Cess - A river cannot rise above its source - State cannot act in a high-handed manner and extort money - State had no authority to impose any tax or cess on manufacture or production of cement: HC

GST - Demo cars are not used for 'further supply' - No ITC on such vehicles as well as on the services of repair/insurance/maintenance: AAAR

GST - Although applicant would charge less than Rs.1000/- per day for hostel facility which is inclusive of food, it is not known as to how many students will be accommodated in a room - not entitled for exemption: AAR

2022-TIOL-09-AAAR-GST

Platinum Motocorp LLP

GST - Appellant is an authorised Dealer of Maruti Suzuki India Limited andpurchases 'Demo Cars' for demonstration purpose along with the purchases of vehicles for further supply - Each Demo car is used for demonstration for a maximum period of 2 years from the date of purchase after which it can be sold as a second-hand car -Appellant submits that after use of the Demo Cars for demonstration purposes these are sold off, on payment of GST, which is on the transacted value - Appellant had sought a ruling as to whether Input Tax Credit (ITC) can be availed on such Capital Goods (demo cars) and set off against output tax payable under GST and whether Input Tax Credit (ITC) can be availed on ancillary input services such as insurance and repair and maintenance availed in respect of demo cars - AAR had denied the ITC on both counts and, therefore, the present appeal beforethe AAAR.

Held: The law s.17(5)(a) ofthe Act provides for ITC in case of "further supply" of said vehicles - However, in the present case, first the vehicles are purchased, then they are used for Demonstration of 2 years or so and in the first demonstration run it loses the character of a new vehicle and this demo vehicles is sold akin to second hand goods and which is different from new Vehicle and accordingly treated differently under GST law - Thus it cannot be said that the demo vehicle is for further supply of such motor vehicles - The purpose and intent of the law is thus very clear inasmuch as allowing the ITC will be ultra vires the basic provisions of 'further supply of such motor vehicles' -Demo Vehicles received by the Appellant have never been received with the intent to simply 'further supply/sell' as such - Input Tax Credit on these vehicles, thus, cannot be allowed -On the same rationale, under Section 17(5)(ab), the credit of the input services of repair/ insurance/ maintenance used in respect of said vehicles with seating capacity up to 13 passengers, cannot be allowed - Order of AAR upheld and appeal dismissed: AAAR

- Appeal dismissed: AAAR

2022-TIOL-35-AAR-GST

Mody Education Foundation

GST - Applicant Mody Education Foundation ( MEF) will charge directly from the students for the hostel facilities enjoyed by Mody University of Science & Technology (MUST) Students - Charges for Hostel facility comes out less than 1000/- per day although charges are collected on yearly basis from the students -  MEF is of the opinion that the Hostel facility charges recovered from the students of MUST are not chargeable to GST being exempted in terms of Sr.no .14 of notification 12/2017 -CTR which covers services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent - A ruling in this regard is sought from the AAR.

Held:   Applicant is providing accommodation service on rent to students and also providing some ancillary services like food facility etc. - It can be inferred that the provision of hostel accommodation could be a principal supply but ancillary services like food cannot be said to arise naturally with the principal service of hostel accommodation and, therefore, are not bundled naturally with principal supply - The said supply consequently, is not a Composite Supply hence the services the applicant is supplying is a Mixed supply as per the GST Act and the applicable rate of tax is the highest rate applicable to the various services supplied by the applicant - Exemption to accommodation service is applicable in respect of a unit of accommodation where tariff is below Rs.1000/- per day - The applicant has stated in their application that they will charge below Rs.1000/- per student per day, but it has not been declared by the applicant that how many students will stay in a room, if more than one student will stay in a room then GST rate will be chargeable - Since the applicant did not make clear that how many students will stay in a room/unit, hence considering non-clarity of tariff of a unit of accommodation, the GST rate as per notification no. 11/2017 -Central Tax (Rate), dated 28.06.2017 will be applicable to the applicant - CBIC Circular No. 32/06/2018-GST dated 12th February, 2018 has clarified that hostel accommodation services having declared tariff below one thousand rupees per day is exempt as per Sr. no. 14 of 12/2017 -CTR - Applicant is providing service of serving of food to students in hostel and which service is classifiable under HSN 9963 as provided under Notification No. 11/2017 -Central Tax (Rate) - Held, therefore, that the applicant would not be eligible for exemption under entry no. 14 of 12/2017 -CTR: AAR

- Application disposed of: AAR

2022-TIOL-380-HC-SHILLONG-MISC

Megha Technical And Engineers Pvt Ltd Vs State of Meghalaya

Cess - Challenge is to the validity of a State enactment that already stands repealed upon the goods and service tax regime having taken over - It is the contention of the petitioners that the cess imposed by the State of Meghalaya by the Meghalaya Cement Cess Act, 2010 was completely illegal, without any authority and grossly prejudicial to the petitioners and others connected with the cement industry.

Held: Since cement was not included as one of the excepted products in Entry 84 of List I, no impost could have been levied by any State on the manufacture of cement notwithstanding such process of manufacture being within the geographical limits of the State - And, for the same reason that the State had no authority to impose any tax or the like on the manufacture of cement in the State, it did not possess any authority to levy cess on such manufacture - Just like a river cannot rise above its source, Section 6 and the manner of collection of levy cannot override the charging section which imposes the tax on the manufacturers and producers of cement in the State - State had no authority to impose any tax or cess on the manufacture or production of cement, whether by the said Act or by any other disingenuous device - Just like in the case where a contract cannot be performed, a ballpark figure of around 15 percent has been judicially recognised in this country to be the loss of the perceived profit, the ad hoc figure of 20 percent in the case may reasonably be taken to be the amount of loss that was occasioned to the manufacturers and producers of cement in this State as a result of the illegal levy of cess by the State without any authority - It is made clear that this figure of 20 percent is arrived at as a rough and ready measure and so that it acts as a deterrent to discourage the State from acting in such high-handed manner and extorting money without authority - It is necessary that 30 percent of the total realisation on account of the cess collected under the impugned Act of 2010, which the government was not entitled to receive and cannot be permitted to appropriate, is earmarked for a public project - Thirty percent of the amount so ascertained and indicated in the Chief Secretary's affidavit will have to be earmarked by the State for purchasing advanced medical equipment at the additional cancer wing which has been set up in the Government General Hospital in Shillong - Petitions are disposed of by holding that the State had no authority to impose cess in terms of the impugned Act of 2010 and by annulling the Act as ultra vires the Constitution and requiring the State to refund 20 percent of the amount realized on such count from the individual petitioners to such petitioners and investing 30 percent of the total amount of cess realised under bogus legislation for the purpose of procuring the equipment for the cancer wing of the Government General Hospital in Shillong - Refund to the petitioners should be made within four months failing which it will carry interest at the simple rate of 6 percent: High Court [para 7 to 9, 13, 14, 15, 18]

- Petitions disposed of: MEGHALAYA HIGH COURT