AAR and AAAR Weekly Round-Up

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 July 22 to 28, 2023. Place of Supply of Goods & Services is Madhya Pradesh and Not Gujarat: Gujarat AAR Rejects Advance Ruling Application as Beyond Jurisdiction M/s Pooja Construction Co CITATION: 2023 TAXSCAN (AAR) 292 The Gujarat Authority for Advance Ruling (GAAR), Ahmedabad has rejected an application for advance ruling seeking clarification on various aspects of the Goods and Services Tax (GST) on the finding that the same is beyond jurisdiction as the place of supply of goods and services is Madhya Pradesh and Not Gujarat. The two-member bench consisting of Milind Kavatkar (State Goods and Services Tax (SGST) Member) and Amit Kumar Mishra (Central Goods and Services Tax (CGST) Member) rejected the application filed by M/S. Pooja Construction Company on the issue of jurisdiction, without going into the other questions, stating that the applicant’s questions regarding registration requirements, tax rates and SAC codes for their works contract services in Madhya Pradesh would need to be addressed by the appropriate authority in that state, the MAAR. The rejection of the application by the GAAR highlighted the need and importance of presenting clear and comprehensible questions with precision and clarity while seeking advance rulings to avoid jurisdictional issues. The ruling also emphasised the relevance of the place of supply for goods and services as it determines the appropriate jurisdiction for seeking clarifications. Chocolate Chikkies Containing Coca attract 18% GST & other Chikkies Without Coca attracts 5%: AAR M/s SIRIMIRI NUTRITION FOOD PRODUCTS CITATION: 2023 TAXSCAN (AAR) 293 The Authority for Advance Ruling (AAR), Karnataka has held that Chocolate Chikkies containing Coca shall attract Goods and Services Tax (GST) at the rate of 18% and other Chikkies without Coca shall attract 5% GST. The authority comprising Dr. M P Ravi Prasad, State Goods and Services Tax (SGST) Member and Sri. Kiran Reddy T, Central Goods and Services Tax (CGST) Member held that the chikkies falling under the category of “Sugar Confectionery not containing cocoa” are classified under Chapter heading 1704 and are taxable at 5% GST. This category includes products such as Sesame Chikkies, Amaranth Chikkies, Crushed Peanut Chikkies, Spirulina Chikkies, and Dry Fruit Chikkies. On the other hand, Chocolate Peanut Chikkies, which contain cocoa powder, are classified under Chapter heading 1806 90 20, falling under the category of “Sugar Confectionery containing cocoa” which are subject to 18% GST. It was further clarified that Dry Fruit Chikkies, despite containing various dry fruits, will also fall under the category of “Sugar Confectionery not containing cocoa” and, therefore, be classified under chapter heading 1704, attracting 5% GST. R&D Services to Foreign Entities are “Export of Service” & Deemed “Zero Rated Supply” if Goods/Prototypes are Supplied by Foreign Entity, GST Implication Limited to Prototypes Developed by Applicant: AAR M/s Hilti Manufacturing India Pvt.Ltd CITATION: 2023 TAXSCAN (AAR) 294 The Gujarat Authority for Advance Ruling (AAR), Ahmedabad has held that the Research & Development (R&D) activities and services provided by the applicant to foreign entities shall be treated as “Export of Service” and deemed to be “Zero Rated Supply” if the goods or prototypes are supplied by the foreign entity whereas Goods and Services (GST) is applicable when the Prototypes are developed by the applicant itself. The Authority consisting of Milind Kavatkar (SGST Member) and Amit Kumar Mishra (CGST Member), after thorough examination of the new submissions and the agreement entered into by the applicant with Hilti Aktiengesellschaft (HAG) as the principal company, observed that the services provided by the applicant to the entities located outside India is covered under Section 13(2) of the IGST Act, 2017 in respect of the services mentioned in List (B) and (C) under Appendix-I as per para 28 of the agreement. This is subject to the condition that the services supplied in respect of goods/prototypes which are required to be made physically available by HAG to the applicant. It was also clarified that in respect of the service under List (A) under Appendix-I of para 28, it does not merit to be covered under section 13(2) of the IGST Act, 2017. The AAR also ruled that the services provided by the applicant is eligible to be treated as a “zero rated supply” under Section 16 of the IGST Act, 2017 in respect of the services mentioned in List (B) and (C) under Appendix-I as per para 28 of the agreement. The authority concluded that in respect of the service listed in (A) under Appendix-I of para 28, the subject services are liable to Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). The ruling offered by the authority thus clarified the tax implications of the appellant based on the nature of their service offerings to entities outside India. No Advance Ruling shall be pronounced in question relating to Supply undertaken Prior to Filing of Application: AAAR M/S Mangala Product Private Limited CITATION: 2023 TAXSCAN (AAAR) 127 The Rajasthan Appellate Authority for Advance Ruling (AAAR) has held that no advance ruling should be pronounced in question relating to supply undertaken prior to filing of application. The two-member bench of Appellate Authority of Advance Ruling, Rajendra Kumar (central Taxes) and Harilal Prajapati (State Taxes) observed that scope of ruling of authority for advance ruling is limited to transactions being undertaken or proposed on the matters which are not sort out. In the present case the advance ruling application was filed on 15/10/2022 before the Rajasthan Authority for Advance Ruling with respect to supply already being undertaken, the GST being paid and GST return has been filed. Hence, the case is out of purview of Advance ruling. Support our journalism by subscribing to Taxscan premium. 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AAR and AAAR Weekly Round-Up

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