I. HIGH COURT
16. [2020-TIOL-1858-(Madras HC)] M/s Sun Dye Chem. WP 29676 of 2019 Date
of order: 6th October, 2020
Sections 37, 38, 39 of CGST Act, 2017 –
Supplier permitted to rectify genuine mistake in GSTR1 to enable customers to
avail credit to which they were legitimately entitled
FACTS
The petitioner as
supplier, while submitting its GSTR1 inadvertently reflected tax amounts in the
IGST column instead of the CGST and SGST columns for the period from August,
2017 to December, 2017. The mistake was brought to its notice by a customer
after 31st March, 2019 when the mechanism to rectify GSTR1 of 2017-18
had lapsed. Hence, the present petition was filed requesting permission to
enable the petitioner to amend its GSTR1.
HELD
The Hon’ble Court held that it was a
case of genuine mistake, the error was not deliberate, nor intended to gain any
profit. The forms through filing which the petitioner might have noticed the
error and sought amendment, viz. GSTR2A and GSTR1A, were not yet notified. In
the absence of an enabling mechanism, the Court was of the view that the
customers of the petitioner should not be prejudiced from availing credit to
which they were otherwise legitimately entitled.
The petitioner was allowed to rectify
the error. Consequently, the petitioner was permitted to re-submit annexures to
GSTR3B with correct distribution of credit between IGST, CGST and SGST.
17. [2020 (41) GSTL 440 (Madras HC)] Urbanclap Technologies India Pvt.
Ltd. WP 9270, 9275, 9287 of 2020 Date of order: 13th August, 2020
Finalisation of assessment on same day
when matter was listed for hearing amounts to violation of natural justice
FACTS
The petitioner was issued personal
hearing notice on 13th February, 2020, the matter was listed on the
very next day (14th February, 2020) and the order was passed on the
hearing date itself. The petitioner challenged the assessment order passed by
the A.O. on the ground of violation of the principle of natural justice.
HELD
The Hon’ble High Court, referring to
its own decision, held that whenever an opportunity is given to explain or
submit objections, such opportunity must be realistic and not notional. A
particular hour of the day may be fixed as an outer limit for making such
submission for administrative convenience, but for reasons of equity and justice
the person aggrieved should be provided an opportunity till the expiry of
working hours of the date to state its objection. The Court was of the view
that the A.O. should wait till the end of the working day when the personal
hearing was fixed for finalisation of assessment. It directed issuance of fresh
notices to the petitioner to appear whereby the new order could be passed
within eight weeks from the date of the first hearing.
18. [2020 (41) GSTL 442 (Guj.)] Gujarat State Petronet Ltd. vs. UOI
15607 of 2019 Date of order: 5th March, 2020
Sections 107 and 108 of CGST Act, Rule
108 of CGST Rules – The period of limitation to file appeal electronically
commences after aggrieved order uploaded on the GST portal
FACTS
A part of the refund application filed
by the petitioner for refund of IGST paid on supplies made to an SEZ was
rejected due of non-availability of invoices issued by the SEZ jurisdictional
Authority. The petitioner, being aggrieved, was unable to file the appeal
electronically as the refund order was not uploaded on the GST portal by the
adjudicating Authority. The petitioner had approached the Authority on various
occasions but due to certain technical issues the Authority was unable to
upload the order. After exhausting all avenues, the petitioner filed an appeal
manually; however, the same was rejected on the grounds of limitation, i.e.,
being time-barred. The respondent was of the view that the electronic filing of
appeal required only details of the adjudicating order which was available with
the petitioner. Uploading an order on the portal and filing of an appeal
electronically are two completely different processes.
HELD
The Hon’ble High Court, on the basis of
the provisions of the GST Act, held that the appeal was required to be filed in
electronic mode only unless any other mode was prescribed in the notification.
And no notification had been issued for manual filing of an appeal.
GST law being newly introduced, there
was no clarity with regard to the procedure to be followed for filing of
appeal. Further, filing of appeal and uploading of the order are intertwined
activities. In such a situation even though the physical copy of the
adjudication order was handed over to the petitioner, the time period to file
the appeal will start only after the said order is uploaded on the GST portal.
Therefore, the delay in filing appeal manually was condoned.
II. TRIBUNAL
19. [2020 (41) GSTL 467 (Tri.-Del.)] Quick Heal Technologies Ltd. vs.
Commissioner of Service Tax, Delhi 50022/2020 Date of order:9th January, 2020
Sections 65B(28), 65B(44), 65B(51),
65(105)(zzzze), 66B of Finance Act, 1994 – Supply of packed anti-virus software
to the end-user by charging license fee amounts to deemed sale and not
chargeable to service tax
FACTS
The appellant was engaged in the
business of research and development of anti-virus software. A unique key,
provided along with the CD in which the software was supplied, was required to
be entered to start the software. The appellant was of the view that software
supplied in CD form, being a canned software, was goods and it was paying sales
tax / VAT on the sale of such quick-heal anti-virus software. The adjudicating
Authority alleged that under the supply of packed anti-virus software to the
end-user by charging license fee, the end-user was provided with a temporary /
non-exclusive right to use the anti-virus software as per the conditions
contained in the End User License Agreement and would, therefore, amount to a
provision of service and not sale.
HELD
The learned
Authority, on perusal of the facts of the case and relevant provisions of the
Finance Act, 1994 observed that the ‘information technology software’ was
defined as any representation of instructions, data, sound or image, including
source code and object code, recorded in a machine-readable form, and capable
of being manipulated or providing interactivity to a user by means of a
computer or an automatic data processing machine or any other device or
equipment. The software developed by the appellant could not be manipulated,
nor did it provide any interactivity to a user and, therefore, did not satisfy
the requirement specified under definition. The software developed by the
appellant was complete in itself to prevent virus in the computer system. Once
the computer system was booted, the anti-virus software began the function of
detecting the virus which continued till the time the computer system remained
booted. No interactivity took place nor was there any requirement of giving any
command to the software to perform its function.
Further, the
Authority relied on the decision of the Supreme Court in Tata Consultancy
Services wherein it was held that intellectual property, once it is put on the
media and marketed, would become ‘goods’ and that software was an intellectual
property and such intellectual property contained in a medium was purchased and
sold in various forms including CDs. The Authority was of the view that if the
pre-packaged or canned software was not sold but was transferred under a
license to use such software, the terms and conditions of the license to use
such software should be seen. In case a license to use pre-packaged software
imposed restrictions on the usage of such licenses and such restriction did not
interfere with the free enjoyment of the software, then such a license would
result in transfer of ‘right to use’ the software within the meaning of clause
29(A) of Article 366 of the Constitution.
The agreement entered into by the
appellant provided the licensee the right to use the software subject to the
terms and conditions mentioned in the agreement. The licensee was entitled to
use the software from the date of license activation until the expiry date of
the same. The licensee was also entitled to the updates and to technical
support. The conditions set out in the agreement did not interfere with the
free enjoyment of the software by the licensee. Merely because the appellant
retained the title and ownership of the software, it did not mean that it
interfered with the right of the licensee to use the software. On the basis of
the above discussion, it was held that the appellant had merely given the right
to use the software and the same would amount to ‘deemed sale’ and hence the
contention of the Department was not accepted and the order was set aside.
20. [2020 (41) GSTL 516 (Tri.-Hyd.)] Virtusa (India) Pvt. Ltd.
A/30588/220Date or order: 24th February, 2020
Rules 5, 14 of CENVAT Credit Rules,
2004 – Rejection of refund claim on the ground that there was no nexus between
input and output services not sustainable
FACTS
The appellant was engaged in providing
Technology Software Services and was registered as an export-oriented unit
under the Software Technology Parks of India (STPI) Scheme. The refund application
for unutilised CENVAT credit filed by the appellant was rejected by the
Authority holding that input services, rent-a-cab operator services, outdoor
catering services, pest control services, custom house agents, gym / health
club services, business or management consultant services and tour operator
services, used in factory had no nexus with the exported services.
HELD
The Authority held that it was a
well-settled legal position that CENVAT credit may or may not be allowed;
however, the refund of the credit cannot be denied. The refund should be
allowed on the basis of the formula prescribed, i.e., ratio of export turnover
to the total turnover multiplied by the CENVAT credit utilised. The formula for
proportionate credit for calculating refund of CENVAT credit holds no scope for
determining such nexus while allowing or disallowing refund of CENVAT credit.
Consequently, the rejection of refund claim was held unsustainable as there was
no requirement to establish nexus of individual services specifically for
refund. If any credit was to be held inadmissible, it must be done by issuing
notice under Rule 14 of the CENVAT credit Rules.
III. AUTHORITY OF ADVANCE RULING
21. [2020-TIOL-275-AAR-GST] MFAR Hotels and Resorts Pvt. Ltd. Date of
order: 12th May, 2020 [AAR-Chennai]
Supply of soft beverages as a room
service from the restaurant located in the premises will be a restaurant
service – Supply of cigarettes independently is not a composite supply and will
be taxable as a mixed supply if supplied at a single price – Supply of liquor
is a non-taxable supply – Supply of food to employees free of cost is a deemed
supply under GST
FACTS
The applicant owns
and manages hotels and resorts. The question before the Authority is what rate
of tax to apply to the supply of soft beverages and tobacco when these items
are supplied independently, say as a room service, and not as composite supply
in the restaurant. The next question is whether the supply of liquor is considered
to be an exempt supply for the purpose of reversal of credit under Rule 42 of
the CGST Rules, 2017. The last question before the Authority is whether free
food supplied to the employees is liable for reversal of credit under Rule 42.
HELD
The Authority noted that the
Notification 11/2017-Central Tax (Rate) dated 28th June, 2017 was
amended by Notification 46/2017-Central Tax (Rate) dated 14th
November, 2017 and subsequently amended by Notification No. 20/2019-Central
Tax(Rate) dated 30th September, 2019, and held that supply of soft
beverages / aerated water, whether in person or as room service by the
restaurant located in the premises of the hotel, will be taxable at 9% CGST and
9% SGST since the declared tariff of the hotel is greater than Rs. 7,500.
However, in the case of sale of cigarettes it is held that they are not
naturally bundled together with restaurant service. Further, it is also held
that when cigarettes are supplied at a single price along with the restaurant
service, such supply is a mixed supply as restaurant service involves serving
of food and beverages alone. With respect to supply of alcoholic liquor, the
Authority held that it is a non-taxable supply under GST, and with respect to
supply of food to employees in a canteen, it is held that supply of service to
employees without consideration is a deemed supply under Schedule I and
therefore is liable to GST.
22. [2020-TIOL-282-AAR-GST] M/s Jinmangal Corporation Date of order: 17th
September, 2020 [AAR-Gujarat]
One-time premium / salami paid
irrespective of the duration of the lease is liable to GST and the recipient is
required to discharge tax under reverse charge
FACTS
The applicant submitted that Ahmedabad
Urban Development Authority had carried out e-auction for leasing certain plots
for a period of 99 years. The plots so auctioned could be used only for the
purpose of construction of commercial projects. They were required to pay a
one-time lease premium. The applicant is of the view that a long-term lease for
a period exceeding 30 years was tantamount to sale of immovable property since
the lessor is deprived of the right to use, enjoy and possess the property once
the said lease has been granted. It was stated that only the State Government
is empowered to levy tax on land and building. The provisions of the Gujarat
Stamp Act were also placed on record.
Further, it was also argued that
Schedule II of the GST Act, 2017 reads as – ‘any lease, tenancy, easement,
license to occupy land is a supply of service’. Lease premium is a periodical
payment. Upfront premium / salami is different and distinct from lease
rent since it is only a one-time payment. Accordingly, the question before the
Authority is whether one-time lease premium is a supply under the law and
whether the applicant is required to discharge tax under reverse charge.
HELD
The Authority noted that the quantum of
lease has no relation in determination of lease or sale. When a person
purchases a commercial plot / land, the purchaser becomes the absolute owner of
the same and there is a sale deed between the seller and the purchaser. On
purchase of land, there is no requirement of renewal or extension of the sale
period. The owner of the commercial plot / land is not required to pay any type
of salami or annual lease premium for it. Besides, the purchaser / owner
of the land can sell the same to anybody and no permission is required from the
seller because the purchaser has an absolute right of possession on the land.
Therefore, the Authority noted that the
lease of the plot for 99 years by the applicant is not ‘sale of land’ but is a
lease of plot / land and therefore does not get covered under clause 5 of
Schedule III of the CGST Act, 2017. Accordingly, the said one-time premium / salami
and annual lease premium paid by the applicant to the Ahmedabad Urban
Development Authority are taxable under the GST in terms of the Notification
No. 11/2017-CT (Rate) dated 28th June, 2017. With respect to the
next question, the Authority noted that as per Notification 5/2019-Central Tax
(Rate) dated 29th March,2019, the promoter is required to pay tax
under reverse charge. Accordingly, the recipient is liable to pay GST under
reverse charge.
23. [2020-TIOL-274-AAR-GST] M/s Macro Media Digital Imaging Pvt. Ltd
Date of order: 4th May, 2020 [AAR-Chennai]
The printing of content provided by the
recipient on the PVC materials of the applicant and supply of printed trade
advertising material to the recipient is a composite supply of service of
printing
FACTS
The
applicant is engaged in printing of billboards, building wraps, fleet graphics,
window graphics, trade show graphics, office branding, in-store branding,
banners, free standing display units and signage graphics. The question before
the Authority is whether the transaction of printing of content provided by the
customer on polyvinylchloride banners and supply of such printed trade
advertisement material is supply of goods? The second question is the rate of
tax applicable on such transactions.
HELD
The Authority held
that the printing of content provided by the recipient on the PVC materials of
the applicant and supply of printed trade advertising material to the recipient
is a composite supply, and ‘supply of service of printing’ is the principal
supply. Accordingly, the classification of service is SAC 998912 and the
applicable tax rate is 9% CGST and 9% SGST as per Serial Number 27/27(iii) of
Notification 11/2017 Central Tax (Rate) dated 28th June, 2017 for
the period from 1st July, 2017 to 13th October, 2017; and
thereafter the applicable rate is 6% CGST and 6% SGST as per Serial No. 27(i)
of Notification No. 11/2017-Central Tax (Rate) dated 28th June, 20I7.
