By G.G. Goyal
Chartered Accountant | C. B . Thakar
Advocate
NOTIFICATIONS
(i) Aadhaar Card
Authentication for Registration Notification No. 62/2020-Central Tax dated 20th
August, 2020
By this Notification, Rule 8
of the CGST Rules has been amended. It provides for authentication of Aadhaar
Card for Registration under GST. Different situations are carved out regarding
authentication. The substance of the amendment is that if Aadhaar is
authenticated then there will not be physical verification, and if it is not
authenticated, then there may be physical verification of the place of
business.
(ii) Levy of Interest
Notification No. 63/2020-Central Tax dated 25th August, 2020
Section 50 of the CGST Act,
regarding levy of interest, was amended by section 100 of the Finance (No. 2)
Act, 2019. By the said amendment, the Legislature wants to provide that the
interest for delayed return should be levied on cash component. When the
amendment was made, the operation of the said amendment was kept pending, to be
made applicable by way of Notification. The aforesaid Notification is issued to
make the above amendment operative from 1st September, 2020.
Representations were made that the operation of the amendment should be made
effective from 1st July, 2017. The CBIC has issued a press note
dated 26th August, 2020 stating that though the amendment is not
made effective retrospectively due to technical reasons, for practical purposes
it will be operative for past period also.
(iii) Extension of Filing date
for Form GSTR 4 Notification No. 64/2020-Central Tax dated 31st
August, 2020
By this Notification, the due
date for filing Form GSTR4 (Annual Return by Composition Dealer) for the year
2019-2020 is extended to 31st October, 2020.
(iv) Extension of compliance
date u/s 171 Notification No. 65/2020-Central Tax dated 1st September,
2020
This Notification seeks to
amend Notification No. 35/2020-Central Tax dated 3rd April, 2020 to
extend the date of compliance u/s 171 (relating to anti-profiteering) which
falls during the period from ‘20.03.2020 to 29.11.2020’ till 30th November,
2020.
ADVANCE
RULINGS
1. Lease of residential
property vis-a-vis commercial use
M/s Lakshmi Tulasi Quality
Fuels (AAR No. 12/AP/GST/2020 dated 5th May, 2020; A.P.)
The applicant in Andhra
Pradesh has filed for an Advance Ruling (AR) in the following background:
The applicant has a building
in Telangana with 73 rooms. The rooms have all amenities like exhaust fans,
geysers, lights and fittings, curtain rods and sanitary fittings, etc. The said
building is given on lease basis to a lessee with a monthly rent of Rs.
7,20,000.
Its contention is that it is
meant for residential purposes. Though the lease may be on a long-term basis,
it is being rented out as a residential property and it should be exempt under
Entry 13 of the Exemption Notification dated 28th June, 2017. The
said Entry is reproduced below:
‘Sl. No. 13 of Exemption Notification, i.e.,
Notification No. 9/2017 dated 28th June, 2017:’
|
Sl.
No.
|
Chapter,
Section, Heading, Group of Service Code (Tariff)
|
Description
of Services
|
Rate
(Per cent)
|
Condition
|
|
13
|
Heading 9963 or Heading 9972
|
Services by way of renting
of residential dwelling for use as residence
|
NIL
|
NIL
|
The Learned AAR referred to
various clauses in the lease agreement and observed the following facts:
(a) The lessee is entitled to engage third-party service
providers, including food, catering, hospitality, security, cleanliness, event
organisation, transportation, management and supervision of the total property
as deemed necessary by the lessee for the purpose.
(b) The lessee shall have the right to deploy branding strategies
on the property.
(c) The lessee has the right to sub-lease the aforesaid property
during the lease term to any third party with prior intimation to the applicant
for the purpose of long stay accommodation. For this, the applicant presented a
sample sub-lease agreement as Exhibit-3.
(d) Exhibit-3 presented by the applicant was examined by the AAR.
It is a ‘Residents Enrolment Form’ but not a sub-lease agreement as claimed by
the applicant. Apart from the residents’ personal details, information like
food preference, optional service price, etc., is being collected through the
enrolment form. With regard to the ‘Rules and Regulations’ attached to the
‘Residents Enrolment Form’, apart from others there are conditions like ‘Rents
will be calculated according to your rent ledger’, ‘Premium dishes will be
limit’, etc.
Based on the above facts, the
AAR observed that the building appears to be meant for commercial use, i.e.,
with the purpose of running a lodge. There is provision of food and hospitality
services. Observing the above, the AAR held that the exemption under Entry 13
of the Exemption Notification is not eligible and it will be taxable at 18%
IGST.
2. Interstate / Intra-state
supply
High Tech Refrigeration &
Air Conditioning Industries
(Advance Ruling No. GOA/GAAR/5
of 2019-20/530 dated 26th February, 2020; Goa)
The applicant has raised
several questions before the AAR for its ruling. The questions are as under:
(i) Fixing of air conditioner and VRV system in Goa for a client
(recipient) registered outside Goa but not registered in Goa. Whether IGST or
SGST and CGST rate applicable and whether billing B to C or B to B?
(ii) Supplying of air conditioner to client (recipient) registered
outside Goa but not registered in Goa consisting of air conditioner (28%),
copper pipe, drain pipe, electric cable, etc. (18%) and fixing rate (18%).
These items can be supplied / billed separately under GST.
(iii) Supplying of air conditioner (28%) for residential house in
Goa consisting of required additional items, i.e., copper pipe, drain pipe,
electric cable, etc. (18%) and fixing rate (18%). Is billing them separately
allowed?
(iv) Can installation of air conditioner (28%) be done by sister
concern or third party to client based in Goa or outside Goa @ 18% GST for
fixing?
(v) Can composite dealer raise service bill for fixing of air
conditioner and also what GST rate would be applicable?
(vi) Stabiliser may or may not be sold with the air conditioner.
What is the rate of GST applicable on stabiliser (18%) when it is attached /
supplied with air conditioner (28%)?
(vii) What is the rate of GST on centralised air conditioning system?
The rate for works contract GST on a split air conditioning system fixed in a
room? And the rate of GST on movable air conditioning system? Client registered
in Goa or client registered outside Goa?
The AAR made reference to
section 97(2) of the CGST Act and held that except the first question, the
others are not maintainable before it.
Question No. 1 was regarding
levy of IGST or CGST / SGST. In respect of this issue, the AAR observed that
the applicant is supplying to a third party situated in Goa on behalf of his
recipient situated in another state and who is not registered in Goa.
He observed as under in
respect of the above aspects:
‘For classification of any
supply as interstate supply or intra-state supply, two ingredients are relied
upon; these are, the location of the supplier and the place of supply. In the
instant case, as stated by the applicant, the location of the supplier is Goa
and the place of supply will be outside Goa as per section 10(1)(b) of the IGST
Act since goods are supplied on behalf of a registered person outside Goa to a
place in Goa.’
The AAR then passed an order
stating that the aforesaid supply should be held as an interstate supply.
3. Classification – LED (Stem)
(Long bulb) with fittings
INVENTAA LED Lights Private
Limited (order No. 21/AAR/2020 dated 24th April, 2020; Tamil Nadu)
The issue before the AAR was
about classification of the above item, that is, LED (Stem) (Long bulb) with
fittings, under GST.
The applicant gave relevant
information about its activities and the product. About the product the
information given was as under:
‘The applicant is engaged in
the design, manufacture and supply of LED lights of various applications in a
wide range of sizes and voltage with fixtures and fittings where the fixtures
and fittings are made of plastics, aluminium, steel, or a combination thereof.
The applicant has stated that they have developed an LED Stem (Long bulb) which
has a 360-degree light output and at the same time saves power up to 60% in
comparison to the CFL bulb, whereas the conventional LED bulb delivers only
180-degree light output. It can be fitted into a B22 or E27 holder. About 70%
of the raw materials are manufactured indigenously and 30% imported from China,
while the manufacturing is done in-house. The applicant named the product as
LED Stem (Long bulb) and has applied for the patent of the technology involving
manufacturing of LED Stem (Long bulb) which has the feature of 360-degree light
output’.
The contention of the
applicant was that the item is covered by HSN 9405 of the Customs Tariff and
liable to tax at 12%. The AAR observed that the other competing Entry under
Customs Tariff is 8539. Both the tariff entries are reproduced in the AR.
The jurisdictional authority
concerned consented that the classification merits inclusion under HSN 9405.
The AAR also made reference to
the rules of classification under the Customs Tariff. He then concluded as
under:
‘From the above, it is evident
that Chapter 94 falls under section XX which covers “Miscellaneous Manufactured
Articles”. Lamps and light fittings can be any source and made of any material.
Further, those lamps and light fittings covered under Chapter 85 are not
covered under this heading by the specific exclusion in the Chapter Notes.
Further, lamps for exterior lighting are covered under CTH 9405. In the instant
case, the product is an LED lamp fixture with LED light integrated into it
which can function independently as garden lights. Therefore, they are
classifiable under CTH 94054090 as “others electric lamps and light fitting”.’
Accordingly, the AAR held that
the item is covered by the Entry at Serial No. 226 in Schedule II of the
Notification No. 01/2017 CT-(Rate) dated 28th June, 2017, liable to
GST at 12%.
4. Co-operative housing
society and levy of GST
Apsara Co-operative Housing
Society Limited (No. GST-ARA-21/2019-20/B-34 Mumbai,
dated 17th March, 2020; Maharashtra)
The applicant is a residential co-operative housing
society. It wanted to know whether the activities carried out by it for its
members qualify as ‘supply’ under the definition of section 7 of the CGST Act,
2017. Another issue raised was that if the activities of the applicant are
treated as supply under the CGST Act, 2017 then whether the applicant has
correctly discharged GST as per the illustrative copy of the invoice generated by
the applicant.
The applicant provided the
bye-laws of the society. As per these, the society is required to do certain
functions like obtain conveyance from the builder, manage, maintain and
administer the property of the society. There were further functions also, like
raising funds for achieving the objects of the society and recreation
activities and to do all things necessary or expedient for the achievement of
the objects of the society.
To achieve the above objects,
the applicant raises funds by collecting contributions from the members,
including towards property taxes, common electricity charges, water charges,
repair and maintenance, other such expenses and sinking fund, etc. It was the
contention of the applicant that there was no other activity.
The applicant stressed upon
the phrase used in section 7(1) that to constitute a supply under the GST Act,
the activity should be in the furtherance or course of business. The applicant
submitted that so far as the activities of the society are concerned, they are
not in the nature of business and therefore there is no supply as per the CGST
Act, 2017. The further contention of the applicant was that the society
functions on the principle of mutuality and there are no separate entities such
as supplier and recipient to constitute supply.
The jurisdictional officer
objected to the above contentions, relying on the fact that there is
consideration against giving services.
Based on the above contentions and facts, the AAR
examined the provisions of the CGST Act. He observed that the concept of supply
under the CGST Act is wide and that the definition of person in section
2(84)(i) of the CGST Act specifically includes a co-operative society
registered under any law relating to co-operative societies. Therefore, the
society and members are two distinct persons. The charges collected from
members were held to be consideration towards provision of services.
In respect of the contention about
‘business’, the AAR referred to clause (e) in the definition of ‘business’ in
section 2(17) which specifically provides that provision by club, associations,
society or any such body for subscription or any other consideration of the
facilities or benefits to its members is ‘business’. Therefore, it is observed
that there is business in the activities of the society. The applicant has
cited various rulings in respect of the principle of mutuality. However, the
AAR distinguished the same on the ground that the present case is under the GST
Act and hence such rulings are not related to the issue.
Finally, the Learned AAR held that the
society is liable to GST. He declined to give a ruling about the quantum of tax
on the ground that such a question is not covered within the scope of section
97(2) of the CGST Act.
