This round-up analytically summarises the key stories related to the Goods and Services Tax Authority for Advance Ruling ( AAR ) and Appellate Authority for Advance Ruling ( AAAR ) reported at Taxscan.in during the period from October 25, 2024 to November 23, 2024.
In a recent ruling, the Kerala Authority for Advance Rulings (AAR) held that GST is applicable on the leasing and concession fees in the concession agreement between Airports Authority of India (AAI) and Adani Thiruvananthapuram International Airport Ltd.
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The AAR bench members comprising Gayathri P.G., IRS, and Abdul Latheef observed that the concession agreement did not constitute a “transfer of business” or “transfer as a going concern”. The ruling noted that even though operational control was handed over, AAI retained ownership of important airport assets which remained in AAI’s books. So, the AAR ruled that the arrangement was an operating lease and not a transfer of business.
The Maharashtra Authority for Advance Ruling ( AAR ) while addressing an Application filed by the Reserve Bank of India ( RBI ) observed that the penalty levied by RBI on third-party vendors for Non-performance or Under-performance of their contractual obligations towards RBI do not constitute supply of service, thus not being subject to taxability under the Goods and Service Tax ( GST ) mechanism.
The two-member Bench of the Maharashtra Authority for Advance Ruling constituted by Ajaykumar V. Bonde, Joint Commissioner of State Tax and Priya Jadhav, Joint Commissioner of Central Tax observed that the liquidated damages are paid only as a means of compensation and not to tolerate an act or to do anything in return for the party paying out the liquidated damages.
The Maharashtra Authority for Advance Ruling ( AAR ) while addressing an Application filed by the Reserve Bank of India ( RBI ) ruled that Penalties, Late Fees, Penal Interests or Fines levied and collected by RBI from contravening banks, non-banking financial institutions and other such entities cannot be deemed as ‘Supply’ under the Goods and Services Tax ( GST ) regime and are not taxable.
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The two-member Bench of the Maharashtra Authority for Advance Ruling constituted by Ajaykumar V. Bonde, Joint Commissioner of State Tax and Priya Jadhav, Joint Commissioner of Central Tax concurred with the submissions of RBI and referred to Paragraph 7.4 of the CBIC Circular to state that the penalties imposed for violation of laws cannot be deemed to be consideration charged by a government or a local authority for tolerating violations.
In a recent ruling by the Kerala Authority for Advance Ruling ( AAR ) held that polymer protective coating services on bridges falls under painting services under Composite Supply of Works Contract. It was determined that the relevant SAC code is 995473, which falls under the category of “painting services.”
The AAR determined that the relevant SAC code is 995473, which falls under the category of “painting services.” This classification includes services related to: Painting services for building interiors and exteriors Coatings and lacquer application Protection and painting of engineering structures, including bridges The ruling establishes that the polymer coating services provided by the applicant are classified under the SAC 995473 due to their nature of improving and protecting immovable property, which aligns with the definition of works contracts under Section 2(119) of the CGST Act.
In a recent ruling by the Kerala Authority for Advance Ruling (AAR), halwa purchased from a supplier, packed at the applicant’s facility, and marketed under a brand name was held not classifiable as “namkeens” under the GST framework.
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The AAR observed that halwa purchased from outsourced manufacturers or suppliers and marketed under a brand name could not be classified as “namkeens” despite being covered under the same HSN Code 2106 90. Entry 101 of Schedule I, which specifically mentions sweetmeats under this code, takes precedence over Entry 46 of Schedule II. In result , halwa was held taxable at a lower rate of 5% under Schedule I, irrespective of whether it is packed, branded, or sourced externally.
In a ruling issued by the Kerala Authority for Advance Ruling (AAR) under the Goods and Services Tax (GST) framework, an automobile dealership with its registered office in Ernakulam, Kerala, was held eligible to avail Input Tax Credit (ITC) on the inward supply of motor vehicles used for demonstration purposes subject to the condition that depreciation was not claimed.
It recognized that these vehicles are indispensable for sales promotion, as potential customers often insist on test drives before making purchase decisions. The AAR acknowledged that the use of demo vehicles aligns with the provisions of Section 16(1) of the CGST Act, as they are utilized in the furtherance of business. However, the AAR clarified that the eligibility of ITC must also satisfy the overriding provisions of Section 17(5), which imposes restrictions on the credit availability for motor vehicles.
In a recent ruling, the Karnataka Authority for Advance Rulings ( AAR ) clarified that car rental services will attract an 18% Goods and Services Tax ( GST ), resolving uncertainty about the tax treatment of these services under GST.
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The bench, comprising M.P. Ravi Prasad and Kiran Reddy T., analyzed the case based on GST laws and relevant notifications. The AAR referred to Notification No. 11/2017-Central Tax (Rate), dated June 28, 2017, and its subsequent amendments, which prescribe the tax rates for various services, including “rent-a-cab” services. As per Entry 10(ii) of the Notification, “rent-a-cab” services are taxable at 18% under GST when the supplier does not avail of the input tax credit (ITC).
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