Applicant cannot seek Advance Ruling on Supply where he is Recipient of Services: AAR [Read Order]

The West Bengal Authority for Advance Ruling ( AAR ) has rejected the application for advance ruling holding that the applicant could not seek an advance ruling on supply where the applicant himself was the recipient of services.

The applicant, Anmol Industries Limited had entered into a leasing agreement with the Shyama Prasad Mookerjee Port, Kolkata (SMPK), a body incorporated under the Ministry of Ports, Shipping and Waterways, Government of India, wherein, the SMPK had agreed to lease an industrial plot of land at Taratala Road for a period of thirty years (30 years) for setting up commercial office complex.

It had been agreed that the applicant would pay a sum to the Lessor, SMPK as an upfront lease premium. The allotment letter further sought to charge GST @18% on the amount.

The applicant was of the view that as per entry No. 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017, as amended from time to time, the above upfront lease premium was exempted from GST.

Ankit Kanodia on behalf of the applicant submitted that the recipient only was paying the tax and the supplier was merely collecting the tax from the recipient and paying to the Government.

Furthermore, sub-section (9) of section 49 clearly stated that every person who had paid the tax on goods or services or both under this Act shall, unless the contrary was proved by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both.

The Authority for Advance Ruling of Brajesh Kumar Singh (CGST Member) and Joyjit Banik (SGST Member) rejected the application holding that to bear the incidence of tax as a recipient of supply could not be construed as payment of tax under the GST Act, as contended by the applicant.

It was further observed that “In the subject application, the applicant cannot seek an advance ruling in relation to the supply where he is a recipient of services.”

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