Authority for Advance Ruling
6. [2018-TIOL-33-AAR-GST] Maharashtra State
Power Generation Company Ltd. dated
8th May, 2018
Liquidated damages liable for
GST.
Facts
Whether liquidated damages
levied in case of delay on the part of the contractor to provide services and
construction of the power plant is leviable to GST was the question before the
authority.
Held
The authority held that
liquidated damages will be liable for GST and the time of supply would be when
the delay in successful completion of the trial operation is established on the
part of the contractor and decision to impose liquidated damages is taken.
Further taxability in respect of liquidated damages for the period prior to GST
and after GST roll out will be as per section 14 of the CGST Act, 2017 i.e.
change in rate of tax in respect of supply of goods or services. Further, no
decision was taken on the availability of input tax credit to the contractor on
the liquidated damages imposed on him, as the same should be raised by the
contractor and not the Appellant.
7. [2018-TIOL-09-AAR-GST] Kansai Nerolac Paints
Limited dated 5th April, 2018
Krishi Kalyan Cess is not
considered as admissible input tax credit under the GST law.
Facts
Assessee is a manufacturer as
well as a service provider rendering works contract services. They are also
registered as an input service distributor for distribution of eligible credit
to its factories and Head office. They received CENVAT credit including Krishi Kalyan
Cess (KKC). Since KKC credit could be utilised only against KKC liability, it
could not be distributed to the factories and therefore, there was accumulation
of KKC credit. In accordance with section 140(1) of the CGST Act, 2017, the KKC
credit was carried forward in the ISD return but was not utilised.
The question before the
authority is whether KKC levied under section 161 of the Finance Act, 2016 as
“service tax” will be considered as admissible input tax credit under the GST
law.
Held
The Authority noted that Rule
3 of the CENVAT Credit Rules, 2004 made it clear that KKC would be
utilised towards payment of KKC only. Under the GST Law, there is no levy of
KKC. Reliance was placed on the decision
of the Delhi High Court in the case of Cellular Operators Association of
India [2018-TIOL-310-HC-DEL-ST] wherein it was held that it is improper to
treat the two cessess i.e. Education Cess and Secondary and Higher Education
Cess as duty of excise or service tax and therefore, cannot be cross utilised.
Accordingly, it was held that KKC cannot be treated as excise duty or service
tax and thus section 140(1) of the CGST Act, 2017 would not include KKC credit
and the same cannot be carried forward in the Electronic Credit Ledger.
