I. HIGH
COURT
1. [2020 (9) TMI 42 (Madhya Pradesh)] Smt. Kanishka Matta vs. UOI Date of order: 26th
August, 2020
Sections 2(17), 2(31), 2(75) and 67(2) of the CGST Act, 2017 – Money can
also be seized by investigating agency / Department during search and seizure
FACTS
A search operation was carried out at the business and residential
premises of the petitioner and cash amounting to Rs. 66,43,130 was seized. The
petitioner filed a writ petition on the ground that the Department does not
have power under law to effect seizure of ‘money’ as it cannot be treated as
‘documents, books or things’ and, therefore, such action is violative of
Articles 14 and 19 of the Constitution of India. The petitioner requested a
direction for release of the seized cash.
HELD
The Hon’ble High Court held that the law has to be seen as a whole and
the definition clauses are the keys to unlock the intent and purpose of the
various sections and expressions used therein, where the said provisions are
put to implementation. A conjoint reading of various relevant definitions and
provisions, i.e., sections 2(17), 2(31), 2(75) and 67(2) of the CGST Act,
showed that money can also be seized. The word ‘things’ as stated in section
67(2) of the CGST Act shall be given wide meaning. As per Black’s Law
Dictionary (10th edition) any subject matter of ownership within
the spear of proprietary or valuable right would come under the definition of
‘thing’. A statute is to be given an interpretation which suppresses the
mischief and advances the remedy. Though the ‘confession statement’ of the
husband of the petitioner was retracted at a later stage, no relief could be
granted at this stage. It was held that the cash was rightly seized from the
husband of the petitioner and until the completion of investigation and
adjudication, the question of releasing the amount would not arise.
2. [2020 (39) G.S.T.L. 129 (Kol.)]
Subhas & Company vs. Commissioner of CGST and CX, 5585 (W) of 2020 Date of
order: 24th June, 2020
Section 140, Rule 117 of the CGST Act, 2017, section 137 of the
Limitation Act, 1983 – Three-year period would be the maximum period for
availing transitional credit which could not be availed due to technical
glitches faced while filling TRAN Form
FACTS
The applicant filed a writ petition for violation of principles of
natural justice as it was unable to claim transitional credits under GST due to
technical glitches faced while filling the necessary forms. The writ petition
was filed for reopening TRAN-2 or for accepting manual TRAN-2 for claiming
transitional credits and setting it off against GST liability without interest.
HELD
The High Court, on the basis of the facts and
circumstances of the case and after considering section 140 of the CGST Act
read with Rule 117 of the CGST Rules, held that the transition from the pre-GST
regime to the GST regime had not been smooth and many assessees had faced
hardships. Various cases with similar facts were decided by the Court holding
that inability to submit forms within the time limit prescribed to claim
transitional credit due to technical issues cannot result in forfeiture of
rights. However, the Court took a view that credit cannot be allowed in
perpetuity and thus, considering the Limitation Act as the guiding principle, a
maximum period of three years was allowed for availing transitional credit. The
Court directed the GST portal to be reopened for the petitioner to fill the
necessary forms or allow filing the forms manually to transfer credit to the
GST regime by 30th June, 2020.
II. NATIONAL ANTI-PROFITEERING
AUTHORITY
3. [2020] 119 taxmann.com 79 (NAA)] Ratish Nair vs. Man Reality Ltd. Date of order: 24th August,
2020 (National Anti-Profiteering Authority)
The penalty provisions u/s 171(3A) of the CGST Act introduced by section
112 of the Finance Act, 2019 which were made effective from 1st
January, 2020 are prospective in nature and cannot be made applicable for a
prior period
FACTS
In the present case, the applicant No. 2 (the Director-General
Anti-Profiteering), had submitted that he had conducted an investigation on the
complaint of the applicant No. 1 and found that the respondent (Man Reality
Ltd.) had not passed on the benefit of Input Tax Credit (ITC), as per the
provisions of section 171(1) of the CGST Act, 2017 in respect of the flat
purchased by the applicant No. 1 in the ‘One Park Avenue’ project of the
respondent. Vide his above report, the DGAP had also submitted that the
respondent had denied the benefit of ITC to applicant No.1 and other buyers
pertaining to the period from July, 2017 to September, 2018 and had thus indulged
in profiteering and violation of the provisions of section 171(1) of the CGST
Act.
Accordingly, a notice was
issued to show cause as to why penalty u/s 171(3A) should not be imposed. The
respondent in his submission stated that the provisions of section 171(3A) were
introduced vide section 112 of the Finance Act, 2019 and the same were
made effective prospectively with effect from 1st January, 2020.
Since the case of the respondent pertained to the period prior to the effective
implementation of the penalty provision, the same would not be applicable.
HELD
It was noted that the respondent has not passed on the benefit of ITC to
his buyers from 1st July, 2017 to 30th September, 2018
and hence he has violated the provisions of section 171(1) of the CGST Act,
2017. However, it is also noted that the Central Government vide
Notification No. 1/2020-Central Tax dated 1st January, 2020 has
implemented the provisions of the Finance (No. 2) Act, 2019 from 1st
January, 2020 vide which sub-section 171(3A) was added in section 171 of
the CGST Act, 2017 and penalty was proposed to be imposed in the case of
violation of section 171(1) of the CGST Act, 2017. It was, therefore, held that
since no penalty provisions were in existence during the period from 1st
July, 2017 to 30th September, 2018 when the respondent had violated
the provisions of section 171(1), the penalty prescribed u/s 171(3A) cannot be
imposed on the respondent retrospectively.
Note: A similar
decision is rendered in the case of Diwakar Bansal vs. Horizon Projects
Private Limited, National Anti-Profiteering Authority, 2020, 119, 18(NAA).
III. AUTHORITY FOR ADVANCE
RULING
1. George Jacob, Re: [2020] 119 taxmann.com 10 (AAR,
Kerala)] Date of order: 20th May, 2020
The annual lease charges collected for leasing of land including water
bodies used for fish farming are exempted as services relating to the rearing
of all life forms of animals under Serial No. 54 of the Exemption Notification
FACTS
The short question in the application was whether lease rent charged by
the municipality for land, i.e., water channel used for fish farming, falls
within the meaning of ‘services relating to the rearing of all life forms of
animals’ and is eligible for exemption as per Serial. No. 54 of Notification
No. 12/2017-Central Tax (Rate) dated 28th June, 2017.
HELD
As per Serial No. 54 of Notification No. 12/2017-Central Tax (Rate)
dated 28th June, 2017, under Heading 9986 services relating to the
rearing of all life forms of animals by way of renting or leasing of vacant
land with or without a structure incidental to its use are exempted from GST.
The term ‘rearing’ means to bring up and care for until fully grown. They take
care of the fish / crab from the point that they are eggs until they are fully
grown up by providing them with feed and also taking care of them in all
possible ways. The next condition is that the rearing should be of animals.
They are rearing fish and crab and there is no dispute that fish and crab are
animals. The next condition is that the land should be provided on rent or
lease. It is clear from the allotment letter and agreement that the wetland is
taken on an annual lease.
‘Renting in relation to immovable property’ means allowing, permitting,
or granting access, entry, occupation, use or any such facility, wholly or
partly, in immovable property, with or without the transfer of possession or
control of the said immovable property and includes letting, leasing, licensing
or other similar arrangements in respect of the immovable property. As per Black’s
Law Dictionary, ‘Land’ includes not only the soil or earth, but also things
of a permanent nature affixed thereto or found therein, whether by nature, such
as water, trees, grass, herbage, other natural or perennial products, growing
crops or trees; minerals under the surface; or by the hand of man, such as
buildings, fixtures, fences, bridges as well as works constructed for use of
water, such as dikes, canals, etc. It is, therefore, clear that all the conditions
stipulated in Serial. No. 54 of the Notification No. 12/2017- Central Tax
(Rate) dated 28th June, 2017 are satisfied and hence the rent paid
to the Gram Panchayat is exempt from GST.
5. [(2020) (39) GSTL 430 (AAR, Madhya Pradesh)] Atal Bihari Vajpayee Institute of Good Governance &
Policy Analysis Date of order: 2nd March, 2020
Articles 243G and 243W of the Constitution of India, Notification No.
12/2017-Central Tax (Rate) dated 28th June, 2017 – GST not
applicable on services provided to Government, Governmental Authority or
Government Entity for doing research work and study, which help them make
policies or understand their impact
FACTS
The applicant, an institute established as a society, is a part of the
Department of Public Service Management, Government of M.P. It acts as a
knowledge resource hub for promotion of good governance. It conducts impact
evaluation, research works and studies for various government departments on good
governance and policy analysis. This study helps such departments to review and
improve the policies for utmost benefit of the target beneficiaries. The
applicant applied for an advance ruling regarding taxability and applicability
of exemption notification on the amounts recovered from government departments
for doing research work.
HELD
The Authority held that in order to avail exemption [Sr. No. 3 of
Notification No. 12/2017-CGST (Rate) dated 28th June, 2017], three
conditions need to be satisfied. The activity should be pure service (excluding
works contract or composite supply), the service should be provided to
Government, Governmental Authority or Government Entity, and such activity
should be in relation to any function entrusted under Article 243G or 243W of
the Constitution of India. As all such conditions were satisfied here, the
Authority ruled that GST shall not be levied on the amount recovered by the
applicant from other government departments.
Further, the applicant
being a co-operative society regulated by the Government of M.P., falls within
the definition of ‘Government Entity’ but not ‘Government’ or ‘Local
Authority’. Thus, such service provided by the applicant to other government
departments would not qualify for exemption vide Entry 8 of the
exemption Notification (Supra). It was further specifically held that
the ruling would be applicable prospectively and, therefore, the applicant
cannot claim refund of GST which might have been paid before obtaining this
ruling.
6. [(2020) 39 G.S.T.L. 310 (AAR, Andhra Pradesh)] Master Minds AAR No. 08/AP/GST/2020 Date of order: 5th
March, 2020
Notification No. 12/2017-Central Tax (Rate) dated 28th June,
2017 – Exemption under said Notification will be available only to educational
institutions imparting education as a part of curriculum prescribed for
obtaining a qualification prescribed by law
FACTS
The applicant was providing coaching / training services to students as
per the syllabus prescribed by the ICAI or ICWAI. The applicant questioned if
it is covered under exemption from GST as an educational institute. It
contended that there were no legal requirements for the institute to be
recognised or authorised and the only condition was that the education imparted
should be a part of the curriculum for obtaining a qualification recognised by
any law.
HELD
In the instant case, the applicant was providing coaching / training
services in respect of CA and CWA courses. The Authority held that the
applicant was not accredited or affiliated to or recognised or authorised by
statutory bodies. Exemption is available to services when provided by these
statutory bodies through their authorised regional councils or branches for
which course completion certificates are issued. Moreover, coaching or training
in the applicant’s coaching centre was not mandatory compliance for aspirants
for their study and obtaining a certificate from the statutory bodies. Therefore,
the services provided by the applicant were not a service by way of education
as a part of curriculum which was prescribed for obtaining a qualification
prescribed by law. Accordingly, it was ruled that the exemption available to
educational institutes will not be available to the applicant as its activities
are not covered under the definition of ‘education institution’. For the same
reason, exemption would not be available on supply of food and accommodation
services by the applicant to its students
7. [2020-TIOL-257-AAR-GST (AAR, Karnataka)] M/s Gnanaganga Gruha Nirmana Sahakara Sangha Niyamitha
Date of order: 18th February, 2020
Collection of contributions from members annually or once in ten years
is a service liable to GST. Water charges collected are exempt from the
liability of GST
FACTS
The applicant is a housing society engaged in the development and sale
of sites for its members. The question before the Authority is whether
maintaining the facilities at the layout with the funds collected from the
members is a service liable for GST? Does the collection of water charges
attract GST? Further, whether lump sum amount collected as endowment fund to be
used for maintenance activities is liable for GST?
HELD
The Authority held that contributions collected from members either
annually or once in ten years towards sourcing of goods or services from a
third person for common use of its members must be divided by the recipients of
such services in the society, and if the said amount per member does not exceed
Rs. 7,500 in that tax period, such amount is exempted from tax as per Entry No.
77(c) of 12/2017-Central Tax (Rate); but if the amount exceeds Rs.7,500, then
the entire amount is taxable. Further, it was held that water charges collected
are exempt under Notification 2/2017-Central Tax (Rate) – Entry 99. With
respect to the endowment fund it was noted that the same is collected when the
members are selling their sites and that being in the nature of service, is
liable to GST.
8. [2020-TIOL-251-AAR-GST (AAR, Gujarat)] Oswal Industries Ltd. Date of order: 9th
July, 2020
Wellness facilities like naturopathy, ayurveda, yoga, etc. provided at
naturopathy centres which necessarily require accommodation to be provided to
customers, is a taxable supply, the principal supply being accommodation
services
FACTS
The applicant has stated that it has one of the largest Naturopathy
Centres in India and offers physical, psychological and spiritual ‘health
overhaul’ with the help of the power of nature. It also provides different
types of wellness facilities such as naturopathy, ayurveda, yoga and
meditation, physiotherapy and special therapy. Its contention is that the
classification of services provided by it is human health and social care services
and hence exempted in view of Serial No. 74 of 12/2017-Central Tax (Rate).
HELD
The Authority noted that the packages offered by the applicant, as
evident from their website, indicates that the therapy offered by them is
strictly on a residential basis and this is also evident from the fact that the
consideration is solely dependent on the type of room opted for by the
customer. In all the packages, three types of rooms are offered either on a
single-occupancy basis or a double-occupancy basis. The rates of the rooms per
night have been specified and these form the major part of the consideration
towards the selected package. The entire package consists of the above three
components of accommodation, food and therapy and the packages would not be possible
without any one of the three components. Thus, the packages offered are
naturally bundled and would be aptly covered under the definition of Composite
Supply.
Further, the principal supply would be the accommodation services since
the therapy can in no way be administered without accommodation. In fact, there
is no option available for the customer to avail the wellness package without
opting for the accommodation. Therefore, in the instant case, the composite
supply of services would be treated as a supply of accommodation service
taxable under GST.
9. [2020-TIOL-245-AAR-GST (AAR, Maharashtra)] M/s Tata Motors Ltd. Date of order: 25th
August, 2020
Nominal amount recovered from employees towards transport facility is
not a supply liable to GST as the same emanates from an employer-employee
relation. Further, input tax credit is allowable to the extent of the cost
borne by the company
FACTS
The applicant has engaged service providers
to provide transportation facility to its employees, in non-air conditioned
buses having seating capacity of more than 13 persons. A nominal amount is
collected from the employees for usage of the bus facility. The question before
the Authority is whether ITC is available on the GST charged by the service
provider on hiring of bus / motor vehicle having seating capacity of more than
13 persons? The next question is whether the amount collected from the
employees is a supply liable to GST and whether ITC is allowable proportionate
to the extent of the cost borne by the company?
HELD
The Authority noted that section 17(5)(b)(i) of the CGST Act, 2017 has been amended with effect from 1st February,
2019 to block ITC on leasing, renting or hiring of motor vehicles having
approved seating capacity of not more than 13 persons. Thus, where the vehicle
capacity is more than 13 persons, such ITC is allowable. With respect to the
amount collected from the employees, it is noted that the applicant is not
providing transportation facility to its employees; in fact, they are receiving
such services. The transaction between the applicant and its employees is due
to ‘Employer-Employee’ and is not a supply under the GST Act. Thus, such
amounts recovered are not liable to GST. Further, as for the last question, it
is held that ITC will be available to the extent of the cost borne by the
company.
