Judgement >> AAAR

We affirm the Ruling UP ADRG-22/2023 dated 21-04-2023 passed by the Authority for Advance Ruling Against the appellant.

We confirm the impugned Ruling UP ADRG-23/2023 dated 21-04-2023 passed by the Authority for Advance Ruling against the Appellant except the provission of GST invoice as held in Para 19 of the Ruling.

We modify the impugned ruling classyfing the product of the appellant under Ch-2401 of GST Tariff subject to the process adopted by the appellant as provided under Explanatory Note to Ch-2401

Advance Ruling No. and Date : 22/WBAAR/2022-23 dated 09.02.2023

Questions before the West Bengal Authority for Advance Ruling [‘WBAAR’], Goods and Service Tax and answers are:

(i) Whether the Constitution of India has conferred any power onto the Parliament to legislate on sale of alcoholic liquor for human consumption with reference to the Goods and Service tax regime, considering the provision of Article 246A read with Article 366(12A)?

(ii) If the answer to question (1) is in the negative, then whether the Central Goods and Services Tax Act, 2017(CGST Act) can directly or indirectly deal with aspects touching upon sale of alcoholic liquor for human consumption by the applicant either with reference to levy of tax on such sale or with reference to reversal of credit solely because the applicant is effecting sale of such alcoholic liquor?

(iii) Under these circumstances, whether the definition of exempt supply as provided under section 2(47) of the CGST Act, read with definition of the term ‘non-taxable supply’ under section 2(78) can therefore include sale of alcoholic liquor for human consumption by the applicant?

(iv) Whether in order to qualify as non-taxable supply under section 2(78), a transaction must first qualify as supply as defined in section 7 of the CGST Act read with Article 246A and Article 366(12A) of the Constitution and as such therefore, sale of alcoholic liquor for human consumption cannot be said to qualify as a ‘supply’ for the above purposes under the ambit of the CGST Act.

(v) Consequently, whether the applicant is obliged to reverse input tax credit (ITC) under section 17(2) of the CGST Act read with rule 42 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) in view of the sale of alcoholic liquor for human consumption effected by it at its premises under the facts & circumstances of the present case?

The applicant has withdrawn the questions under serial number (i) to (iv) and has also rephrased the question under serial number (v) as under:

Question: Whether or not the applicant is obliged to reverse input tax credit (‘ITC’) under Section 17(2) of the CGST Act read with Rule 42 of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’), in view of the sale of alcoholic liquor for human consumption effected by it at its premises under the facts & circumstances of the present case?

Answer: Under the facts & circumstances of the present case, the applicant is required to reverse input tax credit (‘ITC’) in terms of sub-section (2) of section 17 of the GST Act read with Rule 42 of the GST Rules for sale of alcoholic liquor for human consumption.

WBAAAR: The sale of alcoholic liquor for human cor-rsurxption is a non-taxable supply under Section 2(78) of the GST Act,20l7 and subsequently is an exempt supply under Section 2(47) ibid. Therefore, the appellant is required to reverse input tax credit (ITC) in terms of sub-section (2) of section 17 ibid read with Rule 42 of the GST Rules, 2011 for sale of alcoholic liquor for human consumption.

Held: The WBAAR Ruting No. 22/WBAAR/2022-23 dated 09.02.2023 is confirmed and the Appeal stands rejected.

Advance Ruling No. and Date : GST-ARA-50/2020-21/8-108 dated 01.12.2022.

Questions before the Maharastra Authority for Advance Ruling [‘MHAAR’], Goods and Service Tax  -

Whether mere transfer of monetary proceeds by the IVL India Environmental R&D PVT Ltd (hereinafter referred to as 'the Applicant' or “IVL India”) to IVL Swedish Environmental Research Institute Limited (hereinafter referred to as “IVL Sweden”), without underlying import of service will be liable for payment of Integrated Goods and Service Tax under reverse charge mechanism under entry no. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017.

Maharastra Authority for Advance Ruling [‘MHAAR’], Goods and Service Tax ruled as -

MHAAAR: It is clear that the said support services received by the Appellant from IVL Sweden will come under the ambit of import of services as the said services fulfill all the criteria of the import of services.

Once it has been established that service under question is import of services, the same will be liable for payment of IGST at the hands of the recipient of services in terms entry 1 of the Notification No. 10/2017-I.T. (Rate) dated 28.06.2017.

Held: We, hereby, uphold the MAAR Order No. GST-ARA-50/2020-21/B-108 dated 01.12.2022 vide which it has been held that the transfer of monetary proceeds by the Applicant to IVL Sweden, will be liable for payment of Integrated Goods and Service Tax under reverse charge mechanism under Entry No. 1 of Notification 10/2017 - IGST (Rate) dated June 28, 2017. Thus, the appeal filed by the Appellant is hereby rejected.

Advance Ruling No. and Date : GST-ARA-59/2020-21/8-56 dated 27.04.2022.

Questions before the Maharastra Authority for Advance Ruling [‘MHAAR’], Goods and Service Tax and their answers are -

Advance Ruling No. and Date : GST-ARA-122/2019-20/8-54 dated 27.04.2022.

Questions before the Maharastra Authority for Advance Ruling [‘MHAAR’], Goods and Service Tax and answers are -

Question: Whether the reimbursement amount received by the Applicant from Trainer towards “Stipend and other expenses incurred by the Applicant in accordance with AICTE (NEEM) Regulations to ensure wealth safety and health of NEEM Trainees” Is in the capacity of pure agent and hence not includible in the value of taxable supply made by the Applicant to Trainer for the purpose of payment of Goods and Service Tax (“GST”)?

Answer: Not answered in view of discussions made above.

MHAAAR: We find on merits that the appellant do not fulfil the conditions and clauses of meaning of “pure agent” prescribed under rule 33 of the CGST Rules, 2017. Hence, the appellant is not allowable to claim deduction of the reimbursement of amount of stipends and other expenses received from the NEEM Trainer from the value of supply.

Held: The order No. GST-ARA-122/2019-20/B-54 dated 27.04.2022 passed by the Maharashtra Authority for Advance Ruling is upheld with some modification. It is held that the reimbursement amount received by the Appellant from NEEM Trainer towards “Stipend and other expenses incurred by the Applicant in accordance with AICTE (NEEM) Regulations to ensure wealth, safety and health of NEEM Trainees” is not in the capacity of pure agent. In the result the appeal filed by the M/S Beeup Skills Foundation (erstwhile M/s Beep Skills Foundation or M/s CLR Skills Training Foundation) against impugned MAH-AAR order is rejected.

Advance Ruling No. and Date : GST-ARA-82/2020-21/8-111 dated 01.12.2022.

Questions before the Maharastra Authority for Advance Ruling [‘MHAAR’], Goods and Service Tax and the answers are  -

Question-1:- Whether the pallets, crates and containers (hereinafter referred as “equipment”) leased by CHEP India Private Limited (hereinafter referred to as “CIPL” or “the Applicant”) located and registered in Maharashtra to its other GST registrations located across India (say CIPL Karnataka), would be considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the CGST Act and MGST Act?

Answer:- Yes

Question-2:- If the answer to Question 1 is Yes, what is the value on which GST has to be charged i.e. whether it should be lease charges or the value of equipment in terms of Section 15 of the CGST Act and MGST Act read with relevant Rules?

Answer:- As per the discussion made above.

Question-3:- What are the documents that should accompany the movement of the goods from CIPL, Maharashtra to CIPL, Karnataka?

Answer:- Not admitted.

Question-4:- Whether movement of leased equipment from CIPL, Karnataka to CIPL, Tamil Nadu on the instruction of CIPL, Maharashtra can be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act and MGST Act, and thereby not liable to GST?

Answer:- Not answered in view of discussion made above.

Question-5:- With reference to Question 4 above, what are the documents that should accompany the movement of the goods from CIPL, Karnataka to CIPL, Tamil Nadu?

Answer:- Not admitted.

MHAAAR: The goods in movement is a consequence of the lease contract between the CIPL, Maharashtra and CIPL, Tamil Nadu which is a supply by CIPL, Maharashtra. The transaction is nothing but the combination of the transactions of returning back the goods on lease by CIPL, Karnataka to CIPL, Maharashtra and again sending the same goods on a new lease contract by CIPL, Maharashtra to CIPL, Tamil Nadu. Thus, it cannot be said that the goods are moving not as a result of supply under Section 7 of the CGST Act, 2017. It cannot be termed as a mere movement without any involvement of supply and the said transaction of supply of goods on rental or lease basis by CIPL, Maharashtra to CIPL, Tamil Nadu is liable to tax in the hands of CIPL, Maharashtra as the transaction is between CIPL, Maharashtra and CIPL, Tamil Nadu. Further, the services provided by CIPL, Karnataka to CIPL, Maharashtra in facilitating the transportation of goods to CIPL, Tamil Nadu are exigible to GST.

Held: We. hereby, modify the advance ruling pronounced by the MAAR, and hold as under in respect of the question no. (2). (3). (4) and (5):

Question 2 - If the answer to Question 1 is Yes, what is the value on which GST has to be charged i.e. whether it should be lease charges or the value of equipment in terms of Section 15 of the CGST Act and MGST Act read with relevant Rules?

Answer: The value declared in the invoice issued by the appellant would be the value on which GST has to be charged in terms of Section 15 of the CGST Act, 2017 read with second proviso to Rule 28 of the CGST Rules. 2017.

Question 3 - What are the documents that should accompany the movement of the goods from CIPL Maharashtra to CIPL Karnataka?

Answer: The aforesaid question cannot be answered as the same is not covered within the ambit of advance ruling in terms of section 97 of the CGST Act, 2017.

Question 4 - Whether movement of equipment from CIPL Karnataka to CIPL Tamil Nadu on the instruction of CIPL Maharashtra can be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act and MGST Act. and thereby not liable to GST?

Answer: Movement of equipment from CIPL Karnataka to CIPL Tamil Nadu on the instruction of CIPL Maharashtra cannot be said to be mere movement of goods not amounting to a supply in terms of Section 7 of the CGST Act, 2017 as the said transaction would fall under the ambit of supply of services in terms of section 7 of the CGST Act. 2017. The said supply of services involved in the transaction under question is being provided by CIPL Karnataka to CLPL Maharashtra in the capacity of bailee of CIPL Maharashtra for which CIPL Karnataka is charging facilitation fee along with applicable GST from the Appellant, i.e., CIPL Maharashtra as per the Inter-unit Memorandum of Understanding entered between the Appellant and other state units. It is further clarified here that the said movement of goods from CIPL Karnataka to CIPL Tamil Nadu as per the instruction received from CIPL Maharashtra, the owner of goods, will again be treated as supply of lease rental services by CIPL Maharashtra to CIPL Tamil Nadu as ruled by the MAAR.

Question 5 - With reference to Question 4 above, what are the documents that should accompany the movement of the goods from CIPL Karnataka to CIPL Tamil Nadu?

Answer: The aforesaid question cannot be answered as the same is not covered within the ambit of advance ruling in terms of Section 97 of the CGST Act 2017.

Advance Ruling No. and Date : Order No. UP ADRG - 14/2022 dated 02.12.2022

Questions before the Uttar Pradesh Authority for Advance Ruling [‘UPAAR’], Goods and Service Tax  :

Whether the supply of education and training services to commercial pilots in accordance with the training curriculum approved by the DGCA for obtaining the extension of ATRs on their existing license would be covered under SI.No. 66(a) of the Notification No. 12/2017 dated 30.06.2017, and thereby exempt from levy of CGST & UPGST”.

The Authority for Advance Ruling in its ruling held that the supply of education and training services to commercial pilots in accordance with the training curriculum approved by DGCA for obtaining the extension of ATRs on their existing licenses is not exempt under SI.No. 66(a) of Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017 and SI. No. 66(a) of the Notification No. A.NI.-2-843/XI-9(47)/ 17-U.P.Act-l-2017-Grder-(10)-2017 dated 30.06.2017.

UPAAAR: We come to conclusion that the Authority for Advance Ruling have rightly held that the impugned services of the Appellant are not covered under entry number 66(a) of the Notification 12/2017-Central Tax (Rate) dated 28-06-2017, as amended and hence do not qualify for exemption from GST.

Held: We uphold the impugned ruling UP ADRG-14/2022 dated 02.12.2022 passed by the Authority for Advance Ruling against the Appellant.

Appellate Advance Ruling No. and Date : Tamilnadu Order No. TN/AAAR/20/AAR/2022 dated 31.05.2022

Questions before the Tamilnadu Authority for Advance Ruling [‘TNAAR’], Goods and Service Tax:

Whether recovery of nominal amount from the employees for making payment to the third-party service provider, providing food in canteen as mandated in the factories Act, 1948, would attract tax under GST?’

The Original Authority had vide Order No. 20/AAR/2022 dated 31.05.2022 ruled as follows:

“Answered in the Affirmative for the reasons stated in Para 8”

““8.4 To sum up. in the ease at hand, the applicant has established canteen facilities as mandated under Section 46 of the factories Act, 1948 and supplies food at a nominal cost either directly or through third party-vendor. ‘The supply of food by the applicant is “Supply of service by the applicant to their employees as the same is not a part of the employment contract and the canteen facility is provided as mandated under factories Act. the nominal cost, which is recovered from the salary as deferred payment is ‘consideration’ for the supply and GST is liable to be paid.”

TN AAAR: The Appellant had established the canteen in their premises and has been bearing a part of the cost for providing the food/beverages to their employees and a part of the cost is being collected from employees, as fixed by the Managing Committee of the Appellant. The supply of the food/beverages, although at subsidized rates, by the Appellant/employer to their employees is certainly an activity amounting to supply of service and attracts levy of GST on that part of the consideration being charged for such supply.

Held: We uphold the decision of the Authority for Advance Ruling of Tamil Nadu, vide AAR No. 20/AAR/2022 dated 31.05.2022 and reject the subject appeal.