Compilation of important AAR’s: Volume I
Compilation of important AAR’s: Volume I
Important AAR Volume I
Important AAR Volume I
We have compiled the important AAR’s in GST. This is first publication. The rulings covered in this edition are:
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S. No. |
Case |
Issue |
Observation |
Link |
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1 |
M/s. Caltech Polymers Pvt. Ltd. |
Whether recovery of food expenses from employees for the canteen provided by company comes under the definition of outward supplies are taxable under GST Act |
Supply of food article by the employer to the employee is taxable. |
https://www.consultease.com/gst-litigation-in-india/original-order-gst-aar-caltech-polymers/
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2 |
M/S Columbia Asia Hospitals Private Limited |
The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the Central Goods and Services Tax Act, 2017 (CGST Act) shall be treated as supply as per Entry 2 of Schedule I of the CGST Act. |
The activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the Central Goods and Services Tax Act, 2017 (CGST Act) shall be treated as supply as per Entry 2 of Schedule I of the CGST Act. |
http://gstcouncil.gov.in/sites/default/files/ruling-new/Krntk%2026_2018%20CAHPL.pdf |
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3 |
Global Reach Education Services Pvt. Ltd |
Whether the service provided to the Universities abroad is to be considered “export” within the meaning of Section 2(6) of the Integrated Goods and Services Act, 2017, (hereinafter referred to as “the IGST Act”), and, therefore, a zero-rated supply under the CGST / WBGST Act 2017 (hereinafter referred to as “GST Act”). |
The service related to enrollment of the students for foreign universities in an intermediary supply. Hence, it will not qualify for Export because the location of the supply will become the place of the supply u/s 13(8) of IGST Act, 2017. |
https://www.consultease.com/gst-compliances-in-india/aar-global-reach-education-services-pvt-ltd/
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4 |
M/s. Sanjog Steels Pvt Ltd. |
Whether the supply from M/s SSPL to M/s X on a “Bill to ship to” mode as per provisions of Section 10(1)(b) of IGST Act, 2017 is permissible? Whether as per the press note dated 23.04.2018 issued in relation to the transactions of supply u/s 10(1)(b) of the IGST Act, 2017, the use of e-way bill in the aforesaid facts in the column of “ship to” of ultimate customer M/s X is permissible? Whether in the aforesaid facts the provisions of Section 15 of the CGST Act, 2017 read with rule 28 of CGST Rules, 2017 and in particular the second proviso to Rule 28 would apply for the value of supply for the transactions between M/s SSPL and M/s RSE and thereafter M/s RSE and M/s Goyal as all are registered persons and the transactions are business to business transactions with availability of full ITC? Whether the transactions between M/s Goyal and the ultimate customer M/s X would be covered by the provisions of Section 15 for the value of taxable supply as they are not related persons?
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The supply from M/s. SSPL to M/s X on a “Bill to Ship to Mode as per the provisions of Sec 10(1)(b) of IGST Act, 2017 is permissible. The applicant can issue an e-way bill in which the “Bill to” will be mentioned in the name of the M/s. RSE/RPG where as “Ship to” would be in the name of final customer that is M/s. X. In the foresaid facts the provisions of the section 15 of the CGST Act 2017 read with rule 28 of the CGST Rules 2017 and in particular the second proviso to rule 28 would apply for the value of the supply for the transaction between M/s. SSPL and M/s. RSC with availability if the full Input Tax Credit. The transactions between M/s. Goyal and M/s. X (the ultimate Customer) would be covered under the provisions of the section 15 as both are unrelated persons. (as declared in submission by the applicant). |
http://gstcouncil.gov.in/sites/default/files/ruling-new/Raj.25.2018-19%20-Snajog%20Steels%20PL.pdf |
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5 |
Kundan Misthan Bandar |
Supply of food items from a resturant when no sitting facility is used by customer. |
The supply shall be treated as supply of service and sweet shop shall be treated as extension of restaurant; The rate of GST on aforesaid activity will be 5% as on date, on the condition that credit of input tax charged on goods and services used in supplying the said service has not been taken; All the items including takeaway items from the said premises shall attract GST of 5% as on date subject to the condition of non availment of credit of input tax charged on goods and services used in supplying the said service. |
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6 |
M/s Bahl Paper Mills Ltd. (Advance Ruling No. 03/2018-19 Dated 4th May, 2018)
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a) Whether under Reverse Charge Mechanism, IGST should be paid by the importer on ocean freight in case of CIF basis contract, when service provider and service recipient both are outside the territory of India.
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a) RCM is applicable of Ocean Freight even if IGST is paid on CIF value. b) Credit of such RCM paid can be taken on Challan/Invoice. c) Credit of Sanitary fitings can not be availed since it is part of civil structure, but credit can be taken of office fixtures & furniture’s, AC Plant.
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http://gstcouncil.gov.in/sites/default/files/Advance-rulings/03-2018-19_Dtd_04-05-18_Uttrakhand.pdf |
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7 |
Segoma Imaging Technologies |
When services are provided in respect of goods made available by the customers of recipient on his directions. Whether the provision of section 13(3)(a) will be applicable for the place of the supply. |
Yes, it was observed that the goods provided by the recipient even by giving the instruction to the customers in India, will be deemed to be made available by the recipient. Hence the place of supply will be the location of the goods at the time of performance of the service. |
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8 |
Photo Product Pvt Limited |
Applicant is stated to be printing content supplied by the customers on photographic paper. An Advance Ruling is sought regarding the nature and classification of the activity – whether it is supply of goods or service and whether the activity carried out by the Applicant is taxable under HSN 4911 or SAC 9989. Advance Ruling is admissible on this question under section 97(2)(a) of the CGST/WBGST Act, 2017 (hereinafter the GST Act)
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The activity carried out by the Applicant “printing of photographs from media” is classifiable under SAC 9989. The activity carried on by the Applicant, thus is taxable at 12% under Serial No. 27 (i) of Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017 (1135 – FT dated Page 3 of 3 26/06/2017 of the State Tax), as stood amended vide Notification No. 31/2017 – Central Tax (Rate) dated 13/10/2017 (1795 – FT dated 13/10/2017 of the State Tax). This Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act.
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9 |
The Association of Inner Wheel Clubs in India (23/WBAAR/2018-19 dated 26/11/2018)
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The Applicant submits that although funds are collected through sponsorship fees, advertisements, sale of souvenirs etc, such activities do not fall within the ambit of “business” within the meaning of Section 2(17) of the GST Act, as they are undertaken to facilitate and are ancillary to “charitable service” which is not covered in the above clause. In this connection, reference is made to the decision of the Apex Court in Commissioner of Sales Tax v. Sai Publication Fund [(2002) 126 STC 288 (SC)]. Supreme Court observes that if the main activity is not business, then activities ancillary to the main activity are not to be treated as a business. The Applicant also submits that the activities of the clubs do not fall within the ambit of “supply” as explained under Section 7(1) of the GST Act. |
The term “business” under the GST Act includes, under Section 2(17), subclause (e) “provision by a club, association, society, or any other body (for a subscription or any other consideration) of the facilities or benefits to its members. It is, thus, clear that the Applicant is doing “business” as defined under section 2(17)(e) of the GST Act. The subscription and membership fee is to be considered as consideration for the supply of such services, which are classifiable under SAC Heading 99959 under the category „Services furnished by other membership organization‟
The Application also states that the Inner Wheel Clubs falling under the Applicant take part in a wide range of work for charities and causes across the world with the aim of helping people live better lives. “Charitable Activity” under GST is clearly defined under clause 2(r) of Notification No 12/2017-CT (Rate) dated 28.06.2017. The activities undertaken by the Applicant do not conform entirely to the definition. At best, the activities undertaken by the Applicant may be broadly defined as social welfare activities Such activity by an entity is an “adventure” and maybe be treated as a business under Section 2(17)(a) of the GST Act, and a taxable supply of service if consideration is charged from the recipient.
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10 |
M/s Nash Industries (I) Pvt Ltd. (Advance Ruling No. KAR ADRG 24 / 2018)
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Whether the amortized cost of the tool to be added to arrive at the value of the goods supplied for the purpose of GST under Section 15 of the CGST Act read with rule 27 of CGST Rules.
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The amortized cost of tools which are re-supplied back to the applicant free of cost shall be added to the value of the components while calculating the value of the components supplied as per the Section 15 of the CGST / SGST / IGST Act 2017.
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11 |
M/s Toshniwal Brothers (KAR/ADRG 23/2018)
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a) Whether pure and mere promotion and marketing services will be “intermediary services” for the purposes of section 12 of the Integrated Goods and Services Tax Act, 2017 for determining the place of supply of such services? b) If after sale support services are also provided under a composite contract, would it then be composite supply? What will be the principal supply for such contracts? c) Whether the above contracts would qualify as exports if the client is overseas entity, in terms of clause (6) of section 2 of the Integrated Goods and Services Tax Act, 2017 and will be a zero-rated supply as provided in section 16 of IGST Act, 2017? 3. The applicant furnishes some facts relevant to the stated activity.
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(a) The contract of services supplied are not pure and mere promotion and marketing services and the services provided is of the nature of facilitating the supply of goods, and hence would amount to “intermediary services” for the reasons enumerated in the aforesaid paragraphs for the purposes of determination of place of supply of such services. (b) The after-sale services provided are not in the nature of a composite contract and they are independent from the services provided in paragraph 1 above and hence there is no question of determination of what will the principal supply. (c) The third question cannot be answered as it is not in the purview of jurisdiction of this Authority as it amounts to determination of the place of supply.
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12 |
M/s. KIMS Health Care Management Ltd. (KER/17/2018)
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Whether the medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment would be considered as “Composite Supply” and eligible for exemption under the category ‘health care services’?
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The supply of medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment are naturally bundled and are provided in conjunction with each other, would be considered as “Composite Supply” and eligible for exemption under the category ‘health care services’.
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13 |
Manali Enerprise (18/WBAAR/2018-19)
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How should the service of printing question papers for educational institutions be classified
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a) Service of printing Question Papers for Educational Institutions [as defined under clause 2(y) read with Explanation (iv) to Notification No. 12/2017-CT (Rate) dated 28/06/2017] for specific examination is classifiable under SAC 9992. b) Service to such Educational Institutions relating to conduct of examination, as described in 66(b)(iv) of Notification No.12/2017-CT(Rate) dated 28/06/2017, includes the supply of the service of printing question papers, and is exempt under the GST Act. c) Being an exempt supply, the Applicant cannot claim the credit of the GST paid on the inputs used for provisioning the service of printing question papers provided to the Boards / Educational Institutions relating to conduct of the examination.
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14 |
Superwealth Financial Enterprises (P) Ltd. (04/Odisha/AAR/18-19 dtd 31.10.18 )
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Applicability of Entry No.03 of Notification No.12/2017 dated 28.06.17
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The applicant was engaged the supply of O&M services to BMC. They installed the solar poles but those poles were used to provide service of street lighting only. There is no transfer of goods till 10 years. There is no price charged for transfer of the lighting system even after 10 years. The applicant wanted to know whether his activities will be covered in entry no. 3 of notification no. 12/2017 CTR. The authority clarified that transfer of goods under the agreement, even on nil value will exclude this transaction from entry no. 3 , which exempts the pure services from the scope of taxation in GST.
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http://gstcouncil.gov.in/sites/default/files/ruling-new/Odisha%20AAR-04-2018%20Dtd%2031.10.18-SWFEPL.pdf
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15 |
M/s PPD Living spaces Pvt. Ltd. |
The applicant intend to structure future agreements by fixing land cost, fully absorbing development charge. Entire payment made for a plot will be shown in the sale deed and stamp duty and registration fee will be paid. The petitioner sought for advance ruling on the following: Is it correct to structure agreement by fixing the land cost by absorbing the development charges? Whether the ITC availed has to be paid back on pro rata basis, on plots sold after completion?
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The completion certificate in respect of project has been issued on 31.05.2018 and the proposed transaction is in respect of sale of developed plots/land with civil structures after the issuance of completion certificate. Therefore the transaction is covered by paragraph 5 of schedule III of the GST Act. Hence the sale deed executed for plot as well as undivided share in common area attracts only stamp duty and registration charges. The input tax credit availed in respect of the GST paid on goods and/or services used/consumed for the development of the land is liable to be reversed on pro rata basis in respect of the plots sold after the issuance of completion certificate. |
http://keralataxes.gov.in/wp-content/uploads/2018/04/PPD.pdf |
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16. |
ROD Retail Private Limited
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The applicant was supplying ‘sunglass hut’ (hereinafter referred to as ‘goods’) to international outbound passengers (i.e. passengers going out of India) from the duty-free shop (retail outlet) located in the security hold area of IGI Airport, Delhi (i.e. security hold area is located beyond the customs area. A passenger for boarding flight needs to first pass customs and immigration area (where customs verification happens) and thereafter these shops are situated in security hold area/departure lounge). These goods are purchased by the applicant from Gurgaon at 28% IGST.
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SC ruling basis Article 286 of Constitution and section 5(1) of CST Act, debarred ‘States’ to levy VAT/Sales Tax on such transactions. Now as per the amended position tax can be levied. (Though ruling states only this line, the however ruling meant that ‘Center is empowered to levy IGST by way of IGST Act’ and IGST shall be charged since this supply is ‘in the course of inter-state trade or commerce’). Further, the contention of the applicant that definition of export is satisfied as one leg of the transaction completed by the applicant and one leg by the passenger cannot be accepted. To qualify the same as exports, it is necessary that the same should cross ‘India’ and not just customs frontier/area
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17. |
Sonkamal Enterprises private ltd. |
The applicant is importer of chemicals, which they import at JNPT Port, Maharashtra and Kandla Port, Gujarat. They wish to import the chemical at haldia port. They will be storing the goods at rented customs warehouse at Haldia Port; they don’t have any establishment or place of operation in state of West Bengal. Whether they are required to take registration? |
By virtue of section 11 of the Integrated Goods and Services Tax Act, 2017, The place of supply in case of imported goods shall be the location of the importer, in the instant case since the importer is registered in Mumbai, the place of supply shall be Mumbai, Maharastra. |
https://www.mahagst.gov.in/sites/default/files/ddq/GST%20ARA%20ORDER%20-%20SONKAMAL%20ENTERPRISES%20PVT%20LTD.pdf |
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18. |
DRS Marine Services Private Limited
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“Whether GST is applicable on Reimbursement of salary on behalf of foreign entity.”
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Provisions of rule 33 and the facts of the proposed transaction explained by the applicant, we find that the applicant will be acting as a pure agent of RMS in as mush as the entire amount received by them as crews’ salary will be disbursed to the crew and no amounts from the said receipt will be used by the applicant for his own interest. In fact, for performing as a pure agent they will also be receiving compensation separately in the form of fixed fees to be charged as service charges. |
http://gstcouncil.gov.in/sites/default/files/ruling-new/Maha-GST-ARA-34%20dt.24.08.18_DRSSPL.pdf |
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CA Shafaly Girdharwal
CA
New Delhi, India
CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.
