Category: Recent Developments In GST

A. CIRCULARS

(i) Clarification about Assigning proper officer under Sections 74A,75(2) and 122 of CGST Act – Circular no.254/11/2025-GST dated 27.10.2025

Fresh guidelines regarding assignment of proper officers under Sections 74A, 75(2) and 122 of CGST Act,2017 & CGST Rules are provided.

B. NOTIFICATIONS

i) Notification No.17/2025-Central Tax dated 18.10.2025

The CBIC has extended the due date for filing GSTR-3B returns for the month of September 2025 and for the quarter of July–September 2025 till October 25, 2025.

ii) Notification No.18/2025-Central Tax dated 31.10.2025

The Central Goods and Services Tax (Fourth Amendment) Rules, 2025 are published to introduce a faster, technology-enabled, and taxpayer-friendly GST registration process within three working days. These amendments come into effect from 1st November, 2025.

C. NOTIFICATION RELATING TO RATE OF TAX

i) Notification No.18/2025-Central Tax (Rate) dated 24.10.2025

The above notification seeks to amend Notification No. 26/2018-Central Tax (Rate) dated 31.12.2018, to provide definition of “Nominated Agency”. This change is effective from November 1, 2025.

D. ADVANCE RULINGS

Issue: Hotel accommodation vis-à-vis Renting of immovable property – applicable rate of Tax

Orsino Hotels & Resorts LLP

(AAR Order No.08/WBAAR/2025-26 dt.22.8.2025)(WB)

The facts are that the applicant is engaged in the hotel business through its property named Orsino Spa Resort located in Darjeeling. The resort comprises 45 rooms and offers various amenities such as a spa, banquet facilities, a bar, a multi-cuisine restaurant, and a cafe. The applicant has entered into a contractual agreement with the Reserve Bank of India (RBI) on 19th March 2025 to provide continuous accommodation services for RBI officers and their families. As per the agreement, the applicant is obligated to provide a minimum of two double-bedded “Premium Rooms” per day at a pre-agreed rate. The agreement is valid from 1st April 2025 to 31st March 2026, with a provision for extension. Applicant has raised following questions:

“(i) Whether the accommodation services provided by the applicant to RBI having room tariff of less than ₹7500 per day per unit, as part of the agreement for providing accomodation (rooms) services to RBI staff, are taxable under GST at the rate of 12%

(ii) If not, under which HSN code and tax rate will the services be taxed?”

The applicant explained the nature of services which are all akin to facilities provide in hotel room, with Check in time-12 noon, check out time-11:00 am. The RBI is to pay the room tariff per day at an agreed rate. The applicant has charged GST @ 12%.

One of the factors was that RBI is to deduct TDS under Section 194I of the Income Tax Act, 1961, in respect of the payments made by RBI for the accommodation services under the said contract.

The applicant brought to notice of the ld. AAR the definition of “Hotel Accommodation” as provided in Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as well as GST Rate applicable on such accommodation services w.e.f. 18.7.2022, which are as under:

It was submitted that since, the room tariff per unit per day for these accommodation services provided to RBI as per the agreement does not exceed ₹7500, GST rate applicable to applicant shall be 12%.

The applicant also made submission about difference in renting of property vis-a-vis hotel accommodation.

The ld. AAR analysed position vis-à-vis the facts of the case.

The ld. AAR observed that accommodation services refers to providing residential or lodging services for a short period where the tariff for a unit of accommodation is usually declared per unit per day. Accommodation services may include certain other facilities depending on the policy of the hotel.

The ld. AAR also referred to recent changes in the GST Act vide Notification no.05/2025-Central Tax (Rate) dated 16.1.2025 in respect of accommodation services given by the hotel.

The ld. AAR also discussed about various plans available in hotel regarding food facility and modalities connected there with. As compared to above, in renting of premises, the demarcated premises are allotted to the customer. Since this is not position, the ld. AAR held that transaction cannot fall in ‘renting of immovable property’.

The ld. AAR observed that the issue appears to have arisen as RBI is deducting TDS under section 194I of the Income Tax Act which provides for TDS in respect of payment made for renting of immovable property.

The ld. AAR observed that two acts (Income Tax Act and GST) are different. The ld. AAR held that so far as the concept of hotel accommodation services in the GST is concerned there is no reference to the Income Tax Act and it has nothing to do with the Income Tax Act. Therefore, for the purpose of the GST Act, hotel accommodation services will come under serial no. 7 (i) or (vi) of the Notification No. 11/2017 and Central Tax (Rate) Dated 28.06.2017 and liable to GST rate accordingly, irrespective of treatment given by RBI under Income Tax Act.

The ld. AAR held that since the value of supply has not exceeded ₹7500/- for one room as per the agreement with RBI, the applicable rate will be 12%.

Issue: Classification – Pre-packaged and Labelled Goods

Neeli Sea Foods Pvt. Ltd.

(AAR Order No.11/AP/GST/2025 dt.16.9.2025)(AP)

The applicant is engaged in the business of processing and exporting of shrimps. Applicant procures raw shrimp locally from farmers and processes it at the factory. Shrimp processing includes washing, de-veining, peeling, de-heading, tail removal, sorting, grading, and freezing. However, further processing can be done independently based on the customer’s requirements to produce the desired results.

Processed frozen shrimps are packaged separately in accordance with the buyer’s specifications. The Applicant employs the following packaging methods:

a) Primary packaging: The final product is packed into individual pouches or boxes, weighing between approximately 250 grams and 2.5 kilograms.

b) Secondary Packaging: The aforementioned pouches or boxes (i.e., primary packaging) are placed into master cartons, with a maximum weight limit of 25 kilograms.

The primary packaging serves as the principal container for the processed shrimps. These pouches should be stored within master cartons to facilitate convenient transportation. Both the primary and secondary packaging are printed with comprehensive details regarding the product, such as the type, weight, branding information and other relevant specifications (i.e. packaged and labelled). The shrimps so packed are exported to international buyers.

Applicant raised following issues before the ld. AAR:

“- Whether the export of processed frozen shrimps (HSN 0306), which are packaged in individual printed pouches or boxes and subsequently placed inside a print master carton (of up to 25 Kilogram each) that includes the design, label, and other specification provided by the buyer, attracts GST?

– Whether the export of processed frozen shrimps (HSN 0306), packaged in individual plain pouches or boxes and subsequently placed inside a plain master carton (of up to 25 Kilogram each), attracts GST?”

Applicant made reference to relevant entry like entry 2 of Schedule I of Notification No. 01/2017-CGST(R) dated 01.07.2017 updated from time to time and lastly on 13.7.2022. Reliance was also placed on various earlier ARs.

Based on above legal position the ld. AAR observed that as per the provisions of the Legal Metrology Act, 2009 (1 of 2010) and the rules made there under, as the inner packing is printed and is having pre-determined quantity it immediately attains the characteristics of ‘pre-packaged and labelled’ category, meant for retail sale, irrespective of the fact whether the outer packaging is printed or not. Under these circumstances, the inner packaging which ranges from 250 grams to 2.5 kilograms becomes liable to GST, as the same fall within the ambit of ‘pre-packaged and labelled’ category which is mandated to bear the declaration.

The ld. AAR made reference to FAQ dated 18.7.2022 as well as Ministry of Finance clarification on doubts/queries regarding the GST levy on ‘pre-packaged and labelled’ goods vide Press Release dated 18th July 2022.

The ld. AAR concluded the issue as under:

“The supply of shrimps in pouches or boxes of upto 25kg, which are duly pre-packaged and labelled as per Legal Metrology Act 2009 is a taxable supply which is neither exempted nor nil rated supply. As per the Notification no 06/2022 (CT Rate), dated 13th July 2022, GST has been made applicable on supply of such “pre-packaged and labelled” commodities attracting provisions of Legal Metrology Act, 2009. Therefore, where the quantity involved is 25Kgs or less in respect of specified commodities including shrimps (HSN 0306, as per S.No.4 of schedule 1 of notification 01/2017-central tax (rate) dated 28th June 2017) which are pre-packed, they would mandatorily get covered within the ambit of Legal Metrology Act, 2009, and the rules made there under. Accordingly, we are of the considered view that GST would be applicable on the supply of “pre-packaged and labelled” shrimps, capacity upto 25 kgs, and it will be liable for GST @ 5%, irrespective of the fact whether it is for domestic supply or for export outside the country.”

Accordingly, the ld. AAR answered both issues in affirmative.

Issue: Nature of Composite Supply

Greater Visakhapatnam Smart City Corporation Ltd.

(AAR Order No.14/AP/GST/2025 dt.16.10.2025)(AP)

The applicant is a special purposes vehicle (SPV) incorporated as Public Limited Company under the Companies Act, 2013, owned by the State Government of Andhra Pradesh and the Greater Visakhapatnam Municipal Corporation (GVMC). The applicant has undertaken two convergence projects with smart city funds towards development of sewerage system and supply of recycled water to industries.

The applicant has entered into renewed tripartite agreement dated 10.06.2025 between Greater Visakhapatnam Municipal Corporation (GVMC), Greater Visakhapatnam Smart City Corporation Limited (GVSCCL) and M/s. Hindustan Petrol Corporation Limited (HPCL) towards supply of recycled water to M/s. HPCL, wherein GVMC and GVSCCL provided sewerage infrastructure situated in Visakhapatnam, comprising of various equipments and facilities.

Clause 9 of the tripartite agreement towards supply of recycled water specifies that Metering for determining the exact quantities of the Product supplied shall be done at the Delivery Point in the premises of HPCL. Applicant shall install a meter with a standby at the Delivery Point i.e. at M/s. HPCL. There is also clause for levy of charges for maintenance of meters, instrumentation, automation etc at the rate of 0.75% of monthly supply of recycled water bill. In above process applicant has installed only flow meters in the premises of M/s. HPCL to measure recycled water and no other instrumentation/automation of applicant are installed at the premises of M/s. HPCL.

With the above background following questions were raised before ld. AAR.

“1. Whether the maintenance charges of flow meters installed at the end user premises to record the recycled water falls under composite supply.

2. If yes, the rate applicable to principal supply i.e., nil rate can be applied to Ancillary supply also i.e., maintenance charges of flow meters also.

3. If not? What is the applicable GST rate and what is the SAC/HSN code applicable to the same?”

The ld. AAR observed that applicant has installed only flow meters at the consumer’s end to record water flow and no other automation or instrumentation systems involved at HPCL’s premises. It was also noted that the maintenance charges are being collected separately on a monthly basis as a percentage of the recycled water supply bill. The ld. AAR was to determine as to whether such maintenance of flow meters constitutes a part of a composite supply along with the supply of recycled water, and if not, what rate of GST would be applicable for such activity.

The ld. AAR referred to definition of ‘Composite Supply’ and analysed clauses of tripartite agreement in light of same. The ld. AAR observed that as per the provisions contained in Para 5(a)(vi) and 5(b)(vi) of the agreement, applicant is levying separate charges upon HPCL at the rate of 0.75% (plus applicable taxes) of the monthly bill value, towards maintenance of meters, instrumentation and automation etc., which are further subject to revision, as and when deemed necessary.

It was further observed that such maintenance charges are not subsumed within the consideration payable for the supply of “product and clear water,” which has been distinctly provided for under Para 5(a)(i) and 5(b)(i) of the said agreement. Noting above contractual separation, the ld. AAR observed that it clearly establishes that the maintenance of flow meters is being charged as an independent service, in addition to the primary supply of recycled water.

Therefore, the ld. AAR held that the maintenance of flow meters is to be treated as a standalone supply of service, falling under Heading 9987 – Maintenance, repair and installation (except construction) services, taxable at 18% (9% CGST + 9% SGST) under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended.

Accordingly, the ld. AAR gave ruling in negative.

Issue: ITC through TRC-06 challan

Becton Dickinson India Pvt. Ltd.

(AAAR Order No.AAAR/06/2025(AR) (A. R. Appeal No.05/2025/AAAR dt.8.10.2025)(TN)

The present appeal is against the Advance Ruling No. 20/ARA/2025 dated 09.05.2025 – 2025-VIL-88-AAR passed by AAR (TN) on the application for AR filed by the Appellant.

The appellant has put various questions for opinion of ld. AAR. The short gist is that the appellant wanted to know whether it is eligible to ITC for payment of IGST though TR-6 challan in Customs department. The ld. AAR rejected the same and gave ruling in negative.

The facts are that the appellant is importer and imports from its group companies. For above purpose the appellant has a limited risk distributorship agreement (“LRD agreement”), and as per the same, the goods are supplied by the overseas companies to the appellant at a price which would ensure that the appellant earns an Arm’s Length Price (ALP) operating profit margin. At the end of the financial year as per the Income Tax Laws, the ALP margin is determined and compared with the actual margin earned by the appellant on the sale of imported goods. In case the actual margin earned by the Appellant is more than the ALP margin, then the appellant transfers the differential margin through a pricing adjustment (“true up”) by the overseas entity from whom the goods were to imported, and vice versa. While doing so the appellant has to discharge differential duties through TR-6 challan.

The ld. AAR denied ITC for above payment on ground it is neither Bill of entry or other similar documents, for the purpose of Section 16(2) of CGST Act.

The ld. AAAR held that the documents prescribed under Custom Act like Bill of Entry are document valid for section 16(2). The ld. AAAR noted that TR-6 challan is not a document prescribed under the Customs Act or the rules made thereunder, but it is a challan prescribed under the ‘Treasury Rules of the Central Government’, under which any person can pay money into the treasury or Bank on Government Account. The ld. AAAR observed that it does not contain all the details relating to assessment encapsulated in a ‘bill of entry’. Since TR-6 lacked legal backing as authenticated document under Customs Act, the ld. AAAR concurred with ld. AAR and confirmed the order of AAR.

Regarding second query about application of section 16(4) to TR-6 challan, the ld. AAAR held that since TR-6 itself not eligible to ITC, no question of considering application of section 16(4) arises.

The third query was, whether section 16(4) applies to reassessment Bill of entry for availing ITC. The ld. AAAR referred to section 16(4) and observed that when the provisions of Section 16(4) of the CGST Act, 2017 applies ‘mutatis mutandis’ to the IGST Act, 2017, the document ‘Bill of Entry or any similar document’ also gets covered under the said provision and that the time limit prescribed u/s.16(4) applies to documents like Bill of Entry.

Accordingly, the ld. AAAR confirmed the AR and rejected appeal on all issues.

Issue: ‘Supply’ – Scope

Laila Nutra Pvt. Ltd.

(AAR Order No.12/AP/GST/2025 dt.22.9.2025)(AP)

The applicant is engaged in the business of extraction of Concentrate from Herbs and Other Products.

The applicant had a wide range of Research and Development facilities including in Ayurvedic and Herbal Medicines. Applicant carries out R&D activities on certain raw materials, which are further extracted in to concentrates and exported to other countries. Along with four other institutes, applicant was selected to implement a designated project. Among the selected institutes, the applicant was the only one equipped with both an extraction facility and a Research& Development (R&D) facility.

As per instruction from the Central Council for Research in Ayurvedic Sciences (CCRAS), the applicant is responsible for procuring various raw materials
from different sources/vendors, extracting
concentrates from them, and distributing these extracts to the other institutes for further research and development. In certain cases, the applicant also undertakes further research and development on selected extracts. Upon completion of the project, the applicant is required to submit the final project documentation to the Ministry of AYUSH (MoA), through CCRAS.

Presently applicant is awarded two contracts viz:

“Project 1: Research, analysis, and manufacturing of 100 kg each of 5different raw material extracts for further testing by other selected institutes. (Grant sanctioned from Government: ₹10 Cr approximately)

Project 2: Further testing, safety analysis, and reporting on one of the products manufactured in Project 1. (Grant sanctioned from Government: Rs. 10 Cr approximately).

The deliverables under Project 1 include 100 kg of each of 5 different raw material extracts (which constitute less than 10% of the project cost), along with detailed research and analysis on these extracts.

Under Project 2, the deliverable is a comprehensive Testing, Safety, and Analysis Report on one of the extracts developed in Project 1. This report is intended to be placed in the public domain to serve as a reference for other Ayurveda and Herbal Medicine manufacturers in the long term.”

There are further procedural rules to be followed by applicant as Sub-Nodal Agency.

The applicant had sought advance ruling on the following:

“1. Whether the Research and Development activity undertaken by the applicant for the Ministry of AYUSH (MoA), through the Central Council for Research in Ayurvedic Sciences (CCRAS), under a grant-in-aid arrangement, falls within the scope of ‘supply’ as defined under Section 7 of the CGST Act, 2017?

2. If the aforementioned Research and Development activity is considered a ‘supply’ under Section 7 of the CGST Act, 2017, whether such activity qualifies for exemption under Entry No. 3 or Entry No. 3A of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended?”

The applicant was contending that the applicant has neither proprietary rights nor control over the results of the R&D to claim any form of disposal or transfer thereof and hence not within scope of ‘supply’.

To determine questions (1), the ld. AAR referred to Section 7 which specifies the scope of ‘supply’.

The ld. AAR observed that under sub-section (a) of Section 2(31) of the Act, the consideration for the supply of goods or services may be paid by the recipient or any other person. Hence, even if it is assumed that services supplied by the applicant are not received by CCRAS but are received by the beneficiaries i.e., general public and medicine manufacturers, the amount paid by CCRAS to the applicant is still covered under the definition of ‘consideration’ paid for the said supply of goods or services by the applicant and is covered in the definition of ‘supply’ given under Section 7(1) of the Act. The profit motive held not important, considering combined reading of all above definitions, including that of the “business”.

Grants held to be consideration as it is not ‘subsidy’. It is also observed that R&D services, even when not resulting in the transfer of ownership or IP, are still services under GST as per definition of ‘services’ in Section 2(102) of the CGST Act.

Regarding question of exemption under entry 3 or 3A of Notification 12/2017-Central Tax (Rate) dt.28.6.2017, as activity falling under Articles 243G/243W, the ld. AAR held that the said exemption is not available as the service is not provided to Panchayat or Municipality, nor it is directly related to any functions given in said Articles.

Accordingly, the supply is held taxable under GST, and the applicant is held liable to discharge GST at the applicable rate.

BCAJ Admin

A. CIRCULARS

Following circulars have been issued by CBIC, in October 2024.

i) Clarifications regarding scope of “implementation of provisions of sub-sections (5) & (6) in section 16” – Circular no.237/31/2024-GST dated 15^th October, 2024.

By above circular, clarifications are given regarding implementation of provisions of sub-section (5) and sub-section (6) in Section 16 of CGST Act. The above provisions are for extension of time for the purposes of Section 16(4).

ii) Clarifications regarding “doubts related to section 128A” — Circular no.238/32/2024-GST dated 15^th October, 2024.

By above circular, clarifications are given regarding doubts related to section 128A of CGST Act. Section 128A provides for conditional waiver of interest and penalty in respect of demands pertaining to financial years 2017–18, 2018–19 and 2019–20.

B. ADVISORY

1.  Vide GSTN Advisory dated 22^nd October, 2024, the information is given about updated facilities for registration compliance for buyers of metal scrap through form GST-REG-07.
2.  Vide GSTN dated 17th October, 2024, additional FAQs about Invoice Management System (IMS) are given.
3.  The CBIC has issued guidelines for conduct of personal hearings under CGST Act, IGST Act, Custom Act, Central Excise Act and Service Tax Act through video conferencing.
4.  GSTN has issued Advisory dated 29th October, 2024 giving information about barring of GST Returns on expiry of three years.
5. GSTN has issued Advisory dated 30th October, 2024 about Biometric-based Aadhaar Authentication and Document Verification for GST Registration Applicants of Ladakh.
6.  GSTN has issued Advisory dated 5th November, 2024, about Form GST-DRC-03A.
7.  GSTN has also issued Advisory dated 5th November, 2024 about Time limit for reporting e-invoices on the IRP Portal, lowering of threshold of Annual Aggregate Turnover (AATO) to 10 crores and above.

C. ADVANCE RULINGS

37 Classification – “Baby Carriers with Hip seat”

Butt Baby Enterprise Private Ltd. (AR Order No. 10/WBAAR/2024-25 dated 10^thSeptember, 2024 (WB)

The applicant has submitted that it is a company having its head office in West Bengal, and it is engaged in the business of manufacturing and trading of “Baby Carriers with Hip Seat”.

Applicant has raised following questions:

“Q.1: Whether the Products “Baby Carriers with Hip seat” covered by HSN code 63079099 (Other made-up articles, including dress patterns – Other)?

Q.2: If it is not so classified in HSN 63079099 then what would be the correct classification of “baby carriers with hip seat” under the HSN code for GST purposes?”

The applicant explained the nature of product that it provides: in-built mini diaper bag and convertible sling carry bag with five storage pockets, designed to carry infants and toddlers. The product is ergonomically designed to provide support in carrying a baby up to 18 kgs in weight and is typically made from fabric materials combined with other supportive structures.

Applicant also explained the manufacturing process.

Though applicant classified its product under HSN 8715, and charged 18 per cent GST, it wanted correct classification in view of different feedback from market.

Applicant submitted that most of the suppliers engaged in similar products are classifying the items under HSN code 6307 where tax is 12 per cent on value above ₹1,000 and 5 per cent GST on the value not exceeding ₹1,000.

The applicant further submitted that the raw materials used and the characteristics of final product suggest that there is dominating quantity of normal fabrics, narrow woven fabric, foam and mould and hence, it might be more appropriately classifiable under Chapter 63.

The ld. AAR observed that the applicant procures the raw materials like normal fabrics, narrow woven fabric, foam and mold for outward supply of finished goods.

Tariff item 6307 broadly covers following description of goods:

“6307 : OTHER MADE UP ARTICLES, INCLUDING DRESS PATTERNS
6307 – Other made up articles, including dress pattern
630710 – Floor-cloths, dish-cloths, dusters and similar cleaning cloths
630720 – life jackets and life – belts
630790 – Other
63079099- Other”

Looking to the scope of above HSN, the ld. AAR observed that “other made-up articles, including dress pattern” is wide enough to cover the articles like baby carriage with hip seat, and therefore, the ld. AAR opined that above-mentioned item, subject to relevant conditions, would be covered under the Sub-Heading 63079099 in the Heading 6307.

The ld. AAR also observed that goods under Chapter 63 are covered under entry no.224 of Schedule I and entry no.171 of Schedule II of Notification no.1/2017-Central Tax (Rate) dated 28^th June, 2017, attracting GST at the rate of 5 per cent and 12 per cent, respectively, as per sale value of the product as not exceeding ₹1,000 or exceeding R1,000, respectively.

38 Classification — “Antioxidant Water”

Saisarvesh (AR Order No. 24/AAR/2024 dated 5^th November, 2024 (TN)

Applicant is manufacturing Natural Antioxidant Water with natural Betel Leaf extract and natural Ajwain extract. Applicant is trained from CSIR– Central Food Technological Research Institute and is licensed to do Commercial Production by CSIR.

Copy of Certificate issued by the CSIR for “Paan flavored water” is also produced.

Applicant has raised following questions in its AR application.

“1) “We are using HSN 2202 9920, please confirm which is correct or not correct?

2) We are charging tax @ 12% for the products manufactured from end, confirm which is correct or not correct?”

The applicant explained the manufacturing process with use of raw materials like packaged drinking water, Ajwain seeds, and emulsifiers like propylene glycol, etc.

The ld. AAR observed as under about material and manufacturing process:

“12.2. We find that the Applicant are manufacturer of ANTIOXIDANT WATER with natural BETEL LEAF extract or natural AJWAIN extract besides certain additives. On perusal of the process description for manufacturing the ANTIOXIDANT WATER, furnished by the applicant while filing the Advance Ruling Application and further submissions made during and after the personal hearing, it is noticed that the tender, preferable dark green betel leaves/ Ajwain seeds, after washing and grinding would be subjected to Hydro-distillation and the resultant condensate oil is treated with Sodium Sulphate to remove any water molecule present in the oil to obtain volatile oil. Then this volatile oil is dissolved in propylene glycol to get “Stock Solution A”. By the side, prescribed quantity of Menthol crystals are dissolved in propylene glycol to get “Stock Solution B”. Then the “Stock solution A” and “stock solution B” at certain proportions as approved by the Central Food Technological Research Institute (CFTRI), Mysuru, are mixed and blended with packaged drinking water as per the process know-how approved by the CFTRI. It is also observed from the certificate issued by the CFTRI that the said technical know-how for the manufacture of said ANTIOXIDANT WATER viz “Paan Flavored water” have been demonstrated to the applicant and the applicant was also been provided with adequate training in the unit-operations of the process and licensed to undertake commercial production of
the product.”

The ld. AAR referred to Tariff item 2202 9920 in Custom Tariff Act which reads as “Fruit pulp or fruit juice-based drinks”.

The ld. AAR held that Antioxidant Water manufactured by the applicant does not contain any Fruit Pulp or Fruit Juice and, therefore, classification “2202 99 20” adopted by the applicant is not correct.

The ld. AAR then went on to decide correct classification. The ld. AAR observed that the applicant has used “Betel leaves/Ajwain seeds, propylene glycol, Menthol Crystals dissolved in propylene glycol” as their raw materials in the preparation of stock solutions to be blended with the packaged drinking water. Ld. AAR further noted that one of the ingredients used in the preparation of the product is Menthol, which is found naturally in oils of several plants of ‘Mint’ family such as corn mint and peppermint and it possesses well-known cooling characteristics and a residual minty smell of the oil from which it was obtained.

The ld. AAR also observed that in addition to natural flavour contained in a betel leaf/ajwain seeds, menthol crystals are added to get a flavour and taste of ‘Menthos’ and hence, the product prepared by the applicant is nothing but a ‘flavoured drink’.

The ld. AAR also noted that the CSIR has issued certificate as under:

“This is to certify that the CSIR-Central Food Technological Research Institute, Mysuru, has licensed this Instituted Process Know-how on ‘Paan flavored water’ to M/s. IDYA, No. 88, Canal Road, KG. Colony, Chennai – 600 010 as per an agreement entered into between the parties, on 04^th October, 2021.”

Therefore, the ld. AAR concluded that Antioxidant Water manufactured by the applicant is nothing but “Paan flavored water”, and classifiable under HSN 2202 1090 as All goods [including aerated waters], containing added sugar or other sweetening matter or flavoured, and taxable @ 28 per cent, vide entry at Sl. No 12 to Schedule IV of the Notification No 1/2017, Central Tax (Rate) dated 28th June, 2017, and compensation Cess at 12 per cent vide entry at Sl. No. 4 of Notification No 1/2017, compensation Cess (Rate) dated 28th June, 2017.

39 GTA Service — Scope

Globe Moving And Storage Company Pvt. Ltd. (AR Order No. KAR ADRG-39/2024  dated 6^th November, 2024 (Kar)

The applicant has raised the following issue for ruling by the ld. AAR.

“Whether the supply of pure service made by our organization, (being a GTA cum-Packing & Moving Company) to or on behalf of a foreign entity unregistered in India (unregistered person), is exempt from charge of GST under Notification No.32/2017-Central Tax (Rate) dated 13-10-2017 (entry number 21A) & IGST Notification No.33/2017-IGST(Rate) dated 13-10-2017 (entry number 22A)?”

The ld. AAR noted the activity of applicant as under:

“The applicant submitted that they are into the business of GTA (Goods Transport Agency) and packing, moving, transportation, customs clearing through CHA and related supporting services; they provide services to the foreign client (unregistered person / entity), who are also in the same line of business, who export the consignments of their customers, intend to relocate to India, for ultimate use/consumption in India on “Door to Door Delivery” basis, by making all customs formalities abroad and collect the entire Door-to-Door delivery charges from their customers in their own country. The foreign client of the applicant avails the services of the applicant in India, as they have no permanent or temporary place of business in India, for “Customs clearance, transportation and related supporting services” for delivering such goods to the place of customer in India. Accordingly the applicant arrange for customs clearance of goods in Indian ports through authorized Customs House Agents and transport the said goods to the ultimate destination in India as per shipping documents and also as per the instructions of their foreign client.”

The applicant sought to know the applicability of the exemption under entry 21A of Notification 12/2017 — Central Tax (Rate) dated 28^th June, 2017, as amended. The ld. AAR examined the issue with reference to above entry.

The ld. AAR observed that said entry at sl. No.21A is exclusively in respect of services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person, other than certain specified recipients. The ld. AAR also observed that the term “goods transport agency” is defined in para 2 (ze) of the above Notification which says that the “goods transport agency” means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called. Since the applicant is not issuing consignment note in relation to transport of goods, the ld. AAR did not agree with applicant that it is providing goods transport agency service. The ld. AAR also observed that applicant is providing bundle of services of customs clearance (CHA service), loading & unloading services, port handling, liner fee and destination services in India and hence cannot be covered by exemption under entry number 21A of the Notification No.12/2017-Central Tax (Rate) dated 28^th June, 2017.

40 Electronic Commerce Operator vis-à-vis liability to discharge tax

Natural Language Technology Research (AR Order No. WBAAR 14 of 2024 dated 5^th August, 2024 (WB))

The applicant is a society registered under the West Bengal Societies Registration Act, 1961 which is a non-profit organisation and engaged as a research and development organisation under the Department of Information Technology & Electronics, Government of West Bengal. It is inter-alia engaged in the development of language tools and technology as well as Online Literary and Linguistic resources, etc.

The applicant, under the direction of the Government of West Bengal, has developed a website and mobile application named “Yatri Sathi Mobile App” (hereinafter, referred to as “the App”). The App was launched on the ONDC platform and is designed as a ride-hailing Software as a Service (SaaS) platform, also categorised as a Mobility as a Service (MaaS) solution. The primary purpose of the App is to facilitate the business transaction of supply of services by connecting customers to the drivers of West Bengal.

With above facts, the applicant has made this application seeking an advance ruling in respect of following questions:

“(i) Whether the applicant falls under the purview of the E-commerce Operator as defined in sec 2(45) of the GST Act?

(ii) Whether the applicant shall be deemed to be the service provider u/s 9(5) of the GST Act read with notification no. 17/2021-Central tax(rate) dated 18^th November, 2021 for the Driver services provided by the Driver to the Customer connected by “Yatri Sathi Mobile App”?

(iii) Whether the applicant shall be liable to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App considering the Applicant as service provider u/s 9(5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18^th November, 2021?”

To decide the issues, the ld. AAR referred to relevant legal provisions like Notification No. 17/2017 — Central Tax (Rate) dated 28^th June, 2017, as amended from time to time. The ld. AAR also noted that as per section 9(5) tax on intra-state as well as inter-state supplies of services by way of transportation of passengers by a motorcab, maxicab, motor cycle, or any other motor vehicle except omnibus is payable by the electronic commerce operator, if such services are supplied through it.

The ld. AAR also noted that prime activity of applicant is to provide services for facilitating business transactions through the “Yatri Sathi” App by way of providing a platform to connect the actual suppliers (cab drivers) and recipients (passengers intending to use the driver’s service).

The ld. AAR also noted that actual terms and conditions governing business contracts of supply such as quality, price, etc., are mutually agreed upon by the user, i.e., the driver and his client / customer, i.e., the passenger who books a ride through the App and by no means applicant is involved either directly or indirectly in supply of services. The ld. AAR noted that the only consideration received by the applicant is the registration and subscription fees that are received from the account holder, i.e., the driver and no other commission or so is received by the applicant from the driver.

In this connection, the ld. AAR also referred to definition of “electronic commerce” given in Section 2(44), “electronic commerce operator” in Section 2(45) and provision of Section 9(5) about taxation of Electronic Commerce Operator. The ld. AAR observed that Section 9(5) brings taxability on “Electronic Commerce Operator” if supplies are through such operator.

The ld. AAR held that the applicant is an Electronic Commerce Operator.

Thereafter, the ld. AAR observed about applicability of section 9(5) to present facts.

The ld. AAR observed that the term “through” in the context of legal interpretation, particularly with respect to provisions like Section 9(5) of the CGST Act, requires a level of involvement or facilitation by the electronic commerce operator. The involvement should be substantial enough to consider the service as being provided via the operator’s platform, for which significant involvement in the processes of booking, payment handling and ensuring service delivery by Electronic Commerce Operator is necessary.

However, after going through various aspects of transaction in the present case like fare determination, payment facilities, invoicing, type of service model and influence over driver service quality, the ld. AAR observed that the business model promulgated by the applicant is unique where it merely connects the driver and the passenger and their role ends on such connection and effectively does not have any control over the subsequent business activities as the App platform does not collect the consideration and has no control over the actual provision of service by the service provider.

Therefore, the ld. AAR concluded that even though the applicant qualifies to be an Electronic Commerce Operator, the supply of services is not made through it, and therefore, the applicant is not liable for discharging of liability.

The ld. AAR, accordingly, decided the AR in favour of the applicant.

41 Body building — Job work

Kailash Vahn Pvt. Ltd. (AR Order No. 19/ARA/2024 dated 23^rd September, 2024 (TN)

The applicant is engaged in the field of fabrication and truck body building, wherein independent private customers buy chassis from Chassis manufacturer (also referred to as OEM’s), which is sent to them for the purpose of body building activity of Tipper version Motor vehicle falling under Chapter 87 as a complete motor vehicle. The customer owns the chassis and also owns complete body-built vehicle, and it is registered in RTO in the name of such independent private customer. This activity is regarded as “job work activity” in terms of CBIC Circular No. 52/26/2018-GST dated 9th August, 2018.

The applicant submitted that at present they are charging 28 per cent, treating activity of supply of body as goods under CH 8707 but seeks ruling to treat the said body building activity as Supply of Services attracting 18 per cent GST. Applicant has posed following questions for ruling of ld. AAR.

“1) Whether Applicant can consider the said body building activity as ‘job work activity’ and regard it as ‘Supply of Services’ falling under SAC Code -998881 – ‘Motor vehicle and trailer manufacturing services’ (as per Notification No. 11/2017-CT(Rate), dated 28.6.2017 Sl. No.535).

2) If it is regarded as ‘job work activity’ and ‘Supply of Services’, whether the correct applicable rate of GST, will be at 18% (9 + 9) as applicable under Sl. No.26 (ic) or will it be 18% (9 + 9) as applicable under Sl. No.26 (iv).

3) Or will the activity of body building carried out on chassis belonging to and Supplied by Principal is to be regarded as Supply of goods falling under 8707 – as ‘Bodies (including cabs), for the motor vehicles of headings 8701 to 8705’ attracting 28% (CGST @ 14% + SGST @14%) as per Sl. No. 169 of Schedule IV to the Notification No.1/2017-CT (R) dt.28.06.2017.”

In respect of the above body building activity, the applicant placed on record various documents like Tax invoice, E-way bill issued by OEM for supply of chassis, Temporary registration number issued by local RTO as Goods Carrier in the name of independent private customer, Forms 21, 22 and 22 A (Part 1) issued by OEM in favour of such independent private customer, Insurance taken by independent private customer, Tax invoice issued for body building by the Applicant, etc.

The ld. AAR referred to section 7 of the CGST Act, 2017, which provides for scope of Supply and sub-section 1A of the said Section provides as follows:

“where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.”

The ld. AAR also referred to Schedule II of the CGST Act, 2017, which provides for the list of Activities or Transactions which are to be treated as supply of goods or supply of services. Para 3- Treatment or Process under Schedule II provides as follows:

“Any treatment or process which is applied to another person’s goods is a supply of services”.

The ld. AAR also made extensive reference to Circular no.52/26/2018-GST, dated 9^th August, 2018, wherein “bus body building as supply of motor vehicle or job work” is held as providing service as clarified in Para 12.2(b) & 12.3 of said Circular.

The ld. AAR, however, made distinction between the supply of body building activity made to GST-registered persons and the supply of body building activity made to an un-registered person. The ld. AAR held that the bus body building on chassis owned by GST registered customer is Job work, the bus body building on chassis owned by un-registered customer does not amount to job work due to definition of job work provided under Section 2(68) of CGST Act, 2017. With the above analysis, the ld. AAR answered the first question as under:

“that the activity of body building by the applicant on chassis owned and provided by registered customer or un-registered customer both fall under the scope of supply of service and as per the scheme of classification of services merits to be classified at Heading 9988 ‘Manufacturing services on physical inputs (goods) owned by others’ and precisely at Service code (Tariff) 998881 ‘Motor vehicle and trailer manufacturing services’.”

The ld. AAR further held that the bus body building on chassis owned by GST-registered customer amounts to job work, and the bus body building on chassis owned by un-registered customer does not amount to job work.

However, the ld. AAR held that the rate of tax in both the cases, i.e., when chassis is provided by the GST-registered person or when chassis is provided by GST un-registered person, would be 18 per cent, as per Entry No.26(ic) and Entry No.26(iv), respectively, of the CGST Notification No.11/2017 CT(R), dated 28^th June, 2017.

The ld. AAR also felt that there is no need to answer question 3 as it does not exist in view of above answer to questions (1) and (2).

BCAJ Admin

1. NOTIFICATIONS RELATING TO RATE OF TAX

1. The Government has issued various notifications, all dated 19th October, 2023, for amending certain entries in Schedules prescribing rate of tax. The short gist is as under:

2. Notifications bearing no. 12/2023- Integrated Tax (Rate) dated 19th October, 2023 to No. 22/2023- Integrated Tax (Rate) dated 19th October, 2023 with similar effect as above, are issued under IGST Act. These will also be effective from 20th October, 2023.

B.    OTHER NOTIFICATIONS

(i) Notification No. 52/2023-Central Tax dated 26th October, 2023

By the above notification, GST Rules are amended. The changes are mainly to provide a valuation method for corporate guarantee and mandatory vacating of provisional attachment orders.

(ii) Notification No. 53/2023-Central Tax dated 2nd November, 2023

The Central Government has issued the above notification to provide a specific procedure for condonation of delay in filing appeals against demand orders (commonly called as Amnesty for filing appeals). The amnesty is under Specified situation and with Specified conditions.

(iii)Notification No. GST-793(E) dated 25th October, 2023

The Central Government has issued the above notification by which the Goods & Services Tax Appellate Tribunal (Appointment and Conditions of Services of President and Members) Rules, 2023 are published.

The Rules contain the procedure for appointment, the salary and other services conditions.

3. GSTN – News

The GSTN has informed through communication dated 12th October, 2023, the availability of the facility for the E-commerce operators through whom unregistered suppliers of goods can supply goods and also enrolment for supply of goods through E-commerce.

4. Circulars

The following circulars are issued by CBIC.

(i) Clarification above Export of services — Circular no. 202/04/2023-GST dated 27th October, 2023

By the above circular, clarifications are givenabout the export of services, particularly about
conditions in sub-clause (iv) of section 2(6) vis-à-vis RBI’s, AP (DIR Services) Circular no. 10 dated 11th July, 2022.

(ii) Place of supply — Circular no. 203/15/2023 dated 27th October, 2023

By the above circular, clarifications are given aboutthe place of supply under various situations like, transportation of goods, advertising sector, Co-location services etc.

(iii) Taxability of Corporate Guarantee — Circular no. 204/16/2023 dated 27th October, 2023

Vide above circular, the clarification about various aspects of the taxability of personal guarantee and corporate guarantee are given.

(iv) Rate of tax — Imitation Zari Thread — Circular no. 205/17/2023 dated 31st October, 2023

By the above circular, clarifications are given about GST Rate on Imitation Zari Thread or Yarn based thread as per recommendation of GST Council.

(v) Clarification above applicability of GST onCertain Services — Circular no. 206/18/2023 dated 31st October, 2023

By this circular, the applicability of tax on various services like passenger transport, reimbursement of electricity, job-work of Barley, Millets and services like horticulture/horticulture works is clarified.

C. ADVANCE RULINGS

42 Job work – Nature

Indian Oil Corporation Ltd.

(Order No. 01/ODISHA-AAAR/Appeal/2022-23 dated 21st June, 2022 (Odisha))

This is an appeal against AR order No. 03/ODISHA-AAR/2021-22 dated 15th December, 2021. The facts in brief are that M/s. Indian Oil Corporation Limited, Paradeep Refinery, is a public sector undertaking. The Appellant owns and operates 15 MMTPA oil refinery in the state of Odisha located at Paradeep and refines crude oil and produces several petroleum products at this location. The Appellant requires Hydrogen gas, Nitrogen gas and HP steam for its refining activity, collectively referred to as ‘Industrial Gases’. Industrial gases can be obtained from inputs such as Naphtha and other utilities such as Demineralised water (‘DM water’), power, cooling water, service water, instrument air etc.

Appellant has awarded a contract to M/s. Praxair India Private Limited (“Praxair”), for the Construction, Commissioning, and Leasing and thereafter for Operating and Maintaining a new Hydrogen & Nitrogen Plant within the IOCL refinery complex at Paradeep for supplying of industrial gas on Build-Own-Operate (BOO) basis to appellant. Under this agreement, all the inputs required for the Hydrogen plant and Nitrogen plant like naphtha, DM water, cooling water, service water, fire water, steam and power were to be supplied by the Appellant to M/s. Praxair India Private Limited, located in its Refinery Complex as above for manufacturing of industrial gases as final product. The final products are sent back to the Appellant by M/s. Praxair India Private Limited for the exclusive utilization in the refinery processes. All the output products produced after processing are transferred to the Appellant by Praxair through a pipeline. The ownership of the input and output products remains with the Appellant only.

In the above background, the Appellant had approached the AAR for getting an advance ruling on the following issues:

“(i)    Whether sending of inputs (Naphtha, DM water, Power, Cooling water, service water and instrument air) by the Appellant to M/s. Praxair India Private Limited and receiving back of industrial gases (Hydrogen gas, Nitrogen gas and HP steam) under the lease agreement will fall under ‘job work’ in terms of section 2(68) of Central Goods and Service Tax Act, 2017 (CGST Act) and Odisha Goods and Service Tax Act, 2017 (OGST Act)?

(ii)    Whether all the payments under the lease agreement will attract GST as applicable to Job Work.”

In view of the above background facts, the AAR gave a ruling that:

“i)    The activities being undertaken in the Appellant’s premises/production plant do not qualify for ‘Job work’ under section 2(68) of Central Goods and Service Tax Act, 2017 (CGST Act) and Odisha Goods and Service Tax Act, 2017 (OGST Act) and Section 143 of said Acts.

ii)    The Appellant’s next question “Whether all the payments under the contract will attract GST as applicable to Job work?” is not maintainable on the ground already stated supra.”

Appellant has filed an appeal against the above AR.

Before the AAAR appellant repeated that the agreement is to be read in whole and as per agreement, the substance is to render job work services.

The ld. AAAR noted the term in the agreement as under:

“the Lessor (M/s. Praxair India Private Limited) does hereby demise unto the Lesee (Appellant) by way of lease the production plant to hold the same unto the Lessee for a period of 15(fifteen) years from the effective date, paying therefore a monthly rent as hereinafter mentioned the Lessor acknowledges that vacant physical and peaceful possession of the production plant has been handed over to the Lessee on the effective date.”

The ld. AAAR therefore observed that the plant is not under the control and possession of M/s. Praxair India Private Limited but it is with Appellant on a monthly rent basis for 15 years.

Therefore, the AAAR held that the agreement between M/s. Praxair India Private Limited and the Appellant is a simple ‘lease agreement’ and not a ‘job work agreement’ and M/s. Praxair India Private Limited has no control and possession over the place where the inputs supplied by the Appellant are processed. The ld. AAAR also referred to other incidental terms.

The ld. AAAR held that the whole operation of Praxair is under the control of the appellant and hence the claim of the appellant that there is job work, service is rejected by ld. AAAR. Accordingly, the ld. AAAR confirmed AR and dismissed the appeal.

43 Construction Contract for Government entity – Pre and Post amendment
Shree Constructions (Order No. AR. Com/10/2022 dated 8th December, 2022 (Telangana)

The facts are that the applicant, M/s. Shree Constructions, are in the business of execution of works contracts wherein they execute the construction of the building on the land provided by the Telangana State Industrial Infrastructure Corporation Limited (TSIICL). The applicant is to construct warehouses and cold storage at the primary processing centre in Jillela Village of Rajanna Siricilla District. The applicant also informed that TSIICL will be letting out godowns for rent and it will be a business activity. The applicant further submitted that the TSIICL is wholly owned by the Government of Telangana and therefore the supply of works contract service by them is to a Government entity. The applicant therefore sought an advance ruling on the rate of tax applicable to supplies made to such Government entity.

The following question was raised:

“Q1. The rate applicable for the works contract service provided to the Telangana State Industrial Infrastructure Corporation Limited (TSIICL) which is wholly owned by the Government of Telangana State by way of construction of building on their land. Whether it is 12 per cent as the for Telangana State Industrial Infrastructure Corporation Limited (TSIICL) is wholly owned by the Government of Telangana or 18 per cent as the for Telangana State Industrial Infrastructure Corporation Limited is a business entity and collecting rent for letting our Godown/Building from its customers.”

The applicant reiterated its contention of a lower rate of 12 per cent.

The ld. AAR observed that TSIICL is a Government entity and apparently falls under S. No. 3(vi) of Notification No. 11/2017 which reads as follows:

“(vi) [Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, {other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of —

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; or

(d) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.

Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be.

Explanation. — For the purposes of this item, the term business‘ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.”

The ld. AAR also referred to terms ‘Government Authority’ & ‘Government entity’ inserted as the definition in notification no. 31/2017-Central Tax (Rate) dated 13th October, 2017, in Notification no. 11/2017 as clauses (ix) & (x) to the explanation at Para 4 which is as follows:

“(ix) Governmental Authority means an authority or a board or any other body, – (i) Set up by an Act of Parliament or a State Legislature; or (ii) Established by any Government, with 90 percent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution.

(x) Government Entity means an authority or a board or any other body including a society, trust, corporation, — (i) Set up by an Act of Parliament or State Legislature; or (ii) Established by any Government, with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.”

The ld. AAR appreciated that the recipient is a Government entity. It further observed that the original notification No. 11/2017 applied a concessional rate of tax to ‘Government Entities’ & ‘Governmental Authorities’ @ 6 per cent of CGST & SGST each, only if such construction is predominantly for use other than for commerce, industry or any other business or profession. Since in the present case, the ware houses are for business purposes, the ld. AAR held that the above notification cannot apply to the applicant and hence further held that the applicable rate is 18 per cent. The ld. AAR also noted an amendment in the above entry in November 2021 vide Notification No. 15/2021 dated 18th November, 2021 whereby the phrases ‘Government Entity’ & ‘Governmental Authority’ are deleted from the Entry at S. No. 3(vi) of Notification No. 11/2017 with effect from 1st January, 2022. Thus, the works executed even for the ‘Governmental Entity’ or ‘Government Authority’ will be taxable @ 18 per cent from 1st January, 2022.

Accordingly, the ld. AAR confirmed rate @ 18 per cent for pre-amendment as well as post-amendment period.

A similar issue was also raised in one more AR bearing No. AR. Com/15/2022 dated 8th December, 2022 (Telangana). In this case also, the applicant was the same and has executed contracts for the same authority i.e., Telangana State Industrial Infrastructure Corporation Ltd. The applicant is to execute a contract for Bund beautification and construction of suspension wood bridge. The ld. AAR relying upon the above position of notification entry 3(vi) of Notification no. 11/2017 held the above contracts liable to tax @ 12 per cent.

There were further two contracts for establishing Shilparamam and Neera Café and food court. Since the above works are for business purposes, the ld. AAR held that tax applicable to said contracts will be 18 per cent. It was further held that from 1st January, 2022, the first category of contracts will also fall in the category of 18 per cent rate due to amendment in entry 3(vi) as discussed in earlier AR.

44 Exemption to Sub-contractor
Magnetic Infotech P. Ltd. (Order No. AAR. Com/11/2022 dated 22nd November, 2022 (Telangana)

The brief facts are that Magnetic Infotech Pvt Ltd, Plot No. 08, Krishna Nagar Colony, Kakaguda Village, Wellington Road, Picket, Secunderabad, Hyderabad, Telangana — 500009, had filed an application in FORM GST ARA-01 under Section 97(1) of TGST Act, 2017 read with Rule 104 of CGST/TGST Rules under following facts.

The Applicant has entered into agreements with various educational institutions located in different States such as the Board of Secondary Education and others.

The scope of work in respect of the services being provided to the educational institutions by the applicant was noted as falling in the following three categories:

i.    Data processing for conduct of examination

ii.    Results Preparation

iii.    Generation and printing of statistical data and reports in the prescribed proformas as required by the educational institutions.

The aforesaid three categories of services involved processing of examination results which involves collection of examination forms from students and processing, and generation of checklists which are sent to the corresponding education institutions for verification and error correction. Then the checklist corrections are updated to make it error-free data. The further work involved the generation of hall tickets / admit cards, and photo attendance sheets which are sent to the examination centres. There are further activities like Processing the nominal roll data, generation of OMR sheets for obtaining marks, and conducting the examinations with nominal roll data and student information.

Post-examination services include getting the marks awarded from the evaluation centers capturing the data and summarizing it, purifying it and incidental activities till the declaration of results and issuing the marks memos to the students.

The applicant has submitted the following questions for Advance ruling:

a. Whether GST exemption is available to the applicant in respect of the pre and post Examination services being provided to the Educational Boards and Universities (including Open Universities)?

b. If answer to Q. No.1 is affirmative, whether the exemption is available to the applicant in case the services are provided on sub-contract basis i.e. the applicant provides pre and post examination services to the main contractor who in turn provide the said services to the Educational Boards & Universities (including Open Universities)?

Thus, the main issue involved was service rendered by the applicant on sub-contractor basis to main contractor in relation to pre & post-examination services.

The AAR gave AR wherein the Members of the Authority expressed different opinions on the second question raised by the applicant. One of the members Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) held as under:

“It was opined by the above Member that in view of provisions contained under Sl. No. 66(b) of the Notification No. 12/2017—Central Tax (Rate), dt.28- 06-2017, as amended, the service relating to admission to or conduct of examination is exempt when provided to such educational institution, therefore, where a service itself is exempt, this exemption can be claimed by any taxable person including a sub-contractor.”

The other member Shri B. Raghu Kiran, Additional Commissioner, Central Tax held as under:

“8.4. The service relating to admission to or conduct of examination is exempt when provided to such educational institution. The said entry specifies that the services are required to be supplied to educational institution. Nevertheless, where the privity of contract is between the applicant (as a sub-contractor) and a main contractor, in such cases, the main-contractor does not fall under the definition of ‘educational institution’ and therefore, such supply is not covered under entry 66(b) of Not. No. 12/2017-CT (R) dated 28-06-2017 as amended. As such, the benefit of exemption is not available to the sub-contractor who supplies service to main contractor even though service to ultimately rendered to education institution.”

Under the above facts of divergent views on Question 2 about the applicability of GST, the said question was referred to the Appellate Authority for Advance Ruling for the state of Telangana in terms of Section 98(5) of the CGST/TGST Act, 2017 for hearing and decision on the said question No. 2.

The ld. AAAR reproduced the relevant extract of Notification no. 12/2017-CT(R), dated 28th June, 2022 and reproduced the same as under:

The ld. AAAR observed that the exemption is available when services are provided to an educational institution, by way of Services relating to admission to, or conduct of examination by, such institution.

In other words, the ld. AAAR observed that theexemption would be available when the services are provided “to” an educational institution for services relating to admission to, or conduct of examination by, such institution.

The ld. AAAR held that since in the present case, the main contractor to whom the applicant is to provide services as sub-contractor is not an educational institution, though the services are allegedly being provided to the Educational Boards and Universities by the main contractor, the exemption contained in the impugned notification is not available to the applicant. The ld. AAAR held that the wordings of any notification have to be strictly read to allow or deny any exemption.

In view of the above, the ld. AAAR held that the applicant, M/s. Magnetic Infotech Private Ltd., as a sub-contractor, is not eligible to claim exemption as available under Notification no. 12/2017(R), dated 28th June, 2017.

BCAJ Admin