(JAN. 08 – 14, 2023)
This weekend summary provides an analytical synopsis of the most major stories about the Goods and Service Tax Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR), that were authored at Taxscan.in during the one week from January 8 to 14, 2023.
18% GST applicable on Manpower Services given to Government Departments
The Chhattisgarh Authority for Advance Ruling (AAR) bench of Sonal K. Mishra and Rajesh Kumar Singh determined that the applicant is obligated to pay 18% Goods and Services Tax (GST) on the manpower services provided to various Central and State Government entities. The bench arrived at the conclusion that, despite being a “pure service,” the applicant’s activity of providing manpower services—including technical personnel, data operators, housekeeping services, etc.—to various State Government and Central Government Departments does not constitute any sovereign function as defined by Articles 243G or 243W of the Indian Constitution.
According to a ruling by the West Bengal Authority for Advance Ruling ( AAR ),of members Brajesh Kumar Singh and Jyojit Banik, the applicant is required to produce a tax invoice on the contract value as established by the department while acting as a “Project Implementing Agency” and supplying the State Government Department/Directorate. The decision-making body noted that the applicant has acknowledged that, as a project executor hired by the administrative department of the Government of West Bengal, he just serves as the “agent” of the said administrative department to carry out the work. We observe that in this context, an agent must also be regarded as the recipient of the supply of products, services, or both as per section 2(93) of GST Act.
Abhivahan Shulk (Transit Fee) to transit Coal from Forest Area attracts 18% GST under RCM basis
The Chhattisgarh Authority for Advance Ruling (AAR) ruled that 18% Goods and Services Tax attracted towards the Abhivahan Shulk (Transit Fee) to transit coal from Forest area under Reverse Charge Mechanism RCM). The applicant, Chhattisgarh State Power Generation Company Limited (CSPGCL), is an entirely state-owned enterprise that produces electricity and has power facilities spread throughout the state of Chhattisgarh. Coal is the primary raw material used to create electricity. The Ministry of Coal granted a corporation access to a coal mine so that it may extract coal for use in producing electricity. The bench of Sonal K. Mishra and Rajesh Kumar Singh decided that “Abhivahan permission shulk” paid by the applicant to the Forest department for the permission granted by the Forest department of Chhattisgarh, merits classification under the residuary Heading 9997 and the applicant is liable for GST under reverse charge basis in terms of Serial No. 5 of the Notification No. 13/2017-Central Tax (Rate).
Nadiadwala Entertainment cannot Claim Loss in respect of Expenses Incurred on Film ‘Aarakshan’
While holding that the investment for the purchase of distribution of a film is “intangible right,” the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has disallowed the claim of M/s Nadiadwala Entertainment to treat the expenses incurred on the film “aarakshan” as loss under the Income Tax Act, 1961. A bench of Om Prakash Kant (Accountant Member) and Shri Sandeep Singh Karhail (Judicial Member) has held that “the assessee has not incurred expenses for production of the film whereas, the assessee claimed that the said investment was made for purchase of distribution right of the film which are in the nature of intangible assets and therefore investment was for purchase of capital asset and loss incurred on the same is in the nature on opinion, finding of the Ld. CIT(A) on the issue reasoned and no interference is required in the same.”
2% TDS applicable on contract value above ₹2,50,000 on payment to Customs Millers
The bench of Sonal K. Mishra and Rajesh Kumar Singh of Authority for Advance Ruling (AAR), Chhattisgarh ruled that 2% Tax Deduction Source (TDS) is applicable on Contract value above Rs. 2,50,000 on payment to Customs millers. The applicant Chhattisgarh State Cooperative Marketing Federation (MARKFED) sought the advance ruling on TDS on Goods and Services Tax (GST) applicability on the payments made to custom miller. The bench mentioned that Section 51 of the Central Goods and Services Act (CGST), 2017, allows a department or establishment of the Central Government or State Government; a local authority; a Governmental agency; or such persons or categories of persons as may be notified by the Government on the advice of the Council, (the “deductor”), to deduct tax at the rate of one percent from the payment made or credited to the supplier (“deductee”) of taxable goods or services.
Exporter eligible for recovery of unused GST ITC under RCM on transportation costs to GTA
The Authority for Advance Ruling (AAR) of Chhattisgarh ruled that the exporter is eligible for recovery of unused Input Tax Credit (ITC) of Goods and Services Tax (GST) under Reverse Charge Mechanism on transportation costs to the Goods Transportation Agency. The applicant registered as an exporter under GST Act and engaged in exporting molasses to Bangladesh under Letter of Undertaking (LUT) without payment of GST. Further, they purchased the same from the registered tax payers of Haryana and Punjab after payment of 0.1% GST on the goods. The bench of Sonal K. Mishra and Rajesh Kumar Singh held that the applicant is eligible for a refund of unused input tax credits of such GST paid under transportation charges paid under Reverse Charge on transportation charges paid to a GTA in India for the export purpose and GST paid on other ancillary services for the export purpose from registered service providers of India. This decision was made in light of section 54 of the CGST act read with section 16(3)(a) of the IGST act.
The Tamil Nadu Authority for Advance Ruling (AAR) held that the applicant, VBC Associates is not eligible for claim of Input Tax Credit (ITC), as per Section 17 (2) of the CGST /TNGST Act read with Rule 43(a) of CGST /TNGST Rules 2017, on the Goods/Services used in installation of Solar Power Panels, which are considered as Plant and Machinery. The applicant is a Partnership Firm in the business of maintenance of an immovable property and provides the services of maintenance of immovable property, covered under the main SAC 9972. The applicant, on a monthly basis, raises an invoice for ‘EB and DG charges’, to the tenants. The Two member bench of the Authority comprising TG Venkatesh and K Latha observed that goods/ Services for installation of Solar Power Panel are Plant and Machinery, ineligible for ITC.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates.
