Author: admin_gst

GST – States – S.O. 114 /PGSTR/2017/R.89./2018 – Dated:- 12-7-2018 – GOVERNMENT OF PUNJAB DEPARTMENT OF EXCISE AND TAXATION (EXCISE AND TAXATION-II BRANCH) NOTIFICATION The 12th July, 2018 NO.S.O. 114 /PGSTR/2017/R.89./2018- In exercise of the powers conferred by clause (g) of sub-rule (2) of rule 89 of the Punjab Goods and Services Tax Rules, 2017 read with Notification No. S.O.86/P.A.5/2017/S.147/2017 dated the 14th November, 2017, and all other powers enabling him in this behalf, the Governo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST – States – G.S.R.46/P.A.5/2017/S.164/Amd.(16)/2018 – Dated:- 12-7-2018 – GOVERNMENT OF PUNJAB DEPARTMENT OF EXCISE AND TAXATION (EXCISE AND TAXATION-II BRANCH) NOTIFICATION The 12th July, 2018 No. G.S.R.46/P.A.5/2017/S.164/Amd.(16)/2018.-In exercise of the powers conferred by section 164 of the Punjab Goods and Services Tax Act, 2017 (Punjab Act No.5 of 2017), and all other powers enabling him in this behalf, the Governor of Punjab, on the recommendations of the Council, is pleased to make the following rules further to amend the Punjab Goods and Service Tax Rules, 2017, namely:- RULES 1. These rules may be called the Punjab Goods and Service Tax (Eighth Amendment) Rules, 2018. 2. In the Punjab Goods and Service Tax Rules, 2017, in Not

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

3), the second proviso shall be deemed to have been substituted on and with effect from the 17th August, 2017. (vi) in FORM GST REG-01, under the heading 'Instructions for submission of Application for Registration', Serial No.16 shall be deemed to have been added on and with effect from the 17th August, 2017. 3. In the said rules, in Notification No.G.S.R.46/P.A.5/2017/S.164/Amd.(4)/2017 dated the 03rd October, 2017, for sub-rule (1) to amending rule 1, the following shall be substituted, namely:- (2) Save as otherwise provided in these rules, they shall be deemed to have come into force on and with effect from the 15th September, 2017. 4. In the said rules, in the Notification No.G.S.R.55/P.A.5/2017/S.164/Amd.(6)/2017 dated the 14

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nded by the Commissioner shall be deemed to have been substituted on and with effect from the 29th September, 2017. (v) in rule 120, the words and figures the period specified in rule 117 or such further period as extended by the Commissioner shall be deemed to have been substituted on and with effect from the 29th September, 2017. (vi) in rule 120A, the marginal heading Revision of declaration in FORM GST TRAN-1 shall be deemed to have been inserted on and with effect from the 29th September, 2017. (vii) in FORM GST REG-29,- (a) the heading APPLICATION FOR CANCELATION OF REGISTRATION OF MIGRATED TAXPAYERS shall be deemed to have been substituted on and with effect from the 29th September, 2017; and (b) under sub-heading PART-A, against the

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (9) TMI 1672 – BOMBAY HIGH COURT – 2018 (18) G. S. T. L. 595 (Bom.) – Voluntary Compliance Encouragement Scheme (VCES) – Right to appeal – CESTAT dismissed the appeal on the ground that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme and that the appeal is not maintainable.
–
Held that:- The issue decided in the case of Narasimha Mills Pvt. Ltd. vs. Commissioner of C. Ex.(Appeals), Coimbatore, [2015 (6) TMI 787 – MADRAS HIGH COURT] where the Madras High Court, by specific observation, dismissed the appeal on the ground that there is no remedy of appeal in the scheme would be giving unfettered power to the authority and same is not acceptable.
–
There is no reason to adopt a different approach and view than the approach and view adopted by Madras High Court. – The CESTAT directed to hear the appeal afresh and pass appropriate orders on merit of the appeal.
–
Decided in favor of assessee. – CENTRAL EXCISE APPEAL NO.6 O

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ther details. 3. The appellant submitted his reply to the show cause notice but finding no favour with the reply, the adjudicating authority confirmed the demand and ordered recovery of tax amount along with under Section 73 of the Finance Act, 1994, in addition penalty was imposed. 4. Being aggrieved, the appeal was preferred before the appellate tribunal by the appellant on 19th January, 2016. The appellate tribunal initially issued notice and then on 22nd September, 2017 passed order. Same is impugned in the present appeal. 5. Mr. Sharma, learned Counsel appearing for the appellant invited our attention to the order and submitted that though firstly reference is made to the absence of the appellant, the tribunal subsequently by observing that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme dismissed the appeal holding that the appeal is not maintainable. He then submits that dismissal of appeal on the ground of no provision in the

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

; Property Consultants vs Dy. C.C.E. & S.T. Dera Bassi, reported in 2014(35) S.T.R. 65 ( P & H) and submitted that similar view which is taken by the Madras High Court in Narasimha Mills Pvt. Ltd (supra) is taken by Punjab and Haryana High Court in Barnala Builders & Property Consultants (supra). 8. Though Mrs. Bharaswadkar Patil, learned Counsel appearing for the respondent opposes the appeal, considering the facts of the present matter and considering the judgments relied on by Mr. Sharma, learned Counsel appearing for the appellant, we are of the view that there is no reason to adopt a different approach and view than the approach and view adopted by Madras High Court as well as Punjab & Haryana High Court. 9. It would be useful to refer observations of Madras High Court on the issue in paragraph Nos. 18 and 19, which read thus : 18. Further, it is relevant to note that the Service Tax Voluntary Compliance Encouragement Scheme, 2013 has been introduced by the Central

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e decision maker, who, while passing such order, might have misapplied the law, came to an incorrect factual finding, acted in excess of his jurisdiction, abused his powers, was biased, considered evidence which he should not have considered, or failed to consider evidence that he should have considered. To err is human and hence it cannot be expected that all the decision makers would be perfect in their approach in arriving at just conclusions. If any statute or scheme does not make the appeal provision, it would be nothing to mean that the order passed by the authority has become final and conclusive for all the purposes and thereby, giving uncontrolled and unquestionable powers to the said authority by virtue of which, he becomes as monopoly over the statute and will certainly act in an arrogant manner. In this case, the second respondent is the original authority, whose decision regarding the eligibility of the assessee under the scheme is final even if the said decision may perve

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (11) TMI 181 – GUJARAT HIGH COURT – 2018 (18) G. S. T. L. 47 (Guj.) – Correction of errors in the TRAN-1 declarations – migration to GST Regime – transitional provisions – Held that:- Identical question came to be considered by this Court in JAY CHEMICAL INDUSTRIES LIMITED VERSUS UNION OF INDIA [2018 (10) TMI 876 – GUJARAT HIGH COURT] where the Division Bench of this Court by a speaking order, quashed and set aside the similar order and remanded the matters to the learned CESTAT by observing that There is no scope for directing the respondents to allow the petitioner to correct the TRAN1 declaration already made. – R/TAX APPEAL NO. 591 of 2018 With R/TAX APPEAL NO. 593 of 2018 With R/TAX APPEAL NO. 614 of 2018 Dated:- 12-7-2018 – MR

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

x Appeals, which were arising out of the very impugned common order passed by the learned CESTAT and the Division Bench of this Court by a speaking order, quashed and set aside the similar order and remanded the matters to the learned CESTAT by observing as under:- 7. In view of the above and for the reasons stated hereinabove, all these appeals succeed. The impugned common order passed by the learned Tribunal is hereby quashed and set aside and the appeals are restored to the file of the learned Tribunal and to avoid any further multiplicity of proceedings /appeals before this Court, it is directed that the appeals on remand be kept pending till the decision of this Court in the case of Essar Steel India Ltd., being Tax Appeal No.444 of 20

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST – States – G.O. Ms. No. 36 – Dated:- 12-7-2018 – GOVERNMENT OF PUDUCHERRY COMMERCIAL TAXES SECRETARIAT (G.O. Ms. No. 36, Puducherry, dated 12th July 2018) NOTIFICATION In exercise of the powers conferred by section 164 of the Puducherry Goods and Services Tax Act, 2017 (Act No.6 of 2017), the Lieutenant-Governor, Puducherry, hereby makes the following rules further to amend the Puducherry Goods and Services Tax Rules, 2017, namely: – 1. (1) These rules may be called the Puducherry Goods and Services Tax (Seventh Amendment) Rules, 2018. (2) They shall be deemed to have come into force with effect from the 12th day of June, 2018. 2. In the Puducherry Goods and Services Tax Rules, 2017,- (i) in rule 129, for the words Director-General of

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (12) TMI 1429 – BOMBAY HIGH COURT – TMI – Maintainability of appeal – Voluntary Compliance Encouragement Scheme – case of Revenue is that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme dismissed the appeal holding that the appeal is not maintainable – Held that:- Issue decided in the case of Narasimha Mills Pvt. Ltd. vs. Commissioner of C. Ex.(Appeals), Coimbatore, [2015 (6) TMI 787 – MADRAS HIGH COURT], where the very issue fall for consideration before the Madras High Court and the Madras High Court, by specific observation, dismissed the appeal on the ground that there is no remedy of appeal in the scheme would be giving unfettered power to the authority and same is not acceptable.
–
The impugned order dated 22nd September, 2017 passed by the Customs, Excise and Service Tax Appellate Tribunal is quashed and set aside – Matter restored before CESTAT. – CENTRAL EXCISE APPEAL NO. 7 OF 2018 Dated:- 12-7-2018 – PRASANNA B. V

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

cating authority confirmed the demand and ordered recovery of tax amount along with under Section 73 of the Finance Act, 1994, in addition penalty was imposed. 4. Being aggrieved, the appeal was preferred before the appellate tribunal by the appellant on 23rd January, 2016. The appellate tribunal initially issued notice and then on 22nd September, 2017 passed order. Same is impugned in the present appeal. 5. Mr. Sharma, learned Counsel appearing for the appellant invited our attention to the order and submitted that though firstly reference is made to the absence of the appellant, the tribunal subsequently by observing that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme dismissed the appeal holding that the appeal is not maintainable. He then submits that dismissal of appeal on the ground of no provision in the scheme is unsustainable. He further submits that basic Act itself provides remedy of appeal and merely because such appeal r

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ilar view which is taken by the Madras High Court in Narasimha Mills Pvt. Ltd (supra) is taken by Punjab and Haryana High Court in Barnala Builders & Property Consultants (supra). 8. Though Mr. Ladda, learned Counsel appearing for the respondent opposes the appeal, considering the facts of the present matter and considering the judgments relied on by Mr. Sharma, learned Counsel appearing for the appellant, we are of the view that there is no reason to adopt a different approach and view than the approach and view adopted by Madras High Court as well as Punjab & Haryana High Court. 9. It would be useful to refer observations of Madras High Court on the issue in paragraph Nos. 18 and 19, which read thus : 18. Further, it is relevant to note that the Service Tax Voluntary Compliance Encouragement Scheme, 2013 has been introduced by the Central Government, in exercise of the powers conferred by subsections (1) and (2) of Section 114 of the Finance Act, 2013 (17 of 2013) with effect

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

jurisdiction, abused his powers, was biased, considered evidence which he should not have considered, or failed to consider evidence that he should have considered. To err is human and hence it cannot be expected that all the decision makers would be perfect in their approach in arriving at just conclusions. If any statute or scheme does not make the appeal provision, it would be nothing to mean that the order passed by the authority has become final and conclusive for all the purposes and thereby, giving uncontrolled and unquestionable powers to the said authority by virtue of which, he becomes as monopoly over the statute and will certainly act in an arrogant manner. In this case, the second respondent is the original authority, whose decision regarding the eligibility of the assessee under the scheme is final even if the said decision may perverse since no appeal provision has been made. Therefore, the entire scheme has virtually been vested exclusively within his control and the pa

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2019 (1) TMI 821 – GUJARAT HIGH COURT – 2018 (362) E.L.T. 972 (Guj.) – Wrongful availment of CENVAT Credit – input – Linear Alkyl Benzene (LAB) – It was alleged that LAB was not at all utilized as input in the final product, and therefore, the assessee wrongly availed the Cenvat credit of duty paid on such input i.e. LAB – Held that:- It is required to be noted that as such the matter was remanded to the learned Commissioner (Appeals) for the very purpose by specifically observing that the onus is on the Department to prove that the assessee wrongly availed the Cenvat Credit on the tax paid on LAB, which was used in the input of the final product, and therefore, unless and until the Department was able to prove that in the final product the LAB was not used/utilized at all, the Department was not justified in holding that the assessee wrongly availed the Cenvat Credit on LAB.
–
So far as some of the statement is concerned, which are relied upon by the original adjudicating author

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ot at all utilized as input in the final product, and therefore, the assessee wrongly availed the Cenvat credit of duty paid on such input i.e. LAB. Vide order dated 22-1-2007, the Learned Commissioner (Appeals) by a detailed speaking order remanded the matter to the adjudicating authority with a liberty to the Department to prove whether in fact LAB was used in the final product or not, and with a direction to make further investigation and to draw representative samples of their final products for chemical test and supply them copy of opinion of the Director of School of Science, Gujarat University, which earlier was relied upon by the original executing authority but the copy of which was not given/furnished to the assessee. The relevant observations by the Learned Commissioner (Appeals) while remanding the matter with the above directions are as under; I find that though the Central Excise Officers had prior intelligence that the appellants have not utilized LAB in manufacture of t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nt of cenvat credit if there is no evidence otherwise whereas I find that the dealer Shri Jayesh M. Bhimani of M/s. Parshwa Chemicals & M/s. Bhimani Chemicals in his statement has confirmed the dispatch and its receipt and payment of LAB by M/s. Ganesh Chemicals to them; the entry of sale of LAB in their records & RG23D register and also that drivers of the transporter at Vadodara used to deliver to LAB as per their instructions to the places where they were asked to deliver; that Ravindra M. Shah of Shah Bulk Carrier, Vadodara had also confirmed that on reaching the tankers destined for M/s. Bhimani Chemicals Pvt. Ltd., Ahmedabad the drivers of the tankers were being instructed to contact the representative of their firm outside octroi limit of city at Piplej or Aslali. The representative of the said firms were directing the drivers and assigning the destination where the said LAB was to be unloaded/delivered and they were concerned with the receipt/acknowledgment of the said

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

or dealer after taking Cenvat credit thereon. The case of non use of LAB by the appellants is remanded back to the original adjudicating authority with direction to make further investigation and to draw representative samples of their final products for chemical test and supply them copy of opinion of Dr. Y.K. Agarwal, Director of School of Science, Gujarat University. 3. It is an admitted position that thereafter the adjudicating authority did not obtain any chemical test by drawing samples of the final products and despite the same confirmed the demand and imposed the penalty both upon the Company as well as the Director. The matter reached up to the Learned CESTAT and by the impugned order/orders, Learned CESTAT has set aside the demand as well as the penalty, which is subject matter of the present Tax Appeals before this Court. 4. Shri Divyeshvar, Learned Advocate appearing on behalf of the Department has vehemently submitted that as such on remand the chemical samples o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

missioner (Appeals) came to a conclusion on the basis of the same. However, so far as some of the statement is concerned, which are relied upon by the original adjudicating authority while passing the impugned order, the Learned Commissioner (Appeals) specifically observed that they are restricted statement, and therefore, the same could not have been relied upon. Be that as it may when the Department has failed to prove that the final product did not contain the LAB, which was alleged to have been used by the assessee as input on which the tax was paid, it cannot be said that the adjudicating authority was justified in denying the Cenvat Credit on the ground that the said LAB was not used/utilized as input in final product. No error has been committed by the Learned Tribunal. We are in complete agreement with the view taken by the learned Tribunal. No substantial question of law arises. Hence, present Appeals deserve to be dismissed and are accordingly dismissed. – Case laws – Decis

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Goods and Services Tax – Started By: – Bhavesh Sharma – Dated:- 11-7-2018 Last Replied Date:- 14-7-2018 – Hello Everyone,I Want Clarification for following query:PARTY A (BAKERS & CATERERS BUSINESS)PARTY B (COMPANY)Party A Only Supplies Meals (3 Times Lunch a day daily and it pays the bill in the end of month instead at same time) like food delivering done by hotels to Party B. So in this case what will be the GST Rate and SAC Code. and whether it will fall under contract or not.I am taking in SAC 996333Please clarify … – Reply By ANITA BHADRA – The Reply = GST Rate will be 18% .Recently Gujrat AAR said – Food delivery outside hotel premises will attract GST at the rate of 18% and not 5% .It will not fall under Contract as there is n

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Goods and Services Tax – Started By: – TAX solution – Dated:- 11-7-2018 Last Replied Date:- 12-7-2018 – Dear Experts We have purchased some inputs goods and same has been rejected by our quality control department. Now, we want to send back to vendor. My queries are How to send goods to vendor? Whether through Tax Invoice or Challan or Debit note. Whether we have to reverse ITC or credit /increase to tax liability? When purchased return to vendor , purchase return in which GSTR return should be reported by us, whether GSTR- 1 or GSTR-2 . Who will sign the tax invoice? Any intimation is required to tax authority, if any employee is authorized for sign to tax invoices? Please provide related sections /Rules Thanks in advance – Reply By KASTU

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ed by your Vendor. – Reply By KASTURI SETHI – The Reply = Thanks a lot, Sh.Shivkumar Shama Ji. – Reply By Alkesh Jani – The Reply = Sir,For sake of clarity and supporting the views expressed by our experts, the Q.No.33 of FAQ is reproduced below:- Q 33. Is there any provision in GST for tax treatment of goods returned by the recipient?Ans. Yes, Section 34 deals with such situations. Where the goods supplied are returned by the recipient, the registered person (supplier of goods) may issue to the recipient a credit note containing the prescribed particulars. The details of the credit note shall be declared by the supplier in the returns for the month during which such credit note was issued but not later than September following the end of t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 11-7-2018 – Rule 138B provides for verification of documents and conveyances. Rule 138 B(1) provides that the Commissioner or an Officer empowered by him in this behalf may authorize the proper officer to intercept any conveyance to verify the e-way bill or the e-way bill number in physical form for all inter-State and intra-State movement of goods. The Commissioner shall get Radio Frequency Identification Device readers installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the e-way bill has been mapped with the said device. RFID Device RFID stands for Radio Frequency Identification Device. RFID uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically stored information. Passive tags collect energy from a nearby RFID reader s i

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

y approval of the Commissioner or an officer authorized by him in this behalf. RFID system An RFID system consists of three components- a scanning antenna and transceiver (often combined into one reader, also known as an interrogator); transponder, and the RFID tag. An RFID tag consists of a microchip, memory and antenna. The RFID reader is a network-connected device that can be permanently attached or portable. It uses radio frequency waves to transmit signals that activate the tag. Once activated, the tag sends a wave back to the antenna, where it is translated into data. There are two main types of RFID tags- active RFID; and passive RFID. An active RFID tag has its own power source, often a battery. A passive RFID tag, on the other hand, does not require batteries; rather it receives its power from the reading antenna, whose electromagnetic wave induces a current in the RFID tag's antenna. There are also semi-passive RFID tags, meaning a battery runs the circuitry while communi

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

t. High Frequency High-frequency RFID systems range from 3 MHz to 30 MHz, with the typical HF frequency being 13.56 MHz. The standard range is anywhere from a few inches to several feet. Ultra High Frequency UHF RFID systems range from 300 MHz to 960 MHz, with the typical frequency of 433 MHz and can generally be read from 25-plus feet away. Microwave RFID systems run at 2.45 GHz and can be read from more than 30-plus feet away. The frequency used will depend on the RFID application, with actual obtained distances sometimes varying considerably from what might be expected. For example, when the U.S. State Department announced it was to issue electronic passports enabled with an RFID chip, it said the chips would only be able to be read from approximately four inches away. However, the State Department was soon confronted with evidence that RFID readers could skim the information from the RFID tags from much farther than 4 inches, some claiming upward of 33 feet away, proving the differ

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

s is increasing in use. Among its benefits, RFID can identify individual objects, animals or people without direct line of sight, can identify many items – often a thousand or more – simultaneously, and can scan items anywhere from inches to feet away depending on the type of tag and RFID reader. Read time for RFID tags is typically less than 100 milliseconds. Barcodes, on the other hand, require direct line of sight and closer proximity than an RFID tag. They also take longer to read, generally ½ second or more per tag. Because barcodes represent a product type versus an individual object represented by an RFID tag, additional information cannot be gleaned from them. In addition, barcodes are not read-write, and because they are printed on the outside of the object are limited in terms of reuse thanks to wear and tear. RFID tags are more rugged and better protected, often in a plastic cover. However, RFID tags cost more than a printed barcode. RFID challenges RFID is prone to t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

re unable to accommodate encryption, such as might be used in a challenge-response authentication system. One exception to this, however, is specific to the RFID tags used in passports, basic access control (BAC). Here, the chip has sufficient compute power to decode an encrypted token from the reader, thus proving the validity of the reader. At the reader, in turn, information printed on the passport is machine-scanned and used to derive a key for the passport. There are three pieces of information used – the passport number, the birth date of the passport holder and the passport's expiration date – along with a checksum digit for each of the three. Researchers have pointed out that this means passports are protected by a password with considerably less entropy than is normally used in e-commerce, and further that the key is static for the life of the passport, so that once an entity has had one-time access to the printed key information, the passport is readable with or without t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

transmitted. Inspection and detention of goods Rule 138C provides for inspection and verification of goods. Rule 138C(1) provides that a summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of Form GST EWB – 03 within twenty four hours of inspection and the final report in Part B of Form GST EWB – 03 shall be recorded within three days of such inspection. Rule 138C(2) provides that where the physical verification of goods being transported on any conveyance has been done during transit at one place within the State or in any other States no physical verification of the said conveyance shall be carried out in the Statement, unless a specific information relating to evasion of tax is made available subsequently. Form GST EWB – 3 The form GST EWB – 3 has two parts, as Part A and Part B. The proper officer has to furnish the following information in Part A of this form- Name of the Officer Place of inspection Time of inspection Veh

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Goods and Services Tax – GST – By: – Ashwarya Agarwal – Dated:- 11-7-2018 Last Replied Date:- 29-7-2018 – This is a general update for frequently asked queries in relation to credit of GST paid on purchase of Motor Vehicle and other incidental & traveling expense. There has been contradictory opinion on this issue by various experts, however I would like to share my view. As per Sec 17(5) of the CGST Act, credit shall not be available for GST paid in respect of motor vehicle and other conveyance, EXCEPT when it is used for: Transportation of GOODS; Further supply of such vehicle; Transportation of Passenger; Imparting training on driving; Further credit of GST paid on Rent-a-cab is also not available, except when it is used for further

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

d on such expense as discussed above, incurred for FY 2017-18; do not worry as you can avail the same now, before filing of GSTR 3B return for the month of September 2018. Note: If there is any invoice dated of FY 2017-18 for which you have failed to take credit, your can take the same even now before filing of GSTR 3B return for the month of September 2018. I hope you find the same helpful. – Reply By KASTURI SETHI – The Reply = Dear Sh.Aggarwal Ji, Nice article. This article was required to clear the air. Timely and very very informative and useful. One must not be a victim of phobia of the department, if intention as well as interpretation and understanding of law is crystal clear. Mostly suffer loss of ITC out of phobia. Your article ma

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (7) TMI 1012 – CESTAT NEW DELHI – TMI – CENVAT Credit – input service – advertisement in print media – denial of credit on the ground that advertisement in print media service does not carry any service tax liability – Held that:- The definition of input service under Rule 2(l) of the CCR, 2004 provides for credit on any service used for providing the output service. In addition, in the inclusive part of such definition, various activities have been included in which also the service tax is available as input credit.
–
The inclusive portion specifically mentions advertising services. Consequently there is no doubt that the activity carried out through the advertising agencies can be considered has input service in Rule 2(l) – credit allowed – appeal allowed – decided in favor of appellant. – Appeal No. ST/51467/2018-ST(SM) – Final Order No: 52488/2018 – Dated:- 11-7-2018 – Hon ble Mr. V. Padmanabhan, Member (Technical) Sh. Sanjiv Agarwal, Adv. for the appellant Sh. P. R. Gup

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

by them to the appellant, they included service tax on their commission in addition to the amounts paid to print media for publishing of advertisement. 4. He submitted that such service tax has been paid under the category of Advertising Services which are allowable as Cenvat Credit on input services as per the definition of Rule,2(l) of the CCR, 2004. Advertising Services are specifically mentioned the inclusive portion of the definition of Rule 2(l). He also submitted that it is not open to the department to dispute the classification of input service at the hand of the receiver of such services. Finally he submitted that the appellant was entitled to the Cenvat Credit. 5. On behalf of Revenue, we heard Shri P.R. Gupta ld. DR. He justified the impugned order and submitted that no service tax is payable on the payment to print media since the service tax is exempted. He submitted the service tax charged by the advertising agencies was not for any service rendered to the appellant, but

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ng as well as getting them published in print media. The service tax charged by such advertising agencies appear to be for service of the Advertisement Agency rendered to the appellant. 9. The definition of input service under Rule 2(l) of the CCR, 2004 provides for credit on any service used for providing the output service. In addition, in the inclusive part of such definition, various activities have been included in which also the service tax is available as input credit. The inclusive portion specifically mentions advertising services. Consequently there is no doubt that the activity carried out through the advertising agencies can be considered has input service in Rule 2(l). 10. In view of the above discussions, the appellant will be entitled to the Cenvat Credit of service tax paid on Advertising Services as input service. 11. In the result, the impugned order is set aside and appeal is allowed. ( Dictated in open court ) – Case laws – Decisions – Judgements – Orders – Tax Ma

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (7) TMI 1330 – ALLAHABAD HIGH COURT – 2018 (15) G. S. T. L. 483 (All.) – Extension of time period for filing of GST Tran-1 – petitioner has alleged in the petition that despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond – Held that:- The respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner – petition allowed. – Writ Tax No. 965 of 2018 Dated:- 11-7-2018 – Hon'ble Bharati Sapru And Hon'ble Dinesh Kumar Singh, JJ. For the Petitioner : Nish

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

as alleged in the petition that despite making several efforts on the last date for filing of the application, the electronic system of the respondent no.2 did not respond, as a result of which the petitioner is likely to suffer loss of the credit that it is entitled to by passage of time. In view of the above, the respondents are directed to reopen the portal within two weeks from today. In the event they do not do so, they will entertain the GST TRAN-1 of the petitioner manually and pass orders on it after due verification of the credits as claimed by the petitioner. They will also ensure that the petitioner is allowed to pay its taxes on the regular electronic system also which is being maintained for use of the credit likely to be consi

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (7) TMI 1418 – KERALA HIGH COURT – TMI – Failure to upload FORM GST TRAN-1 within the stipulated time – case of petitioner is that though he attempted to upload it within the time, he failed because of some system error – input tax credit – migration to GST – Circular No.39/13/2018-GST, dated 03.04.2018 – Held that:- Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution – the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST T

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

he time, he failed because of some system error. The petitioner, therefore, seeks directions to enable him to take credit of the available input tax. 2. Heard the learned counsel for the petitioner, the learned Government Pleader, as well as the learned Standing Counsel, besides perusing the record. 3. The Government of India has issued Circular No.39/13/2018-GST, dated 03.04.2018, for setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal. Paragraph 5 of the circular outlines the procedure the Nodal Officers is to follow. It reads: 5. Nodal officers and identification of issues 5.1 GSTN, Central and State government would appoint nodal officers in requisite number to ad

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ectronic records and the applications received, identify the issue involved where a large section of tax payers are affected. GSTN shall forward the same to the IT Grievance Redressal Committee with suggested solutions for resolution of the problem. (italics supplied) 4. Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution. 5. So, in this case also, the petitioner may apply to the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner s uploading FORM GST TRAN-1, without reference to

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (7) TMI 1743 – KERLA HIGH COURT – TMI – Input tax credit – failure to upload FORM GST TRAN-1 within the stipulated time – case of petitioner is that though he attempted to upload it within the time, he failed because of some system error – Held that:- Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution.
–
In this case also, the petitioner may apply to the the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner’s uploading FORM GST TRAN-1, without reference to the time-fr

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ailed because of some system error. The petitioner, therefore, seeks directions to enable him to take credit of the available input tax. 2. Heard the learned counsel for the petitioner, the learned Government Pleader, as well as the learned Standing Counsel for respondents 2 and 3, besides perusing the record. 3. The Government of India has issued a circular for setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal. Paragraph 5 of the circular outlines the procedure the Nodal Officers is to follow. It reads: 5. Nodal officers and identification of issues 5.1 GSTN, Central and State government would appoint nodal officers in requisite number to address the problem a taxp

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

applications received, identify the issue involved where a large section of tax payers are affected. GSTN shall forward the same to the IT Grievance Redressal Committee with suggested solutions for resolution of the problem. (italics supplied) 4. Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the Nodal Officer for the issue resolution. 5. So, in this case also, the petitioner may apply to the the Nodal Officer. The petitioner applying, the Nodal Officer will look into the issue and facilitate the petitioner s uploading FORM GST TRAN-1, without reference to the timeframe. Ordere

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (8) TMI 26 – CESTAT ALLAHABAD – TMI – Renting of Immovable Property Service – non-payment of service tax – premises were occupied during the entire period in terms of the agreement but Form 26 AS submitted by the party shows that the party received the amount made by their tenant only upto June, 2011 – deduction of TDS amounts – Held that:- Form 26 AS is a document under the Income Tax Law reflecting the amount of tax deduction at source (TDS) – Admittedly the TDS is required to be deducted by a person making payment to another person and reflects on all the payment actually made. The appellants have not produced any evidence to show that such TDS amount reflected in Form 26 AS is incorrect or inflated or the appellant have made any refund claim of such excess TDS collected by the tenant, from the Income Tax Authorities.
–
Thus, the amounts reflected in Form 26 AS represent the correct value of the services which has to be adopted as the assessable value, unless evidence to

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

a notice of hearing has been sent to the assessee well in advance, it was the responsibility of the assessee to make full arrangements for engaging the advocate in advance and to hand over papers to the advocate. Further I also note that the appeal has been filed by the appellant s Authorized Representative under a Vakalatnama by the name of Mr. Brijesh Verma and Associates, whereas the request for adjournment is being made by Advocate Shri Shambhu Chopra whose Vakalatnama is not on record. He only submits that he will submit his Vakalatnama today. As his Vakalatnama as also No Objection Certificate from the previous counsel is not on record the request made by the learned advocate cannot be entertained as he is not authorized to appear. 2. On going through the impugned orders I find that the demand of Service Tax stand confirmed against the appellant under the category of Renting of Immovable Property . As per the investigations made by the Revenue, it was found that the appellant, w

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

at the premises were lying vacant for the period July, 2011 to December, 2011. 5. While adjudicating, the Deputy Commissioner, Service Tax, Agra accepted the assessee s stand of entitlement to the threshold exemption. As regards the premises lying vacant during the period July, 2011 to December, 2011, he observed that even if it is assumed that the premises were occupied during the entire period in terms of the agreement but Form 26 AS submitted by the party shows that the party received the amount made by their tenant only upto June, 2011 and thereafter, the premises were rented to another company from February, 2012. He, accordingly accepted assessee s stands that the premises were lying vacant during the said period and no rent was received by them. By observing so, he held that inasmuch as during the period, apart from the one during which the premises were lying vacant, the appellant have received the rent from the tenants and provided services, the same are liable to service tax.

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ne by the terms of the agreement entered into between the appellant and their tenants as also by the value reflected in Form 26 AS. After hearing the learned AR I note that Form 26 AS is a document under the Income Tax Law reflecting the amount of tax deduction at source (TDS). Admittedly the TDS is required to be deducted by a person making payment to another person and reflects on all the payment actually made. The appellants have not produced any evidence to show that such TDS amount reflected in Form 26 AS is incorrect or inflated or the appellant have made any refund claim of such excess TDS collected by the tenant, from the Income Tax Authorities. In such a scenario, I hold that the amounts reflected in Form 26 AS represent the correct value of the services which has to be adopted as the assessable value, unless evidence to the contrary is produced by the appellant. 7. In view of the above I find no infirmity in the impugned orders confirming the differential duty of ₹ 2,33

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (8) TMI 812 – CESTAT ALLAHABAD – TMI – Business Auxiliary Service – it was alleged that they have not reflected the correct value of the service in their ST-3 returns filed by them during the financial year 2009-10 to 2013-14 – Held that:- The dispute in the present appeal relates to the verification of the facts as to whether the commission which has accrued in one particular month was actually received by the assessee in a subsequent month/year/period. It might be that the payment which has been received by the appellant in one particular period was on account of the services belonging to the previous financial year. In such a scenario, the appellant’s stand has to be verified correctly from their books of account and should be matc

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

gent of M/s Siyaram Silk Mills Limited. The appellant was registered with the Service Tax Department and was discharging its duty liability, accordingly. 4. Based upon the comparison of the value of the services as reflected in their Balance Sheet and Form 26 AS, it was alleged that they have not reflected the correct value of the service in their ST-3 returns filed by them during the financial year 2009-10 to 2013-14. Accordingly, proceedings were initiated against them by way of a Show Cause Notice, raising demand of duty to the tune of ₹ 4,22,756/-. The said Show Cause Notice culminated into an order passed by Commissioner (Appeals) confirming the demand along with interest and imposition of penalty of identical amount under Sectio

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

government document, indicates the total amount paid/credited in the name of the appellant as well as Income Tax deducted at source against the said payment in their respective columns. As such he observed that there is no doubt that the amount shown in form 26 AS must have been received by the appellant. 7. While I agree with the above observations made by Commissioner (Appeals) but the dispute in the present appeal relates to the verification of the facts as to whether the commission which has accrued in one particular month was actually received by the assessee in a subsequent month/year/period. It might be that the payment which has been received by the appellant in one particular period was on account of the services belonging to the p

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

P. SANKARA NARAYANAN, PROPRIETOR, C.B. FURNITURE AND INTERIOUS Versus GST COUNCIL, REPRESENTED BY ITS REVENUE SECRETARY AND EX-OFFICIO SECRETARY TO THE GST COUNCIL SECRETARIATE, COMMISSIONER, OFFICE OF THE GST COUNCIL SECRETARIAT, NEW DELHI AND THE COMMISSIONER OF STATE TAX, THIRUVANANTHAPURAM – 2018 (8) TMI 1414 – KERALA HIGH COURT – TMI – Input Tax Credit – Unable to to upload FORM GST TRAN-1 within the stipulated time – migration to GST regime – Held that:- The Government of India has issued Circular No.39/13/2018-GST, dated 03.04.2018, for “setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal – the petitioner may apply to the additional 4th respondent, the Nodal Of

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

n, the petitioner had to upload FORM GST TRAN-1 within the stipulated time. He asserts that though he attempted to upload it within the time, he failed because of some system error. The petitioner, therefore, seeks directions to enable him to take credit of the available input tax. 2. Heard the learned counsel for the petitioner as well as the learned Government Pleader, besides perusing the record. 3. The Government of India has issued Circular No.39/13/2018-GST, dated 03.04.2018, for setting up an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal. Paragraph 5 of the circular outlines the procedure the Nodal Officers is to follow. It reads: 5. Nodal officers and identification o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

warded to GSTN who would on receipt of application examine the same. GSTN shall after verifying its electronic records and the applications received, identify the issue involved where a large section of tax payers are affected. GSTN shall forward the same to the IT Grievance Redressal Committee with suggested solutions for resolution of the problem. (italics supplied) 4. Not only the petitioner but also many other people faced this technical glitch and approached this Court. Both the learned counsel submit that this Court on earlier occasions permitted the petitioners to apply to the additional 4th respondent for the issue resolution. 5. So, in this case also, the petitioner may apply to the additional 4th respondent, the Nodal Officer. The

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (9) TMI 854 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (17) G. S. T. L. 504 (A. A. R. – GST) – Rate of tax – sub-contractor – Works Contract Services (WCS) pertaining to railways original works contract – What Tax rate to be charged by the sub-contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract? – Whether to charge tax rate of 12% GST or 18% GST?
–
Held that:- The WCS provided by them is the same or a part of the main contract entered into between the main contractor and the Railways. It also appears that works contract service is civil works performed by the sub-contractor for the Railways and the property in goods (materials used in the supply of Works Contract Service) also gets transferred to the Railways directly – In such a case as per the abovementioned clause (v) of Notfn No. 20/ 2017-CentraI Tax (Rate) dated 22.10.2017, the works contract service provided by the sub-contractor to the main contractor wo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

rate to be charged would be 12% in the present case. – GST-ARA-09/2018-19/B-65 Dated:- 11-7-2018 – SHRI B.V. BORHADE AND SHRI PANKAJ KUMAR 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 SHREE CONSTRUCTION, the applicant, seeking an advance ruling in respect of the following questions : 1. What Tax rate to be charged by the sub-contractor to main contractor on Works Contract Services (WCS) pertaining to railways original works contract? 2. Whether to charge tax rate of 12% GST or 18% GST? At the outset, we would like to make 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

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

able to main contractor should be levied by sub-contractor. 4. As per Notification No-01/2018- Central Tax (Rate) dated 25-01-2018 the service provided by sub-contractor to afore main contractor for railway original works contract services is not specified in the notification. Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicant s view point and submissions on issues on which the advance ruling is sought) 1. As per our view point even though we are sub-contractor providing service to main contractor for original contract work pertaining to railways, we should charge 12% GST only and not 18% as applicable in other cases. 2. The contract for original works pertaining to railways remains the same works contract, 3. As there is difference of opinion after reading of press release of 25th meeting of GST council dated 18-01-2018 and notification No 1/2018 dated 25-01-2018, we are not in position t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

of classification of services Section 5 Construction Services SAC Code Description of Services Rate in % 9954 (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, excluding (including substituted from 25/01/ 2018)) monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the Affordable Housing in Partnership component of the Housing fo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

d 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. 12 (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 sub-contractor to the main contractor providing services specified in item (vi) d above to the Central Government; State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 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. 12 f. Even though, we being subcontractor providing civil construction services to main contractor effecting original works contract for Railways which is not covered in 9954 (ix) and 9954 (x), we believe that the rate

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

brication, 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. As per Section 2 (5) of CGST Act, 2017 agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent; by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; 3. Contractor and sub-contractor are not defined under the CGST Act, 2017 but as per the general definition. a. Contractor means a person or firm that undertakes a contract from the employer to provide materials or labour to perform a service or do a job at a specified price. b. A subcontractor means a person who is hired by a general contractor (or prime contractor, or main contractor) to

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

subcontractor as an agent also who is undertaking the same supply of service for main contractor. 8. It can also be said that, the sub-contractor is only an agent of the contractor and the works job undertaken by him passes directly from the sub-contractor to the employer. 9. As the work get transferred directly to the employer by the subcontractor the works contract remains the same and therefore leads to the conclusion that there is only one contract which is undertaken by the contractor as well as subcontractor. 10. In our case, it is the transaction of a works contract, where the property in goods passes directly to the employer as and when we as a subcontractor have transferred and put our material and services for of execution of civil work carried for railways. The main contractor cannot take out our executed job and cannot treat it separately. Thus it cannot be said at any point of time, that the property in the works job passes to the contractor where the work is executed by u

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

subcontractor also. 03. CONTENTION – AS PER THE CONCERNED OFFICER 2. As directed the application has been examined with reference to provisions of Chapter XVII of CGST Act, 2017 and it is submitted that- i) Prima facie it appears that the question on which the advance ruling is sought under CGST Act doesn't fall under any of the category mentioned in sub section (2) of Section 97 of the Act as the question, put forth by the applicant is only relating to charging of rate of tax on the Works Contract Services (WCS) by the sub contractor to main contractor in respect of railways original works contract. ii) On examination of the Notification No.20/2017-Central Tax (Rate) dated it appears that in terms of serial number (v) of Table, Composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017, supplied by way of construction, erection, commissioning or installation of original works pertaining to – (a) railways, excluding monorail and metro; fate of tax

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ct services are excluded from the main entry (ix) and (x) of the said notification. All other construction services other than specified services are therefore attract rate of 18% tax which includes services provided by sub contractor to main contractor for railway original works Contract, (v) The contention of the Applicant, that their services are covered by the original works contract specified in para (ix) and (x) of amended Notfn.No.01/2018-CT(Rate) dated is not correct in as much as the said Notification has classified all other Works Contracts relating to Construction services in head (xii) prescribing rate of 18%. The minutes of meeting dated 18.01.2018 para-12 quoted by the Applicant has mention Of Government Entity but doesn't specifically include WCS provided by sub contractor to main contractor in relation to Railways. In view of above, the question before the Advance Ruling Authority may be disposed off as per above provisions of law for the time being in force without

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

they are supplying Works Contract Services (WCS), as a sub-contractor, to the main contractor who in turn are supplying WCS for original work pertaining to the Railways. They have made further submissions that when a contractor awards either wholly or partially, the work to a sub-contractor, then the work to be performed by both of them remains the same and identical to what is specified in the contract between the main contractor and the employer, in this case, the Railways and as per Notification No-20/2017- Central Tax (Rate) dated 22-08-2017 the rate of GST is 12% for composite supply of works contract supplied by way of construction, erection, commission or installation of original works pertaining to railways. They are claiming that since the tax rate is 12% for the main contractor, the same rate should be applicable to them too. They have also submitted that Notification No-01/2018- Central Tax( Rate) dated 25-01-2018 has made certain amendments to the earlier Notification No.

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, excluding monorail and metro; (b) ………………………………………………………….; (c) ………………………………………………………….; (d) ………………………………………………………….; (e) ………………………………………………………….;or (f) ……………&helli

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

y. In such a case as per the abovementioned clause (v) of Notfn No. 20/ 2017-CentraI Tax (Rate) dated 22.10.2017, the works contract service provided by the sub-contractor to the main contractor would be supply of Works Contract pertaining to Railways and therefore chargeable to tax @ 12% (6% of CGST and SGST each). However, the benefit of 12% tax rate would be available to the applicant only if the Works Contract services provided by them are Composite supply of works contract as defined in clause(119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to railways. Thus, in respect of Sr. No. 3 of Notification No. 11/2017 dated 28.06.2017 as amended uptill today, even the sub-contractor providing services of composite supply of works Contract in respect of original works pertaining to railways would be covered for concessional rate of GST @ 12% as given under Sr. No. 3 of

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (10) TMI 766 – CESTAT MUMBAI – TMI – Maintainability of appeals against the decision of Asst. Commissioner dated 3rd May, 2018 – Appealable order or not? – Section 129A of Customs Act – Held that:- In an identical set of facts, this Tribunal in the case of Delta Overseas [2015 (7) TMI 1091 – CESTAT NEW DELHI] has held that the letter of Assistant Commissioner (Adj.) cannot be considered as an appealable order for filing the appeal before the Tribunal.
–
As the appeal not maintainable before Tribunal, the appeals filed by the appellants are also dismissed – appeal dismissed – decided against appellant. – Applications No. C/EH/85678/2018 & E/EH/85680/2018, C/MISC/85679/2018 & E/MISC/85681/2018, Appeal No. C/86868/2018 & E/86870/2018 – A/87430-87431/2018 – Dated:- 11-7-2018 – Mr. S.K. Mohanty, Member (Judicial) Shri Vishal Agrawal, Advocate with Shri Ramnath Prabhu, Advocate for appellant Shri S.R. Nair, E.O with Shri M.R. Melvin, Supdt. (AR) for respondent ORDER Per: S.K. Mohan

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

witnesses was taken by the Commissioner, in the capacity of adjudicating authority, the letter dated 3.05.2011 of the Asst. Commissioner, merely communicating such decision should be considered as the order / decision by the competent authority for entertaining the appeal before the Tribunal. To strengthen his argument, the learned Advocate has relied on the judgment dated 01.08.2014 of the Hon ble Delhi High Court (in Customs Appeal No. 1/2014) in the case of Amit Electronics v. Commissioner of Customs (Prev.). 4. Heard both sides and examined the records. 5. The Assistant Commissioner (Adj.) in his letter dated 03.05.2018 had conveyed that he had been directed by the adjudicating authority for communicating to the appellant for not granting cross examination of the witnesses. The said communication of the Asst. Commissioner cannot be considered as an order / decision by the Commissioner of Customs, as an adjudicating authority inasmuch as such letter is silent about the mode of direc

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

esh Govindbhai Patel (supra). On a query from the Bench, as to whether, operation of those two orders of this Tribunal have been stayed or over-ruled by the higher judicial forums, both sides replied in negative. Thus, in view of the coordinate bench decision of this Tribunal, appeal filed against the letter of Assistant Commissioner, in this case, cannot be considered as an appellate order for filing appeal before the Tribunal. The judgment of Hon ble Delhi High Court in the case of Amit Electronics (supra) relied upon by the learned Advocate for the appellant is distinguishable from the facts and circumstances of the present case inasmuch as in such cited case, there was an order dated 03.05.2013, passed by the Commissioner of Customs (Prev.), which was merely communicated by the Asst. Commissioner. Since in the case of Amit Electronics (supra), the order was passed by the competent authority as contemplated under Section 129A of the Act, such order will be considered as appealable o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

V. Ramakrishnan Versus Union of India, New Delhi, Railway Board, represented by its Chairman, New Delhi, Financial Advisor & Chief Accounts Officer, Chennai, Divisional Railway Manager (Works) , Chennai, 5. The Principal Commissioner, GST and Central Excise, Chennai – 2018 (10) TMI 1239 – MADRAS HIGH COURT – 2018 (17) G. S. T. L. 375 (Mad.) , [2018] 59 G S.T.R. 149 (Mad) – Implication of GST on the contracts between petitioners and Railways entered into before 1.7.017 – works contract services done by the petitioner for the work orders entered into prior to introduction of GST and works completed after implementation of GST – the petitioner, without submitting any representation to the respondents, has straight away approached this Court and seeks for a direction – Circular dated 27. 10. 2017.
–
Held that:- The said contention is not acceptable for the reason that the Circular issued by the Railway Board dated 27. 10. 2017 states that for dealing with the impact of GST in individua

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

efore this Court seeking a writ of mandamus to direct the respondents 3 and 4 to implement the instructions issued by the Second Respondent on 28. 10. 2007, in respect of the works contract services done by the petitioner for the work orders entered into prior to introduction of GST and works completed after implementation of GST. 3. In this regard, the learned counsel for the petitioner has drawn the attention of this Court to paragraph No. 3. 1 of the Circular dated 27. 10. 2017, issued by the second respondent, which reads as follows: 3. 1 For dealing with impact of GST in individual contracts, a supplementary agreement is to be entered into with the contractor in consultation with financial advisor in terms of Para 1265 of the Engineering Code. by referring to the above condition, it is submitted that a Supplementary Agreement has to be necessarily entered into with the contractor, as the percentage of GST paid by the petitioner is 12%; whereas, the Railways have been paying them o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

states that for dealing with the impact of GST in individual contracts, a supplementary contract has to be entered into. Therefore, to study the impact of GST in individual contracts, occasion may arise for the Railway Administration to consult the 5th respondent and in such an event, the 5th respondent would be in a position to issue necessary clarification or guidelines to the Railway Administration. 7. As pointed out earlier, since the petitioner has not given a representation to the authorities, the Court directs him to do so within a time frame. Accordingly, the writ petition stands disposed of by directing the petitioner to submit a representation to the fourth respondent along with a copy of this order within a period of two weeks from the date of receipt of copy of this order and on receipt of the representation, the fourth respondent shall consider the same and if any clarification is required, obtain the same from the fifth respondent and pass orders on merits and in accordan

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (10) TMI 1339 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (18) G. S. T. L. 525 (A. A. R. – GST) – Levy of GST – Liquidated damages – Supply or not – point of taxation – valuation of supply. – liquidated damages claimed and awarded to the Applicant under the arbitral award – Held that:- As per the terms and conditions of the agreement there was clearly an agreement between the applicant and SPL to tolerate an act or situation in case such act was done by the other or such a situation arose because of default on part of one or the other during the course of the project covered under the Association agreement and in case of default of terms of the agreement by one of the parties to this Association Agreement, the defaulting party was required to compensate the other party as per the terms and conditions of the Agreement – However we find that if there was further dispute in respect of the claims to be recovered/received by the one party from the other in view of violations o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

consideration” which would clearly be taxable for the supply of services as per Sr. No. 5(e) of Schedule II of the CGST Act, 2018.
–
Ruling:- The consideration that may be awarded to the applicant by the ICC would qualify as supply of service as per Section 5(e) of Schedule II of Section 7(1) of the CGST Act as per detailed discussions above in this regard.
–
The provisions of Section 13 of the CGST ACT will determine the time of supply in cases of supply of services. In the subject case the liability of tax would arise on the applicant as per Sr.No.5(e) of Schedule II of Section 7(1) of the CGST Act and the time of supply would be determined as per the provisions of Section 13 of the CGST Act after the award of arbitration proceedings is given by the Arbitration Tribunal as administered by the ICC as per the Association Agreement by the parties to dispute, in the present proceedings.
–
The value of supply of services will be actual liquidated damages cum consideration as d

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e, what should be the time of supply, that is to say, the point of time in which NACC's liability to pay GST arises ? 3. If the answer to Question No. 1 is in the affirmative, what should be the value of supply on which GST is payable, that is to say, whether the Applicant is liable to pay GST on amount of liquidated damages claimed and awarded to the Applicant under the arbitral award or the amount which is actually received by the Applicant after conclusion of the matter before the final Appellate authority. At the outset, we would like to make it clear that the provisions of both the CGST Act and the GST 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

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e mining of lignite as fuel for power generation by electric utilities. 3. Sasan Power Limited ("SPL" or "Reliance") is a company incorporated under the provisions of the Companies Act, 1956, having its registered office in Mumbai. It is a wholly owned subsidiary of Reliance Power Limited and is a part of the Reliance Anil Dhirubhai Ambani Group. It carries on the business of developing, designing, operating maintaining and owning an Ultra Mega Power Project in Sasan, Madhya Pradesh, India. 4. NACC US has entered into an Association Agreement for mine development and operations ("Association Agreement with SPL effective January 1, 2009 (Refer Annexure A) in order to provide technical know-how to SPL in relation to mine development and operations. The technical know-how, generally identified as evaluation of geological data preparation of feasibility study, development of annual mining and life of mine plans, mine planning design, assistance in training the SPL

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

licant, and through the Assignment and Assumption Agreement, Consent, and Second Amendment to the Association Agreement dated April 1, 2011 (Refer Annexure C), the rights and obligations of NACC US as per the original Association Agreement were transferred and assigned to the Applicant, with the consent of SPL. 7. Further, the Applicant has entered into an Intellectual Property License and US Service Agreement ("IP & Services Agreement") with NACC US dated 1st April 2011 (Refer Annexure D), for receiving services and a non-exclusive license of Intellectual Right from NACC US. The terms of the IP & Services Agreement includes the following scope for the years under consideration: Grant by NACC US to the Applicant of non-exclusive, non-transferable, non assignable, non-sub licensable license to use the Licensed Intellectual property in India in connection with the Applicant's provision of mining services to SPL and any other customer in India. Provision of US based

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

monitoring, mine plan modifications to suit on-ground requirements, regular troubleshooting etc. This phase broadly covered the period from April 2009 and was expected to continue till December 2014. The Development phase would continue to the first date following a period of thirty consecutive days during which the annualized rate of coal production at the Sasan mine has equalled the rate of seven million tonnes per year for such thirty days. As per the Association Agreement, SPL was required to pay a development phase fee USD 250,000 per quarter for each calendar quarter after the Pre-Development phase. (iii) Production Phase – The production phase pertains to the period of production of coal and includes the postproduction on-site and offsite activities viz. regular recommendations relating to mining operations; monitoring and review of mine operations; preparation of policies and recommending systems for mining operations, equipment maintenance and environmental compliance; audit

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

shall be accompanied by reasonable supporting documentation in respect of any unpaid amounts described in Section 5.1(a). Payment by Reliance shall be due within thirty (30) days of Reliance's receipt of such invoice. (b) Post-Effective Date Services. Within fifteen (15) days after the end of each calendar quarter, NAC shall invoice Reliance for (i) the amounts described in Section 5.1 (a) and (ii) the amounts described in Section 5.2 that were incurred during such quarter (and after the Effective Date). The invoice shall be accompanied by reasonable supporting documentation. Payment shall be due within thirty (30) days of Reliance's receipt of such invoice. (c) Development Phase Fee. Each quarterly installment of Development Phase Fee, together with the Gross-Up Payment, shall be due on the forty-fifth (45th) day of each quarter during the Development Phase. NAC shall invoice Reliance for the U.S. Dollar amount of the applicable Development Phase Fee and the estimated Cross-Up

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

in-house international consultants. The last invoice paid by SPL pertained to the period up to September 2013 and it stopped making payment of invoices of the Applicant pertaining to services performed after the period October 1, 2013. The total unpaid invoices raised on SPL are detailed below: Invoice No. Invoice Description Invoice Date Terms Due Date Amount USD Amount INR 2013/14-008 Q4 2013 Dev. Fee 01-Oct-13 45 days 15-Nov-13 311,046.27 2013/14-011 Q1 2014 Dev. Fee 02-Jan-14 16-Feb-14 311,046.27 2013/14-012 Q4 2013 exp. 16-Jan-14 30 days 15-Feb-14 5,032,790 2014/15-001 Q2 2014 Dev. Fee Ol-Apr-14 45 days 16-May-14 315,602.34 2014/15-002 Q1 2014 exp. 11-Apr-14 30 days 11-May-14 6,628,189 2014/15-003 Q1 2014 exp. 11-Apr-14 30 days 11-May-14 71,235.97 2014/15-004 Interest 23-May-14 Receipt 23-May-14 44,320.42 2014/15-005 Interest 23-May-14 Receipt 23-May-14 212,646 2014/15-007 Interest 01-Ju 1-14 Receipt Ol-Jul-14 14,626.54 2014/15-008 Interest Ol-Jul-14 Receipt Ol-Jul-14 169,050 2014

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

reement with SPL. In this regard, the relevant Articles of the Association Agreement are reproduced below: ARTICLE VI TERM AND TERMINATION "Section 6.1 Term. Under earlier terminated in accordance with Section 6.2, the term of this Agreement shall commence on the Effective Date an shall continue until the end of the Production Phase (the " Initial Term"). Following the Initial Term, the parties may extend this Agreement by written agreement for any number of one (1) year terms (each, an "Extended Term" and, together with the Initial Term, the "Term") until the Agreement is terminated pursuant to Section 6.2. Section 6.2 Termination. This Agreement may be terminated : a) At any time by mutual agreement of the parties; b) By either parties in accordance with Article VII (Force Majeure); or c) By either parties in accordance with Article VIII (Events of Default). Section 6.3 Effect of Termination (a) Upon termination of this Agreement for any reason, NAC

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

y to NAC, as liquidated damages and not as a penalty or other punitive amount, the amount specified below: If Termination Occurs During: Then the Termination Payment is U.S.: Year 1 of the Development Phase $11 million Year 2 of the Development Phase $13 million Year 3 of the Development Phase $15 million Year 4 or later of the Development $17 million phase Any year in the production phase $17 million, less the aggregate amount of the Production Phase Royalties received by NAC prior to the termination date" ARTICLE VIII EVENTS OF DEFAULT Section 8.1 Default by Reliance. If Reliance shall at any time be in breach of its (a) payment obligations, (b) other obligations pursuant to this Agreement, including failure to provide reasonable access to the Mine, the Preparation Plant or any Mining Project that are relevant to the duties and obligations of NAC hereunder and the failure to timely provide presentations in section 13.2(1, NAC may give written notice of such default to Reliance,

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ces hereunder, Reliance may give written notice of such default to NAC, in which case NAC shall have ten (10) days within which to cure the default. If, at the end of the ten (10) day period, NAC has not cured the default Reliance shall have the right (i) to cease reimbursing NAC for Services not actually provided until such time as the event of default is cured or (ii) if the default is not cured within sixty (60) days and Reliance is not then in breach of this Agreement, to terminate this Agreement. Reliance shall not be responsible for the On-Site Costs during the period of default and prior to the termination of this Agreement, other than the repatriation and tax equalization costs identified in Annex C and, if any, on the On-Site Consultants Schedule" 13. On May 23, 2014, the Applicant served notice on SPL in accordance with Section 14.1 of the Association agreement for an event of default as defined in Section 8.1 for failure by SPL to make payments as required under Article

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ement. 16. The termination affected by the Applicant under the terms of Association Agreement resulted in the Applicant claiming from SPL the past due and amounting to USD 1,259,310 for development fee and INR 17,087,113 for reimbursement of expenses (including interest thereon) and of liquidated damages to the tune of USD 17 million as per Section 6.3 of the Association Agreement. A copy of the said notice for termination of the Association Agreement is attached as Annexure E. 17.Upon SPL's refusal to pay the aforesaid claims due to Applicant under the Association Agreement, the Applicant filed a request for arbitration on August 8, 2014 with the International Chamber of Commerce (ICC) in London pursuant to the dispute resolution terms/procedure set out in section 12.2 of the Association Agreement. The relevant section of the Association Agreement is reproduced below "Section 12.2 Dispute Resolution: Arbitration (a) Any and all claims, disputes, questions or controversies inv

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

f the appointment of the second arbitrator, then the ICC shall appoint such arbitrator or the chairperson, as the case may be, in accordance with the listing, ranking and striking provisions of the rules. Save and except the provision under Section 9, the provisions of the Part 7 of (Indian) Arbitration and Conciliation Act, 7 996, as amended (the "Arbitration Act") shall not apply to the arbitration. The arbitrators shall not award punitive, exemplary, multiple or consequential damages. In connection with the arbitration proceedings, the parties hereby agree to cooperate in good faith with each other and the arbitral tribunal and to use their respective best efforts to respond promptly to any reasonable discovery demand made by such party and the arbitral tribunal. (b) All arbitration proceedings shall be conducted in the English language and the arbitral award (the "Award") shall be rendered no later than six (6) months from the commencement of the arbitration or

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

shall include interest from the date of any breach or other violation of this Agreement and the rate of such interest shall be specified by the arbitral tribunal and shall be calculated from the date of any such breach or other violation to the date when the Award is paid in full. (e) All notices and other communications by any party to the other party or by the arbitral tribunal to any disputing party in connection with the arbitration hereunder shall be in accordance with the provisions of Section 14.1. (f) Each of the Parties expressly understands and agrees that the Award shall be the final and binding remedy between them regarding any and all Disputes presented to the arbitral tribunal." 18. The ICC had accepted jurisdiction on August 11, 2014 and, at the request of the Applicant and NACC US, which had instituted a separate arbitration proceeding against SPL, consolidated the two arbitrations into one arbitration proceeding on March 12, 2015. 19. Thereafter, SPL filed a civi

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

le Court delivered its final order on September 11, 2015 dismissing the appeal of SPL by holding that when the parties have agreed to resolve all their disputes by arbitration, they cannot be permitted to avoid arbitration. 21. Aggrieved by the order of the Madhya Pradesh High Court, SPL filed a Special Leave Petition ("SLP") on September 19, 2015 before the Hon'ble Supreme Court of India against the above mentioned judgement of the Hon'ble Madhya Pradesh High Court which is pending disposal. 22. By way of Order dated August 24, 2016, the Hon'ble Supreme Court disposed of the SLP filed by SPL by ruling that the parties can participate in arbitration proceedings outside India despite being companies incorporated under Companies Act, 1956, in India. 23. Pursuant to the aforesaid Order of the Hon'ble Supreme Court, the parties have initiated the arbitration proceedings before ICC. ICC has fixed the date of hearing in the matter from 3 April 2018 to 8 April 2018.

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ority is annexed herewith as Annexure F. 25. The Applicant humbly submits that the above order of the Authority should not, in any manner, whatsoever, stand in Applicant's way of approaching your good self yet again as there is no bar prescribed in this regard under the GST law and the questions posed by the Applicant in the instant application qualifies as questions in respect of which an advance ruling can be sought by the Applicant under the CGST Act, 2017 in terms of Section 97(2) of the Act. 26. Further, the Applicant being a wholly owned subsidiary of a foreign holding company is eligible to approach this Hon'ble Authority for an advance ruling and qualifies as an applicant under Secrion 97 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the "CGST Act"). 27. The Applicant submits that there are no pending proceedings against the Applicant or initiated by the Applicant in relation to the questions raised herein before any authority, Tr

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

he course or furtherance of business, (c) the activities specified in Schedule 1, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 3. Section 7 of the CGST Act, 2017 defines the term 'supply' to include all forms of supply of goods or services or both and it expressly seeks to include all activities treated as supply of goods or supply of services as referred to schedule II of the CGST Act, 2017. In this regard, clause 5(e) provides that agreeing to the obligation to refrain from an act, or to tolerate act or a situation, or to act shall be treated as a supply of services. The relevant portion in Sch II is as below: SCHEDULE II (Section 7) 5. Supply of services The following shall be treated as supply of services, namely:- (a) ……….. (b)………….. (e) Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

not its furtherance. All the obligations of the Applicant qua the service recipient under the Association to exist once the Association Agreement is terminated and the same cannot be said to be in furtherance of the Applicant's business. Also, the act of termination cannot be called 'in course of any business as the usage of the term 'in course' indicates the continuity of an activity. When the Applicant terminates the Association Agreement, there is no continuation of any business of the Applicant with the service recipient as all obligations under the Association Agreement cease to exist. In the light of the above, the damages claimed for such termination can, therefore, not be regarded as being in the course or furtherance of business. Therefore, such claim cannot be regarded as being towards 'supply of any service'. 7. The Ld. Sales Tax Officer appears to be of the view that liquidated damages claimed for nonperformance of a contract gets covered under Claus

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

;Obligation". Therefore, it would be relevant to examine the definition of the said term under other legislations/ judicial pronouncements and understand its dictionary meaning. 11. The term "Obligation" has been defined under Section 2(a) of the Specific Relief Act, 1963 as follows: "2. Definitions. (a) "Obligation" includes every duty enforceable by law; 12. The Andhra Pradesh High Court in case of Hyderabad Stock Exchange Ltd vs Rangnath Rathi & CO (AIR (1958) AP 431 has held that 'An obligation is a tie or a bond which constraints a person to do or suffer something'. 13. As per the Black's law dictionary, the term "Obligation" has been defined as: "A legal or a moral duty to do or not do something." 14. As per Wharton's law lexicon, the term "Obligation" has been defined as: "An act, which binds a person to some performance; or for the performance of a covenant etc." 15. From conjoint reading

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ment to terminate the Association Agreement. There is no obligation on the Applicant to terminate the Association Agreement. Also, there is no consideration assigned for any obligation to terminate it. 19. The intention of the contracting parties emanating from the Association Agreement clearly indicates that the Applicant intends to supply and the recipient intends to receive technical know-how. There is nothing whatsoever in the Association Agreement that indicates that the intention of the contracting parties is really to effect a breach of the contract, which is to be tolerated by the either of them. 20. It is critical to note that there is no clause in the Association Agreement that obligates the Applicant to tolerate the act of default on part of the service recipient, and continue to supply services despite such default. 21. On the contrary, Section 6.2. (c) read with Section 8.1 the Association Agreement provides that the Applicant has a right to determine the contract upon occ

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

cause there is no tolerance on its part of the breach effected by the service recipient. Liquidated Damages received for breach/termination of contract cannot qualify as 'consideration' 30. Under the GST law, the term consideration has been defined under Section 2(31) of the Central Goods Service Tax Act, 2017, as follows: " (31). "consideration" in relation to the supply of goods or services or both includes ,- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Governme

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

service recipient. It is submitted that the liquidated damages in the instant case cannot be regarded as consideration for any provision of service as payments made on early termination by the lessor because of a lessee's default cannot qualify as consideration as the payments made i) are damages for the loss suffered by the Applicant and ii) have no nexus with any identified supply. The payment of liquidated damages by the service recipient is made as a consequence of a breach leading to termination and is not a fee or remuneration for any obligation or tolerance undertaken by the Applicant. 33. The nature of damages claimed on termination of a contract was examined by the Apex Court in Maharashtra State Electricity Distribution Company v. Datar Switchgear Limited & Others, (2018) 3 SCC133. The principle laid down by the Court is that the injured party should be placed as good a situation as if the contract had been performed. In other words, it is to provide to damages for pe

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

icket Club of India v. Commissioner of Service Tax [(2015) (40) STR 973], the Hon'ble CESTAT (Mumbai Bench), observed as under: "11……………….. Consideration is undoubtedly, an essential ingredient of all economic transactions and it is certainly consideration that forms the basis for computation of service tax. However, existence of consideration cannot be presumed in every money flow. The factual matrix of the existence of a monetary flow combined with convergence of two entities for such flow cannot be moulded by tax authorities into a taxable event without identifying the specific activity that links the provider to the recipient. 12. Unless the existence of provision of a service can be established, the question of taxing an attendant monetary transaction will not arise. Contributions for the discharge of liabilities or for meeting common expenses of a group of persons aggregating for identified common objectivities will not meet the criteria of taxation under Fin

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

t a specific amount has been agreed upon as a quid pro quo for undertaking any particular activity by a partner, it cannot be assumed that there was a consideration agreed upon for any specific activity so as to constitute a service." In a JaipurJewellery Show v. CCE & ST, jaipur-1, 2017 (49) STR 313 (TRI), dealing with service tax liability on cancellation charges the Hon'ble Tribunal held as follows: "6 ………. that the same are being retained, as regards the cancellation charges, we note by the appellant from the initial amounts given to them for booking a booth, when the same is subsequently cancelled by the customer and the amount is refunded to them. Admitted position, which emerges is, that no booths are ultimately rented out by the appellant to their customers. As explained, such cancellation charges are for putting the appellant into inconvenience by initially booking the booths and subsequently cancelled. Inasmuch as no service stand provided by the appel

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

lected by the assessee as such charges i) cannot be considered as charges towards provision of services of management of an investment, ii) are in the nature of penalty or liquidated damages and iii) ULIP is primarily a contract between the insurer and the insured and when seen in the context of sections 73 and 74 of the Indian Contract Act, 1972, surrender of policy is nothing but ending of contract for which damages are paid and the same cannot be termed as charges towards management. In the words of the Hon'ble Tribunal: " ………….The fact which emerges from the above shows that the charges are either in the nature of 'penalty' or liquidated damages or a combination of both. Thus in no way it can be considered as charges towards providing of any services of management of investment under Unit Linked Insurance Plan ……. We find that ULIP is primarily a contract between the insurer and insured and thus when seen in the context of Section 73 and 74 of the Contr

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

overed by the Applicant to make goods the loss suffered by it and the said amount, it is re-iterated is not towards provision of any service. 36. On application of the above definitions and the above case laws to the Applicant's case, it is submitted that the flow of money from the service recipient is not for any provision of supply of service of tolerating any default in payment by the service recipient. 37. Instead, the claim of liquidated damages is against the loss suffered by the Applicant on account of the default committed by the service recipient. Any payment received as genuine damages or loss flowing from early termination as a result of a default one party, can not be regarded as a consideration for a supply. Therefore, it is submitted that there can be no taxable supply in the instant case as the payment for genuine damages is no consideration for any earlier or current supply. 38. The submission of the Applicant that damages received by it is not consideration for any

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

m an act, and iii) to tolerate an act or situation as supply. Further, much like under the Indian law, the Australian GST law required that a supply should be made for consideration and for this requirement to be met, there i) had to be payment/any act or forbearance consideration for supply and ii) the said payment/any act or forbearance or consideration is 'in connection with', 'in response to' or 'inducement of a supply'. Therefore, there had to be any payment/act/forbearance and the said act/payment/forbearance ought to have sufficient nexus with the supply in question. In the said background, the Australian Tax Office ruled that payments made on early termination of a lease by the lessor does not constitute a supply as the same is nothing but genuine damages for the loss suffered by the lessor. In support of its conclusion, it observed as below: "70. Where a lease is terminated early because of the lessor exercising a right to terminate early arising o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

oner of Customs and Excise, (1995) VAT Dec. No. 13795:- The case involved early termination of an agreement and payment of certain damages amount by the lessee to the lessor , following the appointment of a receiver to the lessee. Where the sum received by the lessor was sought to be taxed on the ground that the same amounted to supply, the UK VAT Tribunal observed as below: "In summary and looking at the entire transaction' the position is this. While the lease is running, the lessee provides consideration in the form of rent for the quarter and in return the lessor supplies or continues to supply possession of the equipment. If the lessee fails to pay his quarter's rent (or commits any other act of' default'…) the lease may be terminated and the lessor may recoup possession. If So, the lessor's obligation to provide the service is spent and any termination payment compensates the lessor for the latter's loss of opportunity to provide that service … th

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

prudence on certain expressions employed under the Act and taxability of damages under the indirect tax law, particularly the GST law, is still uncertain and unclear. In such circumstances, recourse ought to be had to international cases and rulings understand the meaning and import of certain expressions. 41. The Supreme Court of India and High Courts across the country routinely follow international rulings and commentaries, where there is little or almost no jurisprudence on a given subject, for sufficient guidance. As a result, where the rulings in aforesaid foreign rulings cited by the Applicant shed sufficient light on the taxability of damages in the context of the expression 'tolerate an act', such rulings ought to be taken into consideration before deciding the issue at hand before this Authority considering the fact that the expression examined by the foreign authorities in the decisions relied upon by the applicant exactly the same as the expression used under the GS

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

amages against loss/injury. These clauses act as a deterrence against breach of terms by the other party. 44. Mere fact that such a clause is included in the contract for protection of the aggrieved party would not result in creation of an obligation to tolerate a breach of the agreement. On the contrary, it gives the aggrieved party a right to suel enforce the terms and claim damages. 45. Similarly, mere quantification of liquidated damages payable to the service provider on termination of the Association Agreement should not, and would not, alter the nature of transaction and transform into a supply of a service in as much as what is paid to the service provider is nothing but damages for the loss/injury suffered. 46. The Applicant exercised its right/entitlement to terminate the Association Agreement on account of the service recipient's default in complying with its obligations to make payment to the Applicant for services rendered. Due to such default by the service recipient,

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ect of the injury/ loss caused. The mechanism for determination of the damages cannot have any bearing on the nature of the transaction. Even in the instant case, it may so happen, that the arbitral tribunal may alter the amount of liquidated damages claimed. 48. It is submitted that, in principle, there is no qualitative difference in a claim of liquidated damages and a claim of unliquidated damages as there would be arbitral proceedings (in lieu of long-drawn court proceedings) between the parties to adjudicate and assess the amount of liquidated damages payable to the Applicant and the Applicant would still be required to adduce adequate proof of the loss suffered as the requirement of proving the loss suffered by the applicant is not dispensed with' by merely incorporating a clause with liquidated damages. 49. The aforesaid argument of the Applicant has sufficient backing under Indian law and had been constantly apperciated by Indian Courts. Amongst others, the Supreme Court, a

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not an actionable claim and this position is made amply clear by the amendment in section 6(e) of the Transfer of Property Act, which provides that a mere right to sue for damages cannot be transferred". 50. Based on the above, it is clear that the Applicant's right to receive liquidated damages is not guaranteed and crystallized by a mere reference to the payment of liquidated damages in the contract. The receipt of liquidated damages is dependent on the finality of the proceedings before the highest appellate forum. 51. The Applicant receives damages to make good its injury even it approaches any court of law in ordinary course and the mere fact that the Applicant chose to incorporate clause stipulating a genuine pre-estimate of the damages to make goods its injury by fighting out its claim before an arbitral tribunal instead of a court of law shou

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

count of an illegal act of the service recipient. When the service recipient fails to pay the service provider in time as required under the Association Agreement, the Applicant is put to irreparable loss/injury as a result of such non-payment. Comments on submissions made by the jurisdictional officer: 54. The jurisdictional officer had opined in its written submissions that non-performance of a contract is an activity or transaction which is treated as supply of service and the person is deemed to have received the consideration in the form of liquidated damages and is accordingly required to pay tax on such amount. 55. In this regard, the Applicant submits that mere non-performance of a contract by the service recipient would not trigger the levy of GST on liquidated damages paid by the service recipient. The jurisdictional officer had not appreciated the true import of clause 5(e), which requires an agreement to discharge an obligation to refrain from an act or tolerate an act or a

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

amages for the purpose of payment of GST 58. Even assuming arguendo that GST is payable on liquidated damages claimed by the Applicant, the Applicant submits that no GST is payable on liquidated damages unless the same is actually received by the Applicant once the arbitral award attains finality. 59. This view of the Applicant is supported by the jurisdictional officer who observed in its written submissions to this Authority' that time of supply for the liquidated damages may be the date on which the liquidated will be credited in the bank account of the Applicant or the date on which Applicant shows the receipt of liquidated damages in its books of accounts, whichever is earlier. 60. The fact that receipt of liquidated damages is uncertain is also acknowledged by the Authority for Advance Ruling (AAR) under the erstwhile service tax law, which had observed that it would not give a finding on an event that has not occurred as yet and regarding which there is no certainty. Therefo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

mages or for unliquidated damages……….It, therefore, makes no difference in the present case that the claim of the Appellant is for liquidated damages. It stands on the same footing as a claim for unliquidated damages. Noiv the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not so instanti incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has is the right to sue for damages. That is not an actionable claim and this position is made amply clear by the amendment in section 6(e) of the Transfer of Property Act, which provides that a mere right to sue for damages cannot be transferred". 63. In light o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

39;ble Authority : Relevant Provisions of the Central Goods and Service Tax Act, 2017 and the Applicant's interpretation of the same 29.Under the GST law, all "supplies' of goods and services should attract GST (unless specifically exempted). Section 9 of the Central Goods and Services Tax Act, 2017 (CGST Act) is the charging Section which provides that there shall be a levy of a tax called the central goods and services tax on all intra-state supplies of goods or services or both on the value determined under section 15 of the CGST Act, 2017 at such rates not exceeding twenty percent as may be notified by the Government. As is clear from the aforesaid Section, the key pre-condition for the levy of GST is presence of a "supply" of services. 30. Section 7 of the CGST Act, 2017 defines the term "supply" and the relevant portion of the same is reproduced hereunder as follows: "7. (1) For the purposes of this Act, the expression "supply" incl

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ct provides that agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to an act shall be treated as a supply of services. The relevant portion of the Schedule II is extracted hereunder for your ready reference: SCHEDULE II (Section 7) 5. Supply of services The following shall be treated as supply of services, namely: (a) ………………….. (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and " 32. Further, although there is no comprehensive definition of the term "service" (as it existed under the erstwhile service tax regime), the term "service" is defined as follows under section 2(102) of the CGST Act, 2017: "services means anything other than goods, money and securities but includes activities relating to the use of money or conversion by cash or by any other mode, from one form, currency or denomination, to another form currency or denomination for

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

red by Applicant stems from occurrence of an 'Event of default' in terms of Section 8.1 of the Association Agreement, which includes breach of payment obligations by SPL liuidated damages are in the nature of compensation for losses incurred on account of termination of the contract in other words loss of source of business/ revenue). 37. In the light of the aforesaid submissions, it is submitted that any claim and subsequent receipt for liquidated ,damages preferred by the Applicant against SPL should not qualify as a 'supply of service performed by one person for another for a consideration. Accordingly, it should not qualify as "supply of service for the purpose of levy of GST. 38 It is further submitted that section 7 of the CGST Act, 2017 specifically includes within its ambit activities which are deemed to be treated as supply of services under Schedule II of the CGST Act, 2017. Inter alia, clause 5(e) of Schedule II of the CGST Act, 2017 is the relevant clause f

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

only when there is an 'obligation' or 'consensus' amongst the parties 'to tolerate an act or a situation. 42. In the case at hand, it is submitted that there is no obligation on part of the Applicant to tolerate any breach of payment obligations by SPL. The liquidated damages contemplated under the Association Agreement were incorporated to safeguard the interest of the Applicant against an adverse contingency which may or may not occur. 43. Considering the aforesaid factual matrix and legal position, as explained above: The liquidated damages claimed by the Applicant are not in lieu of any activity/obligation which it has agreed to perform at the behest of the service recipient. Such liquidated damages are claimable on account of breach of contract (default in payment obligation) by SPL. The Applicant cannot be considered to have performed any activity for a consideration for SPL with regard to liquidated damages claimed. Also, there is no contractual reciprocity o

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

shall be triggered do not arise. 47. The Applicant, therefore, humbly submits that, although the arbitration proceedings will commence in the month of April 2018, the award by ICC may be pronounced only in later part of this year or early months of next year. Hence, even if the liquidated damages were held to be liable to GST, the question with regard to the value exigible to GST and the time of supply can only be ascertained once the Applicant's eligibility to receive the liquidated damages attains finality before the appellate forum/ Court of law. PRAYER In the light of the above, it is prayed that the Hon'ble Authority may be pleased to rule that: A. Liquidated damages which may be awarded by ICC shall not qualify as 'supply of any goods or services and hence would not be exigible to the levy of GST; and B. Since liquidated damages are not exigible to the levy of GST, the questions regarding valuation of supply and point of time of supply for the purpose of levy of GST

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

mount which is actually received by the applicant after conclusion of the matter before the final appellate authority?. Classification of service Chapter /Section /Heading Description of Service CGST Rate (%) SGST/UTGST Rate (%) IGST Rate (%) Condition Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified). 9 9 18 – 1. Scope of Supply : Section 7 of the Central Goods and Services Tax Act 2017 (CGST 2017) defines scope of supply. As per Section 7(1) (d) the activities to be treated as a supply of good or supply of services as referred in the sch. 2 As per schedule 2 para 5 clause (e) "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" As per above provision liquidated damages may be awarded to applicant NACC India for non-performance of a contract by SPL. Non-performance of a contract is an act

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed. As per Rule 47 of CGST Rules 2017 the invoice referred to in rule 46, in the case of the taxable supply of services, invoice shall be issued within a period of thirty days from the date of the supply of service. NACC India issued an Invoice Dt. 23rd July 2014 for claiming Liquidated Damages from SPL along with notice of Termination of Association Agreement after the completion of 60 days from the date of notice of default. The issue date of invoice is before the effective date of GST Act 2017. As per section 13 Time of Supply may be the date on which Liquidated Damages will be credited in the Bank account of NACC India or the date on which NACC India will show the receipt of Liquidated damages in his books of account whichever is earlier. Or As per

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

oods or the cost of provision of such services. NACC India issued an invoice Dt. 23rd July 2014 amounting 17 million USD to SPL for liquidated damages. The decision on dispute regarding liquidated damages is pending before ICC, London. Invoice date is before the effective date of GST Act 2017. As per Arbitration clause of Association Agreement decision of ICC, London is final & binding remedy between the parties. In such situation value of supply of services will be determined on the basis of actual receipt of liquidated damages by NACC India from SPL after award of ICC, London. 04. HEARING The case was taken up for preliminary hearing on dt. 12.06.2018, with respect to admission or rejection of the application when Sh. N. Venkatraman Sr. Advocate alongwith Sh. Govardhan Purohit, Advocate, Sh Amit Bhagat Advocate and Sh. Aditya Khanna, Advocate appeared and made request for admission of ARA application as per their written and oral submissions. They specifically point out that they

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

hrough the facts of the case and the submissions made by the applicant and the department. We find that the applicant M/s North American Coal Corporation India Pvt.Ltd., (NACC India) is a Private Limited Company incorporated under the Companies Act, 1956 to carry on the business of providing Technical Consultancy relating to Coal Mining and related activities. It is a wholly owned subsidiary of M/s North American Coal Corporation, USA (NACC US). We find that NACC, US has entered into an association agreement for mine development and operations with M/s Sasan Power Ltd. (SPL or Reliance) a company which is a part of Reliance Anil Dhirubhai Ambani Group which is in the business of developing, designing, operating, maintaining owning an Ultra Mega Power Project in Sasan, Madhya Pradesh, India. The Association Agreement as referred above is effective from 1st January, 2009 in order to provide technical know how to SPL in relation to mine development and operations. We further find that lat

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ber, 2013 and it stopped making payment against invoices of the applicant pertaining to services performed after the period 1st October, 2013. The applicant further stated that they were constrained to terminate the Association Agreement with SPL as per the relevant articles of the Association Agreement. The applicant states that several suits and counter suits were filed by the applicant and SPL against each other and it was finally ordered by the Hon'ble Supreme Court that the parties could participate in arbitration proceedings outside India despite being companies incorporated under the Companies Act, 1956, in India. The applicant further stated that accordingly the applicant and SPL have initiated arbitration proceedings before the International Chamber of Commerce (ICC) which are pending finalization. We find that in view of the above details, the applicant has raised three questions for decision of this authority which are as under:- 1. Whether liquidated damages that may be

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

obligations under the Association Agreement do not constitute as supply of services. They contended that the claim of liquidated damages does not qualify as a 'service' itself as it lacks the element of reciprocating which forms the sine qua non for a transaction to qualify as a service. (II) Secondly they have contended that even if one were to argue that the claim of liquidated damages amounts to a service such claim cannot be regarded as being in course or furtherance of business. The termination of the Association Agreement puts an end to the business relationship of the applicant with the service recipient. It results in complete and absolute cessation of the business of the applicant and not its furtherance. That the act of termination cannot be called in course of any business as the usage of the term 'in course' indicates continuity' of an activity. (III) Thirdly they have contended that the situation in view of the facts of the present case would not get co

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

eferred above. We find that in view of the above detailed facts and contentions of the case, we need to examine the issue at hand as under:- We find that as per Section 9(1) of the CGST Act regarding levy and collection Section 9(1) Subject to the provisions of sub-section 2 there shall be levied a tax called the Central Goods and Services Tax on all Intrastate supplies of goods or services or both except on the supply of Alcoholic Liquor for human consumption, on the value determined under Section 15, at such rates not exceeding twenty percent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by taxable person. From the above we find that CGST is leviable on Intra-State supplies of goods or services or both. We find that Section 7 of the CGST Act gives scope of 'supply'. Section 7 of the CGST Act reads as under:- 7. (1) For the purposes of this Act, the expression "supply"

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

visions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as – (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. We find that Section 7(1) provides that for the purposes of this Act, the expression 'supply' includes: (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and the (d) activities to be treated as supply of goods or supply of services as referred to in Schedule. Where the word 'include' is of specific importance which implies that

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

) Agreeing to the obligation to refrain from an Act or to tolerate an Act or a situation or to do an act. Thus in view of the provisions as above we are required to examine the facts of the present case and details of the Association Agreement as submitted, to ascertain whether tax liability would be there or not on the applicant in context of detailed transactions/acts presented before us. We find that first of all there was an Association Agreement first between NACC, US and SPL with effect from 1st January, 2009 and with effect from March, 2011, the rights and obligations of NACC, US as per the original Association Agreement were transferred and assigned to the applicant with the consent of SPL and we clearly find that this agreement was in respect of providing technical knowhow to SPL in relation to mine development and operations. We find that as per the Association Agreement referred above, the provision of services in the Sasan project was to be carried out in three phases as pe

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ociation Agreement between the applicant and SPL. We find that Article VI of the Association Agreement as referred above provides for term and termination which is as under:- ARTICLE VI TERM AND TERMINATION "Section 6.1 Term. Under earlier terminated in accordance with Section 6.2, the term of this Agreement shall commence on the Effective Date an shall continue until the end of the Production Phase (the " Initial Term"). Following the Initial Term, the parties may extend this Agreement by written agreement for any number of one (1) year terms (each, an "Extended Term" and, together with the Initial Term, the "Term") until the Agreement is terminated pursuant to Section 6.2. Section 6.2 Termination. This Agreement may be terminated : a) At any time by mutual agreement of the parties; b) By either parties in accordance with Article VII (Force Majeure); or c) By either parties in accordance with Article VIII (Events of Default). Section 6.3 Effect of Te

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nates this Agreement pursuant to Section 6.2(c), Reliance shall pay to NAC, as liquidated damages and not as a penalty or other punitive amount, the amount specified below: If Termination Occurs During: Then the Termination Payment is U.S.: Year 1 of the Development Phase $17 million Year 2 of the Development Phase $13 million Year 3 of the Development Phase $15 million Year 4 or later of the Development $17 million Phase Any year in the production phase $17 million, less the aggregate amount of the Production Phase Royalties received by NAC prior to the termination date" ARTICLE VIII EVENTS OF DEFAULT Section 8.1 Default by Reliance. If Reliance shall at any time be in breach of its (a) payment obligations, (b) other obligations pursuant to this Agreement, including failure to provide reasonable access to the Mine, the Preparation Plant or any o Mining Project that are relevant to the duties and obligations of NAC hereunder and the failure to timely provide presentations in Secti

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

NAC shall at any time be in breach of its obligation to provide Services hereunder, Reliance may give written notice of such default to NAC, in which case NAC shall have ten (10) days within which to cure the default. If, at the end of the ten (10) day period, NAC has not cured the default Reliance shall have the right (i) to cease reimbursing NAC for services not actually provided until such time as the event of default is cured or (ii) if the default is not cuired within sixty (60) days and Reliance is not then in breach of this Agreement, to terminate this Agreement. Reliance shall not be responsible for the On-Site Costs during the period of default and prior to the termination of this Agreement, other than the repatriation and tax equalization costs identified in Annex C and, if any, on the On-Site Consultants Schedule" Further, in view of default as above we find that Article XII of the Association Agreement clearly provides for Governing law and dispute resolutions as unde

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ance, on the one hand, or NAC, on the other hand, fail to appoint their respective arbitrator within thirty (30) days after receipt by respondent(s) of the demand for arbitration or if the two 2) party-appointed arbitrators are unable to appoint the chairperson of the arbitral tribunal within thirty (30) days of the appointment of the second arbitrator, then the ICC shall appoint such arbitrator or the chairperson, as the case may be, in accordance with the listing, ranking and striking provisions of the rules. Save and except the provision under Section 9, the provisions of the Part 1 of (Indian) Arbitration and Conciliation Act, 1996, as amended (the "Arbitration Act") shall not apply to the arbitrations. The arbitrators shall not award punitive, exemplary, multiple or consequential damages. In connection with the arbitration proceedings, the parties hereby agree to cooperate in good faith with each other and the arbitral tribunal and to use the respective best efforts to r

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

portion of the prevailing party's expenses should be borne by the other party. Unless the Award provides for nonmonetary remedies, any such Award shall be made and shall be promptly payable in (i) U.S. Dollars if payable to NAC or (ii) Rupees if paid to Reliance net of any tax or other deduction. The Award shall include interest from the date of any breach or other violation of this Agreement and the rate of such interest shall be specified by the arbitral tribunal and shall be calculated from the date of any such breach or other violation to the date when the Award is paid in full. (e) All notices and other communications by any party to the other party or by the arbitral tribunal to any disputing party in connection with the arbitration hereunder shall be in accordance with the provisions of Section 14.1. (f) Each of the Parties expressly understands and agrees that the Award shall be the final and binding remedy between them regarding any and all Disputes presented to the arbit

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ue and to receive suitable amounts as claims cum consideration in view of the violations on the part of the party violating or defaulting on the Association Agreement. Further as per the Association Agreement presented before the Authority it is very clear that the amount or consideration to be received by one party i.e. the applicant if any after arbitration from the defaulting party are suitable compensation only for tolerating the act of default or situation of default by one party on the part of the other party as per the terms and conditions of the Association Agreement and are not liquidated damages as claimed by the applicant as would be clear from the specific mentioned under Section 12.2 Dispute Resolution: Arbitration which clearly states as under:- "The Arbitrators shall not award punitive, exemplary, multiple or consequential damages" Thus we find that the consideration if any as received by the applicant after arbitration by the ICC would clearly qualify as '

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Act, 2018. Further we find that the case laws relied upon by them are not relevant in respect of the present facts of the case and Association Agreement as submitted in respect of the present case and therefore cannot be considered. Now we take one by one the questions posed by the applicant before this authority 1. Whether liquidated damages that may be awarded to the Applicant by the International Chamber of Commerce ("ICC") qualifies as a 'supply' under the Goods and Services Tax ("GST") law, thereby attracting the levy of GST ? Answer The consideration that may be awarded to the applicant by the ICC would qualify as supply of service as per Section 5(e) of Schedule II of Section 7(1) of the CGST Act as per detailed discussions above in this regard. 2. If the answer to Question No. 1 is in the affirmative, what should be the time of supply, that is to say, the point of time in which NACC's liability to pay GST arises ? Answer The provisions of Section

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

actual liquidated damages cum consideration as decided and pronounced in the award administered by ICC. 06. 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- 07/2018-19/B- 63 Mumbai, dt. 11/07/2018 For reasons as discussed in the body of the order, the questions are answered thus – 1. Whether liquidated damages that may he awarded to the Applicant by the International Chamber of Commerce ("ICC") qualifies as a 'supply' under the Goods and Services Tax ("GST") law, thereby attracting the levy of GST ? Answer : Answered in the affirmative. 2. If the answer to Question No. 1 is in the affirmative, what should be the time of supply, that is to say, the point of time in which NACC's liability to pay GST arises ? Answer: The time of supply would be determined as per the provisions of S

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (12) TMI 648 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 188 (A. A. R. – GST) – Classification of an item – Friction Material Based Brake Lining and Pad – whether classified under CTH 6813 @ 18% List and Motor Vehicle Brakes and Parts classified under head 8708 comes under 28% List or otherwise?
–
Held that:- From Explanatory Notes, it is evident that only friction material in different shape is classifiable under heading 6813 and that those mounted are specifically excluded from the purview of said heading.
–
Applicant is a manufacturer of Disc Brake Pads which are used in Braking System of Passenger cars. From the manufacturing process flow chart we find that functional part on baking, grinding, machining and powder coating fitted on steel plate. This finished product is ready for being fixed in the brake system of cars – the impugned product is not covered by chapter Heading 6813.
–
The undisputed fact of the present case is that Disc Brake

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Disc Brake Pads DBP is made up of High Capacity Friction Material, both Fibers and Minerals and separately rivet on to Brake Assembly of Motor Vehicles. At the outset, we would like to make it clear that the provisions of both the CGST Act and the GST 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 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus – FACTS OF THE CASE Friction Material Based Brake Lining and Pad are classified Under the Tariff Head 6813 comes under 18% List and Motor Vehicle Brakes and Parts classified under head 8708 comes u

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ss were discontinued. DESCRIPTION OF PRODUCTS. we at COMPO ADVICS (INDIA) PRIVATE LIMITED. Gut No. 325/1, Bhalgaon, Beed Road, Aurangabad. Dist. Aurangabad – 431 007 are engaged in manufacturing of Non Asbestos Disk Brake Pads in collaboration with Advics Japan. These Disk Brake Pads are used in Braking system of passenger Cars. We are presently manufacture different types of pads covering around 60 type of Cars. Statement containing the applicant's interpretation of law and/or facts. as the case may be, in respect of the questions(s) on which advance ruling is required We would like to know that under which HSN Code our Product to be classified. Under 6813 or under 8708 as there are different rate charged in both code. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- SUBMISSION FOR ADVANCE RULLING APPLICATION SR.NO.10 DTD 13.04.2018. IN CASE OF COMPO ADVICS (INDIA) PVT.LTD. OF BHALGAON DIST AURANGABAD. GSTIN 27AAFCC4974P12X

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

07.2017 attracts 28% GST i.e. SGST 14% CGST 14% Total 28%. Copy of the rate of tax as per tariff under the GST rules is enclosed herewith for ready reference. Further as per Excise Heading 6813 which speaks as under: Friction Material and Articles thereof (for example Sheets, Rolls, Strips, Segments, Discs, Washer, Pads) Not mounted, for Brakes, for clutches or the like with a basis of Asbestos, of other mineral substances or of Cellulose, whether or not combined The dealer Compo Advics (India) Pvt. Ltd of Aurangabad manufacturing products is Disc Brake Pads say Brake liner is used for Passenger Cars, SUVs and MUVS is rightly covered by Excise Tariff 8708 And rightly attracts GST 28% Thus, this office is of the opinion that the dealer's products is leviable under GST regime@ 28%. 04. HEARING The case was taken up for preliminary hearing on DT. 12.06.2018, with respect to admission or rejection of the application when Sh. Mohan Parashar, G. M. Accounts along with Sh. M Gandhi, taxat

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

exist two competing entry with different HSN code Viz 6813 and 8708 and they are subject to different GST Rate. In order to ascertain correct HSN code, applicant has approached this authority with following question: With respect to chapter Heading 6813 applicant submits that there is specific mention that if, friction material is not mounted, and then the product would fall under Heading 6813. Applicant further submit that in this industry there is general understanding that the world 'Mounting' means mounting on the break system and thus the DBP manufactured by them would merit classification under HSN code 6813. In order to ascertain the correct classification of the product, we reproduce the relevant chapter Heading 6813 as below: S.No. Chapter/Heading Sub-heading Tariff Item Description as per Notification Heading Description in Custom Tariff Entire Customs Tariff Heading with sub-Heading and Tariff Item (1) (2) (3) (4) (5) 182B 683 Friction material and articles thereof (

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

gh Explanatory Notes to the Harmonized System of Nomenclature, pertaining to chapter heading 6813. The relevant portion reads as follows:- ….owing to its high friction coefficient and its resistance to heat and wear, this material is used for lining brake shoes, clutch disc, etc., for vehicles of all kinds, cranes, dredges or other machinery… According to the particular use for which it is intended, friction material of this heading may be in the form of sheets, rolls, strips, segments, discs, rings, washers, pads or cut to any other shape… The heading excludes: (a)… (b) Mounted brake lining (including friction material fixed to a metal plate provided with circular cavities, perforated tongues or similar fittings, for disc brakes): these are classified as parts of the machines or vehicles for which they are designed (e.g. heading 8708) Thus, from the aforesaid Explanatory Notes it is evident that only friction material in different shape is classifiable under heading

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

They must not be excluded by the provisions of Notes to chapter 87. (iii) They must not be more specifically included elsewhere in the nomenclature. The undisputed fact of the present case is that Disc Brake Pads are being used in Braking System of passenger cars and SUV Vehicles. Further we find that DBP is not excluded from the aforesaid chapter Notes and are exclusively used as parts of motor vehicles of heading 8701 to 8707 and as such merit classification chapter heading 8707. 06. 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-10/2018-19/B-66 Mumbai, dt. 11/07/2018 For reasons as discussed in the body of the order, the questions are answered thus – Question: – We would like to know that Whether under which HSN Code our Product (Disc Brake Pads DBP) to be classified under 6813 or under 8708 as there are di

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2018 (12) TMI 1153 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 475 (A. A. R. – GST) – Classification of goods – interpretation of statute – Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907” in entry number 252 of the schedule 1 of the Notification No 01/2017-lntegrated Tax (Rate) – Rate of tax – specific list of inputs raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship – Procedure to be followed with Vendors if rate of tax applicable is as per entry no. 252 of the Schedule I – Input tax credit.
–
Held that:- We have listed a list of items which cannot be considered as a part of a warship/ submarine. Other than that all the equipments/ tools, etc can be considered as parts of a submarine/warship, without which the same would not be complete and would not exist. These are very integral for the functioning of the submarine/ warship – except for the items listed by us above from the Annexure B and Add

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ax 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 Shandong Heavy Industry India Pvt. Ltd, the applicant, seeking an advance ruling in respect of the following questions. 1. Whether the expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry number 252 of the schedule 1 of the Notification No 01/2017-lntegrated Tax (Rate) covers specific list of goods attached herewith (Refer Annexure B)? 2. Also, what will be the rate of tax for the specific list of inputs raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship? 3. What procedure is required to be followed with Vendors if rate of tax applicable is as per entry no. 252 of the Schedule I. 4. If the rate of tax applicable to all or any of these items is 5% and if the vendor has charged higher r

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

activities are construction of state-of-the-art warships and submarines with facilities situated at Mumbai. MDL has earned a reputation for quality work and established a tradition of skilled and resourceful service to the shipping world in general and the Indian Navy, Coast Guard & ONGC in particular. MDL had also delivered cargo ships, passenger ships, supply vessels, multipurpose support vessel, water tankers, tugs, dredgers, fishing trawlers, barges & border out posts for various customers in India as well as abroad. MDL have also fabricated and delivered jackets, main decks of wellhead platforms, process platforms, jack-up rigs for ONGC. 2. Currently, MDL is involved in manufacture of warships and submarines as per the specifications/requirements provided by Indian Navy. All the inputs including raw materials, parts, consumables etc. required for constructing the warships and submarines are directly procured/ imported by the MDL (List of the Inputs are mentioned at Annexur

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

4/95 dated 16th March 1995, subject to certain conditions and procedures. S.No. Description of goods Conditions 1 2 3 21. All goods If- (a) the said goods are supplied for use in construction of warships of the Indian Navy or Coast Guard; and (b) before clearance of the said goods, a certificate from an officer not below the rank of a Rear Admiral of the Indian Navy or Coast Guard or Director General of Coast Guard or any other officer of the Indian Navy or Coast Guard; equivalent to the Joint Secretary to the Government of India, to the effect that the said goods are intended for the said use, is produced to the proper Officer. 6. Simiilar exemption was there under sr. no. 306C of Notification No.12/2012-CE, Similar exemption was there under Customs Law also at sr. no. 469A of Notification No. 12/2012-Customs as amended by Notification 54/2015-Customs dated 24h November, 2015. Under Sr No 306 C of Notification No 12/2012-CE exemption was given for raw material & parts of goods. Th

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ception, the basic criteria of the parts being classifiable under the parent machine would hold good. b. In Eureka Forbes v. CCE 2001 (130) ELT 146 (CEGAT) = 2000 (8) TMI 567 – CEGAT, NEW DELHI, it was held that a hose specifically designed for a particular product and not capable of general use will be classified as part of that machine and not as a hose . c. In G S Auto International v. CCE 2003 (152) ELT 3 (SC) = 2003 (1) TMI 700 – SUPREME COURT, it was held that If a part solely or primarily suitable for automobiles will be classified as automobile part (under heading 87.08) and not under general heading. This was followed in CCE v. Basmark Components (2007) 213 ELT 533 (CESTAT) = 2007 (3) TMI 50 – CESTAT, CHENNAI, where it was held that plastic goods designed specifically for automobile with high precision are to be classified as automobile parts. d. In Hallmark Industries v. CCE 2000 (122) ELT 540 (CEGAT) = 2000 (6) TMI 802 – CEGAT, CALCUTTA, Elgi ultra Appliances v. CCE 2001 (13

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

achine. – Audio Vision Electronics v, CC – 1987 (31) ELT 796 (CEGAT) = 1987 (7) TMI 254 – CEGAT, NEW DELHI. g. Part of refill is also a part of ball point pen (as refill is part of ball point pen) – Naianda Manufacturing co. v. CCE 1998 (102) ELT 289 27 RLT 150 (CEGAT) = 1997 (12) TMI 381 – CEGAT, NEW DELHI – quoted and followed in B D Sanghvi v. CCE 1999(113) ELT 571 (CEGAT) = 1998 (8) TMI 363 – CEGAT, NEW DELHI, where it was held that brass tip used in refill is part of ball point pen, as refill is essential part of ball point pen. 9. Attention is also invited of the facts that there is no precise definition provided for Parts of goods & therefore going to the dictionary definition which say a separate piece of something, or a piece that combines with other pieces to form the whole of something or One of the pieces that together form a machine or some type of equipment 10. Attention is also invited in the para 13 of advance ruling in case of M/s. CS India steel Pvt ltd vs The Com

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

applicable. However, since there are no conditions or procedures prescribed for entry no. 252 of Schedule I which was provided in the erstwhile law & to avoid litigation & to clear our ambiguity, advance ruling is sought in relation to question raised under Sr-14 of the application. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- In this connection, the point wise comments on para 14 of the application are as under: 1) The meaning of expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry no 252 of the Schedule 1 of the Notification No.1/2017 – Int. Tax is the parts, which are exclusively used for these goods only. 2. Whether the expression Parts of goods will include all the inputs including raw materials, parts and consumables etc., purchased or imported for use in manufacture of warship and submarines – No 3) The rate of tax for inputs raw materials, parts and consumables etc., purchased or i

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

The jurisdictional officer, Sh. K.W. Thaware, Supdt., appeared and stated that they have made a written submissions on which be taken on record and be considered. The applicant has filed reframed application on 14.05.2018 and admitted. The final hearing in the matter is held on 27.06.2018, Sh. Viren Thakkar, C.A. along with Sh. A. B. Shetty, Manager Taxation, Sh. S. P. Shenoy, GM., Sh. Rajiv Rathare, DG, Design, Sh. Punam Chand, ET Finance, appeared and made written and oral contentions as per details in their ARA. They submitted detailed list of items for submarines and warships on which they have requested for classification with respect to whether these items would be treated as parts of submarines and warships and elibible for benefits @ 5% GST. The jurisdictional officer, Ms. Surekha Walavalkar, Suptt., Division – IV, Range -3, Mumbai Central Commissionerate appeared and stated that they would be making written submissions . 05. OBSERVATIONS We have perused the documents on record

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

s of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 . Against this entry of the Schedule I in rate notification under the heading 8906 the rate of GST prescribed is 5%. We find that the issue that is raised before us by the applicant is whether the inputs mentioned in Annexure B of the application, which are used for constructing the warships and submarines are forming parts of such warships/ submarines and therefore chargeable to reduced tax @ 5% under Sr.No.252 Of Notification No-I/ 2017 Central Tax (Rate) dated 28.06.2017. There are 3 Annexure B s submitted by the applicant. The first Annexure B containing 96 entries pertains to P-15 B EQUIPMENT LIST. The second Annexure B containing 6 entries pertains to P-15 B MATERIAL LIST. The third Annexure B containing 35 entries pertains to P-15 B CONSUMABLES LIST. To deal with the limited issue before us i.e. to find out whether the goods/ spares used by the applicant are parts of a warships/ submarines first of all we need to examine

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nt of failed units. Spare parts are an important feature of Logistics Engineering and Supply Chain Management. Thus in view of the above meanings/definitions of part/ parts/ Spare Part, we will be required to examine as to what are the parts of Goods of CTH 8901, 8902, 8904, 8905, 8906 and 8907 and whether the subject goods/ spares as mentioned by the applicant listed in Annexure B of this ARA application can be taken to be covered within the meaning of Parts for Sr. No. 252 of Notification no. 1/2017 Integrated Tax (Rate) dated 28.06.2017. We find that items like Anchor, Bow, Bowsprit, Fore and Aft, Hull, Keel, Mast, Rigging, Rudder, Sails, Shrouds, Engines, gearbox, Propeller, Bridge, etc. are very essential parts of a ship or vessel and are quite clearly parts of a vessel/ ship and a ship cannot be imagined to be in existence without these parts. However, in addition to the above there are some additional equipments that are required to be made available on a ship as a measure of st

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

etail above, we find that part is a separate piece of something or a piece that combines with other pieces to form the whole of something. Similarly the second definition of part also defines part as one of the pieces that together form a machine or some type of equipment. While interpreting the issues like the one at hand, we may refer to certain judgments which throw light on the disputed issue. In case of Saraswati Sugar Mills Vs Commissioner of Central Excise Civil Appeal No.5295 of 2003 decided on 2nd Aug 2011 = 2011 (8) TMI 4 – SUPREME COURT OF INDIA Hon. Supreme Court of India observed: 12. In order to determine whether a particular article is a component part of another article, the correct test would be to look both at the article which is said to be component part and the completed article and then come to a conclusion whether the first article is a component part of the whole or not. One must first look at the article itself and consider what its uses are and whether its onl

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nstituent part of paper and would thus fall within the term "component parts" used in the Notification in so far as manufacture of paper in rolls is concerned. Paper core, however, cannot be said to be used in the manufacture of paper in sheets as component part. We are conscious that the relevant tariff item uses the word "paper" but since paper in rolls and paper in sheets are nothing but different forms of paper, both of them would be excisable goods as paper under the relevant tariff item." 15. In Modi Rubber Ltd. v. Union of India, (1997) 7 SCC 13 = 1997 (8) TMI 75 – SUPREME COURT OF INDIA, the appellant had set up tyre and tube manufacturing plant and imported various plants and machineries. While using the plants and machineries, PPLF (Polypropylene Liner Fabric) was used as a device in the form of liner components to various machinery units to protect the rubber-coated tyre fabric from atmospheric moisture and dust. This Court held that the PPLF was not

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

n of the expression. In the State of Uttar Pradesh vs M/s. Kores (India) Ltd on 18 October, 1976, Equivalent citations: 1977 AIR 132, 1977 SCR (1) 837 = 1976 (10) TMI 131 – SUPREME COURT OF INDIA. In this case the appellant contended before the Hon SC that carbon paper does not lose its character as paper in spite of being subjected to chemical processes, and that ribbon is not an accessory but an essential part of the typewriter. While dismissing the appeal Court held that A word which is not defined in an enactment has to be understood in its popular and commercial sense with reference to the context in which it occurs. It has to be understood according to the well-established canon of construction in the sense in which persons dealing in and using the article understand it. The Hon.SC further observed that Bearing in mind the ratio of the above mentioned decisions, it is quite clear that the mere fact that the word paper forms part of the denomination of a specialized article is not

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Where it was held: Whether a typewriter ribbon is a part of a typewriter is to be considered in the light of what is meant by a typewriter in the commercial sense. Typewriters are being sold in the market without the typewriter ribbons and therefore typewriter ribbon is not an essential part of a typewriter so as to attract tax as per entry 18 of the Second Schedule to the Mysore Sales Tax Act, 1957. In light of the above discussions, considering the meaning of an expression (Part) as given in the dictionary and also the ratio as adopted by the Hon ble Courts as mentioned above besides common parlance test, we now take up each and every input claimed by the applicant to be parts of a warship/ submarine [as listed in Annexure B Of this ARA application] and discuss and find out whether each of the subject goods/ spares can be considered as parts of warship/ submarine. The classification of goods under Sr. No. 252 depends solely on the nature of use to which the goods are put to. We first

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

tting gases, etc.), therein cannot be considered as parts of a warship/ submarine. They are essentially in the form of consumables and for reasons mentioned above cannot be considered as parts of a ship. We also find that the applicant has filed four addendums to Annexure B submitted by them. The first addendum to Annexure B is a P-75 Equipment List consisting of 153 items. We find that except the equipments mentioned in Sr. Nos. 48, 49, 51, 52, 65, 91, 136, 137, 138, 139, 140, 145, 146, 147, all other equipments can be considered to be parts of a warship/ submarine., for reasons mentioned above. The second addendum to Annexure B is a P-75 Raw Material List consisting of 54 items. We find that except the equipments mentioned in Sr. Nos. 2, 3, 10, 14, 18, 19, 25 to 54, all other equipments, except the items mentioned in Sr. No. 24, can be considered to be parts of a warship/ submarine., for reasons mentioned above. In Sr. No. 24, the details submitted by the applicant are not very clear

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

om the Annexure B and Addendums to Annexure B, all other items can be considered as parts of a ship and therefore would be eligible to concessional rate of GST as contended by the applicant. 06. 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-28/2017-18/B-64 Mumbai, dt. 11/07/2018 For reasons as discussed in the body of the order, the questions are answered thus – Question 1:- Whether the expression Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 in entry number 252 of the schedule 1 of the Notification No 01/2017-Integrated Tax (Rate) covers specific list of goods attached herewith (Refer Annexure B)? Answer:- As mentioned in the discussions above only those Annexure B items which are not listed above will be considered as parts of warship falling under 8906 and will be covered under entry number

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2019 (2) TMI 1081 – AUTHORITY FOR ADVANCE RULING, HARYANA – TMI – Input tax credit – GST charged by the Contractor for hiring of buses for transportation of employees – GST charged by the Contractor for hiring of cars for transportation of employees – restriction on ‘Rent a Cab’ service specified in Section 17(5)(b)(iii) – Held that:- The phrase “rent-a-cab” has not been defined in the CGST/HGST Act, 2017. In situations where statutory meaning of any term/phrase has not been provided words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances.
–
Where any commercial vehicle is hired for transportation of passengers, it would be squarely covered by the phrase “rent-a-cab” In other words, any person who provides motor vehicle designed to carry ‘passengers’, on rent, would be

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ts employees under any law for the time being in force; or that such inward supply of services is being is used by the applicant for making an outward taxable supply of the same category of services or as part of a taxable composite or mixed supply.
–
The applicant is not eligible for input tax credit of GST charged by the Contractor for hiring of buses/cars for transportation of employees. – AAR No. HAR/HAAR/R/2018-19/04 (In Application No. 3/2018-19) Dated:- 11-7-2018 – SANGEETA KARMAKAR AND VIJAY KUMAR SINGH, MEMBER Present for the Applicant: Sh Kishore Kunal, Advocate 1. M/s. YKK India Private Limited (hereinafter referred to as the applicant ) is engaged in the business of supply of slide fasteners, chains, sliders etc. ( Zipper or Final Product ). In furtherance to its business of supply of the said Final Products mentioned above, the Applicant uses various goods as well as services for which the applicable tax under the CGST Act or the relevant State Act or Union Territory

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

contractual service provider who provide transportation services and ensure that employees of the Applicant are able to reach the factories in time for doing their day to day work as scheduled. It is in this regard that the Applicant enters into contract with the said suppliers for hiring buses as well as cars. In this regard, reference is made to sample contract entered between Deep Travels ( Contractor ) and the Applicant, both situated in Haryana, for provision of Transportation Services (also referred to as Transportation Services ) to its employees from various locations to Factories. The Applicant has summarised the relevant terms of the sample agreement below for ease of reference: a. The Contractor shall provide transport Services to employees of the Applicant from Factories to Kakarwali, Rewari by way of a buses b. The Contractor shall deploy trained personnel viz. driver and helper buses to provide transportation Services to employees of the Applicant from Factories to Kakarw

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

GST by classifying the activities under HSN 996413 viz. Non-scheduled local bus and coach charter services, attracting GST at the rate of 18%. 5. In view of the fact that the aforementioned GST payment on the invoices raised by the Contractor falls within the meaning of input tax credit under Section 2(63) read with 2(62) of the Act, the Applicant is of the view that the Applicant is eligible to take credit of the GST paid subject to fulfillment of the conditions specified in Chapter V of the Act which deals with input tax credit. 6. Questions on which ruling has been sought by the applicant, are as under:- i. Whether the Applicant is eligible to take input tax credit on: a. GST charged by the Contractor for hiring of buses for transportation of employees? b. GST charged by the Contractor for hiring of cars for transportation of employees? ii. Whether the restriction on Rent a Cab service specified in Section 17(5)(b)(iii) is applicable to input tax credit on:- a. GST charged by the Co

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

raised by the applicant are covered under section 97 (2) (d) of the CGST/HGST Act, 2017. As regard merits the decision was reserved which is being released today. DISCUSSIONS AND FINDINGS OF THE AUTHORITY 8. We have carefully gone through the application for advance ruling and submissions made by the applicant. The applicant is registered taxpayer and has entered into agreement for hiring commercially licensed vehicles for transportation of their employees. The question raised by the applicant is whether they are eligible to avail input tax credit of GST paid by the contractor on the services rendered by them to the applicant. 9. As per Section 16 of the of the CGST/HGST Act, 2017, every registered person shall, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. However, on this availment of input tax credit (ITC), there are exceptions prescribed under Sect

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

me 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)…………………… 10. The point which merits examination here is that whether the impugned services are covered by the definition of rent-a-cab and hence ineligible for ITC. In this regard, it is observed that the phrase rent-a-cab has not been defined in the CGST/HGST Act, 2017. In situations where statutory meaning of any term/phrase has not been provided words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. Resort to rigid interpretation in terms of scientific and technical

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ticulated lorry, known in Britain as an artic cab As per Oxford dictionary, Cab means: 1. A taxi. 2. The driver s compartment in a lorry, bus, or train. As per Merriam-webster dictionary, cab means 1: a light closed carriage pulled by a horse 2: a vehicle that carries paying passengers : TAXICAB 3: the covered compartment for the engineer and the controls of a locomotive or for the operator of a truck, tractor, or crane As per Cambridge dictionary, https://dictionary.cambridge.org/dictionary/english/cab, a taxi (= car with a driver whom you pay to take you where you want to go) the separate part at the front of some vehicles in which the driver sits: From all the above definitions, it emerges that in common parlance, cab refers to a vehicle which has been taken on hire/rent, along with driver, for going from one place to another. 12. When it comes to Goods and Services Tax, tax on services finds its genesis from Chapter V of the Finance Act, 1994, i.e., the Service Tax statute. Therefo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

implies that it includes renting of motor cars, motor cabs, maxi cabs, mini buses, buses and all other motor vehicles which are designed to carry passengers, irrespective of their capacity to carry passengers. The contentions of the applicant that hiring of buses which can carry large number of passengers would not qualify under rent-a-cab is found to be untenable and the activitiy of the contractor in the instant case, providing buses or cars on hire to the applicant, is specifically covered under the meaning of rent-a-cab , which makes the impugned supply as ineligible for ITC in terms of Section 17(5) of the CGST/HGST Act, 2017. 14. In the Case of Commissioner of Service Tax Vs. Vijay Travels [2014 (36) S.T.R. 513 (Guj.)] = 2015 (1) TMI 809 – GUJARAT HIGH COURT, the Hon ble High Court of Gujarat, observed as under: Words and Phrases – Rent – It means the act of payment for the use of something Renting means a usually fixed periodical return, especially, an agreed sum paid at fixed i

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Further, it is also observed that nothing has been brought on record to suggest that the impugned service is not a service which is obligatory for an employer to provide to its employees under any law for the time being in force; or that such inward supply of services is being is used by the applicant for making an outward taxable supply of the same category of services or as part of a taxable composite or mixed supply. Accordingly, the applicant is not eligible for input tax credit of GST charged by the Contractor for hiring of buses/cars for transportation of employees. ADVANCE RULING UNDER SECTION 98 OF THE CGST/HGST ACT, 2017 16.1. The applicant is not eligible to take input tax credit on: a. GST charged by the Contractor for hiring of buses for transportation of employees. b. GST charged by the Contractor for hiring of cars for transportation of employees? 16.2. The restriction on Rent a Cab service specified in Section 17(5)(b)(iii) is applicable to input tax credit on:- a. GST c

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =