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 15 to 21, 2023.

Payment made to State Govt. for Change of Description of Land from Wetland to Ordinary Land Attracts GST under RCM: AAR M/s Manappuram Finance Limited CITATION: 2023 TAXSCAN (AAR) 279

The Kerala Authority for Advance Ruling (AAR), Thiruvananthapuram has held that the payment made to the Government of Kerala for changing the description of land from wetland to ordinary land attracts Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM).

The Authority consisting of Sreeparvathy S.L., Additional Commissioner of Central Tax and Abraham Renn S., Additional Commissioner of State Tax concluded that the activity of permitting the change of land nature and levying fees cannot be considered an activity in relation to any function entrusted to a Panchayat under Article 243 G of the Constitution of India, as claimed by the applicant. The AAR ruled that the activity does not fall under the category of “neither a supply of goods nor a supply of service” as per Notification No. 14/2017 CT (Rate) dated 28.06.2017 as amended. In result, the AAR determined that the payment made by the applicant to the Government of Kerala for changing the land description attracts GST liability under RCM.

Activities or Services Provided by Universities to Its Affiliated Colleges and Students Exempted from GST: AAR M/s University of Calicut CITATION:   2023 TAXSCAN (AAR) 280

The Kerala Authority for Advance Rulings (AAR), Thiruvananthapuram has held that the activities or services provided by universities to their affiliated colleges and students are exempted from Goods and Services Tax (GST). The ruling came in response to the advance ruling sought by the University of Calicut, Kerala.

The Authority consisting of Dr. S.L. Sreeparvathy, IRS, Additional Commissioner of Central Tax and Abdul Latheef K, Joint Commissioner of State Tax clarified that the University of Calicut, being a government authority established under an Act of the State Legislature, with more than 90% control in carrying out functions entrusted to a Panchayat or Municipality, falls within the definition of “Governmental Authority.” The AAR further added that since education is a function entrusted to both Panchayats and Municipalities under the Constitution, the services provided by the university to its affiliated colleges are exempted from GST under entries 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Tax Reduction Benefit under Rule 32 (5) of CGST, Rules not applicable When Fails to Prove Gold as Second-Hand Good: AAR M/s Best Money Gold Jewellery Ltd. CITATION:   2023 TAXSCAN (AAR) 281

The Kerala Authority for Advance Ruling (KAAR) has held that tax reduction benefits under rule 32 (5) of Central Goods and Service Tax (CGST) Rules are not applicable when fails to prove gold as second-hand goods.

ln order to qualify for inclusion under the valuation of supply as envisaged under sub-rule (5) of rule 32, it has to be proved that the applicant is dealing in second-hand goods. Unfortunately, gold in any form fails to pass the test of ‘second-hand goods’. The Authority comprising of Dr.S.L. Sreeparvathy, IRS &Shri. Abraham Renn S, IRS held that “the supply made by the applicant fails to comply with all the requirements specified under Rule 32 (5) of the CGST, Rules 2017. Hence cannot avail of the benefit of provisions stated under sub-rule (5) of CGST rules 2017.”

Settlement of Mutual Debt through Book Adjustment is a Valid Mode of Payment of Consideration, Input Credit is Admissible: AAR M/s PARAGON POLYMER PRODUCTS PRIVATE LIMITED CITATION:   2023 TAXSCAN (AAR) 282

The Kerala Authority for Advance Ruling (KAAR) has held that settlement of mutual debt through book adjustment is a valid mode of payment of consideration and the input credit is admissible.

The Authority comprising of Dr.S.L. Sreeparvathy, IRS &Shri. Abraham Renn S, IRS held that ‘the input tax credit is admissible when consideration is paid through book adjustment as detailed above, subject to the other conditions and restrictions prescribed Sections 16, 17 and 18 of the CGST Act, 2017.

7.5% GST Rate is Liable to Pay on Service of Construction of Residential Apartments: AAR M/s Prime Property Developers CITATION:   2023 TAXSCAN (AAR) 283

The Kerala Authority for Advance Ruling (KAAR) has held that a 7.5 % Good and Services Tax rate is liable to pay on service of construction of residential apartments.

The Authority comprising of Dr.S.L. Sreeparvathy, IRS &Shri. Abraham Renn S, IRS held that “the applicant is liable to pay GST at the rate of 7.5% [3.75% – CGST + 3.75% – SGST] in respect of the services of construction of residential apartments other than affordable residential apartments as per entry an Item No. (a) of Sl. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 subject to the conditions prescribed under the entry in the villa project irrespective of whether the agreement for construction is entered into with a purchaser before the execution of the sale deed for land in favour of the purchaser or after the execution of sale deed for land.”

Top Stories Service Supplied Charitable Society to Educational Institution is liable to GST: AAR M/s CHOICE FOUNDATION CITATION:   2023 TAXSCAN (AAR) 284

The Kerala Authority for Advance Ruling (KAAR) has held that educational service supplied by charitable societies to educational institutions is liable to Goods and Service Tax (GST).

 The Authority comprising of Dr.S.L. Sreeparvathy, IRS &Shri. Abraham Renn S, IRS held that “the service supplied by the applicant to the educational institution i.e., the joint venture is liable to goods and Services Tax (GST) as per notification No. 11/2017-Central Tax (Rate) dated 28 /06/ 2017 andS.R.0 370/2017dated 30/06/2017 of Government of Kerala.”

Activity of Body Building of Motor Vehicle on Chassis Amounts to Supply of Services, Attracts 18% GST: AAR M/s AROMAL AUTOCRAFT CITATION:   2023 TAXSCAN (AAR) 285

The Kerala Authority for Advance Ruling (KAAR) has held that the activity of bodybuilding of motor vehicles on chassis amounts to the supply of services and attracts 18% GST.

The Authority comprising of Dr.S.L. Sreeparvathy, IRS & Shri. Abraham Renn S, IRS held that “the activity of bodybuilding of motor vehicles on the chassis supplied by the customer is a supply of services and is liable to GST at the rate of 18% [9% CGST + 9% SGST] as per entry at Sl. No. 26 (ic) — 9988 — Manufacturing services on physical inputs (goods) owned by others – Services by way of job work in relation to bus body building; of Notification No. 11/2017 Central Tax (Rate) dated 28/06/2017.”

Payment of Net Receivables by One GSTIN for Another GSTIN of Same Company is Not Supply: ITC can be Claimed If Done through Book Adjustment, AAR Rules in favour of Malabar Gold M/s Malabar Gold Private Limited CITATION:   2023 TAXSCAN (AAR) 286

The Kerala Authority of Advance Ruling (AAR), Thiruvananthapuram has held that the payment of net receivables by one Goods and Services Tax Identification Number (GSTIN) for another GSTIN of the same Company is not a Supply and the corresponding legitimate Input Tax Credit (ITC) can be claimed even if the payment is done through Book Adjustment.

The AAR comprising of Dr. S.L. Sreeparvathy, IRS, Additional Commissioner Central Tax and Shri Abraham Renn S, IRS Additional Commissioner State Tax clarified that adjusting the payments through book entries meets compliance requirements and does not constitute a supply between the GSTINs involved and the assessee can avail ITC even when consideration is paid through book adjustment entries. The decision by the AAR reaffirms the intention of the GST legislation to facilitate ease of doing business by recognising the validity of book adjustments and differentiating them from supplies which is very helpful for businesses engaged in complex transactions involving multiple GSTINs.

Tata Autocomp Systems Ltd. Eligible for ITC on GST borne for In-House Canteen Services provided to Employees by Service Provider: AAR M/s Tata Autocomp Systems Ltd CITATION:   2023 TAXSCAN (AAR) 287

The Authority for Advance Ruling (AAR), Gujarat has ruled in favour of Tata Autocomp Systems Ltd., declaring them eligible for Input Tax Credit (ITC) on the Goods and Services Tax (GST) borne by them for the in-house canteen services provided to their employees by a service provider.

The Authority comprising Milind Kavatkar, State Goods and Services Tax (SGST) Member and Amit Kumar Mishra, Central Goods and Services Tax (CGST) Member ruled that food and canteen services provided by the employer to its employees in the factory premises of the employer would not be considered a supply of service under the provisions of Section 7 of CGST and SGST Acts. Consequently, the applicant is eligible to avail ITC on the GST charged by the Service Provider for providing catering services to the employees, the authority held.

Supply of Solar Home Lighting System Attracts 12% GST: AAR M/s R2V2 TECHNOLOGIES PRIVATE LIMITED CITATION:   2023 TAXSCAN (AAR) 288

The Uttar Pradesh Authority for Advance Ruling (AAR) has ruled that supply of solar home lighting systems attracts 12% Goods and Service Tax (GST).

solar home lighting system is a fixed installation design for domestic application that illuminates the home by drawing power from the Solar Energy. It uses solar results to convert Solar energy directly received from sunlight to electricity.  The electricity thus generated is stored in batteries and used for the purpose of lighting the home whenever required. Moreover, such a solar PV module is installed in the open on roof terrace and exposed sunlight throughout the day the charge controller and battery are kept inside a protected place in the house. After reviewing the submissions and provisions, the two-member bench of Authority of Advance Ruling, Rajendra Kumar (central Taxes) and Harilal Prajapati (State Taxes) ruled that solar home lighting system to be classified under heading 94055040 and 12% GST applicable.

Supply of Printing Services providing to Educational Institution for Question Papers, OMR sheets, Answer sheets, marks card exempted from GST: AAR M/s. Y S Hitech Secure Print Private Limited CITATION:   2023 TAXSCAN (AAR) 289

The Telangana Authority for Advance Ruling has held that the supply of printing services provided to educational institutions for question papers, OMR sheets, answer sheets, marks card exempted from Goods and Service Tax.

The two-member bench of Authority of Advance Ruling, S.V. Kasi Visweswara Rao, Additional Commissioner (State Taxes) Sahil Inamdar I.R.S., Additional Commissioner (Central Taxes) observed that Supply of Printing of test papers/question papers, OMR sheets, Certificates, Marks Memo, MICR cheque books etc. using his own paper and ink to educational institutions is a composite supply, of which Printing services is the principal supply which makes the supply exempt from payment of GST.

Services provided by PSTCL for Shifting Transmission Lines on request of NHAI shall attract 18% GST: AAR M/s. Punjab State Transmission Corporation Limited CITATION:   2023 TAXSCAN (AAR) 290

The Punjab Authority for Advance Ruling (AAR) has ruled that services provided by Punjab State Transmission Corporation Limited (PSTCL) for shifting transmission lines on request of National Highway Authority of India (NHAI) Should attract 18% Goods and Service Tax (GST).

After reviewing the facts and submission of the both parties while going through the copy of contracts with NHAI, it was found that after finalization of road plan details an estimate for composite work is prepared and the party is told to deposit the amount of estimate along with applicable GST 18%. After reviewing the submissions and provisions the two-member bench of Authority of Advance Ruling, Virendra Kaur Viraj (central Taxes) and Shyam Karan thidke (State Taxes) ruled that services of shifting of transmission line on the request ofNHAI would be classified under service Head 998631 and would attract GST at 18% days.

Hostel accommodation provided to students for Residential purpose period from 01/08/2021 to 12/07/2022 is Exempted from GST: AAR M/s. V S Institute & Hostel Private Limited CITATION:   2023 TAXSCAN (AAR) 291

The Uttar Pradesh Authority for Advance Ruling (AAR) has ruled that Hostel accommodation provided to students for residential purpose period from 01/08/2021 to 12/07/2022 is exempted from Goods and Service Tax (GST).

After considering the submissions of the applicant, it was observed by the Authority that the applicant fulfilled the twin conditions to cover under Entry No 12 of the Notification No. 12 / 2017 -CT (rate) dated 28/6/ 2017 (exemption notification) namely “services by way of rendering of residential dwelling for you as a residence” issued under the CGST Act 2017 :(a) the building of hostel is residential dwelling, (b) and the hostel is being used for residential of the students. Further from 1/08/2021, the applicant has started to provide the hostel service directly to the student of education Institutions without charging tax liability of GST.  The students are residing for a fixed amount on an annual basis.  it can be inferred the nature of service has not changed from 01/08/2021 only the providers services have changed. On going through the exemption Entry number 14 of notification No 12/2017 -CT(R) dated 28/06/2017 as well as the CBIC circular No.  32 / 06/2018 GST dated 12th February 2018 it was found that description of service is user based, meaning that, if the accommodation is used for residential or lodging purpose than it is immaterial who the user is. After reviewing the submissions and provisions, the two-member bench of Authority of Advance Ruling, Rajendra Kumar (central Taxes) and Harilal Prajapati (State Taxes) ruled that Hostel accommodation provided to students for residential purpose period from 01/08/2021 to 12/07/2022 is exempted from GST.

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