This weekly round- up analytically summarizes the key stories related to the GST Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR), reported at Taxscan.in during the previous week from 7th to 13 th of November, 2022.
The Appellate Authority for Advance Ruling (AAAR), Gujarat, has recently in an appeal filed before it, held that commencement of investigation is a judicial bar for advance ruling. The aforesaid observation was made by the AAAR, when an appeal was preferred before it by M/s. Shalby Limited, as against the Advance Ruling of the Gujarat Advance Ruling Authority (GAAR), dated 19.07.2021. The facts of the case being that the Gujarat Authority for Advance Ruling (GAAR) vide its Advance Ruling No. GUJ/GAAR/R/31/202l dated 19.07.2021, had observed that in the advance ruling application dated 02.12.2020, the appellant had declared no proceedings to be pending or decided with respect to the question raised in the application, while the Revenue had already initiated assessment to business premises under Section 7l of GGST Act on 04-06.2019 and the same was converted into search proceedings under section 67(2) of the act on 05.06.2019, with search proceedings continuing till 06.06.2019, the Gujarat AAAR, while upholding the invocation of Section 104 of CGST Act by the GAAR and declaring advance ruling dated 20.01 .2021 as void ab initio, is legal, made the aforesaid observation.
The Telangana State Appellate Authority for Advance Ruling (AAAR), has recently, while deciding an appeal filed before it, held that liquidated damages recoverable on account of delay in commissioning is not supply and hence that no GST is leviable on the same. The aforesaid observation was made by the AAAR, when M/s. Achampet Solar Private Limited, engaged in production and distribution of electricity obtained from solar energy, filed an appeal before it, as against the Order No.07/2022 dated 16.02.2022, passed by the Telangana State Authority for Advance Ruling (Goods and Services Tax).
With Singha Baheni Industries, engaged in the manufacturing of Industrial Safety Belts and full Body Harness, filing an application before it, the West Bengal Authority for Advance Ruling (AAR), has held that industrial safety belt not exceeding Rs. 1000 sale value is taxable at 5% GST. The question on which the advance ruling was sought for, being found to be covered under clause (a) of sub-section (2) of section 97 of the GST Act, along with the applicant stating that the question raised in the application had neither been decided by nor was pending before any authority under any provision of the GST Act, the AAR Bench consisting of Brajesh Kumar Singh and Joyjit Banik, observed : “ “It appears that the item industrial safety belt made of nylon, which may be termed as life belt, can be covered under Tariff item 6307 20 90. Further, serial number 224 of Schedule I and serial number 171 of Schedule-II, respectively of Notification No. 01/2017- Central Tax (Rate) dated 28.06.2017, as amended from time to time, and corresponding State Tax Notification No. 1125-F.T. dated 28.06.2017, as amended, notifies the rate of tax of ‘other made up of textiles article”.
The Appellate Authority for Advance Ruling (AAAR), Uttar Pradesh, has recently, while deciding upon an application filed before it, held that supply, installation and commissioning of plant & machinery, mechanical engineering works, electrical works etc., amounts to composite supply of work contract service. The aforesaid observation was made by the Authority when an appeal was preferred before it by the appellant HYT Engineering Company Pvt. Ltd, as against the advance ruling order No. UP ADRG 92/2022, dated 24.01.2022, issued by the Authority for Advance Ruling (AAR), Uttar Pradesh. The party having sought the advance ruling on the questions as to whether the work awarded to the applicant is a composite supply of work contract service, the Authority observed that for classifying any contract under works contract, the property involved in the same has to be of any immovable nature, thus holding the work awarded to the appellant as composite supply of work contract service.
The Haryana Authority for Advance Ruling (AAR) has ruled that, no Goods & Services Tax (GST) can be levied on recovery of notice pay or compensation paid on forfeiture of surety bond, while placing reliance on Circular No. 178/10/2022-GST, dated 03.08.2022 , issued by the Central Board of Indirect Taxes & Customs (CBIC). The aforesaid observation was made by the authority when an application was made by M/s Rites Limited, on 7 grounds for clarification, namely, GST taxability of notice pay recovery, compensation on forfeiture of surety bond, recoveries for canteen facility, on amount collected for providing new ID Cards, liquidated damages for performance/short-performance/delay in performance, forfeited security deposit/bank guarantee and written of unclaimed creditors’ balance, wherein the AAR, Haryana ruled that, “it can be said that none of the above transactions on which the applicant has sought the advance ruling regarding the taxability under the CGST Act, 2017, falls under the scope of supply”.
With the applicant M/s Bambino Pasta Food Industries Private Limited ,a private limited company engaged in the manufacturing of Vermicelli and pasta Products, seeking an advanced ruling on whether ITC is available on CSR expenditure spent by the company, the Authority for Advance Rulings, Telangana (AAR) , has ruled that Income Tax Credit (ITC) can be availed on Corporate Social Responsibility (CSR) Expenses. Having before it, the appellant’s contention that the company incurs CSR expenditure under statutory compulsion which is certainly incurred because of running of business and by no stretch of imagination, the two Member Bench of the Authority consisting of S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) Sahil Inamdar, Additional Commissioner (Central Tax), while holding as aforementioned, observed : “Under the Companies Act, 2013, the Companies with a specified net worth or net profit are obliged to incur a minimum of 2 % of their net profit towards their corporate social responsibility (CSR) and failure to do so will attract penalty under sub section 7 of Section 135 of the Companies Act, 2013 which may go up to a maximum of Rs.1 Cr.”
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