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2019 (1) TMI 195 – ALLAHABAD HIGH COURT – TMI – Seizure/ retention order – Section 129(3) of the U.P. GST Act – Held that:- The petitioner is the owner of the goods and as such it is directed that the goods so detained and the vehicle shall be released to the petitioner, on furnishing security in terms of Clause (C) of Section 129(1) of the Act for the amount as indicated under Section 129(1)(a) of the Act forthwith – petition allowed. – Writ Tax No. – 1665 of 2018 Dated:- 20-12-2018 – Pankaj

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2019 (1) TMI 303 – GUJARAT HIGH COURT – TMI – Refund of IGST – Zero rated supply – Reference was made to Circular No.37/2018-Customs dated 9.10.2018 to submit that the same does not relate to IGST and would have no applicability to the facts of the present case. It was submitted that in any case, the petitioner has already returned back the differential drawback amount, and hence, there is no impediment in the way of the respondents in granting the refund to the petitioner.
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Notices issued. – R/SPECIAL CIVIL APPLICATION NO. 20126 of 2018 Dated:- 20-12-2018 – MS HARSHA DEVANI AND DR A. P. THAKER, JJ. For The Petitioner (s) : MR D K TRIVEDI (5283) ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. The learned advocate for the pe

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iming refund under the said rule have been fulfilled by the petitioner. Referring to sub-rule (4) of rule 96 of the rules, it was submitted that the claim for refund can be withheld only in the two eventualities mentioned therein, none of which are attracted in the present case. Reference was made to the e-mail dated 28.11.2018 issued by the IGST Section, Customs House, Mundra drawing the attention of the petitioner to the Board Circular No.37/2018-Customs dated 9.8.2018 wherein it is clearly mentioned that by declaring drawback claim serial number suffixed with A or C, the exporters consciously relinquished their IGST/ITC claim. Reference was made to Circular No.37/2018-Customs dated 9.10.2018 to submit that the same does not relate to IGS

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2019 (1) TMI 509 – CESTAT MUMBAI – TMI – Penalty u/s 78 – non-payment of service tax collected for providing telecom services and work contract services – short payment for other period – cash crisis/ fund shortage was cited as the ground for such non-discharge of duty liability but on 18.08.2011 and 19.08.2011, the appellant was able to discharge the entire amount, which is just within two days from the date of raid conducted by the respondent department – intent to evade or not – Held that:- Appellant was not fling ST-3 returns and would have continued to evade service tax by suppressing material facts, had there been no intervention by the department. This being the factual aspect, it cannot be said that appellant had a bonafide intention to discharge duty liability and it could not do so due to incapacity – also, no material is forthcoming that appellant was ignorant of its duty liability and had in fact furnished its statement by way of ST3 returns to the department indicating it

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(Judicial) Ms. Kranti Rathi, Advocate with Shri J.R. Gawde, Consultant for the appellant Shri Dilip Shinde, AC (AR) for the respondent ORDER Imposition of penalty under Section 78 of the Finance Act, 1994 against non-payment of service tax collected for providing telecom services and work contract services by the adjudicating authority which has attained finality in the order of the Commissioner (Appeals) is assailed by the appellant company before this forum. 2. Brief fact of the appellant s case is that it has been providing works contract services and telecommunication services since 03.11.2006. It has provided services like laying of cables and dock lines for telecommunication companies namely Tata Telecommunications, BSNL etc. as its major clients. Anti-evasion wing of the appellant department, upon collection of intelligence report, visited the office premises of the appellant, inspected its documents and found non-payment of service tax collected to the tune of ₹ 47,65,67

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e before the Commissioner (Appeals), the appellant has filed this appeal in the Tribunal. 3. In the memo of appeal and during course of hearing of the appeal, ld. Counsel for the appellant Ms. Kranti Rathi submitted that appellant was not extended the benefit provided under Section 73(3) of the Finance Act, 1994 after payment of duty, interest and penalty component accordingly and was put to show-cause almost two years after the visit of the departmental officials. In citing judicial decisions in Ford India Pvt. Ltd. vide Final order no. 40182- 40183/2018 dated 23.01.2018, CCE vs. Mahindra & Mahindra Ltd. 2018-TIOL-187-SC-MUM-CX, Thirumurugan Enterprises 2015 (14) STR 681 (Mad.), A.N. Impex 2016 (42) STR 793 (Bom), Amway India Enterprises Pvt. Ltd. 2015 (39) STR 1006 (Tri-Del), Vista Infotech 2010 (17) STR 343 (Tri.Bang), S.K. Electro Engineers 2015 (39) STR 686 (Tri Mum), Royes Inds Ltd. 2016(344) ELT 466 (Tri-Hyd), Pragathi Concrete Products (P) Ltd. 2017 (50) STR 92 (SC), CCE Na

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on team had not raided the premises of the appellant, the fact of suppression by way of evasion of tax would not have been known. Referring to the order passed by the Commissioner (Appeals) in para 6.1, 6.2 and 7 where reference to order-in-original is made by the Commissioner (Appeals), ld. AR argued that the appellant had collected service tax amount during the period April 2010 to June 2011 but had not deposited the same in government exchequer nor disclosed the same on its own to the department and the statement of one of its partners indicates that such service tax liability was not discharged due to cash flow and fund problem which itself indicates that tax liability was well within the knowledge of the appellant firm who had intentionally withheld the same for which extended period was rightly invoked that needs no interference of the appellate Tribunal. 5. Heard from both sides at length and perused the case records and relevant judicial decisions submitted by adversaries. On p

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er ground cited by the appellant in placing reliance to the statement of the partner is that they did not get payment against work done for Tata Telecommunications but nowhere in the reply to the show-cause notice or personal hearing, they had established that in between raid conducted on 16.08.2011 and payment made on 18.08.2011 the appellant had in fact received such payment and promptly discharged its duty liability. Further, appellant wants its case to be covered under Section 73(3) but to being it to its preview, the fact of duty liability should not have been in its knowledge and should have been brought to its notice by the central excise officer. In that context, no such material is forthcoming that appellant was ignorant of its duty liability and had in fact furnished its statement by way of ST3 returns to the department indicating its duty liability. 6. Section 78 requires that such fact of wilful suppression, misstatement etc. had to be established by the department on whom

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2019 (1) TMI 678 – KARNATAKA HIGH COURT – TMI – Detention order – non-compliance of the mandate under the provisions of Section 129(4) of the Act – Held that:- From a plain reading of the order, it is apparent that the contention raised by the learned counsel for the petitioner, that no opportunity has been afforded under Section 129 (4) of the CGST Act stands falsified – it is apparent that the alleged owners have waived the right of hearing and have consented, levy of tax and penalty and have undertaken to pay as per the provisions of Section 129(1)(a) of the CGST Act.
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The Proper Officer realizing the lacuna, has proceeded to pass the rectification order after taking into consideration the objections and hence, the same is nothing but an attempt by the Proper Officer to ensure that the objections filed and contention raised by the petitioner are considered in the proper perspective and in the manner required under the Act. Hence, no malafides can be attributed to the same – t

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T Act, 2017. 3. The petitioner is a transporter represented by its Proprietor and was transporting certain goods as detailed in the order of confiscation. The said conveyance bearing registration No.KA-07-A-8570 was intercepted by the officers of the Revenue Department on 04.08.2018 at 6.55 a.m., near Nelamangala Toll Gate, Tumkur Road, Bengaluru. Thereafter, the documents tendered by the driver of the vehicle were scrutinized, physical verification of the goods with reference to the documents furnished ensued and thereafter report has been drawn. After a verification of the goods in the conveyance, it was found that the consignment consisted of ready made garments worth of ₹ 33,35,335/- and the said consignment was not accompanied by valid documents like tax invoice and e-way bill and the same was in contravention of the provision of Section 68(1) of the CGST Act, 2017 and KGST Act, 2017. On such basis the Revenue concluded that the same amounts to an attempt to avoid paying tax

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the documents that were made available by the driver of the conveyance and inspection of goods has been carried out in the presence of the driver and one Sri.D.H.Naik, who is incharge of petitioner s office at Bengaluru. 6. Learned HCGP would draw the attention of this Court to Annexure-A1 to the writ petition-the order of Demand of Tax and Penalty dated 22.08.2018. The Commercial Tax Officer (Enforcement), South Zone, Bengaluru, who is the Authority, has passed the order and categorically observed as follows:- Further, as per the request of the transporter, personal hearing was given through and endorsement dated 16.08.2018 on 17.08.2018. In response, Sri. Mahendra Jain, S/o Rajatmal, Proprietor of M/s. Bright Road, Logistics, Bengaluru appeared and was heard. At the time of hearing, he also filed a confirmation letter dated 14.08.2018 of M/s. Prathiksha Techologi, Sy. No.207, Site No.03, Jayasingah Layout, Halagevaderahalli Viullage, Kengeri Hobli, Bengaluru Urban, Karnataka, pin-56

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ave consented, levy of tax and penalty and have undertaken to pay as per the provisions of Section 129(1)(a) of the CGST Act. Despite the same, the petitioner has been heard in the matter. 9. Learned counsel for the petitioner would also endeavor to contend that none of the consignees have been heard in the matter. 10. The letter marked at Annexure-H dated 23.08.2018, itself is an answer to the contention raised by the learned counsel for the petitioner. In the letter, nowhere it is stated that the consignee requests for hearing and no material is placed on record to demonstrate the same. Apart from furnishing the letters of the consignees, there are no other details furnished by them. Further, the letter allegedly conveying the confirmation of the consignee to pay the due also does not inspire confidence in this Court. Infact the enclosures to the Annexure at page Nos.171, 173, 175 and 176, appears to be written in the same pen and by the same hand. These are factual aspects that has

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the issue. Hence, the said ruling is distinguishable and inapplicable to the instant case. 13. Learned counsel for the petitioner would submit that the rectification order at Annexure-A3 dated 25.09.2018 has been passed without affording an opportunity and the unilateral action is unsustainable. 14. Per contra learned HCGP would draw the attention of the Court to rectification order and contend that the rectification order was necessitated on account of omission of the Proper Officer to consider the objection/reply filed by the petitioner on 18.09.2018. That the same was omitted from consideration as the objections were filed on 18.09.2018 i.e., a day prior to passing the orders on confiscation and the same was not placed before him. That the Proper Officer realizing the lacuna, has proceeded to pass the rectification order after taking into consideration the objections and hence, the same is nothing but an attempt by the Proper Officer to ensure that the objections filed and contentio

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2019 (1) TMI 974 – CESTAT NEW DELHI – TMI – Penalty u/s 76 of FA – condonation of delay of 1293 days in filing the cross objection – Tribunal rejected the application – HC directed the tribunal to reconsider the application, while tribunal as passed the Final Order itself – the factum of Final Order dated 02.07.2018 was not brought to the notice of the Hon’ble High Court of Madhya Pradesh despite that the said Order is acknowledged to be very much in the knowledge of the respondent-assessee – Held that:- The circumstances as narrated since were not brought to the notice of the Hon’ble High Court of Madhya Pradesh that the Ld. Counsel for the respondent assesses has requested time to seek clarification from the Hon’ble High Court itself. In the interest of justice and in view of the observations of Hon’ble High Court of Madhya Pradesh, time as requested is hereby given.
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Since before this Tribunal nothing is pending as on date, Appeal being already disposed of, liberty is given to

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y the respondent assessee seeking condonation of delay of 1293 days in filing the cross objection. The said application was listed on many occasions where after it was listed on 22.11.2017 when this Tribunal gave a written direction to the assessee respondent to file detailed chronology of dates with full background so as to appreciate the reason for delay of 1293 days in filing the cross objection. The matter for the purpose was adjourned to 12.12.2017. Owing to the absence of the respondent-assessee and the circumstances as detailed and the order dated 12.12.2017 that the Miscellaneous Application of the respondent assessee was dismissed and the Appeal of Revenue was listed for final hearing on 12.01.2018. 3. This Tribunal vide the Order dated 02.07.2018 has allowed the impugned Appeal of the Revenue vide the Final Order No. 52378/2018 dated 02.07.2018 holding : 6. From the record of the case, we find that the demand stands raised for the period 01.10.2004 to 31.03.2010. The amendmen

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vide Order dated 02.07.2018 as such: After going through the order sheet and the proceedings recorded by the Tribunal on 22.11.2017, we are satisfied that the order passed by the Tribunal on 12.12.2017 is contrary to the facts available on record. The Tribunal failed to see that the appellant was directed to furnish the details or the chronological events on 22.11.2017 and the case was posted on 12.12.2017. On the said date request was made for an adjournment on the ground of illness of the counsel of the appellant. Heavens would not have fallen if the case was adjourned for a week or so to enable the appellant to put forth his case before the Tribunal. In view of the foregoing we cannot sustain the order impugned and the same is hereby set aside. The matter is remitted back to the Tribunal with the directions to decide it in accordance with the law. There shall be no order as to costs. 5. The circumstances as narrated above since were not brought to the notice of the Hon ble High Cour

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2019 (3) TMI 540 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Input tax credit – procurement of Gold coins which are to be distributed to the customers at the end of scheme period for achieving the stipulated lifting or payment criteria – various other schemes involved periodically – gift or not – Held that:- The provisions of ITC are governed by Sections 16 and 17 of the CGST Act, 2017. In order to avail ITC, two basic provisions need to be complied with, i.e. Section 16 and Section 17. As per Section 16, a taxpayer is entitled to take credit of input tax charged on any supply of goods or services to him which are used in the course or furtherance of his business, i.e this section disallows ITC against input goods/services used for non-business purposes. Section 17 (5) of the CGST Act deals with Blocked credits and begins with a non obstante clause, which means even if Section 16 (1) allows ITC, Section 17(5) shall block in respect of certain cases.
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The word ‘gift’ has n

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t has assigned a value to the gold coins to be given gifts and the value is ₹ 3,200/- per gm. They have not explained as to how they have arrived at the value because value of gold changes everyday. Secondly the Scheme announced by them states that “customers who lifted the products as per the scheme and made payments as per the scheme are invited for the meeting.
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ITC on “gifts” will not be available when no GST is being paid on their disposal. Just because the applicant submits that they have satisfied Section 16 (1) of the CGST Act 2017 does not mean that they are entitled to credit since Section 17(5) starts with “Notwithstanding anything contained in sub-section (1) of Section 16” The implication is that in the subject case even if it seems, as per the applicant, that Section 16 (1) is applicable in their case and allows them credit, Section 17(5) shall block such credits. – GST-ARA- 72/2018-19/B-165 Dated:- 20-12-2018 – SHRI B. TIMOTHY, AND SHRI B. V. BORHADE, MEMBER

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it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS SOUGHT 1. This Application is being filed by M/s. Biostadt India Limited ( the Applicant /the Company ). The Applicant, having Good and Service Tax (GST) Registration No. 27AACCB1830G123 is inter alia engaged in the business of developing, manufacturing and distributing crop protection chemicals and hybrid seeds

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has constantly helped the company in achieving their long-term vision and mission. 6. It is a well proven fact that the channel of distribution plays a pivotal role in achieving the marketing objectives of the company. In order to achieve sales and marketing objectives, the applicant has launched various target based – sales incentive schemes for their distributors and retailers (customers). These schemes help the customers to be motivated to achieve a specified target and in turn helps the company to achieve their targets. 7. The applicant has PAN-India presence and has operations spread out in more than 15 states. The Applicant was erstwhile registered under Central Excise law, Service tax legislation and respective State Value Added Tax laws and now is registered under Good and Service Tax (GST). 8. This Application is being filed by M/s. Biostadt India Limited which inter-alia has launched a new sales promotion scheme namely the Kharif Gold Scheme 2018 for their customers. The said

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d. Stock returns are not allowed under the said scheme. e. No other discounts are eligible under the said scheme. f. Both the legs of the scheme are independent of each other. Customer satisfying any one leg will be entitled to reward of that leg only. g. A meeting will be called at the end of the scheme period and customers who have satisfied either of the lifting or collection criteria shall be entitled to attend such meeting. h. During the meeting the customer shall be rewarded with the 8gms or 10 gms gold coin depending upon the criteria fulfilled by him. 10. The above mentioned scheme is in force. The applicant will be procuring gold coins from jewelers which are to be distributed at the end of the scheme. As per notification 1/2018 – CGST (Rate) dtd. 28.06.2017, gold is leviable to GST at the rate of 3 percent. 11. The applicant intends to maximize their sales and minimize their outstanding collection through the operation of Kharif Gold Scheme 2018 . Statement of relevant facts

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led to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business. 2.2. Section 16(1) is an empowering section which creates a vested right upon the registered person to claim credit of input tax on goods or services or both procured by him provided they are used or intended to be used in the course or furtherance of his business. 2.3. Following are the important limbs to the qualifying section 16(1): • Registered Person: Section 2(94) of the CGST Act states that registered person means a person registered under Section 25 of the CGST Act. As stated earlier, the applicant is registered under the GST law. Input Tax: Input tax as defined under section 2(62) of the CGST Act includes CGST, respective SGST and UTGST, IGST and so on. Section 2(63) of the CGST Act defines Input tax credit as the credit of input tax. Inputs is defined under Section 2(59) of the CGST Act to mean any goods other

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herance of business. The applicant has launched Kharif Gold scheme with an intention to maximize the sales and collections of the company. The scheme so implemented grants an advantage to the applicant over other competitors in the market. These schemes ensure brand loyalty and market loyalty which are the important aspects of any business. Hence it would be reasonable to conclude that the scheme launched by the applicant is in course or further of applicant s business . 2.4. Section 16(2) of the CGST Act provides for conditions which need to be satisfied for claiming ITC on supply of goods or services or both. These conditions are with respect to possession of tax invoice, receipt of goods, payment of tax and filing of returns. The applicant contends that he has satisfied the conditions as laid down in Section 16(2) and is eligible to claim ITC on purchase of gold coins. 2.5. In accordance with the above paras, applicant strongly feels that he is eligible to claim ITC on procurement o

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………….. (f) ………………………….. (g) ………………………….. (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and 2.8 On a plain reading of aforesaid provisions, one may reasonably conclude that ITC needs to be reversed in respect of gold coins which are disposed of by way of gifts or free samples. However it is imperative to understand the ambit of term gifts . 2.9. The term gift is not defined under CGST Act. Hence reference needs to be made to other statutes or jurisprudence available on the same. The Gift-Tax Act (18 of 1858) had defined the word gift to mean transfer by one person to another of any existing movable or immovable property voluntarily and without consideration in money or money s worth. The Honorable Supreme Court cited the definition of gift from Corpus Juris Secundum, Volume 38 in the case of Sonia Bhatia v. State of UP [1981 SCR (3) 239,1981 SCC (2) 585) = 1981 (3) TMI 250 – SUPREME COURT as

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hese sales linked scheme are purely for advancement of company s business. It is a known principle that nothing comes free in business . Each and every act done for business comes with a consideration. Applying same analogy, gold coins are not given away freely to the customers. The applicant has a contractual arrangement with the customer wherein if he purchases certain amount of company s product or makes payment in a prescribed manner then he shall be entitled to a gold coin of specific weight. Gold coin will not be available to the customer unless he satisfies the criteria laid under the scheme. Giving away gold coins to customer cannot be termed as voluntary act of the applicant. 2.12. The applicant strongly contends that the gold coins distributed to customers at the end of scheme period cannot be qualified as gift . Since they cannot be qualified as gift, disallowance under Section 17(5) will not be attracted. Hence, the applicant should be entitled to claim ITC of gold coins pu

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vited for meeting. Prices of the products vary for different SKUS No Stock Returns under the scheme. In case of any discrepancy company reserves the right to modify/cancel the scheme without prior notice THE CENTRAL GOODS AND SERVICE TAX ACT (CGST), 2017 Relevant provisions under CGST Act, 2017: 1. Inputs [Section 2(59)1: Input means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. 2. Input Tax [Section 2(62)1: Input tax in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes (a) the integrated goods and services tax charged on import of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions

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such person. 6. Conditions for taking input tax credit (Section 16(2): (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation. For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either

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supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where- (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and (iv) travel benefits extended to employees on vacation such as leave or home travel concession; (C) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person for cons

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tural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes – i. laud, building or any other civil structures; ii. telecommunication towers; and iii. pipelines laid outside the factory premises. THE GIFT TAX ACT, 1958 Relevant provisions under the Gift Tax Act, 1958: 1. Gift (Section 2(xii): Gift means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money s worth, and includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section; [Explanation.-A transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income tax Act, by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money s worth, shall be deemed to be a gift made

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t given away as gift: A Section 17(5) of the CGST Act provides for blocked credits. As per section 17(5)(h) registered person is not entitled to claim ITC of tax paid Re g n goods given away as gift or free sample. Erstwhile Gift Tax Act defined gift to mean transfer by one person to another of any existing movable or immovable property voluntarily and without consideration in money or money s worth. Honorable Supreme Court cited the definition of gift in the case of Sonia Bhatia v. State of UP [1981 SCR (3) 239, 1981 SCC (2) 585] = 1981 (3) TMI 250 – SUPREME COURT as a voluntary transfer of property by one to another, without any consideration or compensation therefor. A gift is a gratuity and an act of generosity and does not require a consideration, but there can be none; if there is a consideration for the transaction, it is not a gift. It is a settled principle that Gift cannot arise out of a contractual obligation and nothing comes free in business . The Australian High Cou

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e. > Value of Gold coins is not to be included in the value of goods: Section 15(1) of CGST Act provides that value of supply of goods shall be the transaction value i.e. price actually paid or payable for said supply of goods where the supplier and recipient of supply are not related and price is the sole consideration for the supply. Related persons is defined in explanation to section 15 of CGST AGNES Our customers do not fall under any of the said criteria of related person Price of all the products are pre-defined and customers are obliged to pay that price for purchase of products. Price is the sole consideration received from the customers for sales made by us. Section 15(1) criteria is satisfied in our case and hence value of supply of goods should include only the price that is payable by the customer. Value of gold coins cannot be clubbed with value of supply made by us. Moreover, cost of gold coin to be distributed at the end of scheme is factored in sales price ch

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ruling on allowability of Input Tax Credit and not the valuation. We hereby fervently pray your good office to take cognizance of the above referred submissions and submissions dated 29.08.2018 & 10.09.2018 and accord much awaited justice to law abiding tax payer. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required: Reference Application No:72 Dated 23.08.2018 I. Comments on Annexure-1 of Submission 1. Annexure I contains Statement of Relevant Facts Having a Bearing on the Questions on which the Advance Ruling is sought. This office offers no comments. II. Comments on Annexure-II of Submission 1. Annexure II contains Issues for Determination . This office offers no comments. III. Comments on Annexure-Ill of Submission Para 2.1: No comments, Para 2.2: No comments. Para 2.3 & Para 2.4 : 1. This office contends that the Gold coins to be distributed to customers of

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has not been dealt with in any manner under the GST law. Hence, there is no definite yardstick to find out whether some activity is being carried out in the course or furtherance of a business or not. Each case would need to be examined, based on its facts, on the touchstone of the definition of inputs . 5. In the course or furtherance is not defined, but is broad enough to cover any supplies made in connection with the business. It is important to note that only supplies received by a taxable person that are used/ consumed in the course or furtherance of business are eligible for claiming input tax credit. This impacts the eligibility to claim input tax: credit. Hence, it becomes important for an entity to justify that a particular act is done in the course and furtherance of its business goals and intentions. 6. We can determine whether a activity is undertaken in the course or furtherance of business on the basis of few principles: a. Was the activity undertaken in line with the ba

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stribution of gold coins is not in line with the basic business model. b. The gold coins are not essential for continuity in supply. c. The distribution of gold coins are not concerned with the making of taxable supply for consideration unless we look as this distribution as a hidden discount . 9. The conditions, laid down in Section 16(2) of the Act have been satisfied but not the basic requirement as per Section 16(1) of the Act. Hence, the contention of the Applicant is not acceptable. Para 2.5, 2.6, 2.7, 2.8, 2.9, 2.10, 2.11 and 2.12: 1. Clause (b) of Section 17(5) of CGST Act 2017 stipulates that the input tax credit with respect to the goods disposed of by way of gift shall not be allowed. Or in other words, it is stipulated that no ITC on any goods can be availed, if they are given as gifts, whether or not in course of furtherance business. 2. ITC on goods given away or disposed as gifts should not be available when no tax is being paid on their disposal. The logic of satisfying

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ditions fulfilled ITC is not eligible and once eligible if not hit by 17(5), only then ITC can be availed. 3. The basic intention behind Section 17(5)(h) seems to be that it tries to restrict people from giving benefits or exchange consideration in kind (in lieu of cash) in the garb of gifts to avoid valuation and thus avoid levy of tax, In the instant case, the Gold Coins are gifts/ free supplies in course of business. If consideration for these goods is not charged directly; they shall qualify as gifts and ITC shall not be eligible. 4. If these gold coins are not treated as gifts, another argument can be considered then as discount / hidden discount and the said discount satisfies the conditions under Section 15(3), i.e. the discount (whether in full or in part) arises and is recorded as a contractual obligation under specific invoice(s), TC shall be available on such goods. It may be worthwhile to show such goods under the respective invoice/credit note after establishing on record,

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applicable. 7. The applicant quoted Apex Court s judgment in the case of Sonia Bhatia Vs. State of UP [ 1981 (SCR (3) 239, 1981 .SCC (2) 598] = 1981 (3) TMI 250 – SUPREME COURT and contended that it is applicable to their case. The facts of the case were totally different and also the said judgment was delivered under a different legislation and therefore, the same cannot be made applicable to the facts of this case which is being adjudicated under GST ACT. In the case of KONE ELEVATOR INDIA PVT LTD VS. STATE OF TAMIL NADU as reported in (2014(304) ELT 161. (SC) = 2014 (5) TMI 265 – SUPREME COURT it has been held that, it should be strict and literal, what is applicable in one taxing statute may not be applied to another taxing statute (Per: F.M. Ibrahim Kalifulla.] (Para-84). Hence, the case law. cited by the applicant in this respect is not acceptable. 8. In case the Advance Ruling Authority accepts the contention of the applicant and allows the availment of ITC on gold coins, then

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agar, manager appeared made oral and written submissions. The Jurisdictional Officer Sh. Vivek Anand Assistant Commissioner, Division-VIII, CGST & C. Ex., Mumbai Central GST Commissionerate appeared made written submissions. 05. OBSERVATIONS We have gone through the facts of the case. The issue put before us is in respect of a future transaction which would be on the lines thus – The applicant is engaged in the business of developing, manufacturing and distributing crop protection chemicals and hybrid seeds and in order to achieve sales and marketing objectives, they have launched various target based – sales incentive schemes for their distributors and retailers (customers) to achieve a specified target and in turn helps the company to achieve their targets. The subject application is in respect of a sales promotion scheme known as Kharif Gold Scheme 2018 , which has been floated by them for their customers and is of two types. In the first case, their Customers who purchased cert

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the purpose of Section 16(1) read with Section 2(62) of the CGST Act 2017 (hereinafter referred to as the Act ). It has been submitted that the gold coins are not inputs because the said Distribution of gold coins is not in line with the basic business model, the gold coins are not essential for continuity in supply and the distribution of gold coins are not concerned with the making of taxable supply for consideration unless the distribution is looked as a hidden discount. We find that the applicant has floated the subject scheme for the period June, 2018 to August, 2018 only, by way of which gold coins of different denominations would be given to those customers who lifted a certain quantity of products or made a certain amount of payment. Thus it is seen that it is only those specific customers who fulfill the conditions would be able to avail the benefit of the subject scheme. The applicant has submitted that the said Gold coins are inputs for them and GST levied on such purchase q

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ect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. We will therefore first discuss whether the gold coins in the subject case can be treated as a gift or not. The word gift has not been defined in the CGST Act and the Gift-Tax Act (18 of 1858) had defined the word gift to mean transfer by one person to another of any existing movable or immovable property voluntarily and without consideration in money or money s worth. It is seen from the definition that the transfer i.e the gift given in such a case has to be voluntary. The applicant has submitted that they have a contractual arrangement with the customer wherein if he purchases certain amount of company s product or makes payment in a prescribed manner then he shall be entitled to a gold coin of specific weight. A contractual arrangement implies especially in view of the magnitude and area of the applicant s business that, it should also be agreed by the customer in writing to such scheme

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. Hence in the present context the word gift has an enlarged scope according to us and has its own colour. In all such cases, as in the present case, the statement that goods, in this case gold coins, will be given to customers who satisfy certain conditions is nothing but assurance of giving away gifts on those conditions being achieved by the customers. Under the GST laws the intention for non-granting/denial of setoff is envisaged in situations where there is no tax on output supply. In cases where the goods are procured with levy of input tax and are supplied without tax being paid on such output supplies, the scheme of the GST Act provides no input tax credit, except export. Schedule I to the CGST Act, 2017 deals with activities to be treated as supply even if made without consideration. As per Entry Number 2 to Schedule I (2), Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance

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avily on the customers in making purchase of particular quantities and above or in making payments of certain values and above. This act on behalf of the applicant if it is not excluded from the scope of being a supply, then the provisions of the Valuation Rules come into play. Thus in such cases it can safely be assumed that the purchase value and output supply value of the gift shall be the same and therefore the ITC would be the same as the output GST payable. In other words if the giverof the gift does not pay output tax on the same then the compensation to the department would be the foregoing of the ITC on such gifts. In the instant case it is seen that the applicant has assigned a value to the gold coins to be given gifts and the value is ₹ 3,200/- per gm. They have not explained as to how they have arrived at the value because value of gold changes everyday. Secondly the Scheme announced by them states that customers who lifted the products as per the scheme and made paym

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p ITC on gifts will not be available when no GST is being paid on their disposal. Just because the applicant submits that they have satisfied Section 16 (1) of the CGST Act 2017 does not mean that they are entitled to credit since Section 17(5) starts with Notwithstanding anything contained in sub-section (1) of Section 16 ……… The implication is that in the subject case even if it seems, as per the applicant, that Section 16 (1) is applicable in their case and allows them credit, Section 17(5) shall block such credits. In view of all above deliberations, the questions can be answered thus – 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 72/2018-19/B-165 Mumbai, dt. 20.12.2018 For reasons as discussed in the body of the order, the questions are answered thus – Question :- The question or issue befor

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Goods and Services Tax – Started By: – jamal zaidi – Dated:- 19-12-2018 Last Replied Date:- 20-12-2018 – Dear All,Need your professional rigor view, at the below query-X company registered in India, purchased a machinery from Japan for manufacturing purposes, now due to some technical fault the Machine has to be export to Japan for repair purpose and as soon as this machine repaired the same has to be Re-import to India .scenarioAsset purchase from japan for manufacturing purpose and now need r

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Goods and Services Tax – GST – Dated:- 19-12-2018 – Mumbai, Dec 18 (PTI) Indicating that further simplification of the Goods and Services Tax is on the anvil, Prime Minister Narendra Modi said his government wants to ensure that '99 per cent things' attract sub-18 per cent GST slab. Before implementation of the GST, registered enterprises only numbered 65 lakh, which has now risen by 55 lakh, Modi said, addressing the Republic Summit here. Today, the GST system has been established to a large extent and we are working towards a position where 99 per cent things will attract the sub-18 per cent GST slab, Modi said. Modi indicated that the 28 per cent slab of GST would only be restricted to a few select items, such as luxury goods. T

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eveloped countries is not easy, he said. Modi also spoke of his government's commitment to root out corruption. Corruption had been taken as a new normal in India. It was 'Chalta hai'. Whenever anyone used to speak up, someone would say, 'This is India. This is how it is', Modi said. Why should it be like this, he said. When companies used to be unable to repay loans, nothing used to happen to them and their owners, he said. That is because since the start they had been given protection from probes by certain 'special people', he added. Modi also dwelt on his government's initiative to provide gas connections to households. Till 2014, only 55 per cent houses in the country had a gas connection. Imagine that.

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Goods and Services Tax – GST – Dated:- 19-12-2018 – GSTN will focus on the development of new return filing, further improving the user interface, and Business Intelligence and Analytics. While the new return is yet to be notified, GSTN has started development of the components in which major changes are not expected. Improvement in User Interface on the basis of feedback is a continuous process. Few important initiatives/improvements made for better User experience are: – Questionnaire for filing GSTR-3B to avoid errors by taxpayers. Option to generate pre-populated Challan by the system to avoid depositing Cash in wrong Head by the taxpayers. Introduction of one click Nil return filing. Suggested utilisation of ITC informed to the taxpay

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Goods and Services Tax – Started By: – MohanLal tiwari – Dated:- 19-12-2018 Last Replied Date:- 21-12-2018 – Dear Panelists, We are manufacturer of castings / machinery parts (mainly for Railways) falling under 8607. In our factory premises, we are providing all required materials, machinery & equipment etc and getting in-process manufacturing activities done through contractors for various operation like molding / finishing / machining etc. During Excise & Service tax regime, such services were not attributable to service tax. Now, most of contractors are GST compliance and issuing invoices charging GST @18% which is getting accumulated with us by way of ITC. Kindly advise how far it is correct to charge GST for in-process manufac

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Goods and Services Tax – Levy of GST – place of supply of services – intermediary services – When recipient is located outside India the said provisions of section 12 cannot be made applicable and sin

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Goods and Services Tax – Profiteering – supply of Eastern Meat Masala – benefit of reduction in the rate of tax – The Respondent has not contravened the provisions of Section 171 of the CGST Act, 2017

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Goods and Services Tax – Started By: – Kaustubh Karandikar – Dated:- 19-12-2018 Last Replied Date:- 19-12-2018 – XYZ(Maharashtra) sold Control Panels to PQR(Maharashtra) by charging CGST + SGST. These panels were subsequently sold by PQR to ABC (Goa). Further, XYZ had done the installation of the panel at the Goa site of ABC on behalf of PQR and charged CGST + SGST to PQR in the service invoice towards installation. Is it correct or they should have charged IGST since the services were performed outside Maharashtra? – Reply By DR.MARIAPPAN GOVINDARAJAN – The Reply = In my view IGST is not applicable. – Reply By Kaustubh Karandikar – The Reply = Thanks for your reply. But in my view, it may fall under Section 10(d) of IGST Act, 2017 as per

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2018 (12) TMI 1152 – KERALA HIGH COURT – TMI – Detention of goods with vehicle – Held that:- Division Bench of this Court in Renji Lal Damodaran v. State Tax Officer [2018 (8) TMI 1145 – KERALA HIGH COURT] has dealt with an identical issue, where it was held that It is directed to release the goods on the appellant furnishing Bank Guarantee for tax and penalty found due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules.
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The respondent authorities is directed to release the petitioners' goods and vehicle on their furnishing Bank Guarantee for the tax and penalty due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules – petition disposed off. – WP

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dent to release the goods and the lorry detained by Exts.P4 to P4(d) & Ext.P7 unconditionally by the issue of a writ of mandamus or such other writ or order or direction. (iii) To grant the petitioners such other incidental reliefs including the costs of these proceedings. 2. The learned Division Bench of this Court in Renji Lal Damodaran v. State Tax Officer Judgment dated 06.08.2018 in W.A. No.1640 of 2018 has dealt with an identical issue. 3. Applying the ratio of that judgment, I direct the respondent authorities to release the petitioners' goods and vehicle on their furnishing Bank Guarantee for the tax and penalty due and a bond for the value of goods in the form as prescribed under Rule 140(1) of the CGST Rules. With the abov

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2018 (12) TMI 1184 – CESTAT CHENNAI – TMI – Classification of services – manpower recruitment or supply agency service or not – work of grinding roasted coffee beans, blending coffee powder with chicory and packing of coffee powder – Held that:- It is seen from the invoices as well as from the records that the appellant was receiving charges on the basis of kilogram of coffee powder which is subjected to various activities of grinding, mixing, blending etc. The payment is not in respect of number of persons engaged or work done on daily basis or hourly basis.
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The Tribunal in the case of Divya Enterprises Vs. Commissioner of Central Excise, Mangalore [2009 (12) TMI 155 – CESTAT, BANGALORE] had occasion to analyse a similar issue and h

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g of coffee powder. They had not discharged service tax on the said services. The show cause notices proposed demand of service tax for the period from 2005 – 06, 2006 – 07 and 2008 – 09. After due process of law, the original authority confirmed the demand along with interest and also imposed penalties. Aggrieved, the appellants preferred appeals before Commissioner (Appeals) who upheld the demand, interest and penalties. Hence the present appeals. 2. On behalf of the appellants, ld. counsel Shri S. Kannappan appeared and argued the matter. He submitted that the appellants were undertaking work on specified rates for doing such activities and was a job worker for Narasus Coffee Company. The appellants were paid labour charges on weekly bas

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he findings in the impugned order. It is submitted by him that the appellants were providing labour work to Narasus Coffee Company for doing the activities of blending, grinding, mixing and packing of coffee powder. The work was undertaken at the premises of Narasus Coffee Company and the appellant had received charges for such activities. This is very much clear that the appellant were providing manpower to Narasus Coffee Company. 4. Heard both sides. 5. The issue is whether the activity of the appellants amounted to manpower recruitment or supply agency. It is seen from the invoices as well as from the records that the appellant was receiving charges on the basis of kilogram of coffee powder which is subjected to various activities of gri

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2018 (12) TMI 1272 – PUNJAB AND HARYANA HIGH COURT – TMI – Filing of Form GST Tran-I – carry forward of CENVAT Credit – Held that:- Petition is disposed off by directing respondent No.4 to take a decision on the representation dated 22.11.2018 (Annexure P-6), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner. – CWP-33475-2018 Dated:- 19-12-2018 – MR AJAY KUMAR MITTAL AND MR SUDIP AHLUWALIA, JJ. For The Petitioner : Mr. Amar Pratap Singh, Advocate with Mr. Rohit Gupta, Advocate ORDER AJAY KUMAR MITTAL, J. 1. In this writ petition filed under Articles 226/227 of the Constitution of India, the petitioner has prayed for issuance of a direction to the respondents to open the GST

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uty payable on its final products during the period from 1.4.2017 to 30.6.2017. The petitioner filed all its returns with the prescribed period including ER-1 for the month of June, 2017 and ST-3 for the period from 1.4.2017 to 30.6.2017 as is discernible from document (Annexure P-2 Colly). The petitioner was having an unutilized Cenvat Credit of ₹ 5,16,561/- as on 30.6.2017. Upon enforcing the Goods and Services Tax in India w.e.f. 1.7.2017, the petitioner migrated to the said system of taxation as is clear from the Registration Certificate dated 21.9.2017 (Annexure P-3). The petitioner filed incomplete Form GST Tran-I on 27.12.2017 (Annexure P-4). Thereafter, the petitioner filed Form Tran-I with the limited details which was accept

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2018 (12) TMI 1291 – BOMBAY HIGH COURT – TMI – Revenue appeal – Monetary limit – Recovery of CENVAT Credit – Can the department without pointing out applicability of any of the exceptions in circular dated 11th July, 2018 of CBIC, continue to press the appeal on merits? – Held that:- As is well known by way of its policy for reduction of litigation, the Central Board of Direct Taxes i.e. CBDT and CBIC have been issuing circulars from time to time instructing the department not to file and in some cases if so filed, not to press appeals before Higher Authorities, Tribunal, High Court or Supreme Court as the case may be unless the tax effect involved is higher than the minimum threshhold respectively prescribed in such circulars – In the present case, we are governed by the latest circular of CBIC dated 11th July, 2018.
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Circular is issued in exercise of powers under Section 35R of the Central Excise Act, 1944, which pertains to appeal not to be filed in certain cases. Subsection

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he appeal only it falls in any of the exceptions; not otherwise. This would give rise to wholly arbitrary application of the Government policy which is simply not permissible in law. Excepting the stand of the department would permit the authorities to withdraw appeals against one assessee, whereas without citing any reasons, pursue the appeal against the another assessee situated identically as the former.
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The appeal is dismissed as involving low tax effect. – CENTRAL EXCISE APPEAL NO.155 OF 2018 Dated:- 19-12-2018 – AKIL KURESHI AND M.S. SANKLECHA, JJ. Mr. Jitendra B. Mishra with Mr.Sham Walve for the Appellant. Mr. Durgesh Nadkarni i/by M/s Legal Solutions for the Respondent. P.C.: 1. This appeal is filed by the revenue to challenge the judgment of the Custom, Excise and Service Tax Appellate Tribunal (CESTAT) dated 26th May, 2017. When the appeal was taken up for admission herein, learned counsel for the respondent-assessee raised preliminary objection contending that the ta

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department that the tax effect involved in the appeal is less than ₹ 50 lakhs, we have also ascertained the same from the documents on record. The order passed by the adjudicating authority in the present case was one in which he had confirmed a Cenvat credit amount of ₹ 31,35,863/to be recovered from the respondent-assessee with interest and matching penalty. 4. In background of such facts the question is, Can the department without pointing out applicability of any of the exceptions in circular dated 11th July, 2018 of CBIC, continue to press the appeal on merits? 5. As is well known by way of its policy for reduction of litigation, the Central Board of Direct Taxes i.e. CBDT and CBIC have been issuing circulars from time to time instructing the department not to file and in some cases if so filed, not to press appeals before Higher Authorities, Tribunal, High Court or Supreme Court as the case may be unless the tax effect involved is higher than the minimum threshhold r

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oner (Appeals). All other terms and conditions of concerned earlier instructions will continue to apply. 4. It may be noted that issues involving substantial questions of law as described in para 1.3 of the Instruction dt 17.08.2011 from F No 390/Misc/163/2010JC would be contested irrespective of the prescribed monetary limits. 6. Circular is issued in exercise of powers under Section 35R of the Central Excise Act, 1944, which pertains to appeal not to be filed in certain cases. Subsection (1) of Section 35R provides that the Central Board of Excise and Customs may from time to time issue orders or instructions or directions fixing such monetary limits as it may deem fit for the purposes of regulating the filing of the appeal, applications, revision or reference by the Central Excise Officers under the provisions of Chapter VIA of the Central Excise Act, pertaining to appeals. Thus, this circular has a statutory force. 7. The perusal of the circular would show that the same prescribes

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nder : (a) Where the constitutional validity of the provisions of an Act or Rule is under challenge. (b) Where Notification/Instruction/Order or Circular has been held illegal or ultra virus. 9. Combined reading of the said circulars dated 11th July, 2018 and 11th July, 2018 would be that the appeals involving tax effect less than ₹ 50 lakhs would neither be filed by the department before the High Court nor pressed those already filed. The revised monetary limit, thus is intentionally made applicable to all pending appeals as well. The only exceptions being those laid down in the earlier circular dated 17th August, 2011, relevant portion of which we have reproduced above. 10. We may record that like reasoned judgment in case of Director of Income Tax Vs. S.R.M.B. Dairy Farming (P.) Ltd. (2018) 400 ITR 9 (SC), the Supreme Court had the occasion to examine the contents of a similar circular issued of the CBDT on 9th February, 2011 prescribing revised monetary limits for filing appe

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Customs – F. No. S23/210/2017-AP (IGSTR) – Dated:- 19-12-2018 – OFFICE OF THE PRINCIPAL COMMISSIONER OF CUSTOMS CUSTOM HOUSE: PORT AREA: VISAKHAPATNAM – 530035 PHONE: ( 0891) 2564552: FAX: (0891) 2562613 F. No. S23/210/2017-AP (IGSTR) Date: 19.12.2018 NOTE Sub: Sanction of IGST refunds Attention of all the Exporters/ Customs Brokers is invited CBIC Circular No. 05/2018-Cus., dated 23.02.2018, Circular No. 40/2018-Customs dated 24.10.2018, this Custom House P.N.No.09/2018 dated 26.02.2018 and P.

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2019 (1) TMI 915 – MADRAS HIGH COURT – TMI – Maintainability of petition – availability of statutory appellate remedy – Held that:- Since the petitioner has chosen to pay the tax liability and interest and they are aggrieved only against the imposition of penalty, this Court is of the view that an opportunity may be given to the petitioner to agitate the matter before the Appellate Authority, by filing a regular appeal. Therefore, without expressing any view on the merits of the contentions raised by the petitioner as against the imposition of penalty, this writ petition is disposed of by granting liberty to the petitioner to file a statutory appeal before the concerned Appellate Authority – petition disposed off. – W.P.No.33366 of 2018 An

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th sides. 4. Admittedly, as against the impugned order, a statutory appeal lies before the Commissioner (Appeals), by complying with the other statutory requirements. However, the petitioner did not file any such appeal in time. Now, the merits of the order passed by the respondent is sought to be canvassed before this Court by filing this writ petition, after a period of nearly one year and two months. Since a statutory appellate remedy is available to the petitioner, this Court is not inclined to entertain this writ petition, that too, when the points raised in this writ petition are touching upon the merits of the order and not on the jurisdictional aspect. 5. The learned counsel appearing for the petitioner submitted that the petitioner

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without expressing any view on the merits of the contentions raised by the petitioner as against the imposition of penalty, this writ petition is disposed of by granting liberty to the petitioner to file a statutory appeal before the concerned Appellate Authority viz., the Commissioner of Appeals, within a period of two weeks from the date of receipt of a copy of this order, by complying with the other statutory requirements. If any such appeal is filed, the Appellate Authority shall entertain the same without reference to the period of limitation and pass orders on merits and in accordance with law, after giving due opportunity of hearing to the petitioner. Such exercise shall be done by the Appellate Authority within a period of six weeks

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2019 (1) TMI 1092 – GUJARAT HIGH COURT – TMI – Transmission or distribution for electricity – exemption from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017 – period of the negative list regime – scenario post GST Regime – validity of clarification issued in para 4 (1) of the Circular No.34/8/2018-GST dated 1.3.2018 – includibility of charges such an application fee, meter rent, testing fee, etc collected by the Petitioners – composite supply – Section 43 (2) of the Electricity Act – It is the case of the petitioners that service by way of transmission or distribution of electricity continued to be kept out of the tax net even post 1.7.2012, and, the petitioners, therefore, neither collected nor paid any tax under the Finance Act on charges collected in connection with transmission of electricity even post 1.7.2012.
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Whether services relating to transmission and distribution of electricity fall within the ambit of clause (k) of section 66D of the Finance Act and, ar

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are concerned, vide circular No.131/13/2010-ST dated 7.12.2010, it was clarified that supply of electricity meters for hire to consumers being an essential activity, having direct and close nexus with transmission and distribution of electricity, the same is covered by the exemption for transmission and distribution of electricity extended under relevant notifications.
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From the very manner in which the respondents have treated the services related to transmission and distribution of electricity during the pre-negative list regime, such services would stand covered by the exemption granted to transmission and distribution of electricity by virtue of inclusion of such services in the list of negative services under section 66D (k) of the Finance Act as well as by virtue of exemption notification issued under the CGST Act.
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Scope of bundled service – It is evident that a licensee, on an application by the owner or occupier of any premises, is required to supply electricity to s

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onsumer fall within the ambit of electrical plant as defined under section 2(22) of the Electricity Act. Sub-section (2) of section 43 of the Electricity Act casts a duty upon the licensee to provide if required electric plant or electric line for giving electric supply to the premises – all the services related to transmission and distribution of electricity are naturally bundled in the ordinary course of business of the petitioner and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character.
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A perusal of the GERC Regulations indicates that the services which are sought to be taxed now are the services, which the petitioner is required to mandatorily provide at the rate prescribed by GERC, a statutory authority constituted under the provisions of the Electricity Act. In the opinion of this court, all these services are essential activities which have a direct and close nexus with

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ST Act – principal supply is exempt from levy of service tax – Held that:- There is nothing in section 8 of the Act to read any such construction. What the section says is that the tax liability of a composite or a mixed supply shall be determined in the manner provided thereunder. In a given case, the tax liability may be nil, but that would not take such service out of the purview of section 8 of the Act, which would be attracted if the supply is either composite or mixed in nature, notwithstanding that the end result may be nil tax liability.
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The related supplies cannot be supplied separately nor are the principal supply and related supplies independent of each other. The related supplies are dependent on the principal supply of transmission and distribution of electricity and vice versa, neither service can be provided independent of the other. The transmission and distribution of electricity cannot be done without the help of electric line, electric plant and electric meter,

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ons to the extent the same is based upon item No.4 (1) of the impugned circular dated 1st March, 2018. – R/SPECIAL CIVIL APPLICATION NO. 5343 of 2018 Dated:- 19-12-2018 – MS HARSHA DEVANI AND DR A. P. THAKER, JJ. For The PETITIONER (s) : MR SN SOPARKAR, SENIOR ADVOCATE with MR UCHIT N SHETH (7336) For The RESPONDENT (s) : MR JAIMIN A GANDHI (8065) AND MR ANKIT SHAH (6371) ORAL JUDGMENT (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. By this petition under Article 226 of the Constitution of India, the petitioners seek the following substantive reliefs:- 46. ………… A. This Hon ble Court may be pleased to issue a writ striking down and declaring the clarification issued in para 4 (1) of the impugned Circular No.34/8/2018-GST dated 1.3.2018 (annexed at Annexure A) by the Government of India as ultra vires the provisions of the GST Acts as well as the notifications issued thereunder: B. This Hon ble Court may be pleased to declare that charges such as application fee, meter rent,

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ar dated 7.12.2010. E. This Hon ble Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ or order directing the learned Respondents to drop proceedings sought to be initiated on the basis of the impugned circular by issuing summons dated 28.3.2018 (annexed at Annexure L); 2. The facts giving rise to the present petition are that the petitioner No.1 is a public limited company (hereinafter referred to as the petitioner company ) and the petitioner No. 2 is the executive director and authorized signatory of the first petitioner. The petitioner company is, inter alia, engaged in the business of generation, transmission and distribution of electricity in the State of Gujarat and is duly registered under the Goods and Service Tax Acts. The petitioner company has distribution licence in the cities of Ahmedabad, Surat, Gandhinagar and the Dahej SEZ. It also has a distribution franchisee for Bhivandi in the State of Maharashtra and for Agra in

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Section 43 (2) of the Electricity Act provides that it shall be the duty of the distribution licensee to provide, if required, electric plant or electric line for giving electric supply to the premises of the consumer. The proviso thereto says that no person shall be entitled to demand or continue to receive the supply of electricity for any premises having a separate supply unless he has agreed with the licensee to pay to him such price as determined by the Appropriate Commission. The petitioners collect charges as well as deposit for extending the electricity connection line to the premises of the new consumer. 2.3 Once a line of connection is established, the petitioners start distribution of electricity to the consumer. The petitioners are required to charge price for distribution of electricity in accordance with tariffs as fixed by the appropriate commission from time to time and as per the conditions of the licence. Since the billing of such distribution would depend upon actua

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he Gujarat Electricity Regulatory Commission (Licensee s Power to Recover Expenditure incurred in providing supply and other Miscellaneous Charges) Regulations, 2005 (hereinafter referred to as the GERC Regulations ). Such regulations provide for the activity as well as quantum of charges that can be collected by the distribution licensee for such activity. 2.6 It is the case of the petitioners that the GERC Regulations empower the petitioners to recover the charges as well as fix the quantum charges for various kinds of activities, which are part of the distribution process such as registration, testing charges, disconnection charges etc. The meter rent is also stipulated in the GERC Regulations. The GERC has also framed an exhaustive electricity supply code, which enlists the obligations of the transmission and distribution companies, such as the petitioners. According to the petitioners, they are also entitled to recover some miscellaneous charges under such code. It is the case of

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ed from consumers relating to transmission and distribution of electricity. The Government of India issued Notification No. 11/2010-Service Tax on 27.2.2010, exempting taxable service provided to any person by any other person for transmission of electricity. Another Notification No. 32/2010-Service Tax was issued on 22.6.2010, exempting taxable service provided to any person by a distribution licensee/franchisee for distribution of electricity. In the meantime, the petitioners as well as other distribution/transmission companies received show cause notices proposing to impose tax under the Finance Act on various charges collected by such companies, in respect of the activities relating to transmission and distribution of electricity for the periods prior to the issuance of the exemption notifications dated 27.2.2010 and 22.6.2010. Representations came to be made to the Government for intervention since the entire sector of transmission/distribution companies bona fide believed that no

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smission and distribution of electricity and was, therefore, covered by the exemption for transmission and distribution of electricity. 2.9 On the basis of trade notice dated 20.7.2010, and the circular dated 7.12.2010, a show cause notice came to be issued to the petitioners proposing to impose service tax on different kinds of charges collected in connection with transmission and distribution of electricity, which came to be dropped by the adjudicating authority by observing that all such charges were in connection with transmission and distribution of electricity and therefore not taxable. 2.10 The negative list regime came to be introduced in the Finance Act, 1994 (hereinafter referred to as the Finance Act ) with effect from 1.7.2012. Section 66D of the Finance Act provides for negative list of services, which would not be taxable under the Finance Act. Clause (k) of Section 66D of the Finance Act, which is relevant for the present purpose, reads as under:- (k) transmission or dis

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8.6.2017 providing for list of exempted services. Identical notifications have been issued under the State Goods and Services Tax Act by the respective State Governments. By virtue of Entry 25 of Notification No. 12/2017, transmission or distribution of electricity by an electricity transmission or distribution utility is taxed at nil rate. It is the case of the petitioners that as such the legal position as prevailing under the Finance Act was continued even under the Goods and Services Tax Acts and tax leviable on service of transmission or distribution of electricity by an electricity transmission or distribution utility was exempted from tax under the GST Acts. The petitioners, therefore, neither collected nor paid tax under the GST Acts with effect from 1.7.2017 on the charges collected for activities directly connected with transmission and distribution of electricity in accordance with the provisions of the Electricity Act and the GERC Regulations. Thereafter, the Government of

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ty, have been declared to be taxable. 2.13 Subsequently, the Directorate General of Goods and Service Tax Intelligence, that is, the fourth respondent herein, issued summons to the petitioners on 28.3.2018 requiring them to submit details relating to charges as mentioned in the impugned circular right from the year 2012-13. Tax is proposed to be levied under the Finance Act as well as under the GST Acts on such charges. Being aggrieved, the petitioners have filed the present petition seeking the reliefs, noted herein above. 3. Mr. S. N. Soparkar, Senior Advocate, learned counsel with Mr. Uchit Sheth, learned advocate for the petitioners, submitted that the impugned circular issued by the Government of India clarifying that the charges recovered for the activities directly connected with the distribution and transmission of electricity such as application fee, meter rent, testing fee, labour charges for shifting meters and shifting of service line, etc. (hereinafter referred to as relat

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datorily required to be carried out by the petitioners for the purpose of supply and distribution of electricity and, in fact, it is not even possible to supply electricity without undertaking such activities. It was contended that, all charges, such as application fee, meter rent, testing fee etc. are towards the service of transmission and distribution of electricity and, therefore, the clarification to the effect that they would not be covered by entry relating to exemption of transmission or distribution of electricity is contrary to express words as well as intent of the exemption notification and, therefore, bad and illegal. 3.1 It was contended that all the charges such as application fee, meter rent, testing fee etc. are towards transmission and distribution of electricity and, therefore, exempt by virtue of the inclusion of transmission and distribution of electricity in the negative list and by virtue of exemption notifications issued under the CGST Act, and, therefore, all s

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services do not form part of the services of transmission and distribution then they fall within the ambit of section 66F (3), which provides for taxability of bundled service. It was submitted that, wherein an element of provision of one service is combined with an element or elements of provision of any other service or services, such services are considered to be a bundled service, and by virtue of clause (a) of sub-section (3) of section 66F, if various elements of such service are naturally bundled in the ordinary course of business, it is required to be treated as provision of the single service, which gives such bundle its essential character. It was submitted that, in this case, the ancillary/incidental services are elements of provision of services of transmission and distribution of electricity and, hence, they have to be treated as provision of such service, which gives the bundle its essential character. 3.4 It was submitted that the related services are part of main servic

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ed services were also exempt by virtue of the exemption notifications issued in the past. It was submitted that if the respondents intend to revoke such exemption, it has to be done prospectively by a notification and not by a clarificatory circular. It was submitted that by virtue of section 173 read with section 174 (2) (c) of the CGST Act, all privileges and rights under that Act would continue and, therefore, what was covered by a notification cannot be withdrawn by a circular and, in any case, it cannot be done retrospectively. In support of his submission, learned counsel for the petitioners placed reliance upon the decision of the Bombay High Court in the case of Unit Trust of India v. P. K. Unny, 2001 (249) ITR 612. 3.7 It was further submitted that principle of promissory estoppel would also apply in this case, inasmuch as the respondents had considered these very services to be covered by the exemption notifications, and hence, they cannot now be permitted to take a contrary

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rvices were considered to be part of the service of transmission and distribution, this position continued even during the negative list regime and keeping in view the same, the petitioners neither collected nor paid the tax under the Finance Act on charges collected in this regard nor did the respondents raised any such demand. 3.9 It was submitted that assuming for the sake of argument that related services are not covered by the service of transmission and distribution of electricity, even then, in view of the provisions of sub-section (3) of section 66F of the Finance Act, these services which are naturally bundled in the ordinary course of business with the services of transmission and distribution of electricity would be treated as a provision of the single service, which gives the bundle its essential character, namely, transmission and distribution of electricity. It was submitted that since all these services are bundled together in the ordinary course of business, they would,

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uted under the provisions of the Electricity Act and all these services are closely and directly connected with the transmission and distribution of electricity and, therefore, would clearly fall within the ambit of bundled services as contemplated under sub-section (3) of section 66F of the Finance Act and would, therefore, would be taxable in terms of the main service, namely, transmission and distribution of electricity. 3.10 Insofar as the third phase is concerned, it was submitted that this phase relates to the post-negative list regime, namely, the Goods and Services Tax Act regime. It was pointed out that by virtue of exemption notifications issued under section 11 of the CGST Act, 2017, transmission and distribution of electricity has been exempted from payment of service tax. It was pointed out that, therefore, the related services would stand included in the service of transmission and distribution of electricity and, therefore, would be exempt from service tax. It was submit

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, one of which is a principal supply. It was submitted that since all these services are naturally bundled along with the service of transmission and distribution of electricity, the same would clearly fall within the ambit of composite supply as envisaged under section 2 (30) of the Act. 3.11 Reference was made to the definition of principal supply as defined under section 2 (90) of the Act, which provides that principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. It was submitted that, therefore, the distribution and transmission of electricity is the principal supply which constitutes the predominant element of the composite supply and the related/ancillary services form part of that composite supply. It was submitted that, therefore, even by virtue of the provisions of section 8 (a) of the CGST Act, the related/ancillary services to tran

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ion 11 of the CGST Act, transmission and distribution of electricity by an electricity transmission or distribution utility is exempt. It was urged that when the notification under the parent Act exempts the principal supply, a circular cannot impinge upon the notification and seek to hold the composite supply taxable. It was submitted that the circular cannot run contrary to the notification, and hence, the impugned clarification deserves to be set aside to the extent the same clarifies in respect of the services in question. It was submitted that once the impugned circular is set aside, the rigours of the summons, whereby the petitioner is called upon to furnish details with regard to the services in question would also be required to be set aside. 3.14 It was further contended that, in any case, the impugned circular cannot be given retrospective effect as is sought to be done in the present case. In support of such submission, learned counsel placed reliance upon the decision of th

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ground that the petition is directed against a summons issued by the respondent authorities. Reliance was placed upon the decision of the Madras High Court in the case of Media Graphics v. Commissioner of Customs, Chennai, 2018 (359) ELT 172 (Mad.), wherein the court had declined the prayer to set aside the summons. Reliance was also placed upon the decision of the Madras High Court in the case of K. Elumalai v. Commissioner of Customs, Chennai, 2017 (355) ELT 241 (Madras), for the proposition that a writ petition challenging a summons is not maintainable. It was submitted that the respondent authorities have powers to issue summons and that the summons is, therefore, not illegal and, consequently, cannot be subject matter of challenge in a writ petition. 4.1 On the merits of the case, it was submitted that the exemption notifications, exempting the services in question from liability of service tax, were issued prior to the coming into effect of the negative list regime inasmuch as al

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ervices cannot be bundled with goods falling under section 66D. It was submitted that the previous notifications had been issued prior to the year 2012 and came to be rescinded by the notification dated 20.6.2012 and hence, the clarificatory circular dated 7.12.2010, which had been issued in the context of the earlier exemption notifications would not survive. 4.2 It was submitted that insofar as the GST regime is concerned, these services are not exempted by the notifications issued under section 11 of the GST Act, and hence, when on one service tax is leviable and the other service is exempted, section 8 of the CGST Act would not apply. It was contended that related/ancillary services are not exempted by virtue of any notification under section 11 of the CGST Act and that the impugned circular merely clarifies that these services are not exempted. 4.3 The learned senior standing counsel further placed reliance upon sub-section (22) of section 65B of the Finance Act, which defines dec

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y to enter into the merits of this submission. 4.4 The learned Senior Standing Counsel submitted that the related services are not included in the negative list and cannot be considered as services bundled with the services of transmission and distribution of electricity and furthermore, would not fall within the ambit of composite services under section 8 of the CGST/SGST Acts by considering the services of transmission and distribution of electricity as principal supply and that the petition being devoid of merits, be dismissed and the petitioners be directed to respond to the impugned summons. 5. Mr. Jaimin Gandhi, learned standing counsel for the respondent No. 3, submitted that the only challenge in the petition is to the retrospective applicability of the circular dated 1.3.2018. It was submitted that since retrospective applicability can be interpreted even by the appellate authority, the petition deserves to be dismissed on the ground of availability of an efficacious alternati

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circular, stands automatically rescinded. 5.1 Reference was made to sub-section (1) of section 66F of the Finance Act, as amended in 2012, which provides that unless otherwise specified, reference to a service (hereinafter referred to as main service) shall not include reference to a service, which is used for providing main service. It was submitted that, therefore, the intention of the legislature is clear, viz., that it intended to expand the tax net which resulted in the introduction of the negative list regime. It was submitted that section 66F clarifies the intention of widening the tax net and, accordingly, with effect from 1.7.2012, the Legislature consciously discontinued the additional exemption provided to related/ancillary services by the circular dated 7.12.2010. 5.2 It was submitted that the exemption notifications issued under section 11 of the CGST/SGST Acts exempt the services of transmission and distribution of electricity only, and, hence, the related/ancillary serv

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roposition that an exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause of the exemption notification. Reliance was also placed upon the decision of the Supreme Court in the case of Novopan India Limited v. Collector of Central Excise and Customs, Hyderabad, 1994 (Suppl.3) SCC 606, for a similar proposition of law. It was submitted that the exemption notifications exempt the services of transmission and distribution of electricity alone. The said notifications are to be construed strictly, and hence, related services which have not been specifically included within the purview of such notifications cannot be said to have been included therein. 5.4 Insofar as the retrospective applicability of the impugned circular is concerned, it was submitted that the circular simply clarifies the position as existing as well as the position, which existed earlier,

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y interpreted and, in case of ambiguity, the benefit of doubt should go to the revenue. 5.5 The learned standing counsel further contended that even after the introduction of the GST Act regime, only the service of transmission and distribution of electricity are exempted with effect from 1.7.2017. It was submitted that no exemption has been granted for any allied activity including the service of renting meters. It was submitted that subsection (30) of section 2 read with section 8 of the CGST Act deals with composite services , which are not exemption provisions and cannot be interpreted so as to extend exemption to non-exempt service. Further, as per the definition of composite supply , its constituent supplies should be so integrated with each other that one is not supplied in the ordinary course of business without or independent of the other. It was contended that the supply of the subject services may not necessarily be supplied so as to provide services of transmission and dist

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regime and now that such services were to be notified in the negative list, there was no requirement for any exemption, inasmuch as exemption is required provided the service is taxable. It was submitted that by virtue of section 8 of the CGST Act, if the principal supply is not taxable, the related/ancillary service will also be exempted. It was submitted that by virtue of legislative provision, one cannot look at individual items at all. If they have to be looked into, then under section 66F (3) of the Finance Act and section 8 of the CGST Act, the tax is at the rate of principal supply. It was submitted that a circular cannot go contrary to the exemption notification read with section 8 of the CGST Act. It was submitted even otherwise, by virtue of section 8 of the CGST Act and section 66F (3) of the Finance Act, the transaction is not required to be taxed. It was, accordingly, urged that the petition requires to be allowed in terms of the reliefs prayed for. 7. In the backdrop of t

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from shifting of HT Lines received from MEGA. This part is not subject matter of challenge in the petition] (vii) revenue from power supply/transmission income for the financial year 2012-13 to the financial year 2017-18, which is clearly in terms of the impugned circular dated 1.3.2018, item-4 whereof clarifies that services by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under Notification No.12/17-CT(R) No.25; the other services such as (i) application fee for releasing connection of electricity; (ii) rental charges against metering equipment; (iii) testing fee for meters/ transformers, capacitors etc; (iv) labour charges from customers for shifting of meters or shifting of service line; (v) charges for duplicate bill provided by DISCOMS to consumers are taxable. Thus, it is crystal clear, that the impugned summons, except to the extent the same relates to services provided to MEGA, has been issued on t

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and the challenge to the impugned summons is only an ancillary relief sought in connection therewith. Besides, the clarificatory circular cannot be challenged before the statutory authorities who are bound by the same, and can be challenged only by way of a writ petition under article 226 of the Constitution of India. 8. Adverting to the merits of the case, from the affidavit-inreply filed on behalf of the respondents, it is evident that it is in two parts; the first part is with respect to the taxability of the service provided to M/s. Metro Link Express for Gandhinagar and Ahmedabad (MEGA), which according to the respondents is a declared service falling within the ambit of clause (e) of section 66E of the Finance Act; the second part is with regard to the related/ancillary services of transmission and distribution of electricity, which, according to the petitioners, were exempted by virtue of notifications dated 27.2.2010 and 22.6.2010. It is clear that insofar as the taxability of

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ispute, therefore, relates to the period of the negative list regime and the CGST/SGST regime. 11. Insofar as the second phase, namely, the negative list regime is concerned, with effect from 1.7.2012, section 65B of the Finance Act, 1994 came to be amended and service tax became leviable on all services, other than those services specified in the negative list. Admittedly, transmission and distribution of electricity by an electricity transmission or distribution utility, finds place in the negative list and, is therefore, not exigible to service tax. 12. The first question that arises for consideration is whether services relating to transmission and distribution of electricity fall within the ambit of clause (k) of section 66D of the Finance Act and, are therefore, exempt. In this regard, it may be noted that prior to the coming into force of the negative list regime, goods and services were exempted by virtue of notifications issued in exercise of powers under sub-section (1) of se

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electricity, the same is covered by the exemption for transmission and distribution of electricity extended under relevant notifications. 13. Thus, the reason for saying that supply of electricity meters for hire to consumers is covered by the exemption notification is that such service is an essential activity having direct and close nexus with transmission and distribution of electricity. This circular only provides an interpretation of when a service would stand included in another service, namely, when such service is an essential activity having direct and close nexus with the exempted activity. Therefore, the fact that the exemption notifications came to be rescinded would have no bearing inasmuch as the circular only clarifies what according to the Government of India would stand included in another service. Such interpretation would not change merely because such exemption is now granted under some other provision. 14. It may be noted that insofar as the exemptions prior to th

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ts is that in view of the fact that the exemption notification stands rescinded, the clarification also stands rescinded. What is lost sight of is that the clarification was only in respect of electric meters, whereas all related services were included within the ambit of transmission and distribution of electricity and given the benefit of the exemption notifications. Moreover, the clarificatory circular merely clarifies the stand of the Government as regards what would stand included within the meaning of transmission and distribution services namely, essential activities having direct and close nexus with the transmission and distribution of electricity. The respondents having themselves considered the services in question as being covered by the exemption for transmission and distribution of electricity as such services were essential activities having a direct and close nexus cannot be now permitted to take a U-turn and seek to exclude such services without pointing out any specif

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by virtue of inclusion of such services in the list of negative services under section 66D (k) of the Finance Act as well as by virtue of exemption notification issued under the CGST Act. 16. Examining the issue from the alternative argument advanced on behalf of the petitioners, if related services are per se not covered within the ambit of transmission and distribution of electricity, the question that next arises for consideration is whether such services would fall within the ambit of bundled services as contemplated under section 66F (3) of the Finance Act and within the ambit of composite service as defined under section 2 (30) of the CGST/SGST Acts, and, therefore, liable to be taxed at the rate of the principal supply. Another question is whether section 66F (3) of the Finance Act would cover cases where the single service which gives such bundle its essential character is placed in the negative list and section 8 of CGST/SGST Acts would cover the cases of composite supply wher

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f service tax by virtue of inclusion of the main service in clause (b) of the negative list in Section 66-D and hence, such service is leviable to service tax. (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax. Explanation.- For the purposes of sub-section (3), the expression bundled service means a bundle of provision

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ing to the respondents, this case at best would fall under sub-section (1) of section 66F of the Finance Act and would not be exempted from levy of service tax. It has also been contended that as services in the negative list are not chargeable to tax, section 66F would not apply to services falling in the negative list and, consequently, the benefit of bundling under section 66F (3) would not be available. 19. Sub-section (3) of section 66F of the Finance Act provides for the manner in which a bundled service is to be determined. Clause (a) thereof, which is relevant for the present purpose provides that if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character. The explanation thereof defines bundled service to mean a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of p

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g this issue independently, reference may be made to certain provisions of the Electricity Act. Sections 43 and 45 of the Electricity Act, which are relevant for the present purpose, read as under:- 43. Duty to supply on request: (1) Save as otherwise provided in this Act, every distribution licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises, within one month after receipt of the application requiring such supply: Provided that where such supply requires extension of distribution mains, or commissioning of new sub-stations, the distribution licensee shall supply the electricity to such premises immediately after such extension or commissioning or within such period as may be specified by the Appropriate Commission: Provided further that in case of a village or hamlet or area wherein no provision for supply of electricity exists, the Appropriate Commission may extend the said period as it may consider necessary for e

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es: (1) Subject to the provisions of this section, the prices to be charged by a distribution licensee for the supply of electricity by him in pursuance of section 43 shall be in accordance with such tariffs fixed from time to time and conditions of his licence. (2) The charges for electricity supplied by a distribution licensee shall be – (a) fixed in accordance with the methods and the principles as may be specified by the concerned State Commission; (b) published in such manner so as to give adequate publicity for such charges and prices. (3) The charges for electricity supplied by a distribution licensee may include – (a) a fixed charge in addition to the charge for the actual electricity supplied; (b) a rent or other charges in respect of any electric meter or electrical plant provided by the distribution licensee. (4) Subject to the provisions of section 62, in fixing charges under this section a distribution licensee shall not show undue preference to any person or class of per

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ectricity Act to mean any line which is used for carrying electricity for any purpose and includes (a) any support for any such line, that is to say, any structure, tower, pole or other thing in, on, by or from which any such line is, or may be, supported, carried or suspended; and (b) any apparatus connected to any such line for the purpose of carrying electricity. Electric plant has been defined under sub-section (22) of section 2 of the Electricity Act to mean any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of electricity but does not include – (a) an electric line; or (b) a meter used for ascertaining the quantity of electricity supplied to any premises; or (c) an electrical equipment, apparatus or appliance under the control of a consumer. 22. Thus, any line which is used for carrying electricity for any purpose as well as any apparatus connected to any such line for the purpose of c

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f electric line and electric plant is the meter used for ascertaining the quantity of electricity supplied to any premises. However, insofar as installation of electricity meter and hire charges collected in respect of electricity meters are concerned, by the circular dated 7th December, 2010, the Government of India has clarified that supply of electricity meters for hire to the consumers is an essential activity having direct and close nexus with transmission and distribution of electricity and therefore, is covered by the exemption for transmission and distribution of electricity extended under the relevant notifications. Evidently therefore, all the services related to transmission and distribution of electricity are naturally bundled in the ordinary course of business of the petitioner and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character. 23. Besides, a perusal of the GERC R

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nsmission and distribution of electricity. 24. It has been contended on behalf of the respondents that sub-section (3) of section 66F of the Finance Act would not apply where the single service which gives the bundle of services its essential character is exempt from the levy of service tax. In the opinion of this court, there is nothing in the language employed in sub-section (3) to section 66F to read into it a requirement that such service should not be exempt from tax. All that the sub-section provides is that taxability of bundled services shall be determined in the manner provided therein. The term taxability means liability to taxation. Thus the term taxability would take within its sweep not being taxable also inasmuch as liability to taxation would also mean not being liable to any tax. Thus, the liability to tax of a bundled service has to be determined in the manner provided under sub-section (3) of section 66F of the Finance Act. If the services are naturally bundled in the

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tricity and, would therefore, be exempt from payment of service tax. 26. Insofar as the phase relating to the CGST/SGST Acts regime is concerned, section 8 of the CGST Act makes provision for tax liability on composite and mixed supplies and postulates that the tax liability on a composite or a mixed supply shall be determined in the manner provided in clauses (a) and (b) thereunder. Clause (a) says that a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and clause (b) says that a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. To fall within the ambit of clause (a) the supply has to be a composite one. Composite supply has been defined under section 2(30) of the CGST Act to mean a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or an

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ply is the supply which gives the bundle its essential character. Reverting to the facts of the present case, the principal supply of transmission and distribution of electricity is naturally bundled and supplied in conjunction with the related/ancillary services in the ordinary course of business, accordingly, in view of the provisions of clause (a) of section 8 of the CGST Act, the tax liability of such composite supply is required to be determined by treating the same as a supply of the principal supply namely, transmission and distribution of electricity. 27. It has been contended on behalf of the respondents that clause (a) of section 8 of the CGST Act would not be applicable where the principal supply is exempt from levy of service tax. In the opinion of this court, there is nothing in section 8 of the Act to read any such construction. What the section says is that the tax liability of a composite or a mixed supply shall be determined in the manner provided thereunder. In a give

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n with each other by a taxable person for a single price where such supply does not constitute a composite supply. The illustration thereunder reads thus: Illustration.- A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;" The above illustration gives an indication of the intent of the legislature, viz. it makes it clear that what is to be treated as mixed supply is a combination of supplies wherein each of the items forming part of the supply can be supplied separately and are independent of each other, but are supplied in conjunction with each other. Adverting to the facts of the present case, the related supplies cannot be supplied separately nor are the principal supply and related supplies independent of ea

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ion of electricity is exempt from levy of service tax, the tax liability of the related services shall be determined accordingly. 29. TO SUMMARISE: – The preliminary contention regarding the petition not being maintainable is rejected. – As per the circular dated 7th December, 2010, the reason for saying that supply of electricity meters for hire to consumers is covered by the exemption notification is that such service is an essential activity having direct and close nexus with transmission and distribution of electricity. This circular only provides an interpretation of when a service would stand included in another service, namely, when such service is an essential activity having direct and close nexus with the exempted activity. Therefore, the fact that the exemption notifications came to be rescinded has no relevance inasmuch as all that the circular clarifies is what according to the Government of India would stand included in another service. Such interpretation would not chang

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egative services under section 66D (k) of the Finance Act as well as by virtue of exemption notification issued under the CGST Act. – Any line which is used for carrying electricity for any purpose as well as any apparatus connected to any such line for the purpose of carrying electricity is mandatorily required to be provided to the consumer by the licensee. The term electrical plant takes within its sweep any plant, equipment, apparatus or appliance or any part thereof used for, or connected with, the generation, transmission, distribution or supply of electricity, except for electric meter and any electrical equipment, apparat- us or appliance under the control of a consumer. Sub-section (2) of section 43 of the Electricity Act casts a duty upon the licensee to provide, if required, electric plant or electric line for giving electric supply to the premises. Therefore, providing electric line and electric plant are elements of service which are naturally bundled in the ordinary cours

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etitioner and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character. – The term taxability means liability to taxation. Thus, the term taxability would take within its sweep not being taxable also inasmuch as liability to taxation would also mean not being liable to any tax. Thus, the liability to tax of a bundled service has to be determined in the manner provided under sub-section (3) of section 66F of the Finance Act. If the services are naturally bundled in the ordinary course of business, the bundle of services shall be treated as provision of the single service which gives the bundle its essential character and where the services are not naturally bundled in the ordinary course of business, the same is required to be treated as provision of the single service which results in highest liability of service tax. Accordingly, where the services are naturally bundled in the ordinary

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n and distribution of electricity is exempt from levy of service tax, the tax liability of the related services shall be determined accordingly. 30. For the foregoing reasons, the petition succeeds and is, accordingly, allowed to the following extent: Paragraph 4 (1) of the impugned circular No.34/8/2018-GST dated 1.3.2018 to the extent the same reads as under is hereby struck down as being ultra vires the provisions of section 8 of the Central Goods and Services Tax Act, 2017 as well as Notification No.12/2017- CT (R ) serial No.25: 4. (1) Whether the activities carried out by DISCOMS against recovery of charges from consumers under the State Electricity Act are exempt from the GST (1) Service by way of transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from GST under notification No.12/2017-CT (R ), Sl. No.25. The other services such as,- i. Application fee for releasing connection of electricity; ii. Rental Charges against me

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2019 (2) TMI 476 – CESTAT HYDERABAD – TMI – Taxability – Construction of Complex Services – period April, 2006 to December, 2010 – Held that:- On an identical issue, in the case of Kolla Developers & Builders [2018 (11) TMI 164 – CESTAT HYDERABAD] this Bench has held that construction of residential complex by the builders prior to 01.07.2010 is not taxable in terms of CBEC Circular No. 108/2/2009-ST dated 29.01.2009 and No. 151/2/2012-ST dated 10.02.2012 – appeal allowed – decided in favor of appellant. – Appeal No. ST/26234/2013 – A/31630/2018 – Dated:- 19-12-2018 – Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical) Shri Sunil Galawala, Shri V.S. Sudhir & Shri Venkata Prasad, Representatives (CA) for the Appellant. Shri Arun Kumar, Dy. Commissioner/AR for the Respondent. ORDER Per: P.V. Subba Rao. 1. This appeal has been filed against Order-in-Original No. 07/2013-Adjn (ST) (Commr) dated 17.01.2013. 2. The appellant is registered with the serv

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Aggrieved, the appellant filed this appeal on following grounds. a. What they have constructed is not a residential complex with 12 units in each but independent villas. Therefore, they should not be charged to service tax under residential complex as per Sec.65(91a) of the Finance Act, 1994. This clause reads as follows. residential complex means any complex comprising of – (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. It is the co

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case of Kolla Developers & Builders (supra) this Bench has held that construction of residential complex by the builders prior to 01.07.2010 is not taxable in terms of CBEC Circular No.108/2/2009-ST dated 29.01.2009 and No.151/2/2012-ST dated 10.02.2012. The relevant portions of the Order are reproduced below. 10. We have considered both sides and it is evident from the record that the relevant period was April, 2008 to September, 2008 which is prior to 01.07.2010 and the service provided was construction of residential complex by the builder which, as clarified by the CBEC in their circular dated 10.02.2012 (supra) was not taxable during the relevant period. This position was also held in the orders of the Tribunal in the case of Krishna Homes (supra), UB Constructions (supra) and Vinayaka Homes (supra). Thus, we find that the legal position is settled and the appellant was not required to pay service tax on the services allegedly rendered by them during the relevant period. Cons

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2019 (3) TMI 538 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Classification of goods – engine manufactured and supplied solely and principally for use in railways/locomotives – whether classifiable under HSN Heading 8408 or under HSN Heading 8607 of the Customs Tariff as a part used solely or principally for Railways or Tramway Locomotives or Rolling Stock? – Held that:- Circular No. 30/4/2018-GST dated January 25, 2018 has clarified that only the goods classified under Chapter 86, supplied to the railways attract 5% GST rate with no refund of unutilised input tax credit and other goods [falling in any other chapter], would attract the general applicable GST rates to such goods, under the aforesaid notifications, even if supplied to the railways. Therefore it is very important to classify subject engines, whether the same falls under Chapters 8408 or 8607 – Note 2 of Chapter 86 states that Heading 8607 applies to (a) axles, wheels, wheels sets (running gear), metal tyres, hoop

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incurred for same to such other units qualifies as supply – levy of GST or not – Held that:- As per Section 25 of the CGST Act, 2017, “a person who has obtained or is required to obtain more than one registration, whether in one State or Union territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.” Hence the applicant and their various offices will be distinct persons – As per the provisions of Section 7 of the CGST Act, 2017 read with Sr. no. 2 in Schedule -I of the CGST Act, 2017, supply of goods or services or both between related persons or between distinct persons, when made in the course or furtherance of business is to be considered as supply. Hence, the applicant is required to pay GST on such supply made to their offices/branches having different registration numbers.
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If GST is leviable, whether assessable value can be determined, by arriving at nominal value? – Held th

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an ISD. Hence we do not agree with the applicant's contention that the provisions of Section 24 (viii) of the CGST Act merely refers to the necessity of an independent registration if a person intends to avail the facility of ISD and does not create any stipulation as to necessity of availing the ISD facility itself. – GST-ARA-66/2018-19/B-162 Dated:- 19-12-2018 – SHRI B.V. BORHADE, AND SHRI B. TIMOTHY, MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by Cummins India Limited, the applicant, seeking an advance ruling in respect of the following issue. whether engine manufactured and supplied solely and principally for use in railways/locomotives are classifiable under HSN Heading 8408 or

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mmins India Limited ( Company/the Applicant ), a company incorporated in India under the provisions of the Companies Act, 1956 having its registered office at Cummins India Office Campus, Tower A, 5th Floor, Survey No. 21, Balewadi, Pune-411045. 2. Applicant is a group company of Cummins Inc. situated in Columbus, Indiana and as such is engaged in manufacture, sale of a variety of diesel engines, parts thereof and related services; and undertakes all day-to-day activities required therefore. The Applicant is duly registered under the Central Goods and Service Tax Act, 2017 ( CGST Act ) and Maharashtra Goods and Service Tax Act, 2017 ( MGST Act ) bearing GSTIN 27AAACC7258I31ZW. 3. Post-implementation of GST, the Applicant has analyzed all its business activities and day-today operations to ascertain levy of GST and necessary compliance under GST legislature. However, there appears ambiguity in few of the activities of Applicant vis-a-vis interpretation of GST legislation. Thus, the Appl

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office. Availment of common input supplies on behalf of other unit is being treated as a service of facilitating common input supplies to distinctly registered units and are sought to be assessed for GST at a nominal value. Levy of GST on facilitation of common input services, necessity of registering as an ISD and determination of assessable value. 4. For the sake of brevity these issues are being collectively presented for a suitable ruling. Facts in detail of each transaction referred above followed by issue for determination in detail and submissions on interpretation of law is enclosed vide separate Annexures. The documents in support of the submissions are enclosed as Exhibits thereafter. STATEMENT CONTAINING APPLICANTS INTERPRETATION OF LAW IN RESPECT OF THE QUESTIONS RAISED Classification of Engines exclusively manufactured for use in Railways/Locomotives 1. STATEMENT OF THE RELEVANT FACTS 1.1 The range of products manufactured and supplied by the company inter alia include en

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XVII of the Tariff, which do not yield a clear result. It may be noted that the alternate classification probable(s) here lead to varied GST rate scenarios and thus create ambiguity. 1.4 The Applicant Company thus deemed fit to seek a ruling on the subject classification matter. 2. ISSUE FOR DETERMINATION Whether engine manufactured and supplied solely and principally for use in railways/locomotives are classifiable under HSN Heading 8408 or under HSN Heading 8607 of the Customs Tariff (which has been borrowed for classification purposes under GST regime) as a part used solely or principally for Railways or Tramway Locomotives or Rolling Stock? 3. LEGAL PROVISIONS Relevant Section Notes under Customs Tariff SECTION SECTION NOTE DESCRIPTION XVI (inter-alia covers chapter 84) 1(1) 1. This Section does not cover: (inter-alia covers (1) articles of Section XVII; chapter 84) XVII (inter-alia covers chapter 86) 2(e) 2. The expressions parts and parts and accessories do not apply 6 the follow

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TE 3 TO SECTION XVII OF CUSTOMS TARIFF SUPERSEDES ALL OTHER NOTES AND REFERENCES AND MERITS CLASSIFICATION OF ENGINE MANUFACTURED BY THE APPLICANT UNDER CHAPTER 86 BASED ON ITS USAGE Owing to sole and principal usage. Section note 3 to Section XVII confirms classification of subject goods under Chapter 86 4.1 The classification of goods under the Goods and Services Tax regime is expressly aligned to Chapter/ Heading / Sub-heading / Tariff item under the First Schedule to Customs Tariff Act, 1975 ('Customs Tariff) and warrants reliance on the rules of interpretation and Section/ Chapter/ General Explanatory note thereto, which provide prescription for interpretation of the Customs Tariff (refer to Explanation (iii) & (iv) in the CGST Rale Notification 1/2017 dated June 28, 2017). 4.2 It may be noted that Customs Tariff follows the common classification system, which is popularly called the Harmonized System of Nomenclature (I IS or HSN), developed by the World Customs Organizati

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en the above, in Applicant's view, the position so emerging at para 4.4 above is apt and unambiguous. Sole or principal use of Applicant's engines for Railways engines 4.6 It is submitted that subject goods are manufactured by Applicant strictly as per the designs provided by the Railways Railways/locomotives manufacturers itself. This fact is evident from the Purchase Order issued by railways/locomotive manufacturers itself. This fact is evident from the sample purchase order issued by railways/locomotive manufacturers Railways to the Applicant. A sample copy of such Purchase Order along with detailed design specification is enclosed as Exhibit -A and Exhibit – B. 4.7 It is submitted that, the subject engines ipso facto are not capable of generic use since the same have been manufactured to cater to a specific design and configuration. As a matter of fact these engines (made to specification of Railways/Locomotive manufacturer) do not have any other buyer and hence, cannot be

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the case of Hi-tech Industries Limited vs. Commissioner of Customs, Bangalore (2005 (180) ELT 0356] wherein an identical issue in the context of classification of goods on the basis of principal or sole use of the goods was involved. As a matter of fact, the facts of the said case are applicable mutatis mutandis in the present factual matrix. The Hon'ble Tribunal while deciding the case in the favour of the assessee relied on the observations of the Commissioner (Appeals) while passing the Order in Appeal as under: It is observed that the impugned product imported by the appellants is a web camera. From the technical ¦ ;literature submitted at the time of personal hearing, it is observed that the camera is not an ordinary camera and functions only with the computer and this camera has got very specific functions and it works basically as a part of the computer and cannot function independently on its own. Thus, it is observed that the web camera imported by the appellant is

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4.10 The above decision of the Hon'ble Tribunal has further been affirmed by the Hon'ble Supreme Court in Commissioner vs. Hi-Tech Computers – 2015 (321) E.L.T. A274 (S.C.)]. 4.11 Reliance is further placed on Rail Tech vs. Commissioner of Central Excise Chandigarh (2000 (120) E.L.T. 393 (Tribunal)] =2000 (6) TMI 232 – CEGAT, NEW DELHI where in the following was held: 9. The bare perusal of Tariff heading 76.10 shows that it covers aluminium structures and parts thereof. The entry windows and their frames in the bracketed words, in this Tariff Heading refers only to the parts of the structure. Even the aluminium, plates, rods, profiles, lubes and the like, had been referred to in this Tariff Heading as the ones prepared for use in structures. Similarly, the entry in the sub-heading 7610.10 of this Tariff Heading, regarding doors, windows and their frames and thresholds for doors refers to the ones which are meant for use in the structures as this entry is contained in the sub-h

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ly used in the railways coaches. That being so, it can be safely concluded that these are parts of the railways classifiable under Tariff Heading 86.07(sub-heading 8607.00) of the Tariff. The principal that specific tariff entry has to prevail over the general entry, is not attracted in this case.The view taken in the impugned order dated 15-06-1994 by the Collector (which is the subject matter of the appeal of the assessees) is legally correct and no fault can be found with the same. 4.12 The classification of goods owing to sole and principal usage thereof in view of Section Note 3 is a widely regarded and accepted position of law and the same is also supported by Circular No. 17/90-CX.4, dated 9-7-1990 which clarified that Gear, gear boxes per se classified under 8483 would attract classification under heading 860778608/8614 when specifically designed for use with vehicles of Section XVII. It is submitted that though the referred clarification was issued under the erstwhile excise r

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parts/ accessories. 4.15 Classification of subject goods under Chapter 86 based on its usage is also in line with the GST rate Structure It is submitted that the GST rate structure in India covers in its fold multiple rates to address the diversity in the Indian social stratification. Accordingly, a lower rate of 5% is assigned to many of the articles which are of social significance and are in the interest of public at large. The necessity of a lower rate of GST has been widely discussed by many stakeholders in the incumbent government as well as bureaucrats. 4.16 The rationale behind introducing GST with varied rate structure, is also evident from the fact that entire Chapter 86 which covers in its fold articles such as Railways, locomotive, rolling stock and parts thereof which are of substantial significance for public at large is subject to a levy of GST at the rate of 5%. This submission also finds force by Circular No. 30/4/2018-GST dated January 25, 2018 which clarifies that g

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ed by generic Note 2; b. Note 2, by theme, seem to be exclusion for generic parts and accessories, which may have multiple application notwithstanding its usability inter-alia with articles falling in Section XVII; c. Reference is also invited to note 1(I) of Section XVI, which is inter-alia governs coverage under Chapter 84 (which falls in Section XVI) provides as follows: 1. This section does not cover: (I) articles of Section XVII A The above implies that where by virtue of specific provisions, if goods are covered in Section XVII (ie. Chapter 8607 in present facts) its coverage under Section XVI (ire Heading 8408 in present facts) is automatically ruled out. Again re-enforcing that Subject goods should fall within ambit of Chapter 8607 only and not otherwise. d. Note 2(e) and 3 to Section. XVII are seen competing and irreconcilable, and are hence, repugnant to each other, in such state, the rules of statutory interpretation suggest that the last provision (ie. Section Note 3) must

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pal use. The said view is further strengthened by available jurisprudence, which without exception favours and approve the Applicant's view. 4.22 Reliance is placed on the decision of the Hon'ble Tribunal in the case of Diesel Components Works vs. CCE, Chandigarh (2000 (120) ELT 648] = 2000 (6) TMI 68 – CEGAT, COURT NO. I, NEW DELHI, which deals with an identical issue wherein articles of heading 8409 were proposed to be classified under heading 8607 in view of Section Note 3 owing principal usage in the railways. However departmental authorities sought to invoke provisions of Note 2(e) to disallow the said classification under heading 8607. 4:23 in the said case, while laying down its ratio the Hon'ble Tribunal took cognizance of the provisions of Section Note 2(e) as well as Section Note 3 and held that articles in question attract classification under heading. 8607 in view of the collective reading of the Section Notes. The Relevant portion of the said decision is extrac

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und the parts of the engine to fall under Chapter Headings 84 and 85 because of Section Note 2(e) to Section XVIL After referring to Note 2, learned Commissioner failed to read Note 3 to that Section. That Note reads: 3. References in Chapters 86 to 88 to 'parts' or accessories do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those Chapters is to be classified under that heading which corresponds to the principal use of that part or accessory. In relation to Chapter Note 3, what HSN states is: (B) Criterion of sole or principal use. (1) Parts and accessories classifiable both in Section XVII an in another Section. Under Section Note 3, parts and accessories which are not suitable for use solely or principally with the articles of Chapters 86 to 88 are excluded from those Chapters. The effect of Note 3 is therefore tha

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deration. The Tribunal gave the answer in the affirmative. These parts of IC engines which were the main parts in the locomotive should also be termed as part of the locomotive and not as IC engines coming under the general category. Central Board of Excise and Customs had to consider the issue as to whether a radiator assembly supplied to Indian Railways is to be classified under sub-heading 8607.00 or otherwise. The Board observed that product radiator assembly is designed according to the specifications of the Indian Railways and is for use solely and principally with locomotives of Heading 8601 and 8602. It is clarified that the radiator assembly is not to be classified as parts of IC engines under Heading 8409. This understanding of the Central Board of Excise and Customs is discernible from circular No. 16/90 dated 77-6-7 990, which still holds good. If radiator assembly manufactured for Railways for being fitted in locomotives is to be classified under Heading 8607, we do not fi

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of Section XVII and owing to sole and principal usage, these engines continue to be classified under Chapter 86. 4.26 Given the settled ratio emerging from the ruling above, which has an identical/ similar fact pattern as in the present case, it is prayed that the said view is concluded in context of the present application as well. 4.27. The Applicant is further wishful of the aforesaid conclusion in view of the Board Circular 17/90-CX quoted above, which also confirms the Applicant's point of view though under the excise regime. However, since the basis of classification under excise and GST (which in turn relies on customs) is HSN, a reliance of the aforesaid circular is helpful. INTERPRETATION OF STATUE – CUSTOMS TARIFF – OTHER CONSIDERATIONS Specific entry would prevail over general entry for classification of goods 4.28 Without prejudice to averments above, the Applicant humbly submits before the Hon'ble Authority that it is a settled position in law that, in tariff, a s

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f the competing Headings equally merit consideration and there is a state of indecision, for classification of goods, the general rules of interpretation of the Harmonized System prescribe that goods should be classifiable under the heading occurring last in the numerical order (commonly known as latter the better rule). 4.31 in the instant case, if the said rule is applied that also yields conclusion in favour of Heading under Section XVII only i.e. 8607. 5. PRAYER Owing to sole and principal usage for Railway/locomotives (Chapter 86 goods) the engines manufactured by Applicant are rightly classifiable as parts of goods falling under Chapter 86 and hence, classifiable under heading 8607 and not elsewhere. GST rales should therefore, be determined accordingly. 1. STATEMENT OF THE RELEVANT FACTS 1.1 The Applicant has its presence across various states in India through its manufacturing/service/sales units. These units are located in different states of India. Therefore, in view of secti

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G2/2;&:3/5, Vibhuti Khanc Gomali Nagar, Lucknow: 226010 Area Office 18AAACC7258B2ZU Assam 4th Floor, NA, Archon Arcade, Dr. B. Barua Road, Ulubari, Guwahati, Kamrup Metropolitan, Assam 781007 Area Office 19AAACC7258B225 West Bengal 204/2, Ceramic Road, GT: Road, Asansol, Bardhaman, West Bengal,713303 Depot 20AAACC7258B1ZA Jharkhand Plot No 43; Near Imam Kothi, hazaribagh Road, Kokar, Ranchi, Ranchi, Jharkhand, 834009 Depot 21AAACC7258B1Z8 Odisha PLOT NO 1473/3230, KHATANO 808/255, Rourkela, Sundargarh Odisha, 769041 Depot 22AAACC72583126 Chhattisgarh Ground Floor, Hot No 69, M A Rappai and KX Poulose, Transport Nagar, Korba, Korba, Chhattisgarh, 495677 Depot 23AAAC07258B124 Madhya Pradesh House No 357, New Market Near BEML Colony, Singrauli, Singrauli, Madhya Pradesh, 486889 Depot 24ANACC72588122 Gujarat 13-703 & 704,7th floor, Block-B, Westgate, Near YMCA club, SG Highway, Ahemedabad – 380054 Area Office 27AAACC7258B12W Maharashtra Cummiris India Office Campus, Tower A, Survey

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gh, Begumpet, Hyderabad, Telangana, 500016 Depot 1.2 The Applicant, being a registered person and engaged in the activity of making taxable supply, is eligible to avail Input Tax Credit ( IT:C ) of GST paid on all the input, capital goods and input services procured in the course of furtherance of business. 1.3 Amongst all such procurements, certain common input services are availed by head office of the Applicant located in Pune. Further, the units of the Applicant may also avail common services. Accordingly, the head office or the respective unit, as the case may be, avails ITC of GST paid on such common input supplies subject to provisions of Section 17 of the CGST Act. 1.4 The costs incurred by head office/ units for procurement of such common in head office/ units for procurement of such common input services, is booked by such unit/head office in its own books of accounts. Such cost is then allocated and recovered proportionately from each of the recipient unit to determine the o

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vices on behalf of the other distinct person/s, is in the nature of an activity of facilitating such availment to distinct persons and attracts scrutiny of Section 2(102) and Section 7 of CGST Act to determine whether such facilitation partakes the character as 'service' and results in 'supply of service'. Section 2(102) defines the term 'service' and the same is extracted below for reference:- (102) services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; 3.2 The Applicant submits that on a bare perusal, the definition of service' is very wide and covers in its scope every-thing other than goods, money and securities. It thus appears that, the definition implies a very wide scope of activities as 'service' and inter

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ective of whether there is any consideration for the same. 3.5 The Hon'ble Authority is therefore requested to kindly pass a ruling to clarify that the facilitation of availing common input services by Units of the Applicant to its other units registered as distinct persons qualifies as 'supply of service'. SUPPLY OF FACILITATING COMMON INPUT SERVICES BETWEEN DIFFERENT UNITS WHICH ARE REGISTERED AS DISTINCT PERSON CAN BE ASSESSED AT A NOMINAL VALUE 3.6 Since each of Applicant's unit is registered independently and is treated as a 'distinct person in view of provisions of Section 25(4) of the CGST Act, value of supply made between such distinct person is required to be assessed in view of Rule 28 of the Central Goods and Service Tax Rules, 2017 ( CGST Rules ). Relevant portion of Rule 28 is extracted below for ready reference: 28. Value of supply of goods or services or both between distinct or related persons, other than through an agent- The value of the supply of

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of referring to reasonable means consistent with Section 15 and provisions of CGST Rules, 2017 3.8. It is submitted that, facilitation as undertaken by one unit/ head office to avail the common input supplies on behalf of its other units is an activity specific to Applicant's business and is not being supplied in open market. Consequently, there does not exist any comparable 'open market value' to measure consumption of referred common input supplies. In such a case, the subject supply cannot be assessed with reference to open market value. For the same reason of exclusivity of subject transaction to the Applicants own business, it cannot be assessed with reference to value of 'supply of like kind and quality' as well. 3.9 Further, the subject supply being 'service of facilitation of common input, ascertaining 'cost of provision of service would involve ascertaining cost of service and all the ancillary activities necessary to facilitate the same to recipie

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thority to pass a ruling to accept nominal value as to be assigned for facilitating common input supplies by Unit of the Applicant to its other units registered as distinct person, to be a statutorily correct assessable value. THE FACILITY OF REGISTERING AS AN ISD IS AN OPTION PROVIDED BY THE STATUTE AND THERE IS NO COMPULSION FOR A TAXABLE PERSON TO REGISTER ITSELF AS AN ISD 3.13 The common input services and related expenses are booked in the books of the account of the head office/unit which received it on behalf of other unit. However, since the common input supplies have been consumed by more than one unit of the Applicant, it has allocated and recovered the costs so incurred from each of such unit. Based on the stated facts and submissions made hereafter, the Applicant seeks for a ruling to determine necessity of registering as an ISD. 3.14 The concept of ISD under the GST regime is a legacy carried over from the Service Tax Regime. The concept of ISD was first introduced in the

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the said office; 3.16 As such, when the input supplies are being received by a unit on behalf of distinct persons the ISD mechanism ensures that credit fungibility is maintained by passing on the relevant proportion of ITC to the respective distinct person. However, it does not indicate that such issuance of invoice for distribution of ITC as a mandatory activity and it appears that operating as an ISD is an option. 3.17 We further refer to provision of Section 24 of the CGST Act which enlists the entities that are required to be registered as a taxable person, and the said Section at its sub-clause (viii) requires an ISD to obtain an independent registration. The Applicant submits that, Section 24 merely refers to the necessity' of an independent registration if a person intends to avail the facility of ISD. It however, does not create any stipulation as to necessity' of availing the ISD facility itself. The Applicant further submits that there exists no other statutory provi

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ing to clarify that the mechanism of ISD as provided under CGST Act is an optional facility and the applicant has the right to exercise its discretion to either opt or refrain from availing the ISD mechanism. 4. PRAYER In view of the submissions made above, it is most humbly prayed that Hon'ble authorities may kindly pass a ruling to clarify as follows:- a. Facilitation of common input supplies by one unit to all the other units registered as distinct persons qualifies as 'Supply'; b. Such facilitation of common input supplies can be assessed for GST with reference to a nominal value, which is deemed to be treated as 'open market value'; and c. The facility of ISD is an option provided under CGST Act and Applicant is at liberty to exercise its right to either avail or refrain from the ISD mechanism. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- BRIEF FACTS OF THE CASE Applications made by M/s Cummins India

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principally' in rail ways/ tramway/locomotives. For discussing the issue raised by the applicant, the Section Note 2 of Section XVII which deals in goods like vehicles, aircrafts, vessels and associated transport equipments is reproduced as below:- 2. The expressions parts and parts and accessories do not apply to the following articles, whether or not they are identifiable as for the goods of this Section:- (a) joints, washers or the like of any material (classified according to their constituent material or in heading 8484) or other articles of vulcanized rubber other than hard rubber (heading 4016) (b) parts of general use, as defined in Note 2 of Sec.XV, of base metal (Sec XV), or similar goods of plastics (Chap 39); (c) articles of Chapter 82 (tools); (d) articles of heading of heading 8306; (e) machines or apparatus of headings 8401 to 8479, or parts thereof, articles of heading 8481 or 8482 or, provided then constitute integral parts of engines or motors, articles of heading

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corridor connections; (e) coachwork. The issue raised by the applicant is examined in light of above Section note and Chapter note of relevant Chapter and Sections of the Customs Tariff and merits classification under heading 8408 for the following reasons: a. Note 2(e) of the Section XVII of the Customs Tariff clearly states that the expression parts and parts and accessories do not apply to the machines or apparatus of heading 8401 to 8479, or parts thereof; articles of heading 8481 or 8482 or, provided they constitute integral parts of engines or motors, articles of heading 8483 b. Note 2 of the Chapter 86 of the Customs Tariff states that Heading 8607 applies, inter alia to axels, wheels, wheel sets (running gear), metal tyres, hoops, hubs and other parts of wheels; frames, under frames, bogies and bissel-bogies; axle boses, brake gear; buffers for rolling-stock; hooks and other coupling gear and corridor connections; coachwork. The Heading 8607 does not cover engines of any type.

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India through its manufacturing/service/sales units and they are located in different states in India. As per provisions of Section 25(4) of CGST Act, 2017, units located in each such state are to be treated as a 'distinct person' from units located in other states. The applicant further stated that certain common input services are availed by the head office located in Pune and the units of the applicant. The costs incurred by head office/ units for procurement of such common input services, is booked by head office/such unit in its own books of account and is then allocated and recovered proportionately from each of the recipient unit to determine the office/plant wise profitability, which is an internal procedure. The applicant seeks to get ruling as to whether availment of input tax credit of tax on common input supplies on behalf of other unit/ units registered as distinct person and further allocation of the cost incurred for same to such other units qualifies as supply a

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ST. As per provisions of Section 7 of the CGST Act, 2017 and activity enlisted at Sr. no. 2 in Schedule -I of the CGST Act, 2017, supply of goods or services or both between related persons or between distinct persons as specified in Section 25 when made in the course or furtherance of business is to be considered as supply. Hence, the Applicant is required to pay GST on such supply. The applicant at their submissions to the application at Para 3.7 to 3.10 stated that they are unable to arrive at assessable value as per provisions of Rule 28 as their does not exist any comparable Open market value and also cannot be assessed with reference to value of Supply of like kind and quality . They stated that they are left with only resort to assess the subject supply with reference to the provisions of rule 31 which reads as 31. Residual method for determination of value of supply of goods or services or both.- Where the value of goods or services or both cannot be determined under Rules 27 t

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y hearing when Sh. Rohit Jain, Advocate along with Sh. Narender Vaidya, DGM Taxation appeared and made oral contentions for admission of application as per contentions in their ARA application. Jurisdictional Officer Sh. B. K. Mishra, Supt., Pune II, CGST Commissionerate, appeared and stated that they would be making submissions in due course. The application was admitted and called for final hearing on 27.11.2018, Sh. Rohit Jain, Advocate along with Deepak L Bahirwani, Tax Director-Cummins India Group, Group CFO's Officer and Sh. Vivek Baj, C.A. ELP appeared and made oral contentions as per details submitted by them. No one from the side of the department was present. 05. OBSERVATIONS We have gone through the facts of the case. There are 3 questions raised by the applicant before this authority. (A). In respect of the first question i.e. Whether engine manufactured and supplied solely and principally for use in railways/locomotives are classifiable under HSN Heading 8408 or under

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rate structure, is evident from the fact that entire Chapter 86 which covers in its fold articles such as railways, locomotive, rolling stock and parts thereof which are of substantial significance for public at large is subject to a levy of GST at the rate of 5%. According to them this submission also finds force by Circular No. 30/4/2018-GST dated January 25,2018 which clarifies that goods supplied to railways, which are classified under Chapter 86 attract GST at the rate of 5%. We find that Circular No. 30/4/2018-GST dated January 25, 2018 has clarified that only the goods classified under Chapter 86, supplied to the railways attract 5% GST rate with no refund of unutilised input tax credit and other goods [falling in any other chapter], would attract the general applicable GST rates to such goods, under the aforesaid notifications, even if supplied to the railways. Therefore it is very important to classify subject engines, whether the same falls under Chapters 8408 or 8607. Sectio

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al tyres, hoops and hubs and other parts of wheels, (b) frames, under frames, bogies and bissel-bogies, (c) axle boxes, brake gear, (d) buffers for rolling-stocks; hooks and other coupling gear and corridor connections, and (e) coachwork. Therefore it is crystal clear that Heading 8607 does not cover engines of any type. Finally we agree with the submissions made by the jurisdictional officer the goods classified under Heading 8607 are subjected for assessment on the basis of quantity cleared on weight basis whereas the goods classified under Heading 8408 are subjected for assessment on the basis of quantity cleared on number basis. This shows that the nature of goods classified under these two heads is inherently different from each other. Hence in view of the above discussions we find that the subject engines manufactured and supplied for use in railway, locomotives are classifiable under I ISN Heading 8408 and not under Heading 8607 of the Customs Tariff. (B).Now we proceed to the n

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its located in each such state are to be treated as a 'distinct person' from units located in other states. The applicant further stated that certain common input services are availed by the head office located in Pune and the units of the applicant. The costs incurred by head office/ units for procurement of such common input services, is booked by head office/such unit in its own books of account and is then allocated and recovered proportionately from each of the recipient unit to determine the office/plant wise profitability, which is an internal procedure. The applicant seeks to get ruling as to whether availment of input tax credit of tax on common input supplies on behalf of other unit/units registered as distinct person and further allocation of the cost incurred for same to such other units qualifies as supply and attracts levy of GST. Whether assessable value can be determined by arriving at nominal value and whether the applicant is required to register itself as an

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or between distinct persons, when made in the course or furtherance of business is to be considered as supply. Hence, the applicant is required to pay GST on such supply made to their offices/branches having different registration numbers. This brings us to the next question raised by the applicant which is as under:- If GST is leviable, whether assessable value can be determined, by arriving at nominal value? The applicant in their submissions have stated that, on they are unable to arrive at Assessable value as per provisions of Rule 28 as their does not exist any comparable Open Market Value and also cannot be assessed with reference to value of Supply of like kind and quality . The Applicant has also submitted that on a bare perusal, the definition of service is very wide and covers in its scope every-thing other than goods, money and securities and have concluded that since the definition implies a very wide scope of activities as 'service' and inter alia covers in its sc

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tion or manufacture. The applicant has submitted that they are engaged in manufacture, sale of a variety of diesel engines, parts thereof and related services; and undertakes all day-to-day activities required therefore. Thus they have available the cost of production of such goods and therefore it would be prudent for them to arrive at a value which is 110% of the cost of production. Hence we find that Rule 30 is very much applicable in the applicant's case. In view of the above, we rule that the provisions of Rule 30 of the CGST Rules, 2017 should be followed by the applicant to arrive at the assessable value. The final question raised by the applicant is as under:- Once GST is levied and ITC thereof is availed by recipient unit, whether the Applicant is required to register itself as an Input Service Distributor for distribution of ITC on common input supplies? ISD is a facility available to persons/businesses having a large share of common expenditure and where billing/payment

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provisions of Section 24 (viii) of the CGST Act merely refers to the necessity of an independent registration if a person intends to avail the facility of ISD and does not create any stipulation as to necessity of availing the ISD facility itself. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the questions are answered thus- Question:- Whether engine manufactured and supplied solely and principally for use in railways/locomotives are classifiable under HSN Heading 8408 or under HSN Heading 8607 of the Customs Tariff (which has been borrowed for classification purposes under GST regime) as a part used solely or principally for Railways or Tramway Locomotives or Rolling Stock? Answer:- In view of the discussions made above the engine manufactured and supplied solely

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2019 (3) TMI 539 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Levy of tax – SGST/CGST Act – setting up of a comprehensive CCTV based city surveillance system – amount received for supply of services during the post GST period to the Government of Maharashtra (Home Department) as per the contract – Held that:- In the present contract, we find that the liability of the contractor-applicant does not end with the supply of goods but it extends till the successful testing, commissioning and also to maintenance of the system. The present contract in our view is a works contract as it involves provision of services and goods, but it is for us to decide whether it is works contract as defined under the GST Act cited supra. The term 'immovable property' has not been defined under the GST Act. However, there are plethora of judgments of the Hon. Supreme Court and the Hon. High Courts which have helped understand the term 'immovable property'.
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The set up of a comprehensive CCTV bas

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the Notifications applicable to the present case.
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Thus' Original Works' would mean ; all new constructions; all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; erection, installation etc. that results in increase in life and value of property . In the present case the work done by the applicant does not appear to be original works.
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In the present case, the contract is not related to any original work and is in the nature of composite supply of Works Contract – the activity of the applicant in the present case is nothing but a composite supply of Works Contract, not being original works and they will be covered under Sr. No. 3, item no. (ii) of Notification No. 11/2017 dated 28.06.2017 as amended by Notification No. 1/2018 dated 25.01.2018 and attract 18% GST (9% each of CGST and SGST). – GST-ARA- 90/2018-19/B-159 Dated:- 19-12-2018 – SHRI B. TIMOTHY, AND SHRI B. V. BORHADE, MEMBER PROCEEDINGS (under se

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ce to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) on which advance ruling is required. 1. The Government of Maharashtra (for short GOM ) has envisaged to setup a comprehensive CCTV based City Surveillance System for the city of Pune and Pimpri-Chinchwad (hereinafter referred to as the Surveillance Project ). 2. The GOM published the Request for proposal (for sort' RFP') to seek services of a reputed IT firm as a System Integrator for Design, Development, Implementation & Maintenance of CCTV based Surveillance System For Pune and Pimpri-Chinchwad areas. Accordingly the Applica

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tachments and annexure thereto and all documents incorporated by reference therein; (c) 'Systems Integrator' means M/s. Allied Digital Services Limited interchangeably referred to as SI in the contract; and (d) 'RFP' means the Tender Published by GOM (Ref. No. ISS 1012/CR-7l/Spl-4) and the subsequent corrigenda/Clarifications issued. (e) 'GO Live' means the date on which the proposed solution becomes operational after successful conclusion of all acceptance tests to the satisfaction of GOM. (f) Deliverable means any action/output generated by the SI while discharging their contractual obligations. This would include feeds, analytics, information and all the other services rendered as per the scope of work and as per the SLAS. (g) Assets refer to all the hardware / Software / furniture / data / documentations / manuals / catalogs / brochures / or any other material procured, created or utilized by the SI or the GOM for the Pune Surveillance Project. 3) Term of th

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te of Successful Go Live and shall be subject to strict adherence of the respective SLAS. If the Systems Integrator is liable for any penalty/liquidated damages as per the SLAs (refer to the clause no. 7 of this agreement), the same shall be adjusted from quarterly payments due to the System Integrator. GOM will release the payment within 30 days of submission of valid invoice subject to the condition that invoice and ail supporting documents produced are in order and work is performed to the satisfaction of GOM. GOM shall be entitled to delay or withhold the payment of any invoice or part of it delivered by SI. where GOM dispute such invoice or part of it provided that such dispute is bonafide. The disputed amount shall be settled in Resolution of dispute. 6) Work Completion Timelines List of the broad activities to be carried out by the Systems Integrator and the timelines from the date of work Order are given in the table below. T stands for the date of issue of the Work Order. Sr.N

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ffice & Addnl. CP Office Viewing Center at Zone 1, Supply & Installation of equipments at corresponding Police Stations T + 21 weeks 11 Establishing connectivity for Zone I Cameras, Command Center & Police Stations T+23 weeks 12 Training and Capacity Building for the Police Personnel for Phase I T+25 weeks 13 FAT for Phase I cameras, Command / viewing Center Setup, Police Station Setups T + 26 weeks 14 FAT for Data Centers T + 26 weeks 15 Go Live for the 1 st Zone T + 26 weeks Phase II Operationalization at 2nd 3rd & 4th Zone 16 Supply, Installation of Cameras for 2nd, 3rd & 4th Zones T + 31 weeks 17 Development of the remaining viewing Centers, Supply & Installation of equipments at corresponding Police Stations T + 26 weeks 18 Establishing connectivity for Phase II Cameras, viewing Center, Police Stations T + 33 weeks 19 Training and Capacity Building for the Police Personnel for Phase II T + 35 weeks 20 FAT for phase II Cameras, Viewing Center Setup, Police S

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owned by the system integrator exclusively in terms of the delivery of the services as per this Agreement (hereinafter the Assets ) in proportion to their use & control of such Assets which will include all upgrades/enhancements & improvements to meet the needs of the project arising from time to time. b) Term Assets also refers to all the hardware / Software / furniture / data / documentations / manuals / catalogues / brochures / or any other maternal procured, created or utilized by the SI or the GOM for the Pune Surveillance Project. c) Maintain 3% of installed camera quantity as spare inventory at all times, for an types of cameras. d) Keep all the tangible Assets in good & serviceable condition (reasonable wear & tear excepted) &/or the intangible Assets suitably upgraded subject to the relevant standards as stated in of the RFP to meet the SLAs mentioned in the contract & during the entire term of the Agreement. 9) Provide a well-prepared documentation for

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, where the SI shall be designated as the loss payee' in such insurance policies; & SI shall be able to pay premium for the insurance policy & shall ensure that each & every policy shall keep updated from time to time. o) Ownership of the Assets shall vest with GoM on Go Live of the project. Ownership of any asset, created during the contractual period after go live, shall also vest with GOM upon creation of such asset p) Ensure the integration of the software with hardware to be installed and the current Assets in order to ensure the smooth operations of the entire solution architecture to provide efficient services to GOM of this project in an efficient and speedy manner. q) Obtain a sign off from GOM or its nominated agencies at each stage as is essential to close each of the above considerations. r) Ensure that the Mobile Vans mentioned in RFP shall be registered under the provisions contained u/s 39 of Motor Vehicle Act, 1988 in the name of GoM. s) Follow/observe t

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nto executable/installable product. Government of Maharashtra may permit the SI, right to use the customized software for any similar project being executed by the same SI, with payment of reasonable royalty to GoM for the same. (B) GOM has sovereign rights & nothing herein shall or will be construed or deemed to grant to t System Integrator any right, title, license, sub-license, proprietary right or other claim against or interest in to or under (whether by estoppels, by implication of otherwise) to the Intellectual Property Rights. Miscellaneous j) Personnel/Employees i. Personnel/employees assigned by System Integrator to perform the services shall be employees of System Integrator and/or its subcontractors, & under no circumstances will such personnel be considered as employees of GOM. System Integrator shall have the sole responsibility for supervision & control of its personnel & for payment of such personnel's employee's entire compensation, including sa

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on schedule & upon clearance of the personnel based on profile review & personal interview by GOM or its nominated agencies, within not later than 30 working days. System Integrator shall depute quality team for the project & as per requirements, GoM shall have the right to ask System Integrator to change the team. m) Entire Agreement This MSA, the SLAs & all schedules appended thereto & the contents & specifications of the volumes 1, II, III & IV of the RFP subsequent corrigenda issued thereon & clarification (undertakings) accepted by the GOM constitute the entire agreement between the parties with respect to their subject matter. 7. From the schedule forming part of the contract it is clear that the entire project cost, as per the contract is at ₹ 224,31,50, 106/- The goods used in the project that is capital cost of the project is at Rs.,90,35,70,545/-; and the balance operation cost for 5 years of the entire project which is a 133,95,79,561/ 8

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of Maharashtra. 11. The Applicant submits that prior to the GST regime service tax was an exempted on the contract. 12. It is submitted that as per the agreement the government of Maharashtra released 20% amount of the entire project cost as per the agreement after project Go Live on or about 27 October 2015. The balance amount that is 80% of the total contract value is being released in 20 quarterly equal installments for the further period of 5 years from 27 October 2015 onwards. The quarter is comprised of 3 months viz. April to June, July to September. October to December and January to March of each financial years. 13. The applicant has paid necessary fee for this application of ₹ 5000/- (Five Thousand only). 14. The Copy of the contract along with the Schedules forming part of the contract are annexed herewith for ready reference. 15. According to us the contract in question is a composite supply of works contract as defined in the clause 119 of section 2 of the CGST Act

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aintenance of CCTV based surveillance system for Pune and Pimpri -Chinchwad area. The total fees paid to the applicants as per the agreement for the execution of this contract are at ₹ 2,243,150,105.50/- which includes all the cost components as per scheduled A to S , for a period of 5 years and 10 months of the execution. The Government of Maharashtra released 20% amount of entire project cost. As per agreement after project GO LIVE on or about 27 October 2015. The balance amount i.e. 80% of the total contract value is being, released in 20 quarterly equal installments for the further period of five years from 27 October, 2015 onwards. The Government of Maharashtra has issued letter to the Applicant for Final; Acceptance Certificate for Design, Development, Implementation & Maintenance of CCTV based Surveillance System for Pune & Pimpri-Chinchwad and declared the project GO LIVE from The issuance date of letter on 27 October 2015. The Applicant has submitted invoices dt.

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aharashtra (Home Department) as per the contract in question are taxable under SGST/CGST Act ? Comments:- This activity of the Applicant is Works contract as defined in section 2(119) of CGST Act is a composite supply and shall be treated as 'supply of service 'para 6(a) of Schedule II of CGST Act and which attracts tax under SGST CGST Act. Question 2 :- If answer to the question No.1 is an affirmative then what is the rate of tax under SGST/CGST ? Comments:- As per sr.no. 3(xii) of Notification No.11/2017-Central Tax (Rate) (updated version of the Notification No.11/2017-Central Tax(Rate) dated the 28th June, 2017 as amended upto 27th July, 2018) New Delhi, the 28th June,2017 the tax rate is SGST- 9% & CGST- 9%) 04. HEARING The Preliminary hearing in the matter was held on 05.12.2018, Sh. Prakash Shah, Director, Sh. Vijay Walunj, Authorized signatory,Sh. Pradeep Rawal, Manager Accounts Finance, along with Sh. V. V. Guthe, Advocate appeared and made oral and written submiss

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fer this contract as Surveillance Project . The issues before us are: Question 1: whether there is liability to pay tax under the GST law on the amount received post GST for supply of services as per the contract executed prior to the implementation of GST and Question 2: if the said amount is held to be taxable, then at what rate tax should be paid. Both the questions are inter-connected. Answers to both the questions depend on the determination of the nature of the activity being carried out by the applicant and once the nature of the activity is determined the question both the questions as to whether the activity is covered under the GST law or not, and the applicable rate of duty can be determined. To determine the nature of activity of the applicant it is required to be determined whether the contract involves composite supply as defined under the SGST/CGST Act and further whether such supplies constitute a Works Contract as defined in clause (119) of section 2 of the GST Act. We

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sign, development, implementation and maintenance of CCTV based surveillance system and are integrated in such way that all of them constitute, on the over all, a supply to set up a comprehensive CCTV based city surveillance system. In this view of the matter we are convinced that various supplies as contemplated by the contract constitute composite supply as defined u/s 2(30) which reads as follow- Section 2(30): Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Illustration: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply As a corollary of above finding, the next issue to be decided by us

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with the supply of goods but it extends till the successful testing, commissioning and also to maintenance of the system. The present contract in our view is a works contract as it involves provision of services and goods, but it is for us to decide whether it is works contract as defined under the GST Act cited supra. The term 'immovable property' has not been defined under the GST Act. However, there are plethora of judgments of the Hon. Supreme Court and the Hon. High Courts which have helped understand the term 'immovable property'. One such decision is TTG Industries Ltd. vs. CCE reported as (2004) 4 SCC 751 = 2004 (5) TMI 77 – SUPREME COURT OF INDIA. We can now look at how the judgment has been delivered – 8. In their reply to the show-cause, the respondents explained the processes involved, the manner in which the equipments were assembled and erected as also their specifications in terms of volume and weight. It was explained that the function of the drilling ma

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rilling machine as well as the mudgun are erected on a concrete platform described as the cast house floor which is in the nature of a concrete platform around the furnace. The cast house floor is at a height of 25 feet above the ground level. On this platform concrete foundation intended for housing drilling machine and mudgun are erected. The concrete foundation itself is 5-feet high and it is grouted to earth by concrete foundation. The first step is to secure the base plate on the said concrete platform by means of foundation bolts. The base plate is 80 mm mild sheet of about 5 feet diameter. It is welded to the columns which are similar to huge pillars. This fabrication activity takes place in the cast house floor at 25 feet above ground level. After welding the columns, the base plate has to be secured to the concrete platform. This is achieved by getting up a trolley way with high beams in an inclined posture so that base plate could be moved to the concrete platform and secured

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d condition. 10. The judicial member noticing these facts observed that it is a physical and engineering impossibility to assemble mudguns or the tap hole-drilling machines elsewhere in a fully assembled condition and thereafter erect or install the same at a height of 25 feet on the cast floor of the blast furnace. She found that even the adjudicating authority conceded the fact that the equipments have to be assembled/erected on the base frame projection of the furnace. She also accepted the submission urged on behalf of the appellant that if the machines are to be removed from the blast furnace, they have to be first dismantled into parts and brought down to the ground only by using cranes and trolley ways considering the size, and also considering the fact that there is no space available for moving the machines in assembled condition due to their volume and weight. She found support for her conclusion in the decision of this Court in Municipal Corpn. of Greater Bombay v. Indian Oi

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the ratio of the above case-law, we hold that the mudguns and tap hole-drilling machines do not admit of the definition of goods and, therefore, excise duty is not leviable thereon. 25. In Mittal Engg. Works (P) Ltd. v. CCE [(1997) 1 SCC 203 : (1996) 88 ELT 622] =1996 (11) TMI 66 – SUPREME COURT OF INDIA this Court was concerned with the exigibility to duty of mono vertical crystallisers which are used in sugar factories to exhaust molasses of sugar. The material on record described the functions and manufacturing process. A mono vertical crystalliser is fixed on a solid RCC slab having a load-bearing capacity of about 30 tons per square metre. It is assembled at site in different sections and consists of bottom plates, tanks, coils, drive frames, supports, plates, etc. The aforesaid parts were cleared from the premises of the appellants and the mono vertical crystalliser was assembled and erected at site. The process involved welding and gas-cutting. After considering the material pla

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Heading 85.02. In reaching this conclusion this Court considered the earlier judgments of this Court in Municipal Corpn. of Greater Bombay v. Indian Oil Corpn. Ltd. [1991 Supp (2) SCC 18] = 1990 (11) TMI 407 – SUPREME COURT, Quality Steel Tubes [(1995) 2 SCC 372 : (1995) 75 ELT 17] = 1994 (12) TMI 75 – SUPREME COURT OF INDIA and Mittal Engg. Works (P) Ltd. [(1997) 1 SCC 203: (1996) 88 ELT 622] = 1996 (11) TMI 66 – SUPREME COURT OF INDIA as also the earlier judgment of this Court in Sirpur Paper Mills Ltd. v. CCE [(1998) 1 SCC 400: (1998) 97 ELT 3] = 1997 (12) TMI 109 – SUPREME COURT OF INDIA. This Court observed: (SCC pp. 35-36, para 14) 14. There can be no doubt that if an article is an immovable property, it cannot be termed as 'excisable goods' for purposes of the Act. From a combined reading of the definition of 'immovable property' in Section 3 of the Transfer of Property Act, Section 3(26) of the General Clauses Act, it is evident that in an immovable property th

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tion in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom-made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer movable goods. It was in those peculiar circumstances that the installation and erection of machines at the sites were held to be by this Court to be immovable property that ceased to remain movable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. As can be understood from the above judgements, the Honourable Courts have evolved the term 'immovable property' when faced with the question of what constitutes movable and lmmovable property. Though not issued fo

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following reasons:- 1) CCTV based Surveillance System have permanently been fastened to the things attached to the earth. 2) The CCTV based Surveillance System cannot not be shifted without first dismantling it and then erecting it at another site. In the facts before us and having regard to the principles laid down in the judgments discussed above, we are of the firm view that set up of a comprehensive CCTV based city surveillance system for the city of Pune and Pimpri-Chinchwad does result into installation/commissioning of immovable property wherein transfer of property in goods is involved in the execution of the contract and thus the 'Surveillance Project' is a works contract as defined in Sub-section 119 of Section 2 of the GST Act and is supply of services as per 6(a) of Schedule II of the GST Act. And therefore the amount received for the supply of services post GST are taxable under the provision of GST Act. Question No. 2: Having answered the question No.1 in the aff

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nd is reproduced as under:- SI. No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ………………………………) 9 – (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 – (iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act,2017, supplied to the Government, ………….. alteration of, (a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);(b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply(ii) water treatment, or (iii) sewerage treatment or disposal. 6 – (iv) Composite supply of works contra

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said Notification with the amendment mentioned above also it is very clear that the composite supply of works contract as in the subject case falls under (ii) attracting 18% GST. The said Notification 11/2017 was further amended on 21.09.2017 vide Notification No. 24/2017 – Cen Tax (Rate) and is reproduced as under:- SI.No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ………………………………) 9 – (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 – (iii) Composite supply of works contract …………………. 6 – (iv) Composite supply of works contract ………………. 6 – (v) Composite supply of works contract as 6 defined in clause. (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissi

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ated 13.10.2017, the original Notification No. 11/2017 stood as under:- SI.No. Chapter, Section or Heading. Description of Service Rate (per cent.) Condition 1 2 3 4 5 Chapter 99 All Services Section 5 Construction Services Heading 9954 (Construction services) (i) ………………………………) 9 – (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.' 9 – (iii) Composite supply of works contract …………………. 6 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 (iv) Composite supply of works contract ………………. 6 – (v) Composite supply of works contract as 6 defined in clause. (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection,

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lation to a work entrusted to it by the Central Government, State Government, Union territory or local authority as the case may be Notification 31/2017 Dt.13.10.2017 (vii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work (that is, constituting more than 75per cent, of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity. 2.5 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 Notification 31/2017 Dt.13.10.2017 (viii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services,

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r providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity 6 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. (x) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a subcontractor to the main contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 2.5 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,

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k is of the type of original work. The expression 'Original work' has not been defined under any of the Notifications applicable to the present case. The expression 'original work' has assigned meaning under the CPWD Works Manual 2014 which reproduced as below: 1.3.1 Original Works These shall mean:- (i) all new constructions, (ii) all types of additions, alterations and/or special repairs to newly acquired assets, abandoned or damaged assets that are required to make them workable. (iii) major replacements or remodeling of a portion of an existing structure or installation or other works, which results in a genuine increase in the life and value of the property. Thus' Original Works' would mean ; all new constructions; all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; erection, installation etc. that results in increase in life and value of property . In the present case the work done by t

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2019 (3) TMI 594 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Classification of supply – Zero Rated Supply or a Normal Supply? – export of service or not – Intermediary services or not – Place of provision of services – Accounting, Sales Invoicing, Purchase Invoicing, Cash receipt posting, Bank Payment entries, other receipt entries, Credit Control work, Support Assignment work; Payroll assistance, storing and scanning of data to the data storage disk and any other work – Held that:- We find from the agreement that the services being provided to their client is in the form of Administrative and support services. It is further seen from the clause no.3.3 that NES India will provide general advice and assistance in relation to the Services, as required, from time to time and such services will be charged on a time and costs basis – thus, the applicant's transaction is in the nature of supply of services.
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Export of services or not – Held that:- The applicant located in Indi

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posed service would not fall to be classified as 'intermediary service'.
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Place of provision of services – Held that:- The supplier of service i.e. applicant is located in India, the recipient of service i.e. AM is located outside India -Abu Dhabi; payment is received in convertible foreign exchange, the supplier of service and the recipient of service are not merely establishment of a distinct person and applicant not being an intermediary and services are not specified in sub-section (3) to (13) of section 13, the place of supply of service would be the location of the recipient of services i.e. NES Abu Dhabi, which is outside India. As the applicant satisfies all the ingredients of 'export of services' the service provided by the 'Marketing Services Agreement' would qualify as an export of Taxable service.
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Thus, the applicant is an exporter of services under GST Act and the supply of services in the subject case as covered by the MSA agreement submitted it is very clear t

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or certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- I. STATEMENT OF FACTS : Brief of Indian Company NES Global Specialist Engineering Services Private Limited (NES India) has its registered office is situated at office no 24 & 28, Red Bricks – Level 1, HDIL Kaledonia, Sahar Road, Andheri East, Mumbai -400069, Maharashtra, India. The Company is engaged in providing supply of man-power services to highly technical industries such as Oil and Gas, Power, etc. GST Regn number:- 27AACCN9033F1ZI & C1N :- U72200MH2008FTC288230 Brief of Abu Dh

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nk Payment entries, Other receipt entries, Credit Control work, Support Assignment work, Payroll assistance, storing and scanning of data to the data storage disk and any other work would be required by you as per your requirements. (Refer Separate Service Schedule for total list of services – Copy of MSA enclosed). – Valuation of transaction As per the agreement, NES India is not allowed to outsource or sub contract the work to any other person and hence, in order to provide the above mentioned services, NES India will have to use its current place of business, which is on rent along with current employees and will also incur other related expenses, in order to carry out the desired work for NES Abu Dhabi. In view of the above and as per the MSA, NES India will Charge NES Abu Dhabi the cost incurred in India for providing the desired services, as identified and allocated with a margin of 10% plus taxes as applicable during the period. Written Submission, being the Part and Parcel of t

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e foreign exchange and the fact had been confirmed by the Bank in the Advice, as reproduced below for the sake of brevity.- * In case where foreign currency amount has been mentioned as INR in the advice, it is being confirmed that the bank has received the funds in INR to the debit of Vostro account and that such proceeds are received in fully convertible foreign exchange . Based on the above fact, we reiterate that the above transaction to be considered as Export of Service, as the following conditions fulfilled.- (i) the supplier, (NES India), of service is located in India; (ii) the recipient, (NES Abu Dhabi), of service is located outside India; (iii) the place of supply of service is outside India, (Location of the recipient); (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; (as mentioned supra) and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordanc

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or such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8 Section 16(1) of the IGST Act defines zero rated supply , as follows 16. (2) zero rated supply means any of the following supplies of goods or services or both, namely:- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. In view of the above, the transaction that NES India and NES Abu Dhabi are proposing to enter into is squarely covered by the definition of export of service, as it satisfies all the conditions as listed in section 2(6) of the IGST Act, as follows:- (i) the supplier of service i.e. NES India is located in India and is reregistered under the GST Act in the State of Maharashtra ; NES India will provide services to NES Abu

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IGST Act. In view of the above and as per section 13(2) of the IGST Act, the Place of supply for services provided by NES India is the location of the recipient of services i.e. in Abu Dhabi and the services provided by NES India is not covered by the specific situations covered by sections 13(3) to (13) of the IGST Act 2017. Section 13(1) and 13(2) reads as under:- 13. (1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India (2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services: (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and NES Abu Dhabi will remunerate NES India for the services provided by it from India, in convertible foreign exchange, hence meeting the said condition. (v) the suppl

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ent, the Party providing such services will be an independent contractor of the Party for whom such services are performed, and this Agreement will not be deemed to create a partnership, joint venture or other arrangement between the Parties. The Applicant relied on the similar issue, in which HON. HIGH COURT OF DELHI had taken the view that such transaction will fall under export of service. (Verizon Communication India Pvt. v/s Assistant Commissioner, Service .. on 12 September, 2017, Delhi High Court) = 2017 (9) TMI 632 – DELHI HIGH COURT. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- M/s. NES Global Specialist Engineering Services Pvt. Ltd., 1st floor, Redbrick, Kaledonia Sahar Road, Andheri (East), Mumbai 400069 (GSTIN: 27AACCN9033F1ZI) (here in after referred to as 'the applicant') has filed above application under Section 98 of the Central Goods and Service Tax Act, 2017 read with Rule 104 (1) of the CGST Rules,

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iness Avenue Tower, A1 Salaam Street, P.O. Box no 63107, Abu Dhabi. Foreign Tax Identification number:- 100069908000003. Brief of Parent Company in UK Both the above mentioned companies i.e. NES India and NES Abu Dhabi are subsidiary companies of the parent company named NES Global Limited (NES UK), which is a . registered company in the United kingdom. Brief of transaction NES India and NES. Abu Dhabi have proposed to enter into a service agreement through which NES India will provide support service in respect of the foreign business carried on by NES Abu Dhabi. Every service provided by NES India will form part of the Master Services Agreement ( MSA ) and its Schedules in detail, The services provided by NES India would be as following, for example: Accounting, Sales Invoicing, Purchase invoicing, Cash receipt posting, Bank Payment entries, Other receipt entries, Credit Control work, Support Assignment work, Payroll assistance, Storing and scanning of data to the data storage disk a

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the view that above transaction will fall under Export of Service, on considering the fulfilment of the conditions as per the GST Act and provisions. Export of Services conditions under GST as summarized below: under the provisions of the IGST Act, if a transaction of service provision meets all the conditions of export of services as defined in Section 2(6) of the said act, then such a transaction will be treated as an export of service and qualify as a Zero Rated Supply as per section 16(1) of the Act. Section 2(6) of the IGST Act defines Export of Services , as follows Export of Services means the supply of any service when:- (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange, and (v) the supplier of service and the recipient of service are not merely establishments

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trol work, Support Assignment work; Payroll assistance, storing and scanning of data to the data storage disk and any other work would be required by them as per their requirements. The applicant had mentioned that they have enclosed the copy of Master Services Agreement ( MSA ), but the same was not enclosed and they were asked to submit the same but not submitted. Further, the applicant has provided vide their letter dated 5.07.2018, as Exhibit – 1; a draft Intercompany Services Agreement ( ISA ) with NES. Global Talent Recruitment Services (NES Abu Dhabi) whose registered office is situated at Unit 104, Business Avenue Tower, A1 Salaam Street, P.O. Box No.63107, Abu Dhabi. The above mentioned draft agreement is only Draft and not final. Hence, this also is not a authentic document. 7. To consider the transaction between NES India and NES Abu Dhabi as Export of Service following conditions as per provisions of Section 2(6) of GST Act are to be fulfilled,- i) the supplier of service i

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ompany Services Agreement ( ISA ) mentions the following Services:- 1. Purchases, Invoice Bookings for various Costs such as Visa, Immigration, labour cancellation charges, Medical expenses of various contractors of NES Abu Dhabi. 2. Invoices booking for all overheads. 3. Creating Invoices to various clients. 4. Booking Expenses of Contractors. 5. Bank-Reconciliation of all Bank accounts. 6. Vendor Reconciliation for all Vendors. 7. Cash Receipt entries posting. 8. Bank Payment entries posting, 9. AR reporting: 10. Payroll Assistance. 11. Support Assignment work. 12. Scanning and storing the data in the shared folder of NES Abu Dhabi. 13. General Consultancy Services provided for Accounting, Payroll, Taxation etc., and any other work which would require to do as per the request. The above details does not mention how each services will be provided, and what are the end to end transactions or details of each services, mode of payment, currency of payment, the place of provision of servi

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uirements of Section 2(6). (ii) If the said supply is a Zero Rated Supply, then can the same be considered as an export of service under the GST Act? the answer is since the applicant failed to provide the Master Services Agreement ( MSA ), also the original Intercompany. Services Agreement ( ISA ) and relevant details in terms of Section 2(6). It is prayed that the application may be rejected at this stage: Further submission of the officer -Please refer to the first written submission dated 11.09.2018 Submitted to Advance Ruling Authority. 2) In Para 7 of the above written submission dated 11.09.2018 to Advance Ruling Authority, it was mentioned that the following details were not submitted by the applicant.- 1. copy of Master Services Agreement ( MSA ), 2. copy of Intercompany Services Agreement ( ISA ). 3. Shareholding Patterns & Management personnel of NES India 4. Shareholding Patterns & Management Personnel of NES Abu Dhabi are required. 5. The end to end details of tran

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sheet of invoice amount for the period 2017-18, offer letter of employees issued by NES Global Talent for working in Mumbai of office, details of Directors (Key personnel), and sharing pattern of NES India Abu Dhabi. Registration Certificate of NES Global Talent Abu Dhabi and citation of Delhi High Court decision in respect of W.P.(C) No. 11569/2016, W.P.(C)11572/2016, W.P.(C) No.11575/2016 and C.M. No. 45598/2016, W.P.(c) No. 11577/2016 1.r.o. M/s. Verizon Communication India Pvt. Ltd. = 2017 (9) TMI 632 – DELHI HIGH COURT 3.1) It may be seen that applicant has not provided the information about end to end transactions as detailed at para No.2.1 above. 4) Further the details of share holding pattern and Key Personnel of NES India shows that 9,999 share are with NES Global Ltd. UK and one share is with NES International Ltd., UK. There are four Directors in The company viz. Stephen William Buckley, Coleman Lee Fraser, Coton Simon Francis, Babu Sebastin. In case of NES Abu Dhabi 51% sh

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registered in India, in Annexure-A to the agreement, the service schedule is attached, in which the following services are mentioned: it is found that activities are same as mentioned in earlier submission in para 5 cited above . Hence it is not repeated again here. 4.2) It may be seen that we cannot presume anything including the place of provision of service merely on the basis of nomenclature of the services. This is a question of fact and only the applicant is in possession of relevant detailed information which he has opted not to part with. The applicant has not submitted, how each of the above services will be provided, and what are the end to end transactions or details of each services, mode of payment, currency of payment, the place of provision of service, the place of recipient of service, the place of provider of services, in spite of Advance Ruling Authority directing the applicant to handover supporting documents. 5) We can neither presume or conjuncture nor can we commi

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provider of services, it is prayed that the application may be rejected at this stage. The applicant has also failed submit the complete details as to how they fulfil the requirements of Section 2(6). (ii) If the said supply is a Zero Rated Supply, then can the same be considered as an export of service under the GST Act? the answer is since the applicant failed to provide the Master Services Agreement ( MSA ') and not specifying how each of the services mentioned in the Intercompany Services Agreement ( ISA ), will be provided, and what are the end to end transactions or details of each services, mode of payment, currency of payment, the place of provision of service, the place of recipient of service, the place of provider of services, it is prayed that the application may be rejected at this stage. Therefore, the applicant may be directed to provide complete information as stated in foregoing paras above. 04. HEARING The Preliminary hearing in the matter was held on 07.08.2018,

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e case and submissions made before us by both, the applicant and the department. The applicant, located in India have submitted that they and M/s NES situated in Abu Dhabi (hereinafter referred to as the client) have proposed to enter into a service agreement through which the applicant will provide support service in respect of the foreign business carried on by the client as per the Master Services Agreement ( MSA ) and its Schedules in detail. However even though they have mentioned that they have proposed to enter into a service agreement, it is seen that they have submitted a copy of the agreement which they have already entered into as on 30th April, 2017. The services to be provided by the applicant to the client as per the MSA would be as under:- 1. Purchase Invoice Bookings for various Costs such as Visa, Immigration, labour cancellation charges, Medical expenses of various contractors of NES Abu Dhabi. 2. Invoices Booking for all overheads. 3. Creating Invoices to various cli

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ed office is situated in …………. India and NES Global talent Recruitment Services (NES Abu Dhabi) whose registered office is situated in ………….. Abu Dhabi. 3. Services to be provided: 3.2. NES India will provide to NES Abu Dhabi Administrative and Support Services which includes: Accounting which includes Sales Invoicing, Purchase Invoicing, Cash receipt posting, Bank Payment entries, Other receipt entries, Credit Control work, Support Assignment work, Payroll assistance, Storing and scanning of data to the data storage disk and any other work would be required by NES Abu Dhabi as per its requirements – Refer to Annexure A for detailed Service Schedule. 3.3. NES India will provide general advice and assistance in relation to the Services, as required, from time to time. These will be charged on a time and costs basis, according to NES India's standard rates. Such consultancy services will be provided with NES India's prior consent and at mutually agreeable dates an

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the supply of any service when (i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange, and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 2 in section 8. In the present matter, we find from the agreement that applicant located in India is supplying to their client located abroad. The applicant submitted that the payment for such service has been received by the supplier of service in convertible foreign exchange, and for that copies of invoices, BRC and Bank statements are submitted on record which proves that the payment received is in convertible foreign exchange. We further find from the information submitted on record that both the Applicant and their client are not establishmen

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s section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. (2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services: 3) The place of supply of the following services shall be the location where the services are actually performed, namely: – …………………………………. We find from the scrutiny of the MSA that that the relationship between the parties is that of independent contractors meaning that the agreement does not intend to create relationship of principal and agent. Thus we find that applicant is not a person who arranges or facilitate supply of services between two or more persons and therefore the proposed service would not fall to be classified as 'intermediary service'. We find from the details as given in the application and submissions before us, rec

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the above provision we find that the zero rated supply means (a) the export of goods or services or both, and (b) …………………………….. In the present case, we are of the opinion that the applicant is an exporter of services under GST Act and the supply of services in the subject case as covered by the MSA agreement submitted it is very clear that the said transactions are covered under Zero rated supply 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 52/2018-19/B-160, Mumbai, dt. 19.12.2018 For reasons as discussed in the body of the order, the questions are answered thus- Question:- Whether the transaction in question is a Zero Rated Supply or a Normal Supply under the GST ACT? Answer:- In view of the discussions we hold that the transaction covered under the MSA dated between the applican

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2019 (3) TMI 656 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – TMI – Liability of GST – principal supply of the composite supply qua maintenance contracts executed between the customer and the Applicant – Held that:- The main purpose behind executing the contract is to keep the engines unimpaired and operative at all times for which a fixed price has been decided for the AMC. In order to provide immediate services to the customer and to keep the minimum downtime of the engines, the Applicant has engaged dealers who inter-alia provide maintenance services to the customers on behalf of the Applicant – The goods, material, spare parts, etc. are required to be supplied only when necessary i.e. when, during the course of maintenance services it is found by the skilled personnel that there is a need for such parts which will effectively keep the runtime of the DG Sets at maximum acceptable time.
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A composite supply means that there is a supply of two or more goods or services together

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ipal supply in the transaction before us is supply of service, then the place of supply is required to be determine. The place of supply would be determined in terms of the default Section 12(2) of the IGST Act which states that the location of the recipient would be the place of supply.
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Since the supply of maintenance service in the present case is for a single price with supply of spare parts/goods as and when required, the supply of both, goods and services are made in conjunction with each other in the ordinary course of business and therefore considering the provisions of the GST Laws, the supply of services/goods in the present case is naturally bundled, with the supply of goods being incidental to the supply of services and therefore such contract are to be considered as a composite supply of service where the principal supply is service and the supply of goods is incidental to such supply of service.
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Thus, the principal supply in the present case between the applica

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e CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS REQUIRED 1. This Application is being preferred by Cummins India Limited, Maharashtra ( Applicant/ Company'), a company incorporated in India under the provisions of the Companies Act, 1956 having its registered office at Cummins India Office Campus, Survey No. 21, 5th Floor, Tower A, Balewadi, Pune-411045. 2. The Applicant is engaged in providing goods and services which qualify as 'supply' as per provisions of the Central Goods and Service Tax Act, 2017 ( CGST Act ) and is duly registered thereunde

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To carry out preventive maintenance; – Routine maintenance – To check safety controls; – General inspection of parts; – Supply of consumables; – Other repairs and replacements. As per terms of the AMC agreement between the customer and the Applicant, the Applicant is responsible to upkeep the engines in good working condition by undertaking regular maintenance. In order to provide immediate services to the customer and to keep the minimum downtime of the engines, the Applicant has engaged dealers which inter-alia provide maintenance services to the customers on behalf of the Applicant. If in the course of providing the maintenance services, the dealer is required to utilize consumables, parts etc., it can do so at his discretion (i.e: without any prior permission of the Applicant or customer) and the value for such parts or consumables are recovered from the Applicant under AMC. 6. These goods, consumables etc. required for undertaking activities referred under AMC are made available t

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ing of maintenance services along with supply of necessary parts, it is necessary to analyze the definition of 'works contract' as given in Section 2(119) of the CGST Act. Relevant extract of the same is reproduced below for ease of reference:- (119) works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; 2.2. On perusal of the above definitions, it can be stated that repair and maintenance relating to any immovable property would fall under the ambit of 'works contract'. In the present facts, the Applicant is engaged in providing repair and maintenance in respect of engines which are movable in nature and hence, it would not be considered as 'works contract'. T

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ss. 2.4. In the present facts, the AMC covers in its scope the services of maintenance and supply of parts/consumables as may be required. Mere supply of parts/consumables does not fulfill the requirement of the customer unless the same is appropriately used by the professional expert. Consequently, supply of service and parts is considered as naturally bundled and intrinsically linked with each other to effectively perform the obligations as stipulated under AMC. Given the fact that both the conditions as prescribed under Section 2(30) of CGST Act have been fulfilled, the underlying transaction constitute as a 'composite supply'. 2.5. It is further submitted that once any 'supply' qualifies as 'composite supply' then in view of Section 8 of the CGST Act, the tax structure applicable thereto including determination of assessable value, classification, tax rate etc. needs to be determined with reference to the principal supply comprised thereunder. The term '

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goods follows as a part and parcel of providing the maintenance service comprehensively. In such a case, supply of maintenance service appears to be the dominant intention of the scope of services as envisaged under AMC and thus supply of maintenance service partakes the character of a 'principal supply'. 2.8. At this stage, it would be relevant to refer the past judicial precedents which inter alia discuss the dominant intention of the transaction to decide the taxability of the same under erstwhile regime. Reference is made to the Supreme Court Ruling in the case of Commissioner of Sales Tax, Madhya Pradesh Vs. Purushottam Premji [(1970) 26 STC 38 (SC)] = 1970 (4) TMI 127 – SUPREME COURT OF INDIA wherein some of the tests were evolved to determine taxability of the contract. Relevant extract of the judgment is reproduced below for your easy reference:- The primary difference between a contract for work or service and a contract for sale of goods is that in the former there is

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g, servicing, repairing, overhauling of aircrafts, their instruments and accessories. In this regard, the Court held that the activity undertaken by the Appellant is in the nature of service and accordingly not liable to sales tax. M/s. Rainbow Colour Lab & Anr. Vs. The State of Madhya Pradesh & Ors (MANU/SC/0061/2000) = 2000 (2) TMI 2 – SUPREME COURT OF INDIA The Appellant is engaged in taking photographs, developing and printing films. In this case, it was held that property passing on to the customer in the form of photographic paper is only incidental to the service contract. This activity cannot be subjected to sales tax. M/s. Everest Copiers through R.A. Partner, etc. Vs. The State of Tamil Nadu [MANU/SC/0671/1996] = 1996 (7) TMI 482 – SUPREME COURT OF INDIA The Appellant is engaged in the business of photocopying. It was decided that the contract between the Appellant and the customer is a contract of work or service, not a contract of sale. 2.10. Accordingly, in the pre

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ich substantiates that the purpose of the contract is that of providing services, Relevant clauses are provided below: Maintenance Agreement This Comprehensive Annual Maintenance Contract for DG sets (installed at various locations Of. HDFC Bank limited – Pan India as per Annexure I) is made on this 1st day of April 2017 at Pune by and between: …………………… 1(b) Penalty Further, CUMMINS has expressly agreed that it shall employ its best efforts and provides all necessary resources to perform its services and maintain an uptime of 92% per annum of the DG sets installed at the bank's premises. CUMMINS shall discuss and review the progress and status of the current/and all assignments, on a regular basis as agreed and in addition as and when required with the Bank Failing which the Bank, will decide for location/DG set specific (as the case may be) penalty to be levied @ 10% of AMC amount payable/paid under. Annual Maintenance Contract in respect of assets installed at suc

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hind executing the contract is to keep the engines unimpaired and operative at all times. The same can be substantiated by the following:- Primary obligation of the Applicant is to ensure that equipment is in working condition at least for minimum specified period; In case of major repairs or downtime of the DG sets, the Applicant is required to provide DG set on rental basis to the customer so that there would not be any disturbance to the customer's operations; The Applicant is liable to pay penalty to the customers in case they are not able to up-keep the machine for minimum period of time as prescribed in the agreement; Supply of consumables and small parts such as filters, hoses, gaskets are covered in the contract; Replacement or supply of major parts of the machine are specifically excluded from the scope of contract. Fixed price has been decided for the AMC. 2.13. It is settled position: that intention of the contract is required to be understood in terms of the clauses of

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n is service; place of supply would be determined in terms of the default Section 12(2) of the Integrated Goods and Services Tax Act( IGST Act ) which states that the location of the recipient would be the place of supply. Relevant portion of the Section is reproduced below:- (2) The place of supply of services, except the services specified in sub-sections (3) to (14),- (a) made to o registered person shall be the location of such person; (b) made to any person other than a registered person shall be, (i) the location of the recipient where the address on record exists, and (ii) the location of the supplier of services in other cases. 2.16. Further, the location of the supplier of service would be determined as per the definition provided under Section 2(15) of the IGST Act which is as under: location of the supplier of services means,- (a) where o supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a

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stomers are located in Maharashtra, the Applicant is charging CGST and SGST. IT IS SETTLED POSITION THAT 'SERVICE' FORMS PRINCIPAL SUPPLY OF AMC TRANSACTION 2.19. We would like to refer to the Advance Ruling pronounced by the Uttar Pradesh Advance Ruling Authorities on identical issue on May 16, 2018 wherein it has been held that AM transactions is composite supply and service forms a principal supply thereunder: Relevant portion of the Ruling is reproduced below for your easy reference: a) Whether supply of comprehensive annual maintenance service which may also involve incidental supply of spare parts/ goods should be classified as a composite supply or mixed supply? Ans. -Since the supply of maintenance service is for a one and fixed price with or without supply of spare parts/goods and supply of service and goods is made in conjunction with each other in the ordinary course as per maintenance contracts, this maintenance service to the extent of presence of all the necessary

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er referred Ruling, Applicant submits that 'service forms principal supply of AMC. 3. PRAYER In view of the submissions, it is most humbly prayed that Hon'ble authorities may kindly pass a ruling to clarify that AMC's are in the nature of 'composite supply' of which service forms principal supply. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- BRIEF FACTS OF THE CASE Applications made by M/s Cummins India Ltd. (hereinafter referred as the applicant ) vide their letters dated 26.07.2018 are examined and it is noticed that the applicant have made two applications seeking advance ruling on three issues. Comments on their application are as under: I. Determination of Principal Supply The applicant stated that they are engaged in the business of manufacturing diesel and natural gas engines and also engaged in distribution business which provides after sales services to its customers which includes supply of spare

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e, as defined, the predominant element of a composite supply can be determined on the basis of conditions of the supply agreements (in this case Annual Maintenance Contract). The applicant has been requested to submit a copy of the AMC for examination of the case. The applicant submitted copy of Maintenance Agreement between HDFC Bank Limited and them wherein the obligations of the applicant is to ensure the uptime of equipment to an extent of 92 percent per annum and will provide services like four preventive visits per annum, maintenance of DGE SET as per manufacturer standard practices wherein all other parts and repairs shall be charged at actual. They also carry out supply of all maintenance consumables, periodic maintenance and troubleshooting in engines and alternators. Also, in their application, at para 2.11 the applicant submitted text of a portion of the AMC agreement which explains the obligations of Cummins under the maintenance agreement which is reproduced as under: Part

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g:- I. Primary obligation of the applicant is to ensure that equipment is in working condition at least for minimum specified period; II. In case of major repairs or downtime of the DG sets, the Applicant is required to provide DG set on rental basis to the customer so that there would not be any disturbance to the customer's operations; III. The applicant is liable to pay penalty to the customers in case they are not able to up-keep the machine for minimum period of time as prescribed in the agreement; IV. Supply of consumables and small parts such as filets, hoses, gaskets are covered in the contract; V. Replacement or supply of major parts of the machine are specifically excluded from the scope of contract. VI. Fixed price has been decided for the AMC. In view of the above and the fact mentioned in the copy of the Maintenance agreement submitted to this office, it appears that the predominant element of supply under AMC is supply of service. 04. HEARING The case was scheduled fo

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plicant has submitted that they are engaged in the business of manufacturing diesel and natural gas engines which is supplied to their end customers. They also provide after sales services to their customers on account of engines supplied by them and also by various other parties, which includes supply of spare parts, maintenance services, rebuilding of engines and batteries. The applicant has submitted two agreements entered into with M/s HDFC bank and M/s Yes Bank. They have also submitted a correspondence received from M/s BEML Limited for Work Order to execute the Guaranteed spares and availability contracts for 18Nos. QSK 19C Engines fitted on BH160M Dumpers a/c CCI . We find that the applicant executes an Annual maintenance Contract ( AMC ) with end customers to provide maintenance services, which helps in keeping customer's engines in a good working condition. These services are provided for a fixed charge based on the nature of maintenance activity that may be required, whi

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is to keep the engines unimpaired and operative at all times for which a fixed price has been decided for the AMC. In order to provide immediate services to the customer and to keep the minimum downtime of the engines, the Applicant has engaged dealers who inter-alia provide maintenance services to the customers on behalf of the Applicant. Considering the factual position narrated in Para 2.12 above, it is also submitted that the dominant intention of the activity would be considered as service where skill is important rather than supply of goods and the skill is supplied by the dealers who use competent engineers to perform the services mentioned in the contract. The goods, material, spare parts, etc. are required to be supplied only when necessary i.e. when, during the course of maintenance services it is found by the skilled personnel that there is a need for such parts which will effectively keep the runtime of the DG Sets at maximum acceptable time. Now, to arrive at a decision,

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as prescribed under Section 2(30) of CGST Act have been fulfilled, the underlying transaction constitute as a 'composite supply'. The agreements also reveal that the applicant is engaged in providing repair and maintenance in respect of engines which are movable in nature and hence, it would not be considered as a Work Contract 'since works contract under the GST laws envisages immovable property wherein transfer of property in goods is involved in the execution of such contract. Now that we find that there is a rendering of composite supply we need to find out as to what is the principal supply in this case, whether it is a supply of goods or supply of services. Therefore we refer to the definition of the term 'principal supply' which is defined under Section 2(90) of the CGST Act and is as under:- (90) principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part o

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s considered i.e in this case the place would be Maharashtra where the applicant is registered. To sum up, since the supply of maintenance service in the present case is for a single price with supply of spare parts/goods as and when required, the supply of both, goods and services are made in conjunction with each other in the ordinary course of business and therefore considering the provisions of the GST Laws we find that supply of services/goods in the present case is naturally bundled, with the supply of goods being incidental to the supply of services and therefore such contract are to be considered as a composite supply of service where the principal supply is service and the supply of goods is incidental to such supply of service. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 65/2018-19/B-161 Mum

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