AAR 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 1 to 7, 2023.

Fortified Rice Kernel Deemed to Attract 18% GST, Classified under Tariff item 1904 HSN under Chapter 19 of Customs Tariff Act: AAR M/s Smt. Sonal K. Mishra CITATION: 2023 TAXSCAN (AAR) 265

The Authority for Advance Ruling (AAR), Chhattisgarh has held that Fortified Rice Kernel (FRK) falls under the Tariff item of Harmonized System of Nomenclature (HSN) 1904 under Chapter 19 of Customs Tariff Act, 1975 attracting Goods and Services Tax (GST) at the rate of 18 per cent.

The Authority consisting of Smt. Sonal K. Mishra, Joint Commissioner and Shri Shravan Kumar Bansal, Additional Commissioner clarified that the correct classification of FRK is under Chapter Heading 1904. The applicable GST rate for goods classified under this heading, including FRK, is 18% (9% CGST + 9% SGST) or (18% IGST) as per entry no. 15 of Schedule III to Notification No. 01/2017-CT(Rate) dated 28.06.2017, as amended. In the result, the AAR held that FRK proposed to be manufactured by the applicant merits classification under Chapter 19 subheading 1904 of HSN, attracting GST at the rate of 18% (9% CGST + 9% SGST) or (18% IGST).

No GST Chargeable to State Government as Fair Price Shop not Making any Supply to State Government: AAR M/s CHANCHAL SAHA CITATION: 2023 TAXSCAN (AAR) 266

The West Bengal Authority for Advance Ruling (AAR) ruled that no GST chargeable to State Government as Fair Price Shop not making any supply to State Government.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “The applicant is not making any supply to the State Government. No tax is, therefore, to be charged to the State Government.”

Composite Supply of Works Contract to Local Authority by Erection, Installation, and Maintenance of Sewerage Treatment Plant attracts 12% GST: AAR M/s KSB Limited CITATION: 2023 TAXSCAN (AAR) 267

The West Bengal Authority for Advance Ruling (AAR) ruled that the Composite supply of works contract to local authority by erection, installation, and maintenance of a sewerage treatment plant attracts 12% GST.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “The instant supply qualifies as a composite supply of works contract as defined in clause (119) of section 2 of the GST Act made to a local authority by way of erection, installation, and maintenance of a sewerage treatment plant and would be taxable at the rate specified in serial number 3(iii) of Notification No. 11/2017-CT (Rate) dated 28/06/2017 read with Notification No. 20/2017-Central Tax (Rate) dated 22/08/2017, as amended from time to time, subject to the provisions of section 14 of the GST Act.”

Composite Supply of Services of Milling Food Grains into Atta for Food & Supplies Department Exceeding 25% Value of Supply attracts 5% GST: AAR M/s. Vikash Agritech Food Private Limited CITATION: 2023 TAXSCAN (AAR) 268

The West Bengal Authority for Advance Ruling (AAR) ruled that composite supply of services of milling food grains into Atta for Food & Supplies Department exceeding 25% value of supply attracts 5% GST.

A Two-Member Bench of the Tribunal comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “The instant composite supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the value of goods involved in such composite supply does not exceed 25% of the value of supply. “ “In case the value of goods involved in such composite supply exceeds 25% of the value of supply, the supply shall attract tax @ 5% (CGST @ 2.5% + WBGST @ 2.5%) vide entry serial No. 26 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 [corresponding State Tax Notification No. 1135-FT dated 28.06.2017], as amended” the Tribunal noted.

Registered Person Carrying on Separate Type of Businesses from Same Place of Business Within a State Cannot opt to Obtain Separate GST Registration within Said State: AAR M/s. AESTHETIK ENGINEERS PRIVATE LIMITED CITATION: 2023 TAXSCAN (AAR) 269

The West Bengal Authority for Advance Ruling (AAR) observed that a in cases where a registered person carries on separate type of businesses from same place of business within a State, he cannot opt to obtain separate registration within the said State.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “In other words, option for separate registration may be availed by a registered person provided such registered person has multiple places of business. Therefore, in cases where a registered person carries on separate type of businesses from same place of business within a State, he cannot opt to obtain separate registration within the said State as per proviso to sub-section (2) of section 25 of the GST Act read with rules made there under.” “As per proviso to sub-section (2) of section 25 of the GST Act, separate registration in a State may be granted to a person who has multiple places of business in that State” the Authority concluded.

No ITC Claim against Inward Supply of Input used for Construction of Warehouse when Construction Expenses are Capitalized in Books: AAR M/s. MINDRILL SYSTEMS AND SOLUTIONS PRIVATE LIMITED CITATION: 2023 TAXSCAN (AAR) 270

The West Bengal Authority of Advance Ruling (AAR), ruled that there can be no Input Tax Credit (ITC) claim against inward supply of input used for construction of warehouse when construction expenses are capitalized in the books.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “the applicant is not eligible for input tax credit against inward supply of input/input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are capitalized in books.”

Services of Milling Atta to Food & Supplies Department Eligible for Central Tax (Rate) Exemption as Value of Goods does not Exceed 25% of Value of Supply: AAR M/s. BABA LOKENATH FLOUR MILLS PRIVATE LIMITED CITATION: 2023 TAXSCAN (AAR) 271

The West Bengal Authority for Advance Ruling (AAR) observed that services of milling atta to Food & Supplies Department eligible for Central Tax (Rate) exemption as value of goods does not exceed 25% of value of supply.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “In the instant case, value of supply shall be the consideration in money as well as non-cash consideration, as discussed. This composite supply of services by way of milling of food grains into flour (atta) to Food & Supplies Department, Govt. of West Bengal for distribution of such flour under Public Distribution System is eligible for exemption under entry serial no. 3A of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended, since the value of goods involved in such composite supply does not exceed 25% of the value of supply.”

Activities of Milling of Wheat into Wheat flour, along with Fortification and Supply is Composite Supply: AAR M/s. MURSHIDABAD FLOUR MILL PRIVATE LIMITED CITATION: 2023 TAXSCAN (AAR) 272

The West Bengal Authority for Advance Ruling (AAR), observed that the activities of milling of wheat into wheat flour, along with fortification and supply is composite supply.

A Two-Member Bench of the Authority comprising Sarthak Saxena, Joint Commissioner, CGST & CX and Joyjit Banik, Senior Joint Commissioner, SGST observed that “The agreement further requires the applicant to pack the crushed stock of wholemeal atta after fortification into properly labelled poly-packs having thickness of 50 microns or above.” “It, therefore, appears that the activities undertaken by them for milling of wheat into wheat flour, along with fortification and supplied upon packing of the same qualify the definition of composite supply under clause (30) of section 2 of the GST Act where the supply of services by way of milling is the principal supply” the Authority concluded.

No GST Exemption on Services by way of Loading and Unloading of Imported Unprocessed “Toor” and “whole pulses” and “Black Matpe”: AAR CITATION: 2023 TAXSCAN (AAR) 273

The West Bengal Authority for Advance Ruling (AAR) observed that Goods and Service Tax (GST) Exemption is not available on services by way of loading and unloading of imported unprocessed “toor” and “whole pulses” and “black matpe”.

A Two-Member Bench of the Authority comprising Sarthak Saxena and Joyjit Banik observed that any services supplied for loading and unloading as supplied by the applicant after the goods left the primary market do not qualify for exemption under serial number 54 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The authority held that the “Services by way of loading and unloading of imported unprocessed “toor” and “whole pulses” and “black matpe” as involved in the instant case does not qualify for exemption under serial number 54(e) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.”

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