(JAN 01 – 07, 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 1 to January 7, 2022.
18% GST applicable on Commercial Production of Hand Sanitizers
The Chhattisgarh Bench of the Authority of Advance Ruling (AAR) has decided that hand sanitizers produced for commercial purposes are subject to the Goods and Services Tax at the rate of 18%. (GST). From Notification 1/2017- Central Tax (Rate) , dated 28 June 2017, the authority bench of Members Sonal K Mishra and Rajesh Kumar Singh observed that the product of the manufacturers fall under Entry No. 87 of Schedule III, and attracts 18% Goods and Services Tax (GST) under the head “disinfectants and similar products” and not under Entry No. 63 of Schedule II, taxable at 12% GST under the head “medicaments”. Further ruled that, the appropriate GST rate applicable, on the commercial production of the same by the applicants, is 18%.
Vaccines supplied, across Counter through Separate Chemist Shop owned by Hospital attracts GST
A Two-member Bench of Chhattisgarh Authority for Advance Ruling (AAR),comprising Rajesh Kumar Singh (Member) and Sonal K. Mishra (Member) ruled that “Vaccines sold supplied through a separate chemist shop/ pharmacy store owned by the clinic/hospital across the counter would be subjected to GST as supply of goods, at the applicable note of GST.” The applicant is a licensed paediatrician who administers vaccinations to children who visit their clinic. For the aforesaid immunisation procedures done on the kids, the applicant charges a fee. The petitioner argued that because the vaccinations they administer in their clinic fall within the category of healthcare services, they qualify for an exemption.
The Authority of Advance Ruling at Chhattisgarh has recently ruled that no Input Tax Credit (ITC) can be claimed on Goods and Services Tax (GST) paid for goods, services, operation and maintenance services of cross country pipelines outside factory premises. It was decided that M/s NMDC, the applicant, is not qualified for an input tax credit for the GST paid on the goods and services used for the installation of cross-country pipe outside the applicant’s manufacturing premises. Additionally, it was decided that the application is ineligible for an input tax credit for CST paid on Operation and Maintenance (O&M) services provided for the upkeep of the aforementioned cross-country pipeline installed outside the applicant’s industrial grounds.
Work Contract Services to Repair/ renovate railway track attracts 18% GST
“Work Contract in relation to works contract for repair or renovation or other improvements of railway track attracts 18% Goods and Services Tax ( GST )”, ruled the Advance Authority of Ruling ( AAR ), Chhattisgarh. It was ruled that the activities referred to by the applicant as works contract services provided to M/s RITES Ltd. under the letter of acceptance in relation to work of renewal or renovation of railway track from Karonji Station to Bhatgaon Station would be liable to GST at the rate of 18%.
GST Exemption from Compensation Cess not applicable to Coal Rejects supplied by Power Plant
The Chattisgarh Bench of Authority of Advance Ruling (AAR) has recently ruled that nil liability of gst from compensation cess is not applicable to coal rejects supplied by power plants. The Authority Bench of Members Sonal K. Mishra and Rajesh Kumar Singh has observed that the GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018 extending nil liability of compensation cess on coal rejects supplied by a coal washery, will not be applicable to coal rejects supplied by a power plant and further such power plant supplying coal rejects to the applicant is liable to collect compensation cess.
Services on Job Works of Goods owned by Other Registered person attracts 12% GST
The services on Job works of goods owned by other registered persons attract 12% of Goods and Services Tax (GST) ruled by the Authority of Advance Ruling (AAR) of Chhattisgarh. The applicant M/s Miura Infrastructure Private Limited, a registered dealer, engaged in the business of manufacturing of steel fabricated technological Steel Structures/ building structures and machined equipment. The bench of members Sonal K. Mishra and Rajesh Kumar Singh ruled that if the job works services on goods owned by another registered person attract 12 % and if it is an unregistered person, then 18%.
The Chhattisgarh Authority of Advance Ruling ruled that the sale of Biomass Power Plant as a going concern is supply of goods and is liable to Goods and Services Tax (GST). The bench of Sonali K. Mishra and Rajesh Kumar Singh further noted that the applicant appears to have incorrectly claimed eligibility towards exemption from GST under serial no. 2 of Notification no. 12/2017-Central Tax (Rate) by mischaracterizing the sale of a biomass power plant by way of sale as a going concern as a supply of services when the same is supply of goods by way of transfer as a going concern. Therefore, based on the information provided by the applicant, the authority arrived at the conclusion that the applicant’s current transaction is not covered by Notification No. 12/2017- Central Tax (Rate) 2017 Supply of Goods and is subject to GST at the applicable rate.
Transfer of Fintech App as an Independent part of Business is Transfer of going concern, No GST
The Authority for Advance Rulings (AAR) at Karnataka has recently ruled in the application of The transfer of independent part of business pertaining to “LoanFront” app, a mobile software, qualifies to be a transfer of going concern and is exempted from Goods and Services Tax (GST). It was thus observed that, the taking over of liabilities postulates that there will be a continuity of business, as the said part of business is said to be functional and is decided to be transferred as a whole to a new owner, and thus amounts to transfer of a going concern, of the said independent part of the business.” It was hence observed that, the said activity amounts to “Service by way of transfer of going concern as an independent part” and thus in terms of Sl. No. 2 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.” and ruled that the transfer is entitled to Goods and Services Tax (GST) exemption.
5% GST applicable on Paddy Custom Milling
The activity of Custom Milling Paddy is liable to Goods and Services Tax (GST) at the rate of 5% – ruled by the Authority of Advance Ruling (AAR), Chhattisgarh. The bench of Sonal K. Mishra and Rajesh Kumar Singh mentioned that, pursuant to notification No. 31/2017-CT(R) [notification No. 11/2017-CT(Rate) dated 28.6.17, S. No. 26 refers], the GST rate on services by way of job work in relation to all food and food products falling under Chapters 1 to 22 has been whittled down from 18% to 5%. It was made abundantly clear that the processing fees for milling paddy into rice on a job-work basis are subject to GST at the rate of 5%. (and not on the entire value of rice).
The Gujarat Authority for Advance Ruling (AAR) has held that the lower rate of 5% GST applicable to the food items “prepared and cooked” in the restaurant alone whereas, the sale of readily available food items would attract the applicable rates. Accordingly, it was held that “the readily available food items (not prepared/cooked in the restaurant) sold over the counter by the Applicant to the customer whether consumed in the restaurant or by way of takeaway does not qualify as ‘restaurant services’ instead of falls under supply of goods which is liable to applicable rate of GST Tax.”
The bench of Brajesh Kumar Singh and Jyojit Banik of Authority of Advance Ruling (AAR), West Bengal ruled that the supply of services for the right to use car parking space would be taxable @ 18%. The applicant Eden Real Estates Pvt. Ltd. engaged in the business of construction of residential apartments intended for sale to buyers. Based on the applicant, the services of right to use car parking space as a composite supply of services along with the sale of under construction apartment service. The authority observed that the provision of services for the right to use a parking space is a separate supply and should not be perceived as a composite supply of construction of residential apartments. Thus shall be taxable at 18% from the buyers.
12% GST applicable to Contract for Construction of new Railway siding
The contract for construction of new railway siding would be taxable at 12% ruled by the Authority for Advance Ruling (AAR), West Bengal. The applicant Triveni Engicons Pvt. Ltd., engaged in execution of works contract services. The authority highlighted that, the 12% tax rate specified in serial number 3(v) (a) of Notification No. 11/2017 – Central Tax (Rate) has been removed from Notification No. 03/2022 – Central Tax (Rate), dated 13.07.2022. The bench of Brajesh Kumar Singh and Jyojit Banik ruled that the construction of new railway siding would be taxable at 12% till omission of the said entry vide Notification No. 03/2022- Central Tax (Rate) dated 13.07.2022.
Pencils Sharpener along with Pencils under Brand Name Doms fall under Category of ‘Mixed Supply’
In the application of Dom Industries, the Gujarat Authority for Advance Ruling (AAR) has ruled that the supply of sharpeners along with pencils is covered under the category of “mixed supply”. A two-member bench of Amit Kumar Mishra and Milind Kavatkar has observed that a mixed supply containing more than two supplies shall be treated as a supply of that particular supply which attracts a higher rate of tax in the mixed supply. It was viewed that all the supplies of the applicant are covered under the category of Mixed supply hence as per the provision of mixed supply, the supply which attracts a higher rate of tax shall be the applicable rate for the supply.
The Gujarat Authority for Advance Ruling (AAR) has ruled that the activity of Afforestation carried out by the applicant as a charitable organization is exempted from GST and is not required to be registered under GST. The Gujarat AAR held that the applicant’s service of plantation of mangroves is covered under point (iv) of Charitable Activity define under clause 2 (r) of Notification No. 12/2017-CT (R) dated 28-6-2017 as amended and is eligible for exemption from payment GST in terms of entry No. 1 of Not. No. 12/2017-CT (Rate) dated 28-6-2017. 18. Further held that the applicant’s service does not cover supply as defined under Section 7 of the CGST Act, 2017, therefore, an applicant is not liable for registration under the provisions of Section 22(1) of the CGST Act, 2017.
The Authority for Advance Ruling (AAR), Chhattisgarh ruled that Services of survey and Detailed Project Report (DPR) for water supply schemes for Panchayat/ Municipalities under Jal Jeevan Mission are pure services eligible for GST Exemption. A Two Member Bench of the Authority comprising Sonal K. Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner, observed that “The services of survey and preparation of detailed project report (DPR) for water supply schemes for Panchayats/Municipalities under Jal Jeevan Mission through Public Health Engineering Department, Government of Chhattisgarh provided by the applicant, M/s Aarav Consultancy Services Pvt Ltd. Raipur is eligible for exemption from CST as provided under Sr. 3 of Notification Number 12/2017-Central Tax (Rate) New Delhi, being pure services.” The Bench also noted that “No deduction of TDS is warranted in respect of payment received by M/s Aarav Consultancy Services Pvt. Ltd, Raipur, the applicant againstabove services rendered by them which are exempted as per principal Notification No. 12/2017 — Central Tax (Rate) dated 28th June, 2017 as amended.”
Bus Operator can Avail ITC on Rent paid towards Hiring of Buses
Upon satisfying the requirements outlined in Sections 16 and 17 of the Central Goods and Services Tax (CGST) Act 2017, the Authority for Advance Ruling (AAR) of Chhattisgarh determined that the applicant is qualified for an Input Tax Credit (ITC) on the rent bill provided by the service provider who rents them buses charging Goods and Services Tax (GST) at 18%. The authority observed that the applicant is under the misplaced notion that eligibility of Input Tax Credit is governed under the provisions of Notification No.11/2017-CT(Rate) as amended, whereas it is not so, in as much as non- availment of ITC is a pre-condition for availing the benefit of applicable tax rate for the services rendered by the applicant as provided under the said Notification.
The Chhattisgarh Authority for Advance Ruling (AAR), ruled that Civil works for construction of Rail Infrastructure for South Eastern Coal fields (SECL) Kusmunda Project is composite supply and attracts 12% GST. A Two Member Bench of the Authority consisting of Sonal K. Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner,observed that “The benefit of entry at Sl.no. of Notification No. 11/2017 would be eligible to M/s Agrawal Buildcon and that the works undertaken by them qualifies as “Composite supply” as stipulated under Section 2 (30) of CGST Act. 2017 as also the said work undertaken satisfies the condition of being ‘Works Contract’ as per Section 2 (119) of the Act, and if so the applicable rate of GST would be at 12% effective from 25.01.2018.”
No Ruling can be given on Past and Completed Supply: AAR rules against United Breweries
The Maharashtra Authority for Advance Ruling ( AAR ) , held that no ruling can be given on past and completed supply, thereby ruling against United Breweries Limited, the applicant. The Applicant, engaged in the manufacture of Beer and bottled drinking water had a leasehold land which was leased out to them by the Maharashtra Industrial Development Corporation (MIDC) and was holding this long term leased property, after obtaining necessary approvals, permissions, Commencement certificate from MIDC/NMMC and concerned Authorities, have constructed Industrial structures thereon as per the approved building Plans. The Two Member Bench of the Authority comprising M Rammohan Rao and TR Ramnani, ruled that “Based on the submissions made by the applicant and hearings conducted, the subject application is rejected as being non-maintainable as per Section 95 of the CGST Act, 2017 because the questions raised by the applicant are in respect of past and completed supply as on the date of the application and not supply, which is being undertaken/proposed to be undertaken.”
The Authority for Advance Ruling (AAR) Maharashtra, ruled that Pallets, crates leased by CHEP India Private Limited (CHPL), in Maharashtra to other GST Registrations located in India, is lease transaction and taxable as supply of services. CHEP India Private Limited (CIPL), the Applicant has sought and advance ruling on whether the pallets, crates and containers leased by CHEP India Private Limited located and registered in Maharashtra to its other GST registrations located across India 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. A Two Member Bench of the Authority comprising M Rammohan Rao and T R Ramnani ruled that “Pallets, crates and containers leased by CHEP India located and registered in Maharashtra to its other GST registrations located across India is considered as lease transaction and accordingly taxable as supply of services in terms of Section 7 of the CGST Act and MGST Act.”
The Chhattisgarh Authority for Advance Ruling (AAR), ruled that Supply for providing services for design, engineering, supply etc of Highway Lighting System are installation services and are ineligible for 12% GST. In the instant case, the Applicant has entered into an agreement with M/s. Adani Infra (India) Ltd for providing services for design, engineering, supply, testing at site, freight and transit insurance, erection, installation and commissioning and trial run of the Highway Lighting System. The applicant contended that the work to be executed by the them is regarding the installation of Highway Lighting System and being part and parcel of the project of development, maintenance and management of 4 laning in the State of Chhattisgarh and being essential for completion of road attracts the rate of GST of 12%.
A Two Member Bench of the Authority comprising Sonal K Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner observed that “The aforementioned supply to be made by the applicant to AIIL merits classification as “Installation services”, being electrical installation services of illumination for roads. The applicant is found ineligible to the benefit of tax rate of 12% as stipulated under entry No.3 (iv) (a) of Notification No. 1 1/2017 Central Tax (Rate).”
The Authority for Advance Ruling (AAR) of West Bengal of members Brajesh Kumar Singh and Jyojit Banik ruled that in the case the transaction of transfer of business by Merger of two registration comes under the ambit of ‘Supply of Services’. The applicant Jayesh Popat, proprietor of M/s. Vasant Jewellers is registered under the Goods and Services Tax Act having GSTIN 19JQPP3457M1ZA. The applicant carries another business under the same trade name as a partner and the said partnership firm is also registered under the GST Act having GSTIN 19AAUFV1123F1Z0. The bench ruled that the transaction of transfer of business of the applicant involved in the instant case shall be treated as a supply of services.
Service of regular Monitoring with Logistic Support to Senior Citizens attracts 18% GST
Services of regular medical monitoring with other logistic support as provided by the applicant to senior citizens at their doorstep does not qualified for exemption and liable to Goods and Services Tax at 18% ruled by the Authority for Advance Ruling( AAR ), West Bengal. The applicant has submitted that it aims to create a community where seniors can lead a physically and emotionally healthy and dignified life. Further, the applicant provided services for accompanying members for essential & social outings, accompanying members to the Bank & Post Office, organising social gathering and entertainment programmes etc. After considering the contentions of the applicant, the bench of Brajesh Kumar Singh and Jyojit Banik concluded that the services provided by the applicant can be termed as ‘human health and social care services’ and is taxable at 18%.
Welding of Railway Tracks with labour services is ‘Composite Supply’, attracts 18% GST
The West Bengal Authority For Advance Ruling (AAR) bench of Brajesh Kumar Singh and Jyojit Banik decided that the welding of railway tracks with labour services will be viewed as a composite supply of services and will be beholden to 18% Goods and Service Tax (GST). The authority observed that the railway tracks, for its permanent characteristic and in absence of mobility like other goods, would be regarded as immovable property and therefore fail to qualify to be goods. The authority highlighted the applicant’s assertion that the supply of labour services they provided along with the supply of job work services should be considered as a composite supply because these supplies are naturally combined in this industry, where the job work supply would be the primary supply and the labour supply would be ancillary.
Advance Ruling cannot be given on eligibility of utilization of ITC: AAR rejects Application
The Authority of Advance Rulings (AAR) at Karnataka has recently rejected the application of advance ruling filed by M/s Preethi Granite Exports on the ground that no ruling can be given on eligibility of utilization of Input Tax Credit (ITC). It was observed that, “the application is not maintainable as the questions on which advance ruling is sought by the applicant are not covered under the issues specified in Section 97(2) of the CGST Act 2017” the authority bench held that the instant application is liable for rejection in terms of Section 98(2) Of the CGST Act 2017.
No GST Exemption to Trellis manufactured by Bamboo and High Density Polyethylene
In a decision, Chhattisgarh’s Authority for Advance Ruling (AAR) determined that the product known as “Waterproof Trellis support for climbing plants utilising bamboo and High-Density Polyethylene” is not exempt from the requirement. The product, described as a “waterproof Trellis support for Climbing plants employing bamboo and High-Density Polyethylene,” was claimed to be an agricultural tool by the applicant, Bhavya Srishti Udyog Private Ltd. The bench of Sonal K. Mishra and Rajesh Kumar Singh noted the classification of the said product comes under Section 11 of chapter 14 of Customs Tariff which covers Vegetable plaiting materials; vegetable products not elsewhere specified or included. Tariff item 14011000 covers “Bamboos” in its ambit and it is taxable under the tariff.
The Chhattisgarh Authority for Advance Rulings (AAR) has recently ruled that the construction undertaken by the applicant- , other than construction of railway lines, is not a composite supply to the works contract, thereby attracting 18% Goods and Services Tax (GST). The authority bench of Sonal K Mishra and Rajiv Kumar Agrawal, in addition to the non-adherence of the other aspects/conditions for availing the benefit of notification claimed by the applicant as discussed by the applicant, came to the conclusion that the said construction project being undertaken by the applicant cannot be termed as “pertaining to railways”, much essential for entitlement of the reduced rate of tax
The Chhattisgarh Bench of the Authority for Advance Rulings (AAR) has recently ruled that 18% Goods and Services Tax rate applicable to 75 Inch Interactive Flat Panel Screens used for Data Processing Purposes manufactured by BENQ. The Authority Bench discussed in depth as to how the product sold by the applicant may be classified and observed that the applicable rate of tax in this regard is 18% GST. It was also ruled that, in case the impugned goods are classifiable under heading other than 8471 owing to its functionality as discussed here in above, the said goods will attract rate of tax as specified in the schedules appended to Notification no. 01/2017-CT(Rate) dated 28.6.2017 on such supplies on the basis of description specified therein, including 28% rate of tax.
Rulings can only be given for Proposed or Ongoing Transactions: AAR rejects application
The Karnataka Bench of the Authority for Advance Rulings (AAR) has recently ruled that a ruling can be given only in relation to a proposed or ongoing transaction, rejecting the application filed by M/s Centre for Symbiosis of Technology. The authority observed that, “in the instant case the questions, on which the applicant seeks advance ruling, are not in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the said applicant, but in relation to a completed supply, provided by them. Therefore the instant application is beyond the jurisdiction of this authority and hence is liable for rejection.” The application was thus rejected for being in relation to a completed supply by the authority bench of M P Ravi Prasad and Kiran Reddy T.
The Chhattisgarh Bench of the Authority of Advance Rulings (AAR) recently rejected an application by M/s State Water and Sanitation Mission, Jal Jeevan Mission, on the ground that the recipient of services cannot seek advance ruling on taxability of services. It was observed that the applicant, in the present case, had not been undertaking or has proposed to undertake any supply of goods or services, but is actually the recipient of service. The bench of members Sonal K Mishra and Rajiv Kumar Agrawal ruled that, “The ruling so sought by M/s State Water and Sanitation Mission, the applicant, on the issue of taxability of services provided by the service provider to the applicant cannot be answered owing to it being out of the scope of “advance ruling” as stipulated under Section 95(a) of CGST Act, 2017 read with Section 97(2) of the Act.”
Walltop Computer ‘roombr’ classifiable under Customs Tariff heading 8471 41 90
The Authority for Advance Rulings, Karnataka Bench has recently ruled that walltop computer “roombr” is classifiable under the Customs Tariff Heading 8471 41 90. The applicant, Virtulive Technologies sought an advanced ruling regarding the classification of their recently developed product-roombr, a walltop computer. The Authority Bench of Dr. M P Ravi Prasad and Kiran Reddy T observed that the applicant’s product consists of a central processing unit, a Bluetooth keyboard and IR pen to provide interactivity support as an input unit and a projected interactive display as an output unit. Therefore, even on this aspect also the impugned product squarely gets covered under the category of automatic data processing machines under the tariff heading 8471 41.
Installation, Parts and Service of Oxygen Supply System to Hospitals and Homes attracts 18% GST
The Chhattisgarh Authority for Advance Ruling ( AAR ), ruled that installation, Parts and Service of Oxygen Supply System to Hospitals and Homes attract 18% GST. The applicant is a service provider engaged in the activity of supply, installing, testing and commissioning of oxygen pipeline system in the government hospital covid care ward. Two member bench of the Authority comprising Sonal K Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner observed that “Installation services of parts and equipment for supply of Oxygen and other gases used in hospital, homes and connection of other gas operated equipment for Government hospital, attracts 18% GST.”
No GST on Washed/rejected Coal from Washery on which Compensation Cess is paid and ITC not availed
The Chhattisgarh Authority for Advance Ruling (AAR) ruled that no GST can be levied on washed/rejected Coal from washery on which Compensation Cess is paid and Input Tax Credit (ITC) not availed. The applicant is a mine development operator engaged in rendering Mining Services under a Coal Mining and Development executed with Rajasthan Rajya Vidyut Utpadan Nigam Limited which has been allotted a coal block by the Central Government. A Two Member Bench of the Authority comprising Sonal K Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commissioner held that “No GST can be availed on washed/rejected Coal from washery on which Compensation Cess paid, when no ITC is availed”
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