I.
High Court
1. 2019 [21] G.S.T.L. 3 (Kerala). Kun Motor Co. Pvt. Ltd. vs.
Assistant State Tax Officer, Kerala State GST Department, Thiruvananthapuram.
Dated 6th December, 2018.
E-way
bill not required in case of transportation of car for personal use by dealer
of one State to individual buyer of another State, considered as intra-state
supply.
Facts
First
appellant, a resident of Thiruvananthapuram (Kerala) purchased a Mini-Cooper
Car from Second appellant assessee, a motor vehicles dealer, situated in
another State at Pondicherry for his personal use. Instead of driving, the
appellant opted for transportation of same to Thiruvananthapuram. Dealer’s
owned transportation and logistics wing registered under GST was used for the
transportation of car, in a specifically equipped carriage by road, without
issuance of E-way Bill. Revenue officials intercepted and seized the car in
Pondicherry due to non-compliance of E-way Bill.
Held
The
Hon’ble High Court held that transfer of property in goods vested with the
purchaser at Pondicherry itself, wherein supply was terminated. Further, it was
used for some distance which indicated that it was “used for personal effect”.
Further, subsequent transportation of car to another State would not make the
buyer liable to comply with E-way Bill requirements. Apparent doubt of the
Revenue as to whether a transaction was an inter-state or intra-state sale was
absurd as in case of intra-state there was no ground of detention and for the
latter case the applicable IGST was satisfied, which document was accompanying
the transport also. Detention notice and order quashed as illegal and without
jurisdiction. Appeal of Appellant was allowed.
2.
2018 [19] G.S.T.L. 84
(N.A.P.A) Ankur Jain vs. Kunj Lub Marketing Pvt. Ltd. Dated 8th October, 2018.
Benefit
of reduction in rate of tax of one product cannot be passed by reducing the
price of another product to a greater extent.
Facts
Complaint
was lodged against the respondent a distributor of Maggie Noodles alleging
profiteering. The rate of tax on Maggi Noodle pack (35 gms and 70 gms) was reduced
from 18% to 12%. However, the benefit of such reduction in rate of tax for pack
of 35 gms was not passed on. Instead, the respondent reduced the price of
Maggie Noodles of 70 gms to a greater extent than required.
Held
N.A.P.A
held that benefit to be passed on account of reduction in rate of tax cannot be
granted selectively thereby, concluding that benefit given to one set of
customers cannot be enhanced and set off against another. It was further held
that the respondent had no legal authority to fix the MRP of the product
arbitrarily. Subsequently, penalty was imposed and the respondent was directed
to refund the so earned profit.
3.
2018 [19] G.S.T.L. 90
(N.A.P.A.) Raman Khaira and others vs. Yum Restaurants Pvt. Ltd.
and others. Dated 29th October, 2018.
Allegation
of profiteering by non-passing of benefit of reduction in GST rate to recipient
could not be established for want of credible evidence, hence no violation of
Anti-profiteering provisions.
Facts
The
respondent was alleged to be resorting to profiteering on sale of products
after reduction in rate of tax from 18% to 5%. The Applicant could not conduct
investigation as specific evidence of profiteering against specific supplier.
Held
N.A.P.A
held that there lies no sustainability in the contention of the application
since no credible evidence was produced against the respondent by the
Applicants. The application was dismissed as no violation of anti-profiteering
provisions could be established.
II.
Authority for Advance Ruling (AAR)
4.
[2019-TIOL-12-AAAR-GST]
Ernakulam Medical Centre Pvt. Ltd. Dated 14th December, 2018
Medicines
sold to outpatients by a pharmacy attached to the hospital is not a composite
supply of health care services and therefore taxable.
Facts
AAR had held
that supply of medicines and allied items provided by the hospital through the
pharmacy to the in-patients is part of composite supply of health care
treatment and hence not separately taxable. However, it was held that supply of
medicines and allied items by the hospital through the pharmacy to the
out-patients is taxable. An appeal is filed with the plea that the ruling of
AAR be modified by ruling that the supply of medicines and allied items to the
outpatients through the pharmacy attached to the hospital is also a part of
healthcare services and exempted under the notification.
Held
In case of
outpatients, it is the choice of the patient whether to follow the medical
advice given by the doctor or not. Neither the hospital nor the consulting doctors
can coerce the patient to follow the medical advice given by the doctor and nor
do they have any control over the patients’ medical care. Thus in the case of
outpatients, the healthcare service provided by the hospital is restricted to
the consultation of the doctor and these are not naturally bundled to be
considered as composite supply. Thus even if the outpatient decides to buy
medicines from the pharmacy run by the hospital, the charges for supply of
medicines is billed separately and cannot be considered as composite supply to
extend the exemption.
5. [2019-TIOL-16-AAAR-GST] Shreenath Polypast Pvt. Ltd. Dated 24th
July, 2018
Interest
or late fee or penalty for delayed payment of consideration by the customer
would be leviable to Goods and Services Tax.
Facts
In the
present case, goods are supplied directly from the principal to the buyer
(recipient) and in case the buyer (recipient) is not in position to pay to the
principal by the due date, Del-Credere Agent extends loan to the buyer
(recipient) and makes payment of such supply to the principal on behalf of the
customer. The said loan is repaid by the buyer along with interest agreed
between the Agent and the buyer (recipient). AAR held that service provided by
applicant is by way of extending short term loans and that insofar as the
consideration is represented by way of interest, same is covered under Sl. No.
27 of Notification 12/2017-CT(R) and hence exempted from payment of Goods and
Services Tax – Appeal filed against this order before the AAAR by Assistant
Commissioner.
Held
It was
noted that once the Agent makes payment to the principal on behalf of the
customer, the Del-Credere Agent enters into the shoes of the principal and
becomes entitled to recover the amount from the customer. If such transaction
is treated as a short term loan and the interest thereon considered as exempt
then clause (d) of sub-section (2) of section 15 becomes otiose. In case of
direct transaction between supplier and the customer, where the customer makes
delayed payment with interest, the amount of interest would be charged to GST.
Therefore it was held that an interpretation which would make the leviability
of GST on the interest/late fee/penalty for delayed payment of consideration by
the customer dependent upon the nature of transaction is untenable. Thus, that
interest or late fee or penalty for delayed payment of consideration by the
customer would be leviable to Goods and Services Tax.
6. [2019] 102 taxmann.com 37 (AAAR-Karnataka) Toshniwal Brothers (SR)
(P) Ltd. Dated 9th January, 2019
Since the
after sales support services are independent of promotion and marketing
services, though such services are supplied in terms of single composite
contract, the same cannot be considered as “composite supply” under GST law.
In light
of section 97(2) of CGST Act, 2017, the AAR lacks jurisdiction to give ruling
on questions relating to determination of place of supply.
Facts
Appellant
supplies services of marketing, sales promotion and post-sale support services
to overseas clients located in non-taxable territory. As per the agreement, 25%
of the commission was attributable towards after sales support services. An
application was made to determine as to whether such after sales support
services, provided under composite contract, would amount to “composite supply”
under GST law and if so, what would be the principal supply? The AAR held that
the “after-sales support service” is independent from the promotion and
marketing service and is not a composite supply. Further, as regards whether
services supplied qualify as “export of services” and whether they will be
treated as “zero rated supply”, AAR refrained from giving a ruling for the said
issue being out of scope of section 97(2). Being aggrieved appellant filed
present appeal.
Held
As regards
whether after sales support services constitutes composite supply, the
Appellate Authority observed that it is admitted fact that such after sales
services by way of installation are not required in each and every case of
sale. It was observed that in order for the supply to be termed as a “composite
supply”, what is required is that the supply of the said services should at
least be bundled, more specifically be “naturally bundled” and supplied in
conjunction with each other. The term “naturally bundled” has not been defined
in the GST Act. The appellate Authority noted that the concept of composite
supply under the GST law is similar to the concept of naturally bundled
services that prevailed under the service tax regime and the same was
understood to refer to those transactions involving an element of provision of
service and an element of transfer of title in goods in which various elements
are so inextricably linked that they essentially form one composite
transaction. Accordingly, it was held that the question of after sales service
being naturally bundled with other promotional and marketing services does not
arise for the reason that every promotional activity with a prospective
customer does not result in a sale. Further, every sale does not necessarily
mean that installation support or after-sale support is required. Consequently,
the Appellate Authority held that the after sales support service, although
rendered in a composite manner with the promotion and marketing service is not
a composite supply and especially when the price for the after sales support
service is clearly identifiable and has been so stated in the contract itself.
The ruling given by AAR was upheld. As regards next issue, the appellate
authority upheld ruling of AAR by observing that since question of
determination of place of supply is not covered under section 97(2) of CGST
Act, 2017, the AAR was right in refraining from answering this question on the
grounds of lack of jurisdiction.
7.
[2019] 102 taxmann.com 278
(AAAR-Haryana) Awla Infra. Dated 13th September, 2018
Providing
godowns on lease and the services of management of “storage and warehousing of
agricultural produce” in such godowns can be provided independently, thus when
both services are supplied simultaneously, it is case of “mixed supply”, and
applicable rate of GST would be rate for such supply which attracts highest GST
rate.
Facts
The Food
Corporation of India (FCI) framed a scheme for construction of godowns for
storage of agricultural produce and appointed a nodal agency for implementing
said construction scheme. The nodal agency invited tenders from private parties
for construction of godowns for FCI and the godowns were to be managed and
supervised by nodal agency for guaranteed lease of ten years on Build, Own and
Operate/lease basis for varying capacity of storage of food grains. In terms of
agreements between (a) FCI and Applicant and (b) Applicant and Agency, there
were two types of schemes (i) on lease only basis and (ii) on lease and service
basis. In case of lease only scheme, godowns were built by the Applicant and
were leased out to Nodal Agency which then manages the godowns. Under “lease
and service arrangement”, Applicant entered into agreement with nodal agency
for construction of godowns, wherein Applicant built godowns, leased it to the
nodal agency and also managed the storage & preservation of stocks of food
grains of FCI under the supervision of nodal agency. The “rent received from
leasing of immovable property” is chargeable to GST, whereas “storage and
warehousing of Agricultural produce (Wheat & Paddy) and Rice” is exempt
from GST. However, due to nature of arrangement on “lease with service basis”
between Applicant and nodal agency, the FCI clarified that such arrangement
would be exempt from GST. Accordingly, applicant sought present ruling as to
whether the services supplied by Applicant to nodal agency would be exempt or
chargeable to tax as “renting of immovable property services”?
Ruling
The
authority held that since the Applicant provides both the services to nodal agency
i.e. support services in relation to agricultural produce as well as real
estate services and since both these services are capable of being provided
independently, these cannot be considered naturally bundled. Therefore, it was
held that such services would be regarded as “mixed supply” under section 2(74)
of CGST Act, 2017 and would attract GST rate of that particular supply which
attracts the highest rate of tax of that particular supply in terms of section
8(b) of the CGST Act, 2017. Consequently, the services supplied by Applicant to
nodal agency are held to be chargeable to GST at 18%”.
8. [2019] 102 taxmann.com 284 (AAAR-Haryana) Esprit India (P) Ltd.
Dated 22nd November, 2018
The
Advance Ruling Authority declined to give ruling on questions regarding
taxability of export of services and refund of ITC to exporter for said
questions being out of scope of section 97(2) of CGST Act, 2017.
Facts
The
Appellant is engaged by its foreign holding company/associates to provide
support services to them in relation to goods and merchandise sold by them in
India. Advance ruling is sought on taxability of such support services provided
to foreign associates under GST regime. Further, ruling is sought as to whether
such services would be “export of services” and thus, whether they would be
eligible for refund of Input Tax Credit paid on inputs services or goods or
both. The AAR held that services provided would be chargeable to GST being “intermediary
services”. As regards question of “export of services” and “refund of ITC”, the
AAR declined to give ruling by holding that said question is out of scope of
section 97(2) of CGST Act, 2017. Being aggrieved, Appellant filed the present
appeal.
Held
The
Appellate authority upheld the decision of AAR that services supplied to its
associates would be chargeable to GST under category of “intermediary
services”. As regards remaining two questions, it was observed that the powers
of Authority for Advance Ruling are limited to cases covered u/s. 97(2) of CGST
Act, 2017 only. However, the question
whether a service is “export of service” and thereby whether assessee would be
eligible for “refund of taxes paid on inputs/input services” falls out of the
ambit of section 97(2), it was held that the AAR correctly declined to give
ruling on said issues.
Note: In [2019]
102 taxmann.com 217 (AAR-Maharashtra) K.Uttamlal Exports (P) Ltd. (Date of
Ruling: 23.10.2018), similar issue arose i.e. whether goods exported out of
India directly by the manufacturer but mentioning the applicant as “Third Party
Exporter” on export documents for the purpose of compliance under Foreign Trade
Policy, can be considered as “export of goods” in the hands of applicant for
the purpose of GST law, the AAR declined to give ruling on the ground that said
question is not covered under purview of section 97(2) of CGST Act, 2017.
9.
[2019] 102 taxmann.com 420
(AAR-Odisha) Indian Institute of Science Education & Research. Dated 13th
February, 2019
Imported
Goods supplied by Indian OEM suppliers to specified research institutions are
chargeable to GST at concessional rates and not exempted from GST as such
exemption is available only when specified goods are directly imported by such
research institutions.
Facts
Applicant institution is engaged in imparting science education and
research training. Research laboratories procure imported equipments from
abroad or from OEM (Original Equipment Manufacturer) suppliers of such imported
equipments in India. In terms of Notification No. 51/1996-Customs dated
23.07.1996 read with Notification No. 43/2017-Customs dated 30.06.2017,
equipments directly imported by applicant (i.e. Eligible Institution as
specified in notification) from outside India, are exempted from IGST. In some
cases, research institutions to which the imported goods are to be supplied is
known to the importer at the time of import and in some cases not. Since the
OEM suppliers charged GST at the rates applicable from time to time, the
applicant sought ruling as to whether benefit of exemption granted under
aforesaid notifications would be applicable for specified imported equipments
delivered to eligible research institutions and the applicant is not liable to
pay IGST charged on such imported equipments by OEM suppliers of imported
equipments. Also, applicant sought ruling as to whether concessional rate of
GST vide Notification No. 45 & 47-IGST (Rate) dated 14.11.2017 are
applicable for supply of specified indigenous equipments to the eligible
institutions?
Held
The
Authority noted that the OEM supplier is located in India and the supply of
equipments by such supplier to the specified research institutions is a case of
domestic supply. The transaction of import of equipments by the OEM suppliers
on their own and thereafter, supply of such equipments to some pre-determined
or other research institutions, who otherwise qualify for IGST exemption on
imports, are two different consecutive transactions. Since importer is not
covered under said exemptions under Customs Law, importer would be liable to
pay IGST. Authority observed that the liability to pay GST on the
importer-supplier and not on applicant. Thus, Authority held that in absence of
any liability, the applicant cannot claim for exemption. As regards next question,
authority held that concessional rate of GST is applicable to supply of all the
specified goods, whether imported or indigenous.
10. [2019] 102 taxmann.com 282 (AAR-Haryana) B. M. Industries. Dated 29th June, 2018
Merger of
proprietary going concern with private limited company does not come within
ambit of term ‘supply’ and thus, not liable to GST. Upon the merger, the
transferor can transfer the balance in its Electronic Credit ledger only to the
transferee and not the balance in Electronic Cash Ledger.
Facts
Applicant
proposed to merge his going concern proprietary business with a private limited
company along with all the assets, liabilities, rights, claims of proprietary
business etc. After merger, applicant would apply for cancellation registration
within 30 days as prescribed. The applicant sought ruling on GST implications
on said merger and transfer of balance lying in Electronic Credit Ledger and
Electronic Cash ledger of applicant to the company in which applicant’s
proprietary concern would be merged.
Held
The
Authority observed that in terms of schedule II of CGST Act, 2017, transfer of
business as going concern to another person is not treated as supply under GST.
Thus, authority held that there will not be any GST liability on transfer of
assets and liabilities by applicant to another entity in the course of proposed
merger. AS regards transfer of balances lying in Electronic Cash and Credit
Ledger of Applicant, the authority held that in terms of provisions of section
18(3) of CGST Act, 2017 read with Rule 41 of the CGST Rules, 2017, only the
balance lying in Electronic Credit ledger pertaining to unutilised input tax
credit can be transferred to the credit ledger of the transferee by filing form
GST ITC-02. Since the said provision is not applicable to balance in Electronic
Cash Ledger, applicant cannot transfer such balance to the transferee.
11. [2019] 102 taxmann.com 283 (AAR-Haryana) Pasco Motor LLP. Dated 14th
August, 2018
When the
invoice for sale of goods is issued in one month but the goods are delivered in
subsequent month, the ITC is available to buyer in the month in which he
receives physical delivery of goods.
Further, irrespective of date of actual delivery of goods i.e. whether
in the same month in which invoice is issued or subsequent month, the time of
supply shall be the date of issue of invoice by supplier.
Facts
Applicant
purchases goods from vendors which is in transit for five to ten days. The
vendor raised invoices on applicant only after receiving payment in advance. As
regards the invoices issued by vendor in the end of the month, the goods are
received in subsequent month and thus,
entry for such purchases is made in its books upon receipt of goods. However,
the vendor reports the invoices in its GST returns for the previous months only
i.e. the month in which such invoices are issued. The applicant sought ruling
as to whether the applicant would be entitled to claim the ITC in the same
month in which the vendor has issued the invoices or the next month in which
goods are received. Further, in order
meet its monthly sales target, the applicant raises invoices on its customers
without being in actual possession of goods i.e. before receiving the physical
delivery of goods from its suppliers since the goods are in transit and then,
the applicant makes delivery of goods to its customers in next month. The
applicant sought ruling as to whether applicant will be under liability to pay
tax in the same month in which the invoice was raised though he was not in
possession of goods to be delivered under such invoice.
Held
As regards
the first issue, The authority observed that the explanation to section
16(2)(b) covers only those situations where goods are supplied on “Bill to –
Ship to” basis. In present case, since the applicant himself is the buyer and
the seller of the goods, it was held that the ITC on goods would be available
to the applicant only when he has received the goods in the next month and not in
the month in which the seller has raised the invoice.
As regards
next question, authority held that the provisions of section 12(2), which deals
with the time of supply in case of liability to pay tax on goods, clearly
stipulates that the time of supply shall be earlier of date of issue of invoice
or date of receipt of payment. Thus, in case of issuance of invoice where the
goods are delivered by applicant later on, but the invoice is raised earlier,
the date of issue of invoice will be the time of supply for the purpose of
determining tax period for filing of return and payment of tax.
