This round-up analytically summarises the key stories related to the Goods and Service Tax Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) reported at Taxscan.in during June 17 to 23, 2023.
The Telangana State Authority for Advance Ruling (TSAAR) has held that the inward supply made for the construction of a shed using Prefabricated Technology is not eligible for Input Tax Credit (ITC) since the same is categorised under Immovable Property.
The authority comprising of Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sri Sahil Inamdar, Additional Commissioner (Central Tax) concluded that the warehouse constructed using prefabricated structures constitutes immovable property and is not eligible for ITC under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017. In result, the AAR ruled that ITC is not allowed for the construction of a shed using pre-fabricated technology.
The Telangana State Authority for Advance Ruling (TSAAR) has held that the reimbursement of bonus by the recipient to the service provider shall be included in the value of supply and hence the same rate of Goods and Services Tax (GST) applies to both the main service and the bonus reimbursement as per Section 15(2)(b) of the Central Goods and Servies Tax (CGST) Act, 2017 and State Goods and Servies Tax (SGST) Act, 2017.
The authority consisting of Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sri Sahil Inamdar, Additional Commissioner (Central Tax) clarified that the basis for charging GST at the rate of 5% instead of 18% is the fact that the bonus reimbursement is considered part of the canteen service and not a separate service and hence the same shall be taxed at the rate same as that of the main service.
The Telangana State Authority for Advance Ruling (AAR) observed that the Duty Credit Scrips should be excluded from the value of exempt supply to compute Input Tax Credit (ITC) reversal.
A Two-Member Bench of the Authority comprising S.V. Kasi Visweswara Rao, Additional Commissioner (State Taxes) and Sahil Inamdar, (I.R.S), Additional Commissioner (Central Taxes) observed that “After the insertion of clause (d) in the Explanation-1 to Rule 43 of the CGST Rules vide Notification No. 14/2022 dt: 05.07.2022, the value of ‘Duty credit scrips’ shall be excluded from the value of exempt supply for the purpose of applying Rule 42 of the CGST Rules.”
While enhancing the AAR’s decision, the Maharashtra Appellate Authority for Advance Ruling (AAAR) decided that 18% Goods and Services Tax (GST) is applicable to incentives earned by the reseller based on quarterly targets. Since the incentive received does not qualify for a trade discount, GST must be paid.
The Coram of Rajeev Kumar Mital and Dr. D.K. Srinivas observed that “the MAAR has rightly observed that no sale transaction of goods has taken place between the appellant and hence incentives will not be covered under the provisions of Section 15(3) of CGST Act, 2017. “ Thus, the Maharashtra AAAR bench dismissed the appeal. Read AAR Ruling: GST: Incentives Received for Market Services within India cannot be Considered as Trade Discount nor Export Service, rules AAR
By rejecting the appellant’s appeal, the Maharashtra Appellate Authority for Advance Ruling (AAAR) determined that the reimbursement of the stipend received from the National Employability Enhancement Mission (NEEM) trainer by the NEEM facilitator under the AICTE’s NEEM regulations is not done in the capacity of a pure agent and is therefore subject to Goods and Services Tax (GST).
The appellate bench observed that, to qualify mere receiving payment under the cover of reimbursement of “Stipend amount and other expenses incurred by the Appellant in accordance with AICTE (NEEM) Regulations, by the trainer as a payment received by a pure agent, it should satisfy all parameters under Rule 33 of the CGST Rules namely; Authorisation, Invoicing, Additional Supply. Further noted that the activity of deploying trainees to the Company to undergo training is undertaken by the Appellant in his own interest as a NEEM Facilitator. While the NEEM Regulations make provisions for the NEEM Facilitator to partner with Companies/Industries to provide the training, it makes the Facilitator responsible for payment of stipend and for issue of the training completion certificate. It is the responsibility of the Facilitator to furnish data of the trainees to AICTE. The appellant drew the attention of the appellate bench to the Karnataka Authority for Advance Ruling in the case of Cadmaxx Solutions Education Trust and Yashswi Academy for Skills. In these AARs, it has been held that the stipend amount required to be paid by the trainer to the trainee, which is paid through the applicant (a NEEM Facilitator) is not taxable in the hands of the applicant since the applicant is only acting as a pure agent. However, the bench of Rajeev Kumar Mital and Dr. D.K. Srinivas stated that appellant does not fulfil the conditions and clauses of meaning of “pure agent prescribed under rule 33 of the CGST Rules. Hence, the appellant is not allowable to claim deduction of the reimbursement of the amount of stipends and other expenses received from the NEEM Trainer from the value of supply and liable to GST.
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