST Act, 2017: AAR
- Application disposed of: AAR
2021-TIOL-60-AAR-GST
VDM Hospitality Pvt Ltd
GST - Applicant seeks a ruling as to whether the Temporary Structure (i.e. hall or pandal or shamiana or any other place) built with Iron/Steel Pillars tightened up with Nuts and Bolts and specially created for functions would be treated as Movable or Immovable property in pursuance to the GST Law; Whether credit of the tax paid on Iron/Steel Pillars tightened up with Nuts and Bolt used for the creation of Temporary Structure (i.e. hall or pandal or shamiana or any other place) is admissible u/s 16 of the CGST Act, 2017? Held: + In the case of applicant, it is an admitted fact that the structure (shamiana, pandal or tent) constructed/ erected by the applicant is fixed to the foundation by nuts and bolts. But the applicant holds that this affixation of pillars and pre-fabricated shelter to the earth is not permanent. + So, in essence, the question which needs to be dealt with by this Authority is whether this affixation of the structure with the earth or pillar embedded in the earth is permanent or temporary. The Allahabad High Court in Commissioner, Trade Tax vs. Triveni N L Limited, order dt. 13 January 2014 has observed that "permanently fastened to anything attached to the earth" has to be read in the context for the reason that nothing can be fastened to the earth permanently so that it can never be removed. If the article cannot be used without fastening or attaching it to the earth and it is 'not removed under ordinary circumstances', it may be considered permanently fastened to anything attached to the earth. + In this case, the applicant company is in the business of organizing wedding and other functions from its own premises at Ambience Golf Drive, Gurugram, Haryana. Since, the premises where the structure has been erected is company's own premises, it suggests that the shamiana/tent/pandal has been constructed/erected for permanent enjoyment. + It is not the case of applicant that it plans to dismantle and move the structure to some other place. The pictures attached with the application also depict that the civil work has been undertaken on a very large scale at the premises and this also indicates the permanent nature of the construction/ erected. Further, the concrete base and the pillars used as platform and support to the structure are also of large dimensions and the platform or the structure cannot be put to beneficial use without the existence of the other. + Merely because the walls and roofs have been replaced with pre-fabricated structure (an Engineering marvel), an immovable property cannot be categorized as movable property. Since, both the degree and nature of annexation/ attachment of the structure to the earth is strong and permanent, the structure in question is an immovable property. + Held, therefore, that - ++ The structure created by the applicant is an immovable property for the purposes of GST Law. ++ The applicant is not entitled to the credit of input tax in view of the provisions of Section 17(5)(d) of the CGST/ HGST Act, 2017 .
- Application disposed of: AAR
