AAR and AAAR Weekly Round Up

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 February 22, 2025 to March 15, 2025.

Manpower Supply for ESVHD-MVU scheme on Contractual Basis does not Qualify as Veterinary Clinic Service, GST Applicable: AAR

In Re: UTPAL KUMAR GUHA CITATION: 2025 TAXSCAN (AAR) 105

The West Bengal Authority for Advance Rulings (AAR) has ruled that the supply of manpower for Mobile Veterinary Units (MVUs) on a contractual basis does not qualify as a veterinary clinic service and is therefore not eligible for GST exemption.

The applicant sought an advance ruling under Section 97(1) of the GST Act to determine whether their supply of MVU personnel for the implementation of the “Establishment and Strengthening of Veterinary Hospitals & Dispensaries (ESVHD) – Mobile Veterinary Unit (MVU) under the Livestock Health & Disease Control (LH & DC) Scheme” was eligible for exemption under Notification No. 12/2017-Central Tax (Rate) dated 18.06.2017.

The bench of Dr Tanisha Dutta and Joyjit Banik clarified that a veterinary clinic typically refers to an establishment providing medical treatment and care for animals. Since the applicant was merely supplying manpower for MVUs and not operating a veterinary clinic, the service did not qualify for exemption under this category either.

No GST on Processed Seafood in ‘Industrial Packs- Not For Retail Sale’, 5% GST Applies Otherwise: AAR

In Re: SRAVANTI LAHIRI CITATION: 2025 TAXSCAN (AAR) 106

The West Bengal Authority of Advance Ruling ( AAR ) has ruled that Goods and Services Tax ( GST ) is not applicable on supply of processed seafood in ‘Industrial Packs – Not For Retail Sale’. However, the authority has refrained from pronouncing a ruling citing the need for documentary evidence.

The applicant argued that the supply of frozen seafood to industrial or institutional customers falls under Rule 2(b) of the Legal Metrology (Packed Commodities) Rules, 2011, and is not considered “pre-packaged and labeled” as per Notification 01/2017 Central Tax (Rate) dated 28.06.2017. Referring to Notification No. 7/2022-CTR dated 13.07.2022 and the CBIC’s FAQ issued on 17.07.2022, the applicant claimed that such supplies are exempt from GST.

The AAR bench of Dr. Tanisha Dutta and Joyjit Banik noted that while the revenue authorities opined that the supply could be exempt, the absence of supporting evidence from the applicant made it impossible to determine whether the conditions for exemption were met. Consequently, the AAR refrained from issuing a ruling on the matter.

No GST on Reimbursement of Electricity Charges when Collected at Actual Cost Basis: AAR

In Re: MEGA FLEX PLASTICS LTD CITATION: 2025 TAXSCAN (AAR) 107

The West Bengal Authority for Advance Ruling (AAR) ruled that no Goods and Services Tax (GST) is payable on the reimbursement of electricity charges when collected at an actual cost basis, as the applicant qualifies as a pure agent under Rule 33 of the CGST Rules, 2017.

The applicant, Mega Flex Plastics Ltd, submitted that it has sub-leased a warehouse to White Saffron Grains LLP for ten years, starting April 1, 2022. As per the lease agreement, in addition to the monthly lease rent, the sub-lessee reimburses electricity charges as per actual consumption, calculated using a formula based on West Bengal State Electricity Distribution Company Limited (WBSEDCL) billing.

The applicant’s counsel that it does not supply electricity but merely facilitates its availability so the reimbursement qualifies under pure agent provisions and should not attract GST. The applicant’s counsel relied on Rule 33 of CGST Rules, 2017, which defines a pure agent as a person who incurs expenses on behalf of the recipient without holding any title to the goods or services. Electricity itself is exempt from GST and no tax should be levied on its reimbursement. The bench of Dr. Tanisha Dutta and Joyjit Banik observed that where a lessor collects electricity charges at actuals without any markup from the lessee, such recovery does not form part of the taxable value of supply.

GST exemption Not Applicable to Supply of Man Power Services to Webel Technology Limited: AAR

In Re: Webel Support Multipurpose Service Cooperate Society Limited CITATION: 2025 TAXSCAN (AAR) 108

In a recent case, the West Bengal Authority for Advance Ruling Goods and Services Tax (AAR) has held that Goods and Service Tax (GST) exemption is not applicable to supply of man power services to Webel Technology Limited. The applicant has received a work order from WTL for providing manpower services to the Public Health Engineering Directorate of the Government of West Bengal for executing their ‘JAL JEEVAN MISSION’ Project in the state of West Bengal.

The applicant has questioned whether Jal Jeevan Mission is correct in classifying the services provided to Government entities as exempted services. And whether the services are exempted under notification no. 12/2017 Central Tax (Rate) dated 28.06.2017?

A two-member bench of Dr Tanisha Dutta, Joint Commissioner and Joyjit Banik, Additional Commissioner as it is mandatory to satisfy all the three conditions as mentioned earlier in para 2.5 so as to qualify a services for exemption under serial number 3 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Supplies of Data Entry Operators & Junior Engineers for Jal Jeevan Mission Exempt from GST: AAR

In Re: WEBEL TECHNOLOGY LIMITED CITATION: 2025 TAXSCAN (AAR) 109

The West Bengal Authority for Advance Ruling (AAR) ruled that no Goods and Services Tax (GST) is payable on the supply of data entry operators and junior engineers (System Administrators, Software Support Personnel) for the Jal Jeevan Mission (JJM), as it qualifies for exemption under Serial Number 3 of Notification No. 12/2017 – Central Tax (Rate), dated 28.06.2017.

The applicant’s counsel argued that the services supplied are directly linked to the execution of the drinking water supply function, which is an entrusted function under the Eleventh Schedule of the Constitution. As the applicant does not supply goods and only provides manpower for the project, the services qualify as pure services, making them eligible for exemption under the said notification.

The bench of Dr. Tanisha Dutta and Joyjit Banik observed that the supply of data entry operators and junior engineers is integral to the execution of the Jal Jeevan Mission, which falls under the functions entrusted to Panchayats and Municipalities. The AAR clarified that the applicant is supplying manpower exclusively for JJM, which is directly linked to the drinking water supply function, and the exemption under Serial Number 3 of Notification No. 12/2017 – Central Tax (Rate) applies. So, the supply of manpower services for JJM is not subject to GST.

18% GST on PVC Raincoat: AAR

In Re: ARISTOCRAT INDUSTRIES PRIVATE LIMITED CITATION: 2025 TAXSCAN (AAR) 110

In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) has determined that Polyvinyl Chloride (PVC) raincoats shall be classified under HSN 3926 as plastic articles and attract a Goods and Services Tax (GST) of 18%. The AAR ruling came following an application filed by Aristocrat Industries Private Limited (Aristocrat), a Kolkata-based manufacturer engaged in the production and supply of PVC raincoats. PVC being highly durable and water-resistant is an ideal material for crafting raincoats as protective outerwear.

The two-member bench of Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST observed that PVC, being a synthetic polymer, is explicitly covered under Chapter 39 of the Customs Tariff Act, 1975. The authority highlighted that the chapter notes of Section XI, which deals with textile articles, exclude materials that are classified under Chapter 39.

Accordingly, the authority ruled that Aristocrat Industries Private Limited’s PVC raincoats fall under HSN 3926 and attract an 18% GST rate under Entry No. 111 of Schedule III of Notification No. 01/2017-Central Tax (Rate).

GST Registration Mandatory for IRP Liquidator Conducting Sales for Liquidating Company: AAR

In Re: MAHESHWARY ISPAT LIMITED CITATION: 2025 TAXSCAN (AAR) 111

In a notable ruling, the West Bengal Authority for Advance Ruling (AAR) has declared that an Insolvency Resolution Professional (IRP) or liquidator appointed by the NCLT is required to obtain GST registration before conducting sales of assets belonging to a liquidating company.

The AAR ruling came against an application filed by Maheshwary Ispat Limited, a company undergoing liquidation, seeking clarity on whether the liquidator Santanu Brahma, who was appointed by the National Company Law Tribunal (NCLT) on December 19, 2023. was obligated to obtain GST registration in order to dispose of company assets.

The two-member bench comprising Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST observed that as per Section 24 of the CGST Act, 2017, a liquidator handling the sale of assets of a corporate debtor qualifies as a taxable entity and is mandatorily required to obtain GST registration.

Sale of Assets of Liquidating Company done by Liquidator is Supply of Goods/Services under S.7 CGST Act: AAR

In Re: MAHESHWARY ISPAT LIMITED CITATION: 2025 TAXSCAN (AAR) 111

In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) has held that any sale of assets of a company in liquidation conducted by its liquidator qualifies as a supply of goods or services under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017. The AAR ruling came against an application filed by Maheshwary Ispat Limited, a company undergoing liquidation, seeking clarity on the applicability of GST to the sale of its assets by the liquidator, Santanu Brahma who was appointed so by the National Company Law Tribunal (NCLT) on December 19, 2023.

The two-member bench comprising Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST observed that Notification Nos. 11/2020-Central Tax dated 21.03.2020 & 39/2020-Central Tax dated 05.05.2020 provided a special procedure for corporate debtors undergoing corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Consequently, the AAR held that the sale of assets by a liquidator is a taxable event under Section 7 of the CGST Act, as it falls within the definition of “supply of goods or services or both.” The authority further ruled that the liquidator must comply with GST requirements, including obtaining registration and charging applicable GST on asset sales.

No GST on Technical Services for Water Distribution Networks Provided to PHED: AAR

In Re: RIMITA MUKHERJEE CITATION: 2025 TAXSCAN (AAR) 112

The West Bengal Authority for Advance Ruling (AAR) ruled that no Goods and Services Tax (GST) is payable on technical services provided for water distribution networks to the Public Health Engineering Department (PHED), Government of West Bengal.

The applicant’s counsel argued that the services qualify as pure services, as they do not involve the supply of goods, and are provided to a government department. These services are related to water supply, a function specifically entrusted to Panchayats under Article 243G and Municipalities under Article 243W of the Indian Constitution. So, the supply should be exempt from GST under the notification’s provisions.

The bench of Dr. Tanisha Dutta and Joyjit Banik confirmed that the services provided by the applicant do not involve the supply of goods and are directly related to drinking water supply, a core function of local governance under the Eleventh and Twelfth Schedules of the Constitution of India.

As per Notification No. 12/2017, pure services provided to the government for functions entrusted to Panchayats or Municipalities are exempt from GST. The applicant’s services fall within this category so, the AAR ruled that the supply is not subject to GST.

GST Payable on Reimbursement of Municipal Property Tax by Lessee / Occupier: AAR

In Re: KOLAY PROPERTIES LTD CITATION: 2025 TAXSCAN (AAR) 113

In a ruling related, the West Bengal Authority For Advance Ruling Goods and Services Tax (AAR) has held that Goods and Service Tax (GST) is payable on  reimbursement of municipal property tax by lessee / occupier

The question before the authority is that whether GST is applicable on reimbursement of municipal property tax by the lessee/occupier? The applicant states that the question raised in the application has neither been decided by nor are pending before any authority under any provision of the GST Act.

The authority held that the municipal property tax levied under the Kolkata Municipal Corporation Act, 1980, being a tax other than the CGST Act/ WBGST Act/ UTGST Act/ GST (Compensation to States) Act shall therefore form a part of the value of supply on which GST will be levied. While concluding the two member bench of Dr Tanisha Dutta, Joint Commissioner and Joyjit Banik, Additional Commissioner, SGST held that  value of supply would be inclusive of municipal property tax and tax under the GST Act is payable on such value.

18% GST on Service of Hiring of Fitted Assets such as A/C, Fire Sprinkler, DG Sets and Electric Installations: AAR

In Re: TCG Urban Infrastructure Holdings Private Limited CITATION: 2025 TAXSCAN (AAR) 114

In a recent ruling, the West Bengal Authority for Advance Ruling (AAR) held that the hiring of fitted assets, including air-conditioning systems, fire sprinklers, Diesel Generator (DG) sets, and electric installations, is classified as leasing or rental services and is subject to a Goods and Services Tax (GST) of 18%.

TCG Urban Infrastructure had been charging 28% GST under SAC 997314 but queried whether the services shall instead be taxed at 18% under SAC 997314 as ‘leasing or rental services concerning office machinery and equipment’ or classified as ‘support services’ under SAC 998599.

The two-member bench comprising Tanisha Dutta, Joint Commissioner, CGST & CX, and Joyjit Banik, Additional Commissioner, SGST examined the applicant’s business model and observed that the Applicant provides tenants with pre-installed infrastructure such as electrical wiring, heating, ventilation, and air conditioning (HVAC) systems, sprinkler fire-fighting systems, and backup DG sets and charges a monthly hire fee on the same.

The Bench ruled that the supply of hiring services of air-conditioning systems, fire sprinklers, DG sets, and electric installations falls under “leasing or rental services, without operator,” which is explicitly covered under Serial No. 17(viii) of Notification No. 11/2017-Central Tax (Rate) with each of the supplies attracting 18% GST.

Milling Services for PDS Flour Exempt from GST as Goods Component Stays Below 25% Threshold: AAR

In Re: Shree Krishna Roller & Flour Mills CITATION: 2025 TAXSCAN (AAR) 115

The West Bengal bench of the Authority for Advance Ruling (AAR) held that milling services provided for the production of fortified flour distributed under the Public Distribution System (PDS) are exempt from Goods and Services Tax (GST). It was observed by the bench that the exemption applies as the value of goods involved in the composite supply does not exceed 25% of the total value of the supply, meeting the criteria under Entry No. 3A of Notification No. 12/2017-Central Tax (Rate).

Two important questions were raised by the applicant and they include: First, What is the value of supply and rate of tax of services of conversion of wheat into fortified atta which in turn is supplied by the State Government through the Distribution system? Secondly, What components are to be included to calculate the value of goods involved in the supply for the purpose of Notification No. 2/2018- Central Tax (Rate)?

The AAR comprising of  Members Tanisha Dutta and Joyjit Banik noted that the applicant’s milling services for the West Bengal government, supplying atta for PDS distribution, qualify as a composite supply and are exempt under Entry 3A of Notification 12/2017-Central Tax (Rate), as the goods’ value does not exceed 25% of the total supply.

No GST ITC on Provision of Third-Party Canteen Services to Contractual Workers: AAAR

In Re: M/S. Troikaa Pharmaceuticals Ltd CITATION: 2025 TAXSCAN (AAAR) 111

In a notable ruling, the Gujarat Appellate Authority for Advance Ruling ( AAAR ) has ruled that no Input Tax Credit ( ITC ) may be availed by an employer on the Goods and Services Tax ( GST ) paid for canteen services provided to contractual workers.

The Applicant queried before the AAAR whether they could claim ITC on the GST paid for these canteen services rendered to both employees and contractual workers, in light of the fact that provision of canteen facilities to employees is a mandatory requirement under Section 46 of the Factories Act, 1948.

The AAAR Bench, comprising Rajeev Topno SGST Member and B.V. Siva Naga Kumari, CGST Member, upheld the GAAR ruling stating that since contractual workers are not statutory employees, ITC on their canteen costs is blocked under Section 17(5)(b) of the CGST Act, 2017. Another key issue raised was the applicability of Circular No. 172/04/2022-GST, which clarifies that GST is not applicable on perquisites provided by an employer to its employees under a contractual agreement. The AAAR ruled that the provisions of the circular do not apply to contractual workers since they do not fall within the definition of “employees” under the GST regime.

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