![GST AAR and AAAR Annual Digest 2023 - [part 3] - TAXSCAN](https://www.taxscan.in/wp-content/uploads/2024/01/GST-AAR-and-AAAR-Annual-Digest-2023-part-3-TAXSCAN.jpg)
This yearly digest analyzes all the AAR and AAAR stories published in the year 2023 at taxscan.in.
The Haryana bench of Sunder Lal and Kumud Singh , Authority for Advance Ruling (AAR) ruled that Good and Services Tax (GST) is applicable on export of pre-packaged and labelled rice up to 25kg.
The bench determined that that GST is applicable to all supplies of pre-packaged and labelled rice bags made to foreigners. In addition, the bench noted that regardless of whether the rice is being sold for internal use or export, 5% GST will be applied if it is being delivered in pre- packaged and labelled bags with a capacity of up to 25 kg.
The Rajasthan Authority for Advance Ruling (RAAR) ruled that advance ruling may not be requested. The bench concluded that the application is not covered by advance ruling as a result.
Moreover, they observed that the applicant filed their application before the Rajasthan AAR on 14.10.2022 i.e. much later from the supply of services. The Applicant was discharging his GST liability since starting on the service supplied by him and asked for advance ruling when subsidy has not been given to him from the concerned department. We observe that the applicant’s motto is to find out whether the mechanism opted by him for payment of GST on said service is right or wrong, which is against the spirit of advance ruling
Haryana bench of Sunder Lal and Kamud Singh for Advance Rulings (AAR) ruled thermal based fogging machine attracts 18% of the GST
The bench observed that in general and technical terms a fogging machine is a mechanical appliance. As a fogging machine convert the liquid inside it into another state of matter before disbursing the same in the form of a haze. These vapours are transported via the machine’s nozzle and released into the atmosphere. The disinfectant or chemical liquid administered through a fogging machine spreads on both surfaces as well as in the air itself. The micro-
droplets of disinfectant or chemical solution remain on surfaces for a longer period. The thin fog penetrates smaller and hidden surfaces and even reaches into corners and difficult regions.
he Authority for Advance Ruling ( AAR ), bench of Sunder Lal, and Kumud Singh, Haryana, has recently, in an application filed before it, held that PVC cushion mats taxable at 18% GST,
The bench observed that “The supply of the said goods i.e., PVC cushion matts fall under chapter 39 of the GST tariff rates. And the applicable tax rate of the same is 18%
The Haryana Authority for Advance Rulings (AAR) ruled that water supply activities done by the developer for residential house attracts 18 % GST.
The AAR bench concluded that for any supply to be covered under the Pure Services that there should be no supply of goods, the recipient should be Central government/State government/Union territory/ Local Authority and services should be by way of any activity about any function entrusted to a panchayat under article 243G of the constitution or about any function entrusted to a Municipality under Article 243 W of the Constitution. Exclusion in this entry is already mentioned.
The Haryana bench of Sunder Lal, and Kumud Singh Authority for Advance Ruling (AAR), observed that the Fees for Gastroenterologist services received by M/s Asian exempt from GST.
The Bench,noted that “Fee/charges for Health Care Services received by M/s Asian is exempt under GST except for the services mentioned under heading 9993 clause no. 3 IA vide
notification no. 13.07.2022.”
The Haryana bench of Sunder Lal, and Kumud Singh Authority for Advance Rulings ( AAR ) ruled security services by Limited Liability Partnership ( LLP ) to any registered person are not covered under Reverse Charge Mechanism (RCM).
The bench observed that an LLP is a Body Corporate for the Companies Act, 2013 and the same would apply to the term body corporate for notification no. 13/2017-CGST(Rate) dated 28.06.2017 and as amended on 31.12.2018 vide notification no. 29/2018. The Authority ruled that an LLP is a body corporate and so excluded from entry no. 14 of notification no. 13/2017 dated 28.06.2017 and notification no. 29/2018 dated 31.12.2018. The applicant is required to charge applicable tax on the security services supplied by him as per section9 (1) of the CGST/HGST Act, 2017 read with the relevant provision of the IGST Act, 2017.
The Rajasthan bench of Umesh Kumar Garg, and Mahendra Singh Kavia, Authority for Advance Ruling (AAR), held that the Services of Construction and Recarpeting of Commercial Complex Road to Rajasthan Housing Board attracts 18% GST.
The Bench observed that “We further observe that GST rates of Works contract involving
construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of following rendered to Government or Local authority increased to
18% vide Notification No. 03/2022- Central Tax (Rate) I Dated: 13th July, 2022.”
The Bench also noted that applicant filed their application before the Rajasthan Authority for Advance Ruling (RAAR) on 02.06.2022 i.e. much later from the execution of contract dated
08.09.2021 and that the applicant is registered with GST authorities and well aware about the type of supply its notification, circular, discharging his GST tax liability and submitting his GST returns in accordance to them with effect from execution of contract
The Haryana bench of Sunder Lal and Kamud Singh ,Authority for Advance Rulings (AAR) ruled that the engagement of system integrator for MRBD services for water supply & sewerage connections under the jurisdiction of Municipal corporations are taxable services which attract
18% of GST.
The bench concluded that the services provided by the applicant to MC, Gurugram is a taxable supply. Engagement of system integrator for implementation water revenue management system, creation and maintenance of database, spot billing/meter reading and bill distribution (MRBD) services for water supply & sewerage connections under the jurisdiction of Municipal Corporation, Gurugram is covered under which SAC 998633of the CJST Act, 2017.
According to the decision made by the Odisha bench of G.K. Pati and P.K. Mohanty ,Authority for Advance Ruling (AAR), the applicant (registered person), who obtained the service by renting residential space to use as a guest house, is subject to the Goods and Services Tax (GST) under the Reverse Charge Mechanism (RCM) in light of the Notification No. 05/2022-Central Tax (Rate) dated July 13, 2022.
The bench highlighted the notification No. 05/2022-Central Tax (Rate) dated the 13th July, 2022
CBIC, notified that with effect from 18th July 2022, service by way of renting of residential dwelling to a registered person shall be attracting GST under RCM. It was observed that the liability to pay GST @ 18% under the RCM will arise on the recipient (tenant), if he is a registered person under GST with no other condition.
Further, it may be noted that type or nature/purpose of use of residential dwelling i.e. for residence or otherwise by the recipient, has not been a condition in the said RCM notification. Hence, service of renting of residential dwelling to a registered person, would attract RCM irrespective of the nature of use.
The Uttar Pradesh Authority for Advance Ruling (AAR) consisting of members Harilal Prajapati and Rajendra Kumar ruled that sugarcane juice attracts 12% Goods and Services Tax (GST). The authority observed that as per chapter heading 2009, it includes “fruit juices (including grape must) and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter”. Since sugarcane is not a fruit or vegetable. Hence it shall fall into tariff item 20098990, “others”.
Further stated that although, there is no specific entry for the product ‘Sugarcane Juice in Notification NO. 1/2017-Central Tax (Rate) dated 28.06.2017, there is an entry most akin to the product and process (at sr. No. 41 of Schedule 2 of Notification No.1/2017 CENTRAL TAX (Rate) Dated 28-6-2017 and attracts 6% CGST and 6% SGST or 12% IGST under tariff item 20098990.
The Karnataka Authority for Advance Rulings (AAR ) ruled that no GST exemption to Aircraft Type Ratings (ATR) training for commercial pilots since it does not result in qualification but only course completion.
The Authority ruled that the impugned services of the applicant are not covered under entry number 66(a) of the Notification 12/2017-CentraI Tax (Rate) dated 28-06-2017, as and hence do not qualify for the exemption.
The supply of the aircraft type rating training services to commercial pilots, by the training curriculum approved by the Directorate General of Civil Aviation for obtaining the extension of aircraft type ratings on their existing licenses, does not result in qualification as the applicant imparts training and issues only course completion certificate and thus the impugned services are not covered under Sl. No. 66 (a) of Notification No. 12/2017Central Tax (Rate) dated 28.6.2017 and are eligible for GST under the CGST / KGSTAct 2017.
Karnataka Authority for Advance Ruling (AAR) consisted of members Dr. M. P. Ravi Prasad and Kiran Reddy T. ruled that the transition of sale of one of the independent business divisions along with its assets and liabilities on a going concern basis in terms of business agreement comes under the purview of transaction of supply under section 7 of CGST/KGST Act, 201.
The applicant intended to sell the staffing business in the course of his business and thus the third limb also is fulfilled. Thus the panel observed that the applicant satisfied all the 3 parts and thus the transaction constitutes ‘Supply’. Also, it was also ruled that 18% of GST has to be paid in terms of Entry No.15(vii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended.
The Karnataka Authority for Advance Rulings (AAR) ruled that the supply of goods to overseas customers is neither supply of goods nor supply of services under Entry 7 of Schedule III of
Central Goods and Services Tax Act (CGST), 2017.
The observed that the goods are supplied from a location outside India to a location outside India. That is both the places are outside India. The supply of goods from a place in the non- taxable territory to another place in the non-taxable territory without such goods entering into India. Thus it was ruled that the said transaction shall treated as neither as a supply of goods nor supply of services.
The Gujarat bench of Amit Kumar Mishra and Milind Kavatkar Authority for Advance Ruling ( AAR ) has ruled that 28% GST is payable on the supply of PVC floor mats for cars.
The bench of has observed that the floor mats used for four-wheel motor vehicles (cars) supplied by the applicant are principally for use in motor vehicles. The applicant’s contention is that the product would merit classification under CTH 3918, as the product in question is a floor covering of plastic. The concluded by noting that the impugned goods i.e. PVC floor mats for use in cars supplied by the applicant is classifiable under CTH 8708 & applicable rate of GST would be 28% [14% each of CGST and SGST].
The Gujarat Authority for Advance Ruling ( AAR ) has held that 28%Goods and Service Tax ( GST ) attracts on the supply of unmanufactured tobacco leaves coated with natural edible gum.
The authority ruled that on purchase of tobacco leaves/bhukko from the agriculturist, the
applicant is liable to pay GST on RCM basis at 5% [2.5% CGST and 2.5% SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 109 of Schedule I.
The AAR held that in case of a supply of unmanufactured tobacco leaf consequent to coating the same with natural edible gum, the applicant is liable to pay GST at 28% [14 % CGST and 14
% SGST] in terms of notification No. 1/2017-Central Tax (Rate), Sr. No. 13 of Schedule IV
The Odisha bench of G K Pati and P K Mohanty, Authority for Advance Ruling has recently ruled that service received by a registered person by way of renting of residential premises used as a guest house of the registered person is subject to Goods and Services Tax (GST) under Reverse Charge Mechanism (RCM).
The bench observed by the that the decision to bring the renting of residential dwellings under the tax net was taken in the 47th GST Council Meeting held in June 2022 by partially removing the exemption and including the same under RCM services when provided to a registered person.
It was thus ruled that, wherein the Applicant (Registered person) has received the service by way of taking residential premises on rent for use as its guest house, it is observed that the said service received by the Applicant (Registered person) is subject to GST under Reverse Charge Mechanism in view of the Notification No. 05/2022- Central Tax (Rate) dated 1 July, 2022.
The bench of Dr D K Srinivas and Rajeev Kumar Maharashtra Appellate Authority of Advance
Ruling (AAAR) has ruled that GST is payable on voluntary gratuitous payment from an outgoing member of a housing cooperative society.
MAAR has observed that considering the Model Bye-Laws No. 7 (e) & 38 (e) (ix) of the Cooperative Housing Societies, the appellant cannot recover an additional amount
towards donation or contribution to any other funds or under any other pretext from transferor
or transferee by the housing society. Society cannot collect amounts as voluntary donations from the Transferor or Transferee over the premium i.e. Rs. 25,000/- fixed by the society for the transfer of flats.
Further the bench held that the contribution by the outgoing member is nothing but Advance amounts paid to the society for services carried out or to be carried out for the members of the Society and is therefore taxable as per the GST Laws.
The Haryana bench of Kumud Singh, and Sunder Lal, Authority for Advance Ruling (AAR), ruled that the Amount of Surety Bond forfeited/encashed from outgoing contractual employee attracts nil GST.
The Bench observed that “GST is not applicable to Amount of Surety Bond forfeited/encashed from outgoing contractual employee.”
The Haryana bench of Sunder Lal and Kumud Singh, Authority for Advance Ruling ( AAR ) ruled that the Goods and Services Tax ( GST ) Rate is applicable on the lease of pre-owned motor vehicles as per the notification of the Central Tax Rate.
The bench, after perusing all the aspects of the matter at hand i.e. the factual details as well as the legal provision applicable observed that in the present case, it can be said that the supply of
leasing of the pre-owned motor vehicle is for the furtherance of business.
According to the authority, leasing a pre-owned vehicle is a taxable event, and the rate of tax is to be determined in accordance with notification no. 11/2017-CT(R) dated as amended, serial no. 17 (VI), which states that the tax is to be charged at “the same rate of central tax as applicable on supply of like goods involving the transfer of title in goods.” Also, the applicable compensation cess must be calculated in line with notification no. 1/2017-compensation cess (Rate), which has been issued on June 28, 2017.
The Two-Member Bench of Sunder Lal, and Kumud Singh the Haryana Authority for Advance
Ruling (AAR) observed that the Residents Society collecting Common Area Maintenance (CAM) charges for services provided to its resident members attracts GST.
The Bench observed that “Residents Society collecting CAM charges for services provided to its resident members attracts GST.”
The Haryana bench of Sunder Lal, and Kumud Singh, Authority for Advance Ruling (AAR), observed that GST is not applicable on Notice Pay Recovery from Outgoing Employee.
The bench observed that “CGST Act, 2017. Notice pay does not result into the provision of service by either party, it is sort of compensation either to employee or employer and not a consideration. It is a safety valve sort of option to both the parties i.e. if one of the party frustrate the employment contract either by reneging or by failing to perform. It is the employee who is the service provider and service supplied by him in the course of its employment is excluded from the definition of Supply under the GST Act.” The Bench concluded by noting that the amount collected as Notice Pay Recovery from outgoing employee attracts nil GST.
The Haryana bench of Sunder Lal, and Kumud Singh, Authority for Advance Ruing (AAR), ruled that GST is leviable on welfare activities done by Residents Society for its resident members. The applicant in the present matter is M/s Valley Residents Welfare Society, which is a welfare society.
Monthly contribution collected from the members by the society is used for the purpose of making payments to the third parties in respect of commonly use services or goods which
includes facilities like lift, water pump, health and fitness centre, swimming pool, payment of
electricity bill for common area, maintenance of parking spaces, maintenance of parks, disposal of garbage and cleanliness etc. The bench observed that “GST can be levied on welfare activities done by Residents Society for its resident members.”
The Haryana bench Sunder Lal, and Kumud Singh Authority for Advance Ruling (AAR), observed that there is no GST on Amount collected from Employees for providing new ID Cards. The applicant in the present matter is Rites Limited
The Coram observed that “The Id-card is reissued in case of loss of the same or the card is in non-serviceable condition. In this matter, the authority is of view that this transaction does not fall under the taxable event under the GST as it’s covered under the schedule Ill(l) appended with the CGST Act, 2017.”
The Haryana bench of Sunder Lal, and Kumud Singh Authority for Advance Ruling (AAR), ruled that there is no GST on Amount of Creditors Balance Unclaimed/Untraceable, Written Off by
Crediting Profit and Loss (P&L) Account. The applicant in the present matter is Rites Limited
The Bench observed that “The authority is of view that there are no services received or provided by the applicant company in the above mentioned situations/transactions. So, this transaction of writing off unclaimed amount of the contractors/other creditors is basically an income and not a supply, hence outside the purview of scope of supply under the GST Act.
The Delhi Bench of Mallika Arya and S.B Deepak Kumar (Appellate Authority for Advance
Ruling (AAAR) has held that the Ministry of Housing and Urban Affairs (MoHUA), is not exempt from Goods and Service Tax (GST) on sale of commercial built-up areas.
The Division bench held that, The MoHUA, Government of India, was not exempted from payment of GST on sale of commercial built-up space, as it was not related to any function entrusted to a municipality under Article 243 W of the Constitution. Hence, the exemption under
S. No 4 of Notification No. 12/2017- Central Tax (Rate) and parallel notifications under SGST and IGST were not admissible. The Bench further observed that, MoHUA, Government of India was not a Municipality under Articles 243P and 243Q of the Constitution. Also, since such services were being provided to business entities, exemption under S. No. 6 of the said
Notification was also not admissible.
The Maharashtra bench of Rajeev Kumar Mital and Dr DK Srinivas observed Appellate
Authority for Advance Ruling (AAAR) ruled that the other charges like water supply connection charges, electricity meter and security deposit amounts are inextricably linked with construction of residential apartment and attracts 12% GST and directed the applicant to refund excess tax collected.
The Two-Member Bench determined that “Insofar as the challenge to the levy of service tax on taxable services as defined under Section 65(105) (zzzzu) is concerned, we do not find any merit in the contention that there is no element of service involved in the preferential location charges levied by a builder.”
The Bench concluded by noting that other charges which are inextricably linked to services by way of construction of residential apartment /dwelling are part of a bundled service with principal service of construction of residential apartment /dwelling. The rate of tax applicable on such services would be 12% as applicable to the construction service.
The Rajasthan Authority for Advance Ruling (AAR) has rejected the application of the applicant, Glensky Spirits Pvt. Ltd, for seeking an advance ruling as the question raised before the authority was vague
The Authority observed that there are many types of construction services being received by the
applicant and no detailed submission about construction work was made categorically in the application by the applicant.
The bench find that availability of ITC on services depends on so many factors viz. type and nature of services, condition of services supplied etc. It was also noted that the comments of the state officer were also not clear in this matter. The Authority members further added that the
Applicant is going for setting up a plant without knowing the nature of construction categorically and it is not possible to give a ruling unless and until details are provided. It was thus opined that “Availment of ITC without specific details cannot be generalized and ruling cannot be given in the absence of particular services.”
The Rajasthan bench of Umesh Garg and Mahendra Singh Kavia Authority of Advance Ruling (AAR) has recently ruled that the construction services provided by the applicant through a
works contract with the Rajasthan Housing Board attract Goods and Services Tax (GST) at the rate of 18% IGST.
The authority thus ruled that, “The services provided by applicant to RHB after 13.07.2022 onward until rate not changed it will attract a rate of 18% GST.”
Gujarat bench of Samir Vakil and Vivek Ranjan Appellate Authority for Advance Ruling (GAAAR) ruled that there is no GST exemption to the supplier of the manpower services to the Central, State or local government.
The authority observed that the words “or a Governmental authority or a Government Entity” in the heading Description of services against the referred Entry No.3 to Notification No.12/2017- Central Tax (Rate) has been omitted vide Notification No. l6/2021-Central Tax (Rate) dated 18.11.2021.
Further the bench of observed that the appellant in their appeal has admitted that there is no entry exempting such services provided to Government offices.
The authority observed that the manpower services provided were not related to any activity in relation to any function carried out by these service recipients as entrusted under articles 243G or 243W of the Constitution of India.
The Gujarat bench of Samir Vakil and Vivek Ranjan Appellate Authority for Advance Ruling (GAAAR) ruled that 18% Goods and Services Tax (GST) is applicable on the services supplied by the sub-sub-contractor to sub-contractors.
After reviewing the arguments, the bench concluded that the appellant is subject to tax discharge at a rate of 18% under Entry No. 3(ii) of Notification No. ll/2017-CT(R) of June 28, 2017, as subsequently revised by Entry No. 3(xii) of the aforementioned Notification.
The bench observed that the entry No. 3(iii) of the subject Notification provides fbr rate of tax at l2% if any taxable person is providing composite supply of works contract as defined in section 2(119) of CGST Act, 2017 to Central Government, State Government, Union Territory, a local authority or a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of: a historical monument. archaeological site or remains of national importance, archaeological excavation. or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act. 1958 (24 of 1958); canal, dam or other irrigation works; pipeline, conduit or plant for (i) water supply (ii) water treatment. or (iii) sewerage treatment or disposal.
The Rajasthan Bench of Umesh Garg and Mahesh Kumar Gowla the Authority for Advance
Ruling (AAR) has recently rejected an advance ruling application with respect to which supplies were already being undertaken and Goods and Services Tax (GST) was already being paid by the applicant.
The Authority observed that, “ purpose of Advance ruling is to provide certainty of tax liability in advance in relation to a future activity to be undertaken by the applicant and help the applicant in planning about GST liability on activities well in advance along with proper interpretation and understanding of tax laws. Advance rulings can be given only for a proposed transaction & matters related to qualify for advance ruling whether it will be undertaken or proposed to be undertaken
The payment received by the Cooperative Housing Society (CHS) from the departing member in the name of gratuitous payment/voluntary contribution is now taxable under the Goods and
Services Tax (GST), according to a recent decision by the bench of Rajeev Kumar Mital and Dr.
D.K. Srinivas of Maharashtra Appellate Authority for Advance Ruling (MAAR).
The Gujarat bench Milind Kavatkar and Amit Kumar Misra, Authority for Advance Ruling ( AAR
) has held that Goods and Service Tax (GST) would not be applicable on subsidised deductions made from employees availing food in the factory.
The Division Bench held that the subsidised deduction made by the applicant from the employees who were availing food in the factory would not be considered as a supply’ under the provisions of section 7 of the CGST Act, 2017.
The Gujarat bench of Milind Kavatkar and Amit Kumar Misra Authority for Advance Ruling (AAR) has held that no Goods and Service Tax (GST) would be applicable upon the amount of portion of canteen charges which was recovered from employees.
The Bench determined that GST would not be leviable on the amount representing the employee’s portion of canteen charges recovered/collected by the applicant from its employees and paid to the canteen service provider on behalf of the employee since it would not be considered as a supply under the provisions of section 7 of the CGST Act,2017 and the GGST Act,20l7.
The Gujarat bench of Milind Kavatkar and Amit Kumar Misra Authority for Advance Ruling (AAR) has rejected the advance ruling application on finding that the application was filed by the non-supplier without requisite fee.
The Division Bench rejected the application finding that the application was not filed by
KhanepeHungermall LLP, but by the Chartered Accountant in his own name. Since the person who had applied was not the person who proposed to undertake the supply. the question of- giving an advance ruling would not arise.It was also found that It had been filed without requisite fee.
The Andra Pradhesh bench of K. Ravi Sankar and RV Pradhamesh Bhanu ,Authority for
Advance Ruling (AAR) has held that no Goods and Service Tax (GST) would be applicable on the supply of 1kg red gram Dal secondary packing to 50kg bags to civil supplies corporations.
The Authority observed that first and foremost condition of taxability was that the commodity should have been a pre-packed commodity which meant that the commodity was not packed for any specific known buyer. In the Instance case the applicant was packing the commodity at the behest and at the specific instructions of the buyer, AP State Civil Supplies Corporation Limited
The Gujarat bench of Milin Kavatkar and Amit Kumar Misra Authority for Advance Ruling (AAR) has rejected the application on the admissibility of the Input Tax Credit (ITC) as the applicant
was not found to be the supplier.
The Division Bench rejected the application finding that the applicant in the present proceeding was neither a supplier of the goods/service nor is the ruling sought on Input Tax Credit in respect of the supply received by the applicant. “We find that the applicant before us is not the supplier of the service and [b] that the ruling sought is not for admissibility of input tax credit in respect of supply received by the applicant. In fact, it is the supplier who may seek an advance ruling in the matter. This being the factual matrix, we find that the applicant before us has no locus standi in seeking a ruling in the facts of the present case” the Bench observed.
The Andhra Bench of K. Ravi Sankar, Pradesh and RV Pradhamesh Bhanu , Authority for Advance Ruling (AAR) has held that no Goods and Sbench of ervice Tax (GST) would be
applicable upon the amount recovered from employees for canteen and transportation facilities.
The Authority determined that no GST would be applicable on the amount recovered from employees for canteen and transportation facilities. “The transportation services is not a supply for the applicant made in the course or furtherance of business and the recoveries made by the applicant from their employees does not fall under the definition of supply under Section 7,” the Bench further observed.
The Andhra Pradesh Bench of Ravi Sankar and RV Pradhamesh Bhanu, Authority for Advance Ruling (AAR) has held that 18% Goods and Services Tax (GST) would be applicable upon the
liquidated damages collected from Chettinad Logistics Pvt Ltd for non-performing the acts.
The Authority observed in the light of section 7 read with definition of consideration under
Section 2(31), that the liquidated damages paid by defaulting party to the non-defaulting party for tolerating the act of non-performance or breach of contract have to be treated as consideration for tolerating of an act or a situation under an agreement and hence such an activity would constitute supply of service and the liquidity damages were exigible to tax under CGST and SGST @9% each under the chapter head 9997 at serial no. 35 of Notification
No.11/2017-Central/State tax rate.
Goods and Services Tax Authority for Advance Ruling (GST AAR) is a quasi-judicial body established in India under the GST Act of 2017. The GST AAR is in charge of issuing binding rulings on the interpretation of GST legislation and rules for individual transactions or activities prior to their execution.
It is made up of one or more members chosen by the central government who are eligible to sit on a High Court bench. The authority has the authority to hear and decide the application within 90 days after its receipt.
A Division Bench of Acting Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya of Calcutta High Court set aside the order of the West Bengal Authority for Advance Ruling (WBAAR) and remanded the case to the same Authority for Advance Ruling to reconsider the application.
The panel observed that the West Bengal Authority for Advance Ruling had made a fragile attempt in the impugned order in the writ petition to address the question of who is the applicant before the AAR seeking an advance ruling and came to the conclusion that the appellants, as recipients of service, are not entitled to maintain an application before the AAR. Coram held that it will be well within the jurisdiction of the AAR to consider the application on merits rather than rejecting the same on the ground of lack of locus standi.
The two-bench member consisting of S.V. Kasi Visweswara Rao and Sahil Inamdar of Telangana Authority for Advance Ruling (AAR) held that Construction of sheds using Prefabricated technology is not permitted for Input Tax Credit (ITC) under Goods and Services Tax (GST).
S.V. Kasi Visweswara Rao (Addl. Commissioner of State Tax) observed that the Supreme Court considered even a temporary shelter such as a hut as an immovable property as long as it is for the beneficial enjoyment of the land to which it is attached. Applying this principle, the apex court of India held the doors and shutters which are generally fixed to the door frame in the wall with screws & nails to be immovable property.
The AAR bench point out that, because the “PFS” being built is an immovable property, the input tax credit is not allowed on inward supplies for its construction, including works contract services, because the credit falls under the category of blocked credits under sections 17(5)(d) and (c) of the CGST/TGST Act 2017.
In a significant case, the Telangana bench of Kasi Visweswara Rao and Sahil Inamdar, Authority of Advance Ruling (AAR) has held that the transaction of supply of ambulances to the government of Tripura attracts 28 % Integrated Goods and Service Tax (IGST) as it is an inter- state supply.
The bench determined that they are eligible for taking input tax credit on the tax charged on any supply of goods or services which are used or intended to be used during furtherance of this business provided the applicant fulfils the conditions for availing of ITC as detailed in provisions of Section 16 of CGST/TGST Act’2017.
In a recent ruling, the Ahmedabad Bench o fMilind Kavatkar and Amit Kumar Mishra, Authority for Advance Ruling (AAR) has ruled that 12% Goods and Services Tax (GST) is applicable on accommodation buildings located outside the boundary of religious places.
The authority bench Observed that as per Section 22 of the Central Goods and Services Tax Act, 2017, every supplier shall be liable to be registered from where he makes a taxable supply of goods or services or both, if its aggregate turnover in a financial year exceeds twenty lakh rupees.
The Telangana Authority of Kasi Visweswara Rao and Sahil Inamdar of Advance Ruling (AAR) has ruled that 18% of the commission will be deducted from the bonus amount as an intermediary.
The bench observed that 5% GST is payable on the rest of the amount, which is arrived at after excluding the commission from the entire bonus, as it would be included as the value of supply of canteen services by Section 15(2) of the Central Goods and Service Tax Act, 2017.
The Telangana State Authority for Advance Ruling (TSAAR) has held that the inward supply made for the construction of a shed using Prefabricated Technology is not eligible for Input Tax Credit (ITC) since the same is categorised under Immovable Property.
The authority comprising of Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sri Sahil Inamdar, Additional Commissioner (Central Tax) concluded that the warehouse constructed using prefabricated structures constitutes immovable property and is not eligible for ITC under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017. In result, the AAR ruled that ITC is not allowed for the construction of a shed using pre-fabricated technology.
The Telangana State Authority for Advance Ruling (TSAAR) has held that the reimbursement of bonus by the recipient to the service provider shall be included in the value of supply and hence the same rate of Goods and Services Tax (GST) applies to both the main service and the bonus reimbursement as per Section 15(2)(b) of the Central Goods and Servies Tax (CGST) Act, 2017 and State Goods and Servies Tax (SGST) Act, 2017.
The authority consisting of Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sri Sahil Inamdar, Additional Commissioner (Central Tax) clarified that the basis for charging GST at the rate of 5% instead of 18% is the fact that the bonus reimbursement is considered part of the canteen service and not a separate service and hence the same shall be taxed at the rate same as that of the main service.
The Telangana State Authority for Advance Ruling (AAR) observed that the Duty Credit Scrips should be excluded from the value of exempt supply to compute Input Tax Credit (ITC) reversal. A Two-Member Bench of the Authority comprising S.V. Kasi Visweswara Rao, Additional Commissioner (State Taxes) and Sahil Inamdar, (I.R.S), Additional Commissioner (Central Taxes) observed that “After the insertion of clause (d) in the Explanation-1 to Rule 43 of the CGST Rules vide Notification No. 14/2022 dt: 05.07.2022, the value of ‘Duty credit scrips’ shall be excluded from the value of exempt supply for the purpose of applying Rule 42 of the CGST Rules.”
While enhancing the AAR’s decision, the Maharashtra Appellate Authority for Advance Ruling (AAAR) decided that 18% Goods and Services Tax (GST) is applicable to incentives earned by the reseller based on quarterly targets. Since the incentive received does not qualify for a trade discount, GST must be paid.
The Coram of Rajeev Kumar Mital and Dr. D.K. Srinivas observed that “the MAAR has rightly observed that no sale transaction of goods has taken place between the appellant and hence incentives will not be covered under the provisions of Section 15(3) of CGST Act, 2017. “ Thus, the Maharashtra AAAR bench dismissed the appeal. Read AAR Ruling: GST: Incentives Received for Market Services within India cannot be Considered as Trade Discount nor Export Service, rules AAR
By rejecting the appellant’s appeal, the Maharashtra Appellate Authority for Advance Ruling (AAAR) determined that the reimbursement of the stipend received from the National Employability Enhancement Mission (NEEM) trainer by the NEEM facilitator under the AICTE’s NEEM regulations is not done in the capacity of a pure agent and is therefore subject to Goods and Services Tax (GST).
The appellate bench observed that, to qualify mere receiving payment under the cover of reimbursement of “Stipend amount and other expenses incurred by the Appellant in accordance with AICTE (NEEM) Regulations, by the trainer as a payment received by a pure agent, it should satisfy all parameters under Rule 33 of the CGST Rules namely; Authorisation, Invoicing, Additional Supply. Further noted that the activity of deploying trainees to the Company to undergo training is undertaken by the Appellant in his own interest as a NEEM Facilitator. While the NEEM Regulations make provisions for the NEEM Facilitator to partner with Companies/Industries to provide the training, it makes the Facilitator responsible for payment of stipend and for issue of the training completion certificate. It is the responsibility of the Facilitator to furnish data of the trainees to AICTE.
The appellant drew the attention of the appellate bench to the Karnataka Authority for Advance Ruling in the case of Cadmaxx Solutions Education Trust and Yashswi Academy for Skills. In these AARs, it has been held that the stipend amount required to be paid by the trainer to the trainee, which is paid through the applicant (a NEEM Facilitator) is not taxable in the hands of the applicant since the applicant is only acting as a pure agent. However, the bench of Rajeev Kumar Mital and Dr. D.K. Srinivas stated that appellant does not fulfil the conditions and clauses of meaning of “pure agent prescribed under rule 33 of the CGST Rules. Hence, the appellant is not allowable to claim deduction of the reimbursement of the amount of stipends and other expenses received from the NEEM Trainer from the value of supply and liable to GST.
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