Judgement >> AAAR

Advance Ruling No. and Date : KAR ADRG 16/2019 dated: 25.07.2019

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

Applicability of GST on partially completed fiats i.e.

a) Partially completed flats having identified customers before GST regime

b) Partially completed flats, where customers are identified after implementation of GST regime, and

c) Partially completed flats, where no customers are identified.

The rulings in the three questions are respectively as follows:

a) In respect of Partially completed flats having identified customers before GST regime, the Applicant is liable to pay service tax under the Finance Act 1994 proportionate to the services provided up to 30.06.2017 and from 01.07.2017 onwards liable to pay GST proportionate to the services provided effective from 01.07.2017, in terms of Section 142(11)(b) of the CGST Act 2017.

b) In respect of partially completed flats, where customers are identified after implementation of GST, the Applicant is liable to pay GST on the transaction value of Supply.

c) In respect of partially completed flats, where no customers are identified the applicant is not liable to GST as no supply is involved. However, if the supply is made prior to the issuance of completion certificate then GST is liable to be paid the transaction value of supply, as answered in (b) above.

Karnataka AAAR: It is evident that this Appellate Authority being a creature of the statue is empowered to condone a delay of only a period of 30 days after the expiry of the initial period for filing appeal. As far as the language of Section 100 of the CGST Act is concerned, the crucial words are “not exceeding thirty days” used in the proviso to sub-section (2). To hold that this Appellate Authority could entertain this appeal beyond the extended period under the proviso would render the phrase “not exceeding thirty days” wholly otiose. No principle of interpretation would justify such a result. Therefore, we hold that we are not empowered to condone the delay of 77 days in filing this appeal.

13.  Since the appeal cannot be allowed to be presented on account of time limitation, the question of discussing the merits of the issue in appeal which is the eligibility to GST on partially constructed flats whose construction commenced before the implementation of GST but customers for the flats were identified only after the implementation of GST, does not arise.

Held: We dismiss the appeal filed by the appellant M/s. Durga Projects & Infrastructure Pvt. Ltd., on grounds of time limitation.

Advance Ruling No. and Date : KAR ADRG 49/2019 dated: 18.09.2019

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

Whether “Pooja oil” can be classified under tariff item 1518 of Schedule-I (taxable at 5%.) or Schedule-II (taxable at 12) of Notification No. 01/2017-CT(R) dated 28.06.2017, as amended from time to time?

Karnataka Authority for Advance Ruling has passed the ruling as:

The “Pooja Oil”, classified under tariff heading 1518, being inedible mixture gets covered under entry number 27 of Schedule - II of the Notification No.01/2017-CT (R) dated 28.06.2017, as amended, and hence is taxable at 6% under CGST Act, 6% under KGST Act and 12% under the IGST Act.

Karnataka AAAR: We do not find it necessary to go into the arguments of the Appellant that when a product is classifiable under two or more different tariff heads, the classification which is more beneficial to the assessee is to be adopted. This situation does not arise since the product Pooja oil is held by us to be classifiable only under Chapter subheading 1518 00 40.

Held: We uphold the order No. KAR ADRG 49/2019 dated: 18.09.2019 passed by the Advance Ruling Authority and appeal filed by the appellant M/s. S.K. Aagrotechh, stands dismissed on all counts.

Advance Ruling No. and Date : 19/WBAAR/2019-20 dated 26.08.2019

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

Whether "HDPE Woven Tarpaulin" is classifiable as textile under Section Xl of the First Schedule of the Customs Tariff Act, 1975  and, if so, whether it is classifiable under HSN 6306, 6301 or 5903 of the Tariff Act.

West Bengal Authority for Advance Ruling has passed ruling as: 

The HDPE fabric coated/covered with LDPE or LLDPE melt, used for manufacturing the tarpaulin, is not textile material classifiable under Heading 5903. Tarpaulin made from such fabrics of the variety the Applicant supplies, therefore, is not tarpaulin made from textile material, and not to be classified under Heading 6306. The fabric being no textile material, the question of classifying the tarpaulin made from it as a made-up textile article under Heading 6301 does not arise.

West Bengal AAAR: The question as to whether the product can be classified under HSN 5903, Note 2 to Chapter 59 is relevant which excludes "products in which the textile fabric is either completely embedded in plastics or entirely coated or covered on both sides with such material, provided that such coating or covering can be seen with the naked eye with no account being taken of any resulting change of colour (Chapter 39)". The sample produced by the Appellant was seen with the naked eye to be completely coated on both sides by plastic material and thus the laminated HDPE woven fabric in the instant case is not a textile material and does not merit classification under HSN 5903.

Held: We find no infirmity in the ruling pronounced by the WBAAR. The appeal thus fails and stands disposed accordingly.

Advance Ruling No. and Date : 17/WBAAR/2019-20 dated 19.08.2019

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

Whether the service of loading and unloading of imported raw whole yellow peas is exempt under Sl No. 54(e) of the Exemption Notification No. 1212017 - Central Tax (Rate) dated 28/062017.

West Bengal Authority for Advance Ruling has passed the ruling as:

The Applicant supplies the service of loading, unloading etc. after the cargo of yellow peas, imported from a foreign land, reaches the port of entry. Exemption under Sl No. 54(e) of Notification No. 12/2017 - Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017), as amended from time, is not applicable to the Applicant’s service.

West Bengal AAAR: The spirit of the legislature was intended to boost the agricultural sector of the home country and not that of a foreign land. The primary market in the instant case being located in foreign shores does not conform to the definition as stated above. Further there is no evidence that the grains have not undergone any type of treatment before leaving the foreign country from where they have been imported into India.

Held: We find no infirmity in the ruling pronounced by" the WBAAR.

Advance Ruling No. and Date : 15/WBAAR/2019-20 dated 19.08.2019

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

Whether printing of trade advertisement materialis a supply of goods or service. The Applicant further wanted to know the classification of the trade advertisement material if its transaction is a supply of goods.

West Bengal Authority for Advance Ruling has ruled:

The Applicant is making a composite supply, where the service of printing is the principal supply. The goods supplied, having no use other than displaying the printed matter, is ancillary to the principal supply of printing.

West Bengal AAAR: The Appellant argued that the product description in their invoice is mentioned as “Printing and Supply of Trade Advertisement Material – HSN # 4911”, because what they supply are primarily goods. However, we find that in the purchase order no. 5000060092 dated 12.04.2019, ITC Limited has mentioned the order description as service - “Digital Printing - Outdoor”. Also in purchase order issued to the Appellant under no. 018/EMPL/18-19 dated 24.05.2018 issued by Eden Media Pvt. Ltd, the particular of charges has been mentioned as “Printing charges for 1 no. of Blackback flex”. Thus, it is clear beyond doubt that what the Appellant supplies is nothing but service. Hence, we find no basis in the argument of the Appellant that it supplies goods only.

Held: We find no infirmity in the ruling pronounced by the WBAAR.

Advance Ruling No. and Date : GST-ARA-120/2018-19/B-51, dated 04.05.2019

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

Question (i): Whether the applicant, a Charitable Society having the main object and factually engaged in imparting Medical Education, satisfying all the criteria of "Educational Institution", can be said to be engaged in the business so as to cast an obligation upon it to comply with the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 in totality.

Answer :- In view of the discussions made above it is MGIMS which appears to be engaged in imparting medical education and not the applicant. The applicant has entered into a joint project with the State and Central Governments to form MGIMS which is an entity different from that of the applicant. Hence, the applicant cannot be said to be satisfying all the criteria of an "Educational Institution".

Question 2:- Whether the applicant, a Charitable Society having the main object and factually engaged in imparting medical education, satisfying all the criteria of "Educational Institution" is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 or it can remain outside the purview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply.

Answer :- As applicant has been found to be not an educational institution, the applicant falls within the scope of Sections 22 or 24 of the GST Act, 2017, they are liable to obtain registration if they provide taxable services and their turnover exceeds the threshold limit prescribed for registration.

Question 3: In a situation if above questions are answered against the contention of the applicant institution then following further questions are being raised for the kind consideration by the Honourable Bench.        

1. Whether the fees and other charges received from students and recoupment charges received from patients (who is an essential clinical material for education laboratory) would constitute as “outward supply” as defined in section 2 (83) of The Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 and if yes then whether it will fall in classification entry at Sr. No 66 or the portion of nominal amount received from patients (who is an essential clinical material for education laboratory) at Sr.  74 in terms of Notification 12/2017 Central Tax-dt. 28/6/2017.
2. Whether the cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations, other investigation such as CT-Scan, MRI, Colour Doppler, Angiography, Gastroscopy, Sonography during the course of diagnosis and treatment of disease would fall within the meaning of “composite supply” qualifying for exemption under the category of “educational and/or health care services.”
3. Whether the nominal charges received from patients (who is an essential clinical materials for education laboratory) towards an “Unparallel Health Insurance Scheme” to retain their flow at one end for the purpose of imparting medical education as a result to provide them the benefit of concessional rates for investigations and treatment at other end would fall within the meaning of “supply” eligible for exemption under the category of “educational and/or health care services.”
4. Whether the nominal amount received for making space available for essential facilities needed by the students and staffs such as Banking, Parking, and Refreshment which are support activities for attainment of main activities and further amount received on account of disposal of wastage would fall within the meaning of “supply” qualifying for exemption under the category of “educational and/or health care services.”

Answer : Questions (iii) (a) to (d) is rejected as being not maintainable.

Maharastra AAAAR Held: Now, when it has been established that the medical institute, MGIMS, which is engaged in providing medical education, is separate and distinct entity from the Appellant Society so far as the applicability of the GST law is concerned, the questions asked by the Appellant are answered in-seriatim as under:

(i) Whether the applicant, a Charitable Society, having the main object and factually engaged in imparting Medical Education, satisfying all the criteria of “Educational Institution”, can be said to be engaged in the business so as to cast an obligation upon it to comply with the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 in totality.

Ans: - Since, the Appellant Society, as established herein above, does not provide the said Medical education, the question raised above is not proper and correct, and hence not answered.

(ii) Whether the applicant, a Charitable Society having the main object and factually engaged in imparting Medical Education, satisfying all the criteria of “Educational Institution” is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 or it can remain outside the preview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply.

Ans: The above question is not answered due to the reasons mentioned in the question (i) above.

(iii)(a) Whether the fees and other charges received from students and recoupment charges received from patients (who is an essential clinical material for education laboratory) would constitute as “outward supply” as defined in section 2 (83) of The Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 and if yes then whether it will fall in classification entry at Sr. No 66 or the portion of nominal amount received from patients (who is an essential clinical material for education laboratory) at Sr. No. 74 in terms of Notification 12/2017 Central Tax - dt. 28/6/2017.

Ans: - The above question is not maintainable in terms of the Clause (a) of section 95 of the CGST Act, 2017, as the transaction with respect to which the Appellant has asked the question, is not pertaining to the Appellant but same is related to the medical institute, i.e., MGIMS.

(iii)(b) Whether the cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations, other investigation such as CT-Scan, MRI, Colour Doppler, Angiography, Gastroscopy, Sonography during the course of diagnosis and treatment of disease would fall within the meaning of “composite supply” qualifying for exemption under the category of “educational and/or health care services.”

Ans: - The above question is not maintainable in terms of the Clause (a) of section 95 of the CGST Act, 2017, as the transaction with respect to which the Appellant has asked the question, is not pertaining to the Appellant.

(iii)(c) Whether the nominal charges received from patients (who is an essential clinical materials for education laboratory) towards an “Unparallel Health Insurance Scheme” to retain their flow at one end for the purpose of imparting medical education as a result to provide them the benefit of concessional rates for investigations and treatment at other end would fall within the meaning of “supply” eligible for exemption under the category of “Educational and/or Health Care Services.”

Ans: - The above question is not maintainable in terms of the Clause (a) of section 95 of the CGST Act, 2017, as the transaction with respect to which the Appellant has asked the question, is not pertaining to the Appellant.

(iii)(d) Whether the nominal amount received for making space available for essential facilities needed by the students and staffs such as Banking, Parking, Refreshment etc. which are support activities for attainment of main activities and further amount received on account of disposal of wastage would fall within the meaning of “supply” qualifying for exemption under the category of “educational and/or health care services.”

Ans: - The above question is not maintainable in terms of the Clause (a) of section 95 of the CGST Act, 2017, as the transaction with respect to which the Appellant has asked the question, is not pertaining to the Appellant.

Advance Ruling No. and Date : GST-ARA-22/2018-19/B-85, dated 06.08.2018.

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

Question 1:-  Whether the Penal Interest is to be treated as interest for the purpose of exemption under Sr. No. 27 of Notification No. 12/2017Central Tax (Rate) dated 28.06.2017, Sr, No. 27 of Maharashtra State Notification No. 12/2017-State Tax (Rate) dated 29.06.2017, and sr. No. 28 of Notification No. 9/20171ntegrated Tax (Rate) dated 28.06.2017?

Answer :- Answered in the negative.

Question 2.:- If the answer to the above is negative, whether the activity of collecting penal interest by the Applicant would amount to a taxable supply under the GST regime?

Answer Answered in the affirmative. The said activity squarely falls under clause 5(e) of the Schedule II of the GST Act, 2018 and therefore such amounts received, would attract tax liability under GST laws.

Maharastra AAAR vide AAAR Order No. MAH/AAAR/SS-RJ/24/2018-19 dated 24.03.2019 Held : We do not find any reason to interfere with the ruling pronounced by the Authority for Advance ruling vide their order No. GST-ARA-22/2018-19/B-85, dated 06.08.2018.

Appellant has filed the present application, under section 102 of the CGST Act, 2017 on 13.09.2019 for the rectification of the Order No. MAH/AAAR/SS-RJ/24/2018-19 dated 24.03.2019.

Maharastra AAAR: It is conceded that the Ruling made in the impugned AAAR Order is contrary to the interpretation of the legal provision as envisaged by the Board, and since the said Board Circular is beneficial in nature, the same needed to be applied retrospectively in keeping with the Hon’ble Apex Court Judgment, relied upon by the Applicant.

Held: We, hereby, hold that the additional/Penal interest recovered by the Applicant from their customers against the delayed payment of monthly instalments of the loan extended to such customers, would be exempt from GST in terms of SI. 27 of the Notification No. 12/2017-C.T. (Rate) dated 28.06.2017.

Advance Ruling No. and Date : AAR NO. 22/AP/GST/2019, Dated 08.07.2019

Questions before the Andhra pradesh Authority for Advance Ruling [‘APAAR’], Goods and Service Tax which were ruled as: 

(a) Whether the supply of services such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., and supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them are naturally bundled and thus form part of the composite supply of principal activity of supply of electrical energy?

(b) Whether the supply of services such as connection, re-connection, supervision of the works, erection of poles, sub-stations, transmission lines etc., and supply of meters etc., to the consumers for the purpose and during the course of supply of electricity to them can be treated as part of principal supply of transmission or distribution of electricity which is exempted?

(c)  Whether the above supplies made to the consumers through contractors and third parties for the purpose of purpose of transmission or distribution of electricity or sale of electrical energy are also exempted?

Answers to questions (a); (b) & (c)

In the facts and circumstances presented by the applicant the

“Transmission or distribution of electricity by an electricity transmission or distribution utility” is only exempted vide entry no. 25 of the Notification No. 12/2017- Central Tax (Rate) New Delhi, the 28th June, 2017. Any service, other than transmission or distribution of electricity, rendered by the applicant is not covered in the said entry for claiming exemption. Services rendered apart from “transmission or distribution of electricity” are taxable.

(d) If the answer to the above questions is ‘NO’, whether the works executed under Deendayal Upadhyay Gram Jyoti Yojna for Rural Electrification (‘DDUGJY’), Integrated Power Development Scheme (‘IPDS’) and Restructured Accelerated Power Development and Reforms Program supplies made through contractors are liable to 12% GST since they are executed under grants provided by central government and no commercial activity is involved with regards these works?

(e) If the answer to the above questions at (A), (B) and (C) is ‘NO’, whether the execution of the Agricultural Demand Side Management Scheme (AGL) works are liable to 12% GST since they are executed for the purpose of non-commercial?

Answers to the questions (d) & (e):

The activities referred by the applicant are not covered in the Notification No.24/2017-Central Tax (Rate), dated 21.09.2017 for availing concessional rate of 12% GST rate and the applicable rate of tax is 18% (9% under Central tax and 9% State tax).

(f) Whether the supply of services and goods made by the applicant through contractors by way of construction, erection, commissioning, or installation of infrastructure for extending electricity distribution network up to the tube well of the farmer or agriculturist for agricultural are exempted vide Notification No.14/2018- Central Tax (Rate) dated 26.07.2018?

Answer to the question (f)

The Applicant is only entitled for the benefit of NIL rate of GST under SI. No. 10A of Notification no. 12/2017-Central Tax (Rate), dated 28.06.2017, amended by notification no. 14/2018-Central Tax (Rate), dated 26.07.2018 for the stated works and not for the contractors providing services to the applicant.

Andhra pradesh AAAR: The exemption is applicable only to the 'electricity distribution utilities' i.e., the appellant alone and it being a exemption notification cannot be interpreted or extended to the contractors who carry out the above mentioned works on behalf of the appellant and therefore the works taken up by contractors are exigible to tax. We concur with the decision of the lower authority in this regard.

Held: We are of the opinion that the Ruling of the AAR is in tune with legal position and it needs no interference and the appeal is accordingly dismissed. We confirm and uphold the decision of the lower Authority.

Advance Ruling No. and Date : GST-ARA-23/2018-19/B-87, dated 10.08.2018.

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

i. Whether the “Commission” received by the Applicant in convertible Foreign Exchange for rendering services as an "Intermediary” between an exporter abroad receiving such services and an Indian importer of an Equipment, is an "export of service” falling under section 2(6) & outside the purview of section 13 (8) (b), attracting zero-rated tax under section 16 (1) (a) of the Integrated Goods and Services Tax Act, 2017?

ii. If the answer to the Q. (i) is in the negative, whether the impugned supply of service forming an integral part of the cross-border sale/purchase of goods, will be treated as an "intra-state supply" under section 8 (1) of the IGST Act read with section 2 (65) of the MGST Act attracting CGST/MGST? And, if so, at what rate?

Maharastra AAAR vide AAAR Order No. MAH/AAAR/SS-RJ/26/2018-19 dated 22.03.2019 Held : We are of the opinion that since the questions asked by the Appellant are not covered under our scope and jurisdiction, no ruling can be passed in the instant matter. The impugned ruling passed by the Advance Ruling Authority is hereby quashed.

Appellant has filed the present application, under section 102 of the CGST Act, 2017 on 23.08.2019 for the rectification of the Order No. MAH/AAAR/SS-RJ/26/2018-19 dated 22.03.2019.

Maharastra AAAR : It can adequately be inferred that since there is dispute in the interpretation of the legal provisions of section 97(2)(e) of the CGST Act, 2017, which certain leaves the scope for argument and debate, there is absolutely no question of any error apparent from the face of record, as was being made out by the Appellant. Thus, the allegations, made by the Appellant with regard to the error crept in the impugned Order No. MAH/AAAR/SS-RJ/26/2018-19 dated 22.03.2019, which is apparent from the face of record, is without any rationale, and hence do not merit consideration.

Held: We, hereby, reject the application filed by the Appellant under section 102 of the CGST Act, 2017 seeking the amendment in the Order No. MAH/AAAR/SS-RJ/26/2018-19 dated 22.03.2019.

Advance Ruling No. and Date : GST-ARA-142/2018-19/B-88, dated 13.08.2018.

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

Question 1:-Whether contributions from the members in the Administration Account, recovered for expending the same for the weekly and other meetings and other petty administrative expenses incurred including the expenses for the location and light refreshments, amounts to or results in a supply, within the meaning of supply?

Answer:-Answered in the affirmative.

Question 2:-If answer to question no. 1 is affirmative, whether it will be classified as supply of goods or services?

Answer:-It will be classified as supply of services

Question 3:-Whether the applicant would be a Taxable Person under the provisions of the Act?

Answer:- Answered in the affirmative, subject to provisions of Section 22 of the GST Act.

Question 4:-If answer to question no.3 is affirmative, who shall be person responsible under GST, as office bearers keep on changing every year?

Answer:-The applicant is liable to pay GST and not the office bearers.

Question 5:-Whether the said collection of funds under common pool and spending back on the same said contributors, would entail ‘supply’ as defined in the law.

Answer :-Answered in the affirmative.

Question 6:- If answer to Question no.5 is affirmative, whether the same would be supply of goods or services?

Answer:- It will be classified as supply of services

Maharastra AAAR: It is observed that the Appellant is not providing any specific facility or benefits to its members against the membership subscription charged by it, as the entire subscription amount is spent towards meetings and administrative expenditures only. Thus, we conclude that the Appellant is not doing any business as envisaged under section 2(17) of the CGST Act, 2017.

Held: We, hereby, hold that the amount collected as membership subscription and admission fees from members is not liable to GST as supply of services.