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2018 (5) TMI 647 – AUTHORITY FOR ADVANCE RULINGS, MAHARASHTRA – 2018 (13) G. S. T. L. 449 (A. A. R. – GST) – Levy of GST – reinstatement charges paid to Municipal Authorities – to carry out the excavation of roads for laying, repair and maintenance of electric supply lines. – activity related to sovereign function or not – It has been contended that the service falls under entry 4 of Notification No. 12/2017 -Central/State Tax (Rate) dated 28.06.2017 – Whether reinstatement charges paid to Municipal Authorities would be liable to GST? – Held that: – There is specific entry in N/N. 12/2017-Central/State Tax (Rate) dated 28.06.2017 – from Chapter 99, it is very clear that if any services, including the three services excluded in clauses (a) to (c) of the above entry, are provided by the Government or local authority to any business entity, they would not be eligible for any exemption under GST – the applicant has made a whole lot of arguments to hold that the recovering of charges for t

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ding services such as gas, telephone, electricity, etc. The Guidelines for Trenching activity-2015 [No:AMC/ES/7725/11 Dated 18.12.2014 – policy guidelines for granting trench excavation permissions to underground service provider Utility agencies and Municipal agencies & the reinstatement of trenches] as provided by the applicant state that in addition to the regular RI charges, access charges for right of way will be recovered by MCGM from all utilities which lay underground services below MCGM roads – This statement helps to understand the position as respects MCGM [Municipal Corporation of Greater Mumbai]. That these charges would be exigible to GST is not doubtful even to the applicant and we agree with the same.
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To determine whether it is a composite supply by Municipal Authorities, the available information is insufficient as the question posed is in respect of Municipal authorities in general and not any specific Municipal Authority with complete details and therefore is n

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imilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act /MGST Act would be mentioned as being under the GST Act 02 FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- 1 – STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON ANNEXURE I- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS (S) ON WHICH THE ADVANCE RULING REQUIRED 2. M/s. Reliance infrastructure limited ( the Applicant") is inter alia engaged in the business of generation, transmission and distribution of electricity and is registered under Goods and Service Tax Act ( GST ) bearing Registration No. 27AACCR7446Q1ZM. 3. The Applicant has obtained a license under Section 14 of the Central Electricity Act, 2003 ( Electricity Act ) to distribute e

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ion system in his area of supply and to supply uninterrupted electricity to his consumers. Further, in terms of Section 67 of the Electricity Act, every licensee may, from time to time but subject to the terms and conditions of his license, within his area of supply lay down or place electric supply lines and carry out following works: i) to open and break up the soil and pavement of any street, railway or tramway, ii) to open and break up any sewer, drain or tunnel in or under any street, railway or tramway; iii) to alter the position of any line or works or pipes, other than a main sewer pipe; iv) to lay down and place electric lines, electrical plant and other works; v) to repair, alter or remove the same; vi) to do all other acts necessary for supply of electricity. 6. Section 67 of the Electricity Act confers power on the appropriate Government to prescribe procedure to enable the licensee to carry out the specified works. This Section inter alia lays down that in order to carry o

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ction 67 of the Electricity Act. It also lays down lay down the procedure for fencing, guarding and other safety measures relating to the works and the immediate reinstatement of the affected areas and manner of restoration and the payment of the cost of reinstatement to the authority etc. The key provisions laid down in this connection are summarized hereunder: *Rule 11 of the Electricity Work Rules provides that licensee shall be liable to deposit an amount for restoration and maintenance of the affected areas. * Rule 12 of the Electricity Work Rules provides that the distribution licensee shall carry out the restoration and maintenance of the property affected by the works carried out by the distribution licensee. * Proviso to the Rule 12 of the Electricity Work Rules provides that where the restoration work is carried out by the concerned local authority, payment may be recovered by the local authority from the distribution licensees. * Rule 13 of the Electricity Work Rules provide

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Reinstatement Charges: Flat rates applicable for arriving a! reinstatement charges for various road surface based on prevailing Unified Schedule of Rates as well as charges for using existing duct will he as per Annexure-A. These rates have been worked out considering the width of trench as 0.9M, average depth of 0.9M and 0.55M width of affected area of road on each side; i.e. the total width of road to be improved will be 2.4M as against 2,4M as per previous practice. In case, the excavation proposed by the distribution licensee is not included in the Annual Plan submitted with Municipal Authorities, the distribution licensee is liable to pay Additional Reinstatement Charges at the rate of 7% of the normal Reinstatement Charges. The relevant extract of the MCGM Trenching Policy have been vided provided below: 6. Reinstatement Charges Along with Reinstatement Charges: 50% Additional amount shall be obtained from the utility agency as security deposit which can be utilized to recover p

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lines. The relevant extract of the MCGM Trenching Policy have been provided below: 6A. Access Charges (Right ofway charges): In addition to the regular RI charges; access charges for right of way will be recovered by MCGM from all utilities which lay underground services below MCGM roads. Presently these charges will be recovered at the rate of ₹ 100/- Per Meter length of the cable s/conduits/ducts Per Year. The Access charges will be enhanced as and when it is felt expedient to MCGM, on demand from MCGM or rather proactively; the access charges shall be deposited year by year by the Utility agencies. The access charges will be applicable to all types of trenching works i.e. open cut trenching, HDD & Micro trenching. Applicable access charges in individual case shall be Informed to the applicant utility agency through demand note along with the reinstatement Charges. 10. Therefore, every distribution licensee would be required to make payment of reinstatement charges and acce

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ng of the year, the distribution licensees would also be charged Additional Reinstatement Charge of 7% over and above the normal Reinstatement Charges, access charges and security deposit. Copy of the in-principle approval wherein the Municipal Authorities have charged reinstatement charges, access charges and additional reinstatement charges is enclosed as Exhibit C. d) Further, whenever the security deposit made by the Applicant gets exhausted (either as adjustment against penalties or against the reinstatement charges), the Municipal Authorities issues letters directing the Applicant to make additional security deposit. Copy of the letter issued by Municipal Authorities is enclosed as Exhibit D. 11. It is to be noted that that the Applicant has made similar payments of reinstatement charges and access charges to other authorities namely Mumbai Metropolitan Region Development Authority (MMRDA) and Mira Bhayandar Municipal Corporation. STATEMENT CONTAINING THE APPLICANT S INTERPRETATI

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2017, it is clear that the following conditions should be cumulatively fulfilled: i) There should be service (Condition I) ii) Service should be provided by Central Government, State Government, Union territory, local authority or governmental authority (Condition Il) iii) Service should be by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution (Condition Ill) Condition 2.3 The reinstatement charges are collected by the Municipal Authorities towards the activity of restoration of roads which includes activities such as construction, alteration, repair and maintenance of roads. It is pertinent to understand whether the activity undertaken by the Municipal Authorities would constitute works contract and thereby services . 2.4 In terms of Section 2(119) of the CGST Act, works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, m

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ishad a District board and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act 2006: (e) a Regional council or a District Council constituted under the Sixth Schedule to the Constitution; f) a Development Board constituted under article 371 Of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution; 2.7 In terms of Article 243P read with 243S of the Constitution of lndia, a Nagar Panchayat, Municipal Council or a Municipal Corporation would constitute Municipality . Thus, Condition II in Entry 4 to NN 12/2017 stands fulfilled as the MCGM, MMRDA and Mira Bhayandar Municipal Corporation would be treated as local authority Condition III 2.8 The Condition Ill requires that the services should be by way of any activity in relation to any function entrusted to a municipalit

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trusted to them including those in relation to the matters listed In the Twelfth Schedule: (b) the Committees with such powers and authority as may be necessary 10 enable them to carry Out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule 2.11 The relevant entry of Twelfth Schedule of the Constitution of India is reproduced hereunder: (1)… (4) Roads and Bridges;… 2.12 As the services provided by the Municipal Authorities is towards restoration or reinstatement of the affected roads, bridges, etc. Condition Ill stands fulfilled. 2.13 Therefore, in view of the above, service of restoration of roads can be said to be provided by way of any activity in relation to any function entrusted to a municipality under Article 243 W of the Constitution and accordingly, reinstatement charges for restoration of roads collected by the Municipal Authorities can be said to be exempt from the applicability of GST. Access charges (right

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xable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction With each other in the ordinary course Of business, one of which is a principal supply; 2.16 Further, in terms of Section 8 of the CGST Act, the tax liability of a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. 2.17 In the present case, the Municipal Authorities provide services of restoration of roads and also right of way to carry out excavation work. The services of giving right of way and restoration of roads are naturally bundled and are supplied in conjunction with each other in the ordinary course of business of granting permission to the licensee for carrying out the excavation works. Thus, it can be said that it would constitute a composite supply in terms of Section 2(30) of the CGST Act wherein the service of restoration of roads would be the principal supp

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thorities would be squarely covered by the Entry 4 to the Notification No. 12/2017 -Central Tax (Rate) dated 28.06.2017 ( NN 12/2017 ). From a perusal of Entry 4 to NN 12/2017, it is clear that the following conditions should be cumulatively fulfilled in order to avail such exemption: i) There should be service (Condition I) ii) Service should be provided by Central Government, State Government, Union territory, local authority or governmental authority (Condition II) iii) Service should be by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution (Condition III) 2. Relying on the discussion and deliberations during the course of the hearing, we understand that it is undeniable that the Condition I and Condition Il are fulfilled in the instant case. The only doubts raised by Your Honour during the course of the hearing was whether the services provided by the Municipal Corporation ( local authority ) can be said to constitute

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bridges . 5. It is a settled position in law that the term in relation to is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context The Applicant has placed reliance on the following judicial precedents: * Doypack Systems Pvt Ltd vs. Union of India [1988 (36) ELT 201 (SC) = 1988 (2) TMI 61 – SUPREME COURT OF INDIA * Home Solution Retail India Ltd vs. Union of India [2009 (237) ELT 209 (Del.) = 2009 (4) TMI 14 – DELHI HIGH COURT 6. The Applicant submits that no activities or functions are explicitly specified as regards the subject matters listed under the Twelfth Schedule of the Constitution of India. Further, the functions entrusted to the municipality in relation to roads and bridges have not been defined anywhere in the Constitution of India or CGST Act, 2017 or any other Act. Thus, any activity carried out in relation to roads an

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y would also be covered by Entry 4 to NN 12/2017 and exemption should be allowed. 8. Further, as regards the argument that the functions or activities entrusted to Municipalities cannot be carried out for commercial purposes or business entities does not hold water. In this connection, the Applicant wishes to draw your attention to Entry 5 of the Twelfth Schedule to the Constitution of India which provides water supply for domestic, industrial and commercial purposes . Thus, from a perusal of the said entry, it is clear that the functions listed under the Twelfth Schedule are not restricted to be provided to public at large but it can also be provided for commercial purposes or industrial purposes to business entities. Hence, the services of the restoration of roads carried out for the Applicant would also get covered under the Twelfth Schedule to the Constitution of India. 9. Further, the Applicant also wishes to draw attention to the fact that the entries under NN 12/2017 can be clas

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o be used by general public at large. 11. Similarly, from a perusal of Entries covered by (iii) and (iv) above, it is clear that wherever the legislature wanted to exempt services provided to particular class of recipients, it has made explicit provisions to that effect. In the absence of such provisions in Entry 4, exemption cannot be denied in the instant case. 12. In view of the above, it is clear that wherever the legislature wanted to exempt services for use by general public or to be provided to some particular class of service recipient, it has made explicit provisions to that effect. In the absence of such provisions, exemption cannot be denied in the instant case. Thus, the exemption cannot be said to be available only when provided to public at large and the benefit of exemption is available even if the service is provided to particular business entity. 13. The Applicant also places reliance on the decision of M/s B.R. Enterprises vs. State of U.P. & Ors-MANU/SC/0330/1999

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different use of words in the two Articles is for a purpose, if the field of two Articles are to be the same. the same words would have been used. It is true, as submitted, that since trade is used both in Article 298 and 301, the same meaning should be given. To this extent, we accept it so but when the two Articles use different words, in a different set of words conversely, the different words used could only be to convey different meaning. If different meaning is given the field of the he different. so. When Instead of the words trade and commerce in Article 301. the words trade or business is used it necessarily has different and wider connotation than merely trade and commerce . Business may be of varying activities. may or not be for profit. hut it necessarily includes within is ambit trade and commerce so sometime it may be synonymous but its field stretches beyond trade and commerce, 14. In support of the above contention, reference may also be made to the following judgement

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to and the Authorities cannot add or substitute any word while construing notification either to grant or deny exemption. In this connection, reliance is placed on the Apex Court decision of Saraswati sugar Mills Versus Commissioner orc. Ex., Delhi-Ill – 2011 (270) E.LT. 465 (S.C.).= 2011 (8) TMI 4 – SUPREME COURT OF INDIA 16. In view of the above, it is clear that the benefit of exemption should be available to road restoration services provided by local authority to the Applicant. Exemption Notifications should be construed strictly 17. The Applicant also states that the Exemption Notifications are beneficial Notifications intended to benefit the industry and public at large and the same cannot be interpreted in a manner which renders the purpose of the Notification futile. It is a settled position of law that beneficial legislations should be interpreted liberally in order to extend the benefit of the statute to the assessee. In this connection, the Applicant places reliance on the

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there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances. 18. The Applicant also relies on the case of Commissioner of Central Excise, Surat-l Versus Favourite Industries 2012 (278) E.L.T. 145 (S.C.) = 2012 (4) TMI 65 – SUPREME COURT OF INDIA , wherein the Apex Court held as under: 31. Moreover, a liberal construction requires to be given to a beneficial notification. This Court in Commissioner of Customs (Preventive) Mumbai V. M. Ambalal and Company, (2011) 2 SCC 74 2010 (260) ELT. 487 (S.C.) = 2010 (12) TMI 16 – Supreme court of India , (in which one of us was the party) has observed that the beneficial notification providing the levy of duty at a concessional rate should be given a liberal interpre

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y of GST. Access charges cannot be subject to GST 20. The Applicant further submits that the Municipal Authorities also recover access charges for the purpose of right of way over the road to carry out excavation work. It is pertinent to note that the access charges for access of roads payable in conjunction with reinstatement charges to carry out the excavation work. It is pertinent to note that the access charges for access of roads are payable in conjunction with reinstatement charges to carry out the excavation work. 21. In terms of Section 2(30) CGST Act, composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Further, in terms of Section 8 of the CGST Act, the tax liability of a composite supply comprising two or more suppl

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017. Therefore, GST would not be applicable on the access charges collected by the Municipal Authorities. In view of the above submissions, no GST would be leviable on reinstatement charges and access charges recovered by the Municipal Authorities. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It appears from the application that M/S. RIL, a private company engaged in business of generation, transmission and distribution of electricity claimed that reinstatement charges and access charges paid to Municipality for restoration work of roads damaged by excavation work undertaken by the applicant are exempted from GST in terms of entry no. 4 of the Notification No. 12/2017- Central Tax (rate) dated 28.06.2017. In support of their contention, they have argued that since such services provided by a governmental authority (Municipality) fall under the function entrusted to a municipality under article 243W of the Constitution, qualif

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roads caused by natural wear and tear in the interest of local public utility In the instant case, the service provided by the Municipality towards restoration of damaged roads caused by excavation work done by M/S. RIL is purely for commercial purpose, upon consideration, doesn t come under purview of Article 243 W of the Constitution and hence not exempted in terms of Notification No; 12/2017- Central Tax (rate) dated 28.06.2017. This service of restoration work is being provided by the local authority to the assessee for furtherance of their business and hence attracts GST. In terms of entry no. S of the Notification No. 13/2017- Central Tax (rate) dated 28.06.2017, the leviable GST is payable by the recipient i.e. M/S. RIL on reverse charge basis. 04. HEARING The case was taken up for preliminary hearing on dt.31.01.2018 when Sh. Gopal Mundhra (Advocate) attended alongwith Shi Thomas. K. D (DGM). On dt.28.02.2018, Shi Gopal Mundhra -(Advocate), Ms. Ginita Bodani (Advocate) and Sh T

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ce Infrastructure Ltd MCGM GST Number 27AAALM0042L3Z4 Sr. No. SAC / Activity Code Description of Activity Amount 1 RI FOR RELIANCE ENERGY LTD 63690.00 2 997212 ACCESS CHARGES FOR POWER CABLES 1000.00 64690.00 90.00 90.00 64870.00 c. There is also a Demand Note No. 783184406 dt.16.10.2017 which informs the applicant in response to their application to undertake excavation in trench. The aforesaid amount has been informed. It is categorically mentioned that payment of reinstatement charges do not guarantee the grant of permission. d. The Permit issued for the location of the trench as specified therein states that simultaneous work order for reinstatement is issued to Ward Contractor and further that he will take up the work on the date of completion of the applicant s work mentioned in the permit or in phases as per clause no. 10 of the Permit. The applicant before us is Reliance Infrastructure Limited and the supply would be by the Municipal authorities. We may refer to the GST Act to

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he the person liable for paying the tax in relation to the supply of such goods or services or both The notification issued under the above sub-section has an entry thus- Notification No. 13/2017-Central/State Tax (Rate) In exercise of the powers conferred by sub-section (3) of section 9 of the Central/Maharashtra Goods and Services Tax Act, 2017, the Central/State Government on the recommendations of the council hereby notifies that on categories of supply of services mentioned in column (2) Table below; supplied by a person as specified in column (3) of the said Table, the whole of central / state tax leviable under section 9 Of the said Central Goods and Services Tax Act, shall be paid On reverse charge basis by the recipient Of the such services as specified in Column (4) of the said Table: Table Si No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 5 Services supplied by the Central Government, State Government, Union Territory of local aut

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tification issued for the purposes of section 9(3) of the GST Act, the applicant would be liable to pay tax in respect of the services received from the Municipal authorities. And therefore, the questions would have to be entertained. We begin to discuss the facts and the questions posed. Question 1 Whether reinstatement charges paid to Municipal Authorities would be liable to GST? We deal with the question by looking at the arguments of the applicant. It has been contended that the service falls under entry 4 of Notification No. 12/2017 -Central/State Tax (Rate) dated 28.06.2017. We shall reproduce the said entry thus- Si. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Service Rate (per cent.)/CGST+MGST=IGST] Condition 4 Chapter 99 Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the constitution

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hority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. The word Municipality is defined in the Constitution in the definitions in Article 243P(e)A As Municipality means an institution of self government constituted under article 243Q; Article 243Q says thus- 243Q (1) there shall be constituted in every State,- (a) a Nagar Panchayat (by whatever name called) for a transitional area, that is to say, an area in transition from a rural area to an urban area; (b) a Municipal Council for a smaller urban area; and (c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Part: ………………………………………………….. Since there is a reference to the Twelfth Schedule, we also refer to the same thus – TWELFTH SCHEDULE (Article 243

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, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries. As can be seen, Roads is a matter listed in the Twelfth Schedule. so there is a function of a Municipality in relation to Roads . We have seen above that the Constitution defines Municipality as an institution of self-government. The function as entrusted by the Constitution in relation to Roads is the construction of roads for the use by the general public. These are sovereign functions. The applicant is inter alia engaged in the business of generation, transmission and distribution of electricity. This calls for laying and maintenance of the power lines and other incidental work which requires the digging up of trenches. The Municipal Authorities grant the needful permissions. However, these permissions come with charges for restoring the street or pavement which has been dug up. Thus, the activity in the present case is the charges recovered by the Municipal Authorities to restore that portion of

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s up the road and there is restoration required to be done. This restoration work would not result in performing of the sovereign function. The sovereign has already been performed by constructing the road or undertaking maintenance works roads. The restoration work can be equated neither to construction work nor to maintenance work as suo-motu undertaken by the Municipal Authorities. The restoration charges are also not in the nature that the Municipal Authorities are performing any job of construction for the applicant. The street or pavement or road that is dug up is a general road. In view of all above, we are of the firm view that it should not be disputed that the recovering of charges for restoring the patches which have been dug up by business entities of the nature as the applicant cannot be equated to performing a sovereign function as envisaged under article 243 W of the Constitution. Further, we find that there is specific entry in Notification No. 12/2017-Central/State Tax

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, they would not be eligible for any exemption under GST. We find that the applicant has made a whole lot of arguments to hold that the recovering of charges for the restoration of the street or pavements amounts to a service activity in relation to a function entrusted to a municipality under article 243 W of the Constitution. However, we find that the arguments fail to make a point. As regards the case laws, we only observe that the facts and provisions aren t in pari materia with those in the present case. We find that there is no other entry in the Schedule contained in the Notification No.12/2017-Central/State Tax (Rate) for services exempted from GST which would cover the impugned transaction. Neither is a specific entry for the impugned transaction in the Notification No. 11/2017-CentraI/State Tax (Rate) for services taxable to GST at various rates. In view thereof, the residuary entry no.35 of the Notification No.11/2017-Central/State Tax (Rate) covering services nowhere else c

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nt and we agree with the same. However, the applicant has made a general query as regards access charges paid to Municipal Authorities. We have no further information than the receipt raised and the policy guidelines of MCGM. To determine whether it is a composite supply by Municipal Authorities, the available information is insufficient as the question posed is in respect of Municipal authorities in general and not any specific Municipal Authority with complete details and therefore is not answered. 06. In view of the detailed deliberations held hereinabove, it is ordered thus – 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-11/2017/B- 14 Mumbai, dt. 21.03.2017 For reasons as discussed in the body of the order, the questions are answered thus – Question 1 Whether reinstatement charges paid to Municipal Authorities would be liable to GST? Question 2 Whether access charges paid to Municipal Authori

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2018 (5) TMI 759 – AUTHORITY FOR ADVANCE RULING – KARNATAKA – [2018] 59 G S.T.R. 209 (AAR), 2018 (13) G. S. T. L. 114 (A. A. R. – GST), [2018] 2 GSTL (AAR) 101 (AAR) – Supply of goods & services to SEZ or not – intra-state supply – Place of Provision Rules – Whether the Hotel Accommodation & Restaurant services provided by them, within the premises of the Hotel, to the employees & guests of SEZ units, be treated as supply of goods & services to SEZ units in Karnataka or not?
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Held that: – On reading Section 16(1)(b) of IGST Act' 2017 & Rule 46 of CGST Rules 2017 together it is clearly evident that the supplies of goods or services or both towards the authorised operations only shall be treated as Supplies to SEZ Developer /SEZ Unit.
–
Since place of provision of services in case of Hotel has been prescribed under the Act 'location of the Hotel' the rendition of services of restaurant, short term accommodation and Banqueting/conferencing cannot be said to have been 'imported o

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r, NASCO ISHANNYA, 27/1, Khanapur Road, Tilakwadi, Belgaum – 560 006, having GSTIN number 29AAACG9426FIZI, have filed an application, on 25.11.2017, for advance ruling under Section 97 of CGST Act, 2017, KGST-Act, 2017 & IGST Act, 2017 read with rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA 01. They also enclosed copy of challan for ₹ 5,OOO/- bearing CIN number UTIB17112900307729 dated 24.11.2017. 2. The Applicant is engaged in hotel business, having hotel "Fairfield Marriott" and provides hotel accommodation & restaurant services. They are providing services to the employees & guests of some of the units in SEZ, Belgavi, in addition to the regular customers. They are charging SGST & CGST at the applicable rates. The SEZ units contended that the services are being supplied / rendered to sez unit only and hence rate of GST is NIL as per provisions of section 16(1)(b) of IGST Act'2017. Therefore the applicant filed this instant app

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aurant services in Belgaum; that the hotel is situated outside the SEZ and also independent of SEZ; that the billing is done on SEZ company for employees of SEZ; that they have not entered into any contract with either SEZ or any unit in the SEZ; that they are not giving any concessional rate to the billings of SEZ at present; that SEZ units contended for concession; that SEZ units gave letter to the hotel to provide billing in their name whenever any of their guest / employee uses the services/ facilities and hence they filed the instant application. FINDINGS & DISCUSSION: 5. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri R.L. Barve, Chartered Accountant during the personal hearing. We also considered the issue/transaction(s) involved on which advance ruling is sought by the applicant, relevant facts of the transaction(s) involved, the applicant s understanding of rate of tax in respect of the

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017 & Rule 46 of CGST Rules 2017 together it is clearly evident that the supplies of goods or services or both towards the authorised operations only shall be treated as Supplies to SEZ Developer /SEZ Unit 9. The place of supply of the services by way of lodging accommodation by a hotel, shall be the location at which the immovable property (hotel) is located or intended to be located, as per Section 12 (3)(b) of the Integrated Goods and Services Tax Act, 2017. Also the place of supply of restaurant and catering services shall be the location where the services are actually performed, as per Section 12 (4) of the Integrated Goods and Services Tax Act, 2017. In the instant case, admittedly, the applicant is located outside the SEZ. Therefore the services rendered by the applicant are neither the part of authorised operations nor consumed inside the SEZ. 10. Since place of provision of services in case of Hotel has been prescribed under the Act 'location of the Hotel' the ren

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2018 (5) TMI 1181 – AUTHORITY FOR ADVANCE RULING – GUJARAT – 2018 (13) G. S. T. L. 211 (A. A. R. – GST), [2018] 2 GSTL (AAR) 97 (AAR) – Rate of GST – applicant is having business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories – whether rate of tax on their supplies made to the recipient would be 12% or 18%? – applicability of Circular No. 28/02/2018GST dated 08.1.2018.
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Held that: – the service recipient has engaged the applicant for running of the canteen for their workers / employees. The rates for the meal, snacks, tea have been fixed and payable by the recipient. Menu is required to be decided by the canteen committee of the recipient. It is, therefore evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor

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2017-Central Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/201 7-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax @ 18% (CGST 9% + SGST 9%). – Advance Ruling No. GUJ/GAAR/R/2018/8 Dated:- 21-3-2018 – R.B. Mankodi (Member) and G.C. Jain (Member) Present for the Applicant : Shri Mehul P. Buch (Consultant) The Applicant M/s. Rashmi Hospitality Services Private Limited has submitted that the applicant is having business of caterers and supply food, beverages and other eatables (non-alcoholic drinks) complete services at various places of their customers who have in house canteens at their factories. The applicant -submitted that applicant normally charges GST @ 18% classifying their services under heading 9963 as outdoor catering.. 2. The applicant has submitted that one of the customer, who is recipient of services, has gi

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n of 'Outdoor Caterer' under Finance Act, 1994 was as under 'Outdoor caterer means a caterer engaged in providing services in connection with catering at a place other than his own but including a place provided by way of tenancy or otherwise by the person receiving such services. 3.3 The applicant further submitted that viewing the above clarification, it is admitted fact that statutory body have to provide food and beverage to their staff and the applicant is the outside contractor providing the service to statutory body, hence whether the above clarification is applicable to them, and what should be the tax rate before the said notification and after notification ? 4.1 The Goods and Services Tax and Central Excise Commissionerate, Kutch (Gandhidham) inter-alia informed that the question under consideration is whether the service provided by the applicant to the client is classifiable under chapter 996311 or otherwise and GST is applicable @ rate 12% or 18%. It is submitt

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18% is applicable on that service. 4.2 It is further submitted that as per contract made between the applicant and the client, the canteen space and all equipments have been provided by the client to the applicant and the applicant is only providing the services pertaining to Food, edible preparation service. It is opined by the Commissinerate that the activity carried out by the applicant appears to be in the nature of cooking of Foods and serving of foods along with edible preparations and it is classifiable as services provided in canteen and other similar establishments (Chapter Heading 996333). 4.3. It is further opined by the Commissionerate that as per classification of services provided vide Notification No. 11/2017-Central Tax (Rate) dated 28 06.2017, the activity carried out by the applicant appears to be in the nature of service provided in canteen and other similar establishments and also classifiable under Chapter Heading 996333 and GST @ rate of 18% is applicable on that

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pany would pay the applicant as per System / Manual Record availing Canteen meal. It is also agreed that the company would pay agreed rate per card punch for using the Normal Meal', per card punch for 'Special Meal', and would pay in cash per piece for snacks and per cup of Tea. It is also agreed that VAT & Service Tax would be paid extra, as applicable. It has also been stipulated that the menu would be decided by the canteen committee from time to time, which will consists of 'limited' and 'unlimited' items as stipulated in the agreement. 7.2 Sr. No. 7 of Notification No. 11/2017-Centra1 Tax (Rate) dated 28.06.2017, as amended, issued under the Central Goods and Services Tax Act, 2017 (herein after referred to as. the 'CGST Act, 2017') and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended issued under the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the 'GGST Act, 2017') provides different r

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rcial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent. Explanation.- declared tariff includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)].] (ii) ….. 6 – (iii)….. 9 -] (iv) * * * * * * *] (v) Supply, by way of or as part of any service or in any other manner whatsoever in outdoor catering wherein goods, being food or any other article for human consumption or any drink (whether or not alcoholic liquor for human consumption), as a part of such outdoor catering and such supply or service is for ca

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e activity undertaken by the applicant is in the nature of supply of service provided by a restaurant, eating joint including mess, canteen and covered by Sr. No. 7(i) of the Notification No. 11/2017-Central Tax (Rate) or it is in the nature of supply of service as a part of outdoor catering and covered by Sr. No. 7(v) of the Notification No. 11/2017-Central Tax (Rate). 8.2 On perusal of the copy of the agreement submitted by the applicant, it is evident that the service recipient has engaged the applicant for running of the canteen for their workers / employees. The rates for the meal, snacks, tea have been fixed and payable by the recipient. menu is required to be decided by the canteen committee of the recipient. It is, therefore evident that the applicant, who is caterer, is providing service from other than his own premises to the recipient. Therefore, the nature of service provided by the applicant is that of outdoor catering service. 8.3 Even though the meal, snacks, teas are pr

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ded by Hon'ble High Court of Allahabad in the case of Indian Coffee Workers' Co-Op. Society Ltd. Vs. CCE & ST, Allhabad [2014 (34) S.T.R. 546 (All.)], wherein it was held as follows – 8. Analyzing the provisions of clause (24) of Section 65 of the Finance Act, 1994, in order to be a caterer, a person should be one who supplies food, edible preparations, beverages (alcoholic or non-alcoholic) or crockery and similar articles or accoutrements for any purpose or occasion. The supply may be made directly or indirectly. Consequently, there has to be, firstly, a supply of food, edibles, beverages or crockery and similar articles or accoutrements. Secondly, this supply may be for any purpose or occasion. A purpose is an effectuation of a particular object. An occasion is an event defined with reference to time which may take place either as an isolated occurrence or be sporadic or periodical. Thirdly, the supply may be directly by the person himself or indirectly through anot

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ity of a canteen which is provided by NTPC or, as the case may be, by LANCO within their own establishments. NTPC and LANCO have engaged the services of the assessee as a caterer. The assessee is an outdoor caterer because the services which he provides as a caterer are at a place other than his own. The place is provided by NTPC and LANCO. The inclusive part of clause (76a) expands the definition to a place provided by way of tenancy or otherwise by the person receiving such services. NTPC and LANCO have engaged the services of the assessee as an outdoor caterer and the assessee is an outdoor caterer because services in connection with catering are provided by it at a place other than a place of the assessee. 10. Consequently, on a plain and literal construction of the provisions of Section 65(105)(zzt) read with the definitions of the expressions caterer and outdoor caterer as contained in clauses (24) and (76a), it is evident that the assessee is subject to the levy of Service

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ed under the CGST Act, 2017 / GGST Act, 2017 or the notifications issued there under. Nevertheless, the observations made in the aforesaid judgement of the Hon'ble High Court are relevant for deciding the present issue. In the said judgement, the Hon'ble High Court has observed that the taxable catering service cannot be confused with who has actually consumed the food, edibles and beverages which are supplied by the assessee. It is also held that the taxability or the charge of tax does not depend on whether: and to what extent the person engaging the service consumes the edibles and beverages supplied, wholly or in part. 9.3. In the present case also, the service of catering is provided by the applicant to the recipient and the fact that the meal, snacks, tea etc. are consumed by the workers / employees of the recipient would not alter the nature of service provided by the applicant. 10. In view of the foregoing, we rule as under – RULING The supply of services by M/s. Rashmi

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2018 (5) TMI 1507 – CESTAT AHMEDABAD – TMI – CENVAT credit – input services – MS Angles, MS Channels, MS plates and MS PIPES etc. used in repair and maintenance of plant and machinery in their factory – Held that: – This Tribunal consistently held that MS Angles, Channels, Beams etc., used in Repair and Maintenance of Plant and Machinery in the factory is admissible to credit – appeal dismissed – decided against appellant-Revenue. – Appeal No E/10444/2018 – A/10570/2018 – Dated:- 21-3-2018 – Dr. D. M. Misra, Member (Judicial) For Appellant (s) Shri K. J. Kinariwala AR For Respondent (s): None Per: Dr. D. M. Misra None present for the Respondent. Heard the Cd. AR for the Revenue. 2. This is an appeal filed against the order-in-appeal No. KCH-EXCUS-000-APP-137-2017-18 dated 20.12.2017 passed by Commissioner (Appeals), Central Excise, and GST-Rajkot. 3. The short issue involved in the present appeal is: whether the appellant are entitled to avail Cenvat credit of the duty paid in respect

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case (supra) after analysing the principle of law of this Tribunal observed as under:- "5. I have considered submissions from both the sides and perused the records. I find that the issue as to whether the goods used for repair and maintenance of plant and machinery are eligible for cenvat credit, stands decided in favour of the Appellant by Hon'ble Rajasthan High Court in the case of Hindustan Zinc Ltd. (supra) wherein Hon'ble High Court has held that MS/SS plates used in the workshop meant for repair and maintenance of the plant and machinery's would be liable for cenvat credit and also by the judgments of Hon'ble Chhattisgarh High Court in the case of Ambuja Cements Eastern Ltd. v. Commissioner of Central Excise (supra) and Hon'ble Karnataka High Court in the case of Commissioner of Central Excise v. Alfred Herbert (India) Ltd. (supra) wherein Hon'ble High Court have held that the inputs used for repair and maintenance of plant and machinery would be el

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even if theoretically possible, is commercially inexpedient. The scope of the expression used in the definition of 'input' in Rule 2(k) of the Cenvat Credit Rules, 2004 – used in or in relation to manufacture of final products, whether directly or indirectly and whether contained the final products or not" is much wider than the scope of the expression "used in manufacture of" and therefore the expression- "used in or in relation to manufacture of final product', whether directly or indirectly" in the definition of input in Rule 2(2) would cover all the goods whose use is commercially expedient in manufacture of final products. 5.3 Repair and maintenance of plant and machinery is an activity without which smooth manufacturing is not possible. Commercially, manufacturing activity is not possible with malfunctioning machines, and leaking tanks, pipes and tubes. Therefore the activity of repair and maintenance of plant and machinery is an activity whic

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2018 (5) TMI 1524 – CESTAT AHMEDABAD – TMI – Short payment of service tax – whether the appellant had short paid service tax of ₹ 2,44,017/- during the period 2011-12? – Held that: – appellant had categorically claimed that out of the total short payment of ₹ 2,44,017/- an amount of ₹ 1,86,262/- has been paid in the Financial Year 2012-13, as provision was only made in the year 2011-12, whereas bills were raised subsequent year 2012-13 – This fact needs to be verified by the Adjudicating Authority and the re-determination of the liability be carried out accordingly – appeal allowed by way of remand. – Appeal No ST/10437/2018 – A/10569/2018 – Dated:- 21-3-2018 – Dr. D. M. Misra, Member (Judicial) For Appellant (s) : None F

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reas in the returns, the appellant had paid ₹ 36,58,459/ resulting into short payment of ₹ 2,44,017/- It is their contention that a part of the said amount i.e. ₹ 1,86,262/- is attributable to the provision of ₹ 18,08,368/- made in the books of accounts in the Financial Year 2011-12, for which the bills were raised in the subsequent Financial Year 2012-13, and accordingly service tax amount was paid in 2012-13. The remaining amount has not been disputed by them. 5. Ld. AR for the Revenue submits that since the issue was not raised before the Adjudicating Authority, therefore, it could not be verified. 6. I find that the appellant had categorically claimed that out of the total short payment of ₹ 2,44,017/- an a

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2018 (5) TMI 1704 – AUTHORITY FOR ADVANCE RULING – KARNATAKA – 2018 (13) G. S. T. L. 255 (A. A. R. – GST), [2018] 2 GSTL (AAR) 104 (AAR) – Levy of GST on rent payable by a Hospital, catering life saving services – appellant have taken premises of one floor on rental basis from existing building of Mallige Hospital for heart Care Services only – Rental or leasing services involving own or leased non-residential property – purview /jurisdiction of authority under Section 97(2) (e) of the CGST Act 2017.
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Held that:- The Applicant has taken the premises on lease and running exclusive heart care centre & providing health care services on commercial basis – The impugned service of Rental or leasing services involving own or leased non-residential property is classified under the heading (SAC) 997212 and is taxable under GST. Further no specific exemption is available under any notification for the time being in force for the said service. Also there is no provision available in the Act

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of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01. They enclosed copy of challan for ₹ 10,000/- bearing CIN number PUNB18012900027179 dated 05.01.2018 towards the fee for advance ruling and hence the same is admitted. 2. The applicant is a cardiology specialised hospital running on a premises taken on lease. They are providing cardiology related, life saving, health care services to the patients and the said output services are exempt from GST. They have taken premises of one floor on rental basis from existing building of Mallige Hospital for heart Care Services only. 3. The applicant sought advance ruling on the question / issue that "Whether GST is leviable on the rent payable by a Hospital, catering life saving services?" PERSONAL HEARING: / PROCEEDINGS HELD ON 09.02.2018. 4. Dr.Mahantesh Charanthimath, Chairman and Managing Director of the applicant concern appeared and filed written submissions presenting the following: (a) That the business enterprise

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g bearing on the question / issue raised, the applicant's understanding / interpretation of law in respect of the issue. 6. The Applicant sought advance ruling on the question that whether GST is leviable on the amount of rent paid/payable by them towards leasing of the premises by the hospital or not, which clearly falls under the purview /jurisdiction of this authority under Section 97(2) (e) of the CGST Act 2017. 7. Renting in relation to immovable property is defined at 2(zz) of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as (zz) "renting in relation to immovable property" means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property; The Applicant has taken the premises on lease and runn

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2018 (5) TMI 1737 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (13) G. S. T. L. 224 (A. A. R. – GST), [2018] 2 GSTL (AAR) 102 (AAR) – Levy of GST on Health care services – diagnosis, pre & post counseling therapy and prevention of diseases by providing sophisticated and relevant tests – N/N. 12/2017- Central Tax (Rate) dated 28th June, 2017 – Whether the Applicant qualifies as clinical establishment? – Whether the services provided by the applicant qualifies to be health care services?
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Clinical Establishment – Held that:- The applicant offers services/facilities requiring diagnosis such as patient counselling, suggesting the relevant test for the patient, collecting samples, obtaining the result of the test, sharing the test results and post counselling. The medical team of the applicant discusses with the oncologist/pathologist, takes samples of required tissues and send it for the tests to US/Germany, with regard to the oncology/auto immune deceases. They play the role of

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KAR ADRS 5/2018 Dated:- 21-3-2018 – Sri Harish Dharnia, Joint Commissioner of Central Tax And Dr. Ravi Prasad M. P., Joint Commissioner of Commercial Taxes (Vigilance) RULING 1. M/s Sayre Therapeutics Pvt. Ltd., Bengaluru, ('the applicant') is a registered taxable person registered under the Central Goods and Services Tax Act, Karnataka Goods and Services Tax Act and Integrated Goods and Services Tax Act, The applicant is involved in the diagnosis, pre and post counselling, therapy and prevention of diseases by providing tests that are sophisticated and relevant. 2. The applicant is a healthcare company dealing with oncology ajid immunology therapy and diagnostics related products. They in-licenses medicines, secures regulatory approvals post clinical studies and then commercialises novel drugs, devices and molecular diagnostics in therapeutic areas, i.e. oncology and auto immune disorders, thereby transforming patient care. The applicant is specifically working in precision d

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, is a microarray based gene expression test that aids in identifying challenging tumours, including metastatic, poorly differentiated and undifferentiated cancers. This test assumes significance, as current day precision therapy can be effective only if the site of origin is known. Similarly, they have collaborated with a molecular diagnostic company from Germany to provide advance genetic diagnostics tests that help in prevention and management of cancers and blood disorders, In all these diagnostic tests, die Medical team of the applicant is involved in the complete cycle of testing process beginning with patient counselling to sharing the results and post-test counselling. Thus, the applicant is involved in diagnosis, pre- and post-counsel ling, therapy and prevention of diseases by providing tests that are sophisticated and relevant. (c) The Entry No. 74 of Notification 12/ 2017- Central Tax exempts health care services at clinical establishment, an authorised medical professional

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ers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. (e) As per sub-section (47) of section 2 of the Central Goods and Services Tax Act, exempt supply means supply of any goods or services or both which attracts ml rate of tax which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Semces Tax Act, and includes a non-taxable supply. (f) Based on the above notification, services provided by the applicant meets the requisite criteria and qualifies as health care services and hence is nil rated supply. FINDINGS & DISCUSSION: 5. We have considered the submissions made by the Applicant in their application for advance ruling as well as during the personal hearing on 09-01-2018. We have a

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from the patients, transport the samples for the relevant test, collect the test result, discuss with the ancologist and clarify the queries, based on which the ancologist recommend the treatment options to the patient. 7. Health care services provided by clinical establishments, an authorised medical practitioner or para-medics are exempted vide Sl.No.74 of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017. Therefore the issue/s before us to decide are a. Whether the Applicant qualifies as clinical establishment? b. Whether the services provided by the applicant qualifies to be health care services? 8. We proceed to answer the questions as under; Clause 2(s) of the Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 defines clinical establishment as under: clinical establishment3' means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatme

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cation No. 12/2017- Central Tax (Rate) dated 28th June, 2017 defines Health Care Services as under: (zg) health care services means any service by way of diagnosis or treatment or care for illness, injury deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; 11. In the instant case the Applicant is involved in providing the services of diagnosis, pre & post counseling! therapy and prevention of diseases by providing tests that are sophisticated and relevant. The medical team of the applicant is involved in the complete cycle and hence they facilitate the diagnosis process and therefore the services provided by the applicant qu

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2018 (6) TMI 111 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA – 2018 (13) G. S. T. L. 251 (A. A. R. – GST), [2018] 2 GSTL (AAR) 103 (AAR) – Classification – Nature supply – divisible contract [Supply of goods & Supply of Services] or an indivisible contract [works contract] – Construction of power lines, erection of transmission towers and transformers – single composite contract, but with three connected agreements for Supply of Materials, Erection and Civil Works respectively – KPTCL is a Government body or not – Whether the contract, executed by them for KPTCL, is a divisible contract [Supply of goods & Supply of Services] or an indivisible contract [works contract]? – Whether the tax rate of 12% [CGST-6% + SGST-6%] is applicable to the contract, in pursuance of N/N. 24/2017-Central Tax (Rate) dated 21.09.2017?
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Held that:- The composite supply of works contract as defined at Section 2 clause 119 of CGST Act 2017 is treated as supply of service in terms of serial no.6, Schedule

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e Government – Further M/s KPTCL, who awarded the contract to the applicant, are registered under Companies Act 1956 as a company and is a separate entity. Therefore it can not be considered as the State Government or a State Government Authority. Hence the applicant is not entitled for the benefit of the concessional rate of GST @ 12%, in terms of N/N. 24/2017-Central Tax (Rate) dated 21.09.2017.
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Ruling:- The contract contract entered by the applicant is of the nature of 'indivisible' and squarely falls under the works contract, which is a service – The Applicant is not entitled for the benefit of concessional rate of GST @12% in terms of Notification No.24/2017-Central Tax (Rate) dated 21.09.2017. – Advance Ruling No. KAR ADRG 3 of 2018 Dated:- 21-3-2018 – MR. HARISH DHARNIA MEMBER AND DR. RAVIPRASAD, MEMBER RULING 1. M/s Skilltech Engineers 6s Contractors Private Ltd., (hereinafter referred to as 'Applicant') holding GSTIN number 29AACCS5473FIZ0, having registered add

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rms and conditions are commonly applicable to all the three agreements. 3. The applicant sought advance ruling on the following questions/issues that 1. Whether the contract, executed by them for KPTCL, is a divisible contract [Supply of goods & Supply of Services] or an indivisible contract [ works contract]? 2. Whether the tax rate of 12% [CGST-6% + SGST-6%] is applicable to the above contract, in pursuance of Notification No.24/2017-Central Tax (Rate) dated 21.09.2017? PERSONAL HEARING PROCEEDINGS HELD ON 09.01.2018. 4. Sri. L Arun Kumar, Executive Director of the applicant concern appeared and presented the following: (a) That a single bid/tender was called for by KPTCL, for composite activities of Supply of material, Erection of the same & Civil Works associated with the erection. (b) That three separate agreements were entered into for the three different activities, after identifying the successful bidder. (c) That the question on which advance ruling has been sought for

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Whether the tax rate of 12% [CGST-6% + SGST-6%] is applicable to the above contract, in pursuance of Notification No.24/2017-Central Tax (Rate) dated 21.09.2017? 7. In view of the above the issues before us to decide are (1) whether the contract entered by the applicant falls under works contract or not and (2) Whether the applicant is entitled for concessional rate of GST under Notification No.21/2017-CentralTax (Rate). 8. Section 2 clause 119 of CGST Act'2017 defines works contract as a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; 9. The composite supply of works contract as defined at Section 2 clause 119 of CGST Act'2017 is treated as supply of service in terms of serial no.6, Schedule

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ighlighted the words 'State Government'. Also on the next page they have submitted a bullet point KPTCL is covered under the definition of State Government . 12. The Applicant therefore contends that they are providing services to 'State Government' and are thus eligible for the tax rate enumerated in the aforesaid notification. 13. A statutory body, corporation or an authority created by the Parliament or a State Legislature is neither 'Government' nor a local authority'. Such statutory bodies, corporations or authorities are normally created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b) and article 154(2)(b) of the Constitution respectively. It is a settled position of law (Agarwal v. Hindustan Steel AIR 1970 Supreme Court -1150) that the manpower of such statutory authorities or bodies do not become officers subordinate to the President under article 53(1) of the Constitution and similarly to the Gover

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2018 (6) TMI 518 – AUTHORITY FOR ADVANCE RULINGS, GUJARAT – 2018 (14) G. S. T. L. 147 (A. A. R. – GST), [2018] 2 GSTL (AAR) 96 (AAR) – Job-work or not? – Activity of manufacturing industrial gases viz. Oxygen, Nitrogen and Argon – transition to GST regime – Valuation – related party transaction or not? – Whether the activity undertaken by the applicant amounts to “Job Work” as defined under Section 2(68) of the Central Goods and Services Tax Act, 2017? – What is the value on which the applicant is liable to pay GST?
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Held that:- It is clear that the Atmospheric Air used by the applicant belongs to M/s. Essar. Thus, all the inputs viz. Atmospheric Air, Industrial Water and Electricity belongs to M/s. Essar – As all the necessary ingredients of the definition of ‘job work’ are fulfilled in this case, the activity of manufacturing of industrial gases viz. Oxygen, Nitrogen and Argon by the applicant amounts to ‘Job Work’ as defined under Section 2(68) of the said Acts – it is eviden

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s. Essar to the applicant for the agreed activity to be carried out by the applicant – The value of supply by the applicant shall be the transaction value, which is the price actually paid or payable for the said supply as Job Charges, in view of sub-section (1) of Section 15 of the said Acts.
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Ruling:- The activity undertaken by the applicant falls under the ‘Job Work’ as defined under Section 2(68) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 – The applicant is liable to pay Goods and Services Tax on the value of supply determined under Section 15(1) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017. – Advance Ruling No. GUJ/GAAR/R/2018/7 (In Application No. Advance Ruling/SGST&CGST/2017-18/AR/16) Dated:- 21-3-2018 – Mr. R.B. Mankodi, Member And Mr. G.C. Jain, Member For The Applicant : Shri Rohit Jain, Advocate RULING The applicant M/s. INOX Air Products Private Limited (herein a

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city and industrial water remains with M/s. Essar and M/s. Essar is also the owner of the gases manufactured by the applicant using the said electricity and water. 2.2 It is submitted that the gases so produced are further captively consumed by M/s. Essar in its steel manufacturing operations. In order to ensure continuous availability of the gases, the applicant s gas plant is located at a designated land within the premises of the Steel Plant. The applicant has obtained a separate GST registration for this premises. 2.3 The mechanics of the transaction and consideration payable by M/s. Essar to the applicant for the manufacture and supply of gases is as follows :- a. The applicant will raise a daily invoice for the fixed and variable job work charges for each product, based on the quantum cleared on that day; b. At the end of each month, the applicant will raise a supplementary invoice for additional consideration for the gases supplied in that month, equivalent to the difference bet

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ant was acting as a job worker for Essar, the valuation was carried out as per Rule 10A of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000 (herein after referred to as the Central Excise Valuation Rules, 2000 ). Further, since the gases were captively consumed by M/s. Essar, Rule 8 of Valuation Rules was also pertinent, which mandated the payment of Central Excise Duty on the cost of manufacturing plus a ten per cent mark-up. In light of Rule 10A read with Rule 8 of the Valuation Rules, the applicant discharged the Central Excise Duty on an assessable value comprising of the following: (a) Job Work Charges payable by Essar to applicant; (b) The value of electricity and industrial water provided by Essar; (c) Notional rent for the designated land; (d) Escalation on account of WPI / CPI Plus a ten per cent mark-up on the aforesaid. 2.5 In view of the above, the applicant raised following issues for determination before this authority :- (i) Whether the activity

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he applicant uses its air separation plant to separate the Oxygen, Nitrogen and Argon by liquefying and separating the atmospheric air. Accordingly, it is pertinent to note that activity of manufacture of gases by Air Separation Unit ( ASU ) requires three primary ingredients viz. air, electricity and water for separation of the atmospheric air. These raw materials and inputs are supplied to them by M/s. Essar and the said activity of separation of air to obtain gases is done on behalf of M/s. Essar only. Therefore, the transaction in the present case clearly classifies as a job work transaction. They submitted that as clarified by the Circular D.O.F. No. 334/4/2006-TRU dated 28.02.2006 issued by the Ministry of Finance, which has reiterated the settled law (UOI Vs. Playworld Electronics Private Ltd. – AIR 1990 SC 2002), that in order to determine the taxability of a transaction, it is essential to determine its true commercial nature. It is submitted that the perusal of various clause

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gases by the applicant. The said inputs are processed by the applicant for manufacturing the industrial gases by employing its plant and personnel, and the applicant has no rights whatsoever to the resultant gases. It is submitted that in view of the commercial arrangement outlined above, the activity undertaken by the applicant on behalf of M/s. Essar is clearly a job work activity. 4.2 It is submitted that from the provisions of the CGST Act, 2017, there are three essential requirements to be fulfilled by the applicant in the present case to term the present transaction as job work, namely : (a) The activity undertaken by the company should qualify as a treatment or process , (b) The treatment or process undertaken should be on goods i.e. the raw materials/ inputs involved in the present cases should fall within the ambit of term goods, (c) The goods should belong to Essar . 4.3 The applicant submitted that as the terms treatment or process have not been defined under the GST laws, r

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resent case on the goods. Therefore, condition (a) mentioned above is fulfilled in the present case. 4.4 The applicant submitted that the raw materials / inputs on which the treatment / process undertaken by the applicant should qualify as goods . In this regard, they referred to definition of term goods given in section 2(52) of the CGST Act, 2017. They also referred to the definitions of goods given under some of the erstwhile Sales Tax and VAT legislations. It is submitted that in the context of the definition of goods under the Sales Tax and VAT legislations, the Hon ble Supreme Court has examined and ruled on the issue of whether electricity constitutes goods . They referred to the decision of Hon ble Supreme Court in the case of Commissioner of Sales Tax, M.P., Indore Vs. M.P. Electricity Board, Jabalpur [1970 (25) STC 188] and State of Andhra Pradesh Vs. National Thermal Power Corporation Ltd. and Ors. [(2002) 3 SCR 278] and submitted that electricity is in the nature of moveabl

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r as the payment for procurement of the same to the Government authorities is also done by M/s. Essar only. Further, this is also evident on perusal of clause 4 of the Agreement. As regards the Air used by the applicant for manufacture of the industrial gases, they submitted that the following aspects need to be examined to conclude on the issue of ownership of the air viz. (i) statutory position; and (ii) position under the commercial arrangement. They submitted that it is a settled position in law that the owner of land is also the owner of the vertical column of air above the land. This position derives from the Latin maxim cuius est solum, eius est usque ad coelum et ad inferos, and has been legislatively recognized under the Indian Easements Act, 1882 at Section 7 thereof. It is submitted that the said provision clearly states that the ownership of land includes ownership of the air vertically above the land and this principle has also been judicially accepted in a plethora of dec

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led in the present case. 4.6 The applicant submitted that as all the conditions required to be fulfilled by the applicant in order to fit into the definition of the term job work are satisfied, the present transaction would be construed as a job work transaction and the applicant would be considered as a job worker of Essar. 5.1 As regards the valuation, it is submitted that the valuation of the present transaction would be transaction value as determined in accordance with Section 15(1) of the CGST Act, 2017 i.e. the price actually paid or payable when the following two conditions are satisfied : – The supplier and the recipient of the supply should not be related, and – Price should be the sole consideration for the supply They referred to the decisions in the cases of Commissioner of Central Excise Rajkot Vs. Jai Bharat Steel Industries [2005 (192) ELT 792 (Tri.-Mumbai)], maintained in Supreme Court [2016 (340) ELT A138 (SC)] and Eicher Tractors Ltd. Vs. Commissioner of Customs, Mum

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lly payable or paid and in the present case, the price actually paid or payable is the job work charges, therefore, GST in the present transaction would be payable only on the job work charges paid by M/s. Essar to the applicant. 6. The applicant also submitted that they only process the goods supplied by M/s. Essar to manufacture those goods into industrial gases. The activity of processing applied to another person s goods is a supply of service by virtue of Section 7(1)(d) read with Entry 3 of Schedule II of the CGST Act, 2017 which provides that any treatment or process which is applied to another person s goods is a supply of services . Accordingly, the process undertaken by the applicant in the present case on the goods belonging to M/s. Essar would be considered as a Supply of Service and GST on the said transaction would be payable only on the processing charges collected by the applicant from M/s. Essar. 7.1 The applicant filed further submission vide letter dated 16.11.2017,

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st. In fact, as per their agreement (Para 4.3.2 Page 25), earlier they were paying Central Excise duty. The gases produced are further captively consumed by M/s. Essar in its steel manufacturing operations. The applicant s claim that they have obtained a separate GST registration for location at designated land of Essar is not correct as the applicant has mentioned it as their additional place of business and GST Registration s copy has been submitted. 8.2 The definition of job work under Section 2(68) under the CGST Act, 2017 has been referred and it is submitted that the job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person; that the person who is treating or processing the goods belonging to other person is called job worker and the person to whom the goods belong is called principal . 8.3 With respect to the submissions made by the applicant at Para 4.1.2 of the submissions wherein it has been stated that the activit

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goods, supplied by M/s. Essar, on which any treatment or process is undertaken by the applicant to manufacture industrial gases. Therefore, the activity of the applicant does not meet the definition of job work given in the CGST Act, 2017 as it does not involve any treatment or process on goods belonging to another registered person. It is evident that the applicant is involved in an activity which is not job work but manufacture and supply of a completely new item i.e. industrial gases which are goods in terms of section 2(52) of the CGST Act, 2017. 8.4 Further, as the process undertaken amounts to manufacture, the applicant was registered with the Central Excise department as a manufacturer and discharging Central Excise liability towards clearances to M/s. Essar. Even the clause 2(c) of Schedule 2 of CGST Act, 2017, mandates that any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration a

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ant amounts to Job Work as defined under Section 2(68) of the CGST Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the GGST Act, 2017 and the CGST Act, 2017 and the GGST Act, 2017 have been collectively referred to as the said Acts ). The term job work has been defined under Section 2(68) of the said Acts as follows :- job work means any treatment or process undertaken by a person on goods belonging to another registered person and the expression job worker shall be construed accordingly; 10.2 The applicant has submitted that the essential requirements to be fulfilled by them to term the present transaction as job work includes that the treatment or process undertaken should be on goods, and that these goods should belong to Essar. 11.1 The definition of the term goods has been given under Section 2(52) of the said Acts as follows :- goods means every kind of movable property other than money and securities but includes actionable claim, growing

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merely because electric energy is not tangible or cannot be moved or touched like, for instance, a piece of wood or a book, it cannot cease to be movable property when it has all the attributes of such property. It is needless to repeat that it is capable of abstraction, consumption and use which, if done dishonestly, would attract punishment under s. 39 of the Indian Electricity Act, 1910. It can be transmitted, transferred, delivered, stored, possessed etc. in the same way as any other movable property. Even in Banjamin on Sale, 8th Edn., reference has been made at page 171 to County of Durham Electrical, etc., Co. v Inland Revenue(1) in which electric energy was assumed to be goods . If there can be sale and purchase of electric energy like any other movable object we see no difficulty in holding that electric energy was intended to be covered by the definition of goods in the two Acts. The applicant has submitted that similar view has been adopted by the Hon ble Supreme Court of In

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has been held that the term processing is a much wider term. In our opinion, the expressions further processing and any other purpose mentioned in Rule 4(5)(a) are fairly wide and would take their colour from the processes mentioned in the definition of input . As such the generation of electricity or steam as intermediate products would fall within the scope of these expressions, and would amount to job work (c) S.B. Sarkar s Word & Phrases of Excise, Customs & Service Tax, 4th Edition : Process means Prepared, handled, treated or produced by a special process (d) Websters Dictionary : Processing means to subject to some special process or treatment; to subject (esp. raw material) to a process of manufacture, development or preparation. 12.3 The applicant carries out activity of manufacturing industrial gases viz. Oxygen, Nitrogen and Argon by undertaking treatment or process on the goods viz. Atmospheric Air and Industrial Water. 13.1 As per the definition of Job Work such tr

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ailability / accessibility, as applicable, of/to each of the inputs. 4.1.2 ESSAR agrees to provide to INOXAP the Inputs (free of charge) at the INOXAP Facility to enable INOXAP to meet its obligations in relation to the Manufacturing Activity and to generate the Guaranteed Quantity (which obligations are contingent upon supply of the Inputs) under this Agreement. For the avoidance of doubt, the Parties agree that ESSAR shall at all times during the Term continue to provide the auxiliary power (free of charge) in accordance with Clause 12.1.3 of Schedule 1 at the INOXAP Facility. 13.3 As regards Atmospheric Air, which required for manufacturing industrial gases viz. Oxygen, Nitrogen and Argon, there is no reference in the agreement. In this regard, the applicant has submitted that the owner of the land is also the owner of the vertical column of air above the land, which position derives from the Latin maxim cuius est solum, eius est usque ad coelum et ad inferos (Translated : For whoev

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s ownership of the air vertically above the land. This principle has also been judicially accepted in a plethora of decisions. In light of the settled principle of law, the ownership of land extends to the ownership of the air vertically above it. Accordingly, the air (above the land which is owned by ESSAR), clearly belongs to ESSAR. It is also submitted by the applicant that in terms of the arrangement between the parties, M/s. Essar is required to provide land and all other inputs for the processing of gases by INOXAP. Since the owner of the land would own the ambient air above its land, in effect, M/s. Essar has provided the same to INOXAP in terms of the arrangement (along with electricity, industrial water etc.) 13.4 In view of the aforesaid statutory position and commercial arrangement, it is clear that the Atmospheric Air used by the applicant belongs to M/s. Essar. Thus, all the inputs viz. Atmospheric Air, Industrial Water and Electricity belongs to M/s. Essar. 14.1 As all th

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e goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then, – (i) …….. (ii) …….. (iii) …….. Provided that ……….. Explanation. – For the purposes of this rule, job-worker means a person engaged in the manufacture or production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him. Thus, it is evident that under the Central Excise regime also, the applicant was discharging duty under Rule 10A of the Central Excise Valuation Rules, 2000, which Rule was applicable where the excisable goods were produced or manufactured by a job-worker, on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorized by him. 14.4 Therefore, taking all these aspects into consideration, we hold th

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med to be related persons if – (i) such persons are officers or directors of one another s businesses; (ii) such persons are legally recognised partners in business; (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or; (viii) they are members of the same family; (b) the term person also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. 15.2 The applicant and M/s. Essar are not related persons as defined under Explanation (a) and (c) of Section 15 of the said Acts. 15.3

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GST – States – F-10- 13/2018/CT/V (26) – Dated:- 21-3-2018 – Government of Chhattisgarh Commercial Tax Department Mantralaya, Mahanadi Bhawan, Naya Raipur Notification Naya Raipur, Dated: 21.03.2018 No. F-10- 13/2018/CT/V (26) – In exercise of the powers conferred by Section 99 the Chhattisgarh Goods and Services Tax Act, 2017, State Government, hereby Constitutes Chhattisgarh Appellate Authority for Advance Ruling for Goods and Services Tax, from the date of issue of this notification and appo

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2018 (6) TMI 1127 – AUTHORITY ON ADVANCE RULINGS, KARNATAKA – 2018 (13) G. S. T. L. 228 (A. A. R. – GST), [2018] 2 GSTL (AAR) 100 (AAR) – Levy of GST – Composite supply – natural bundle of services – Sub-contract – Whether supply of turnkey Engineering, Procurement & Construction (EPC) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017? – If Yes, Whether the Principal Supply in such case can be said to be ‘Solar Power Generating System’ which is taxable at 5% GST? – Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors?
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Whether supply of turnkey EPC Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017? – Held that:- The different goods and /or servic

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nent of PV Modules is procured by the owner himself. Therefore the same cannot be construed as a principal supply by the applicant. Therefore this question does not remain relevant.
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Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors? – Held that:- The sub-contractor is an individual supplier and the rate of GST applicable depends on the type of supply and no concessional rate of GST is provided to sub-contractor on the basis of main contractor. Hence the supply made by sub-contractor need to be viewed as an individual supply and thereby the appropriate rate of GST has to be applied.
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Ruling:- The major component (PV Module) said to have been constituting 70% of the whole project can not be construed to be supplied by the applicant consequent upon High Sea Sale of the said product and hence it cannot be construed to be a principal supply of the project and thereby cannot be a composite suppl

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e solar photovoltaic plants for supply of power generated. The contracts are for supply of goods as well as services. The applicant has sought advance ruling in respect of the following questions: a) Whether supply of turnkey Engineering, Procurement & Construction ( EPC ) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017. b) If Yes, Whether the Principal Supply in such case can be said to be Solar Power Generating System which is taxable at 5% GST. c) Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors. 4. The applicant furnishes, in exhibit II to the application, some facts relevant to the stated activity: a. The applicant is an EPC contractor & enters into contract with various developers who desire to set up and operate solar photovoltaic plants for supply of power

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tting up of the solar power plant as well as transmission lines for transmission of the electricity generated up to the storage or the GRID. e. There may be a single lump sum price for the entire contract for supply of both goods and services and payment terms may be defined depending on various milestones. The applicant also provided a diagrammatic illustration of the solar power system. 4. The applicant, in Exhibit III to the application, has furnished their understanding of rate of tax / exigibility in respect of the impugned transaction, on the basis of the following grounds: 4.1. Legal provisions and applicability 4.1 . 1 Rate of solar power generating system Under GST regime, various rates have been prescribed for goods and services. Per, Notification No. 1/2017 – Integrated tax (Rate) dated 28 Jun 2017, solar power generating systems and parts for their manufacture are taxable at 5%. The relevant entry reads as follows: Chapter Heading Description 84 or 85 or 94 Following renewa

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o a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply'. Section 2(90) defines principal supply as -principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary'. Further, mixed supply has been defined under the Act as mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply . Hence, for mixed supply there should be a single price and entire contract gets taxed at the supply with highest rate of tax. 4.1.3 Concept of works contract Works contract has been defined under

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contract (including_ services, portion) should be taxable at 5%. 4.2. Ambit of composite supply 4.2.1. Wide ambit of term 'Composite Supply' Composite Supply has been defined in Section 2(30) of the Central Goods and Services Tax Act, 2017 as 'composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;' Further, Principal Supply has been defined in Section 2(90) of the CGST Act as 'principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary' Thus, principal supply refers to the supply which is the predominant element in a composite supply. Illustration as provided in GST la

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turally bundled c) The taxable supplies should be supplied in conjunction with each other d) One taxable supply should be a principal supply In such case, the supply which is the principal supply is treated as the main supply and the entire transaction is taxed as per the principal supply. In the present case, the Applicant would like to submit that the main intent of the contract is provision of the solar power generation system which consists of various components such as modules, structures, inverter transformers, cables, SCADA, transmission lines, etc. Services like civil construction are merely incidental to provision of such goods and form an ancillary part of the contract. It is submitted that service portion of the contract is only -10 to 15% and balance is supply of goods. This also substantiates the fact that provision of services is incidental to supply of goods and hence, the supply of goods should form the principal supply and the entire contract should be taxed as supply

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enerating system'. 4.2.2. Wide ambit of term 'solar power generation system' The term 'solar power generating system' has not been defined under GST. Solar power generating system generally are the systems which absorb sunlight and convert it into electricity which can be put to further use. Solar power system has been defined under Solar Power – Grid connected Ground Mounted and solar Rooftop and metering Regulation 2014 issued by State of Goa. Solar power system as per the regulation means 'a grid-connected solar generating station including the evacuation system up to the Grid inter-connection point'. Typically the term system has a wide ambit. As per the Oxford Dictionary, the definition of the term 'system is -a complex whole, a set of things working together as a mechanism or interconnecting network . Similarly, the system is defined in Chambers 20th Century Dictionary as anything formed of parts placed together or adjusted into a regular and conne

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he whole system is a Solar Power Generating System and is entitled for the benefit of notification. Therefore, the denial of benefit of notification by the adjudicating authority is not sustainable. The impugned order is set aside and the appeals are allowed'. Further, in the case of Bangalore Tribunal in the case of B.H.E.L. vs. Commissioner of Central Excise, Hyderabad it was held that In the present case, the appellants have claimed exemption in respect of inverter charger card as solar power generating system. The appellants actually manufactured SPV lantern. The above lantern required electricity for its working. It is possible to convert solar energy to electricity with the help of inverter charger manufactured by the appellants. The Dy. General Manager has certified that the inverter merger constitutes solar power generating system as it performs the function of generating the required high frequency AC power from Sunlight with, the help of SPV module and supplying it to the

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Section 66F (3) of the Finance Act, 1994 (the Finance Act') two rules have been prescribed for determining the taxability of such services The rules prescribed are explained as under: 1. If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character' 2. If various elements of a bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of a service which attracts the highest amount of service tax. The concept of naturally bundled services was explained in the Education Guide issued by the CBEC in the year 2012 (the Education Guide'). The relevant extract of the Education Guide is reproduced as under for case of reference: Bundled service means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of an

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ry course of business would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below – * The perception of the consumer or the service receiver. If large number of service receivers of such bundle of services reasonably expect such services to be provided as a package then such a package could be treated as naturally bundled in the ordinary course of business. * Majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines * The nature of the various services in a bundle of services will also help in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the oth

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be drawn: * In case more than two supplies are supplied together wherein one of the supply is principal supply would qualify as composite supply. * Further, goods supplied under the composite supply are supplied in conjunction with each other. Also, such composite supply is supplied in the ordinary course of business. * The composite supply would qualify as supply of the principal supply. Taxes would be applicable as on such principal supply. Drawing reference to the above, it is submitted that the customer perceives the entire contract is for supply of solar power generating system as the intent of both the parties is supply of the goods/ system which would help in generation of electricity. Hence, the entire contract (both goods and services) and bundled and linked wherein the main intent is provision of the goods which constitute solar power generating system. 4.2.4. Global Jurisprudence – Meaning of Composite Supply The concept of 'composite supply' is a global concept and

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rately there can be little doubt that the sale of the completed vehicle is a single supply. Like a motor vehicle, spectacles are customarily bought as a completed article and in such circumstances are treated as such by the purchaser. The cost that either the frame or the lenses may be purchased separately is not to the point. Similarly the fact that one component, the lenses, is GST-free or that one component is subject to a discount does not alter the characterisation. • In the case of Saga Holidays, Stone J focused on the 'social and economic reality' of the supply and found that there was a single supply of accommodation and the adjuncts to that supply (including the use of the fitrniture and facilities within each room, cleaning and linen services, access to common areas and facilities such as pools and gymnasiums and various other hotel services such as porterage and concierge) were incidental and ancillary to the accommodation part of the supply.' Per the above,

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rded as ancillary to a principal service if it does not constitute for customers an aim in itself but a means of better enjoying the principal service supplied'. Per the above principal, in the present case also, what the customer wishes or intends to obtain is the main supply of solar power generating system and services are only a means to enjoy the same and hence, services are incidental to the main supply of goods. 4.2.4.3. United Kingdom Under the UK VAT laws, a multiple supply (also known as a combined or composite supply) involves the supply of a number of goods or services. The supplies may or may not be liable to the same VAT rate. If a supply is seen as insignificant or incidental to the main supply, then for the purposes of VAT it is usually ignored – the liability is fixed by the VAT rate applicable to the main supply (or supplies). In the case of Tumble Tots (UK) Ltd v R & C Commrs [2007] BVC 179. Members of a playgroup received a T-shirt (children's clothing i

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osite supply. Further, in terms of Section 2(90) of CGST Act, principal supply means the supply of goods or services which constitutes predominant element of a composite supply. Further, as per Section 8, in case of composite supply, the taxes applicable on principal supply would be applicable on the composite supply. In the present case, the intention of both the parties is to supply the whole of solar power generating system in totality which consists of various goods and services are incidental to provision of such goods. What the customer wants is a functional solar power system and services such as erection, commissioning etc are only a means to provide the main supply of goods. 4.4. Contract does not constitute works contract It is submitted additionally that works contract is also defined as a composite contract and includes a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovat

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fit would also be available to sub-contractor 4.5.1 In certain cases, the turnkey contractor engages various sub-contractors (manufacturers/supplies/ sub-contractors) who further supply the goods to such contractor or engage in provisioning of certain portion of the turnkey contract. 4.5.2 Further, there may be cases wherein the Developer divides the EPC contract between two separate EPC contracts of construction of solar power generation system. 4.5.3 Notification no. 1/2017-Integrated Tax (Rate), which provides concessional rate on solar Power generating system does not specify the persons who would be eligible for concessional rate of 5% i.e. developer, EPC contractor or manufacturer/ supplier/ sun-contractor. 4.5.4 Since the concessional rate of 5% is provided to renewable energy products and parts thereof, the same should be applicable to all suppliers providing such products as long as it can be established (through certification or otherwise) that these are to be used in solar p

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ncipal supply. Other services, erection, testing and commissioning of solar power plants are ancillary to the supply of solar power generating system and hence, entire contract (including all goods as well as services) should qualify as solar power generating system taxable at 5%. * Concessional rate of 5% for supply of solar power generating system or its parts should also be available to sub-contractors. Further to above submissions, we most respectfully pray that: 1. Allow us to reiterate all the submissions without prejudice to one another; 2. Grant a personal hearing put forth our contentions and explain our submissions before passing any order in this regard; 3. Allow us to amend, alter and add to the present reply; 4. Allow us to produce additional documents and other material during the time of Personal Hearing; and 5. In that behalf pass such other orders and directions as may be deemed proper and necessary. PERSONAL HEARING: / PROCEEDINGS HELD ON 09.02.2018. 5. The Applicant

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ing the applicant made the following additional written submissions. 6.1 The Applicant has put forth the argument that the proposed transaction/ Contract is one for supply of 'Solar Power Generating System' as a whole and hence the rate of GST should be 5%. In furtherance to the same the applicant puts forth as follows: (a) The intent of the parties is always for supply of Solar Power Generating system as a whole. (b) The applicant has also submitted a draft contract and draws attention to Clause B of the draft contract which provides that B. Owner has appointed the Contractor for supply of the Solar Power Plant which includes engineering, design, procurement, supply, development, testing and Commissioning of the Plant as per scope defined in relevant schedule of this Contract, as per Applicable Law and Technical Specifications (c) The Applicant has further drawn reference to Schedule I of the agreement which defines the scope of work to be executed by the Contractor i.e. the A

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tract does not constitute works contract. The following submissions have been made in this regard. (a) Works contract is defined as a composite contract and includes a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. (b) Therefore, in order to determine whether the supply made by the Applicant is of works contract, it is imperative to understand (i) the essence of the contract and the intention of the parties involved in the contract to determine whether the parties intend to undertake works contract or supply of solar power plant and (ii) whether the activities are undertaken on an immovable property for the contract to qualify as works contract. Essence of the contract and intention of the parties i

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no intention to make such plant permanent, the foundation would not change the nature of the plant and make it an immovable property. (c) The applicant has relied upon the following judgments in furtherance of their arguments. (i) Sirpur Paper Mills Ltd., vs. Collector of Central Excise, Hyderabad (1998 1 SCC 400) (ii) Commissioner of Central Excise v. Solid and Correct Engg Works & Ors. (2010 (175) ECR 8 (SC)), (iii) Sri Velayuthaswamy Spinning Mills v. The Inspector General of Registration and the Sub Registrar (2013 (2) CTC 551), (iv) Perumal Naicker v. T. Ramaswami Kone and Anr. (AIR 1969 Mad 346) In view of the aforesaid judgments, the applicant submits that in the instant case, the solar power plants supplied by the Applicant is commissioned and installed only for the purpose of better functioning of the plant and are capable of being removed and transferred from one place to another. Hence, the fact that the plant is firmly but not permanently attached to the land means that

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99 – CX4 dated 15 January, 2002 ('the Circular), after realizing the anomaly in case of plant and machinery assembled at site, issued the Circular clarifying the following: (i) If items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered asmoveable and will, therefore, not be excisable goods. (vi) If any goods installed at site (example paper making machine) are capable of being sold or shifted as such after removal from the base and without dismantling into its components/parts, the goods would be considered to be movable and thus excisable. The mere fact that the goods, though being capable of being sold or shifted without dismantling, are actually dismantled into their components/parts for ease of transportation etc., they will not cease to be dutiable merely because they are transported in dismantled condition….. Relying on

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T Act defines composite supply to mean 'a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply'. Section 2(90) defines principal supply as principal supply means 'the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary'. Further, in terms of Section 8 of the CGST Act, it has been clarified that a composite supply comprising two or more supplies, one of which is a principal supply will be treated as supply of such principal supply. The relevant para of Section 8 of the CGST Act provides as follows: 8. Tax liability on composite and mixed supplies. – The tax liability on composite or a mixed supply, shall be determined

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ers and switches. This is due to the fact that PV module is a packaged, connect assembly of typically 6xio photovoltaic solar cells, which constitute the photovoltaic array of a photovoltaic system that generates and supplies solar electricity. In other words PV modules are nothing but an assembly of solar cells that helps in converting solar power into electricity. Hence, PV module is the most important component of solar power generating system and therefore, would squarely qualify as the 'principal supply'as per the provisions of the GST law. Accordingly, it is submitted that the GST rate of PV modules which is 5% should be applicable on the whole of the contract. Reference can be made to the CERC Order dated 23 March 2016 involving determination of Benchmark Capital Cost Norm for Solar PV Power Project for FY 16-17. In the said case also, the CERC, of the total cost of the project including land cost, PV Modules cost is considered as 62%. A copy of the said order has also b

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rt of the contract. The same shall not in any manner exceed the lumpsum price agreed between the Parties and also does not in any manner dilute the responsibility of the Contractor… Further, there is a definition in the draft agreement, Major Equipment [1.1.67] which clearly identifies PV Modules as the Major Equipment Major Equipment(s) means PV solar modules which is an assembly of solar cells that helps in converting solar power into electricity and all other Equipments specified in Schedule 3 (Contract Price and Payment Milestones) for facilitation of Payment under this Contract; Reference in this regard is made to the judgment of Delhi Tribunal in the case of Rajasthan Electronics & Instruments Ltd. vs. Commr. Of C. Ex., Jaipur wherein a Solar Photovoltaic Module was held to be a Solar Power Generating System. Relevant extract of the judgement is reproduced below for ease of reference: 7. The adjudicating authority admitted the fact that Solar Photovoltaic Module is a Solar

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r divides the contract between two separate contracts of construction of solar power generation system. Notification no. 1/2017-Integrated Tax (Rate), which provides concessional rate on solar power generating system does not specify the persons who would be eligible for concessional rate of 5% i.e. developer, contractor or manufacturer/ supplier/ sub-contractor. Since the concessional rate of 5% is provided to renewable energy products and parts thereof the same should be applicable to all suppliers providing such products as long as it can be established (through certification or otherwise) that these are to be used in solar power generation system. This would also be in line with practice under erstwhile excise law wherein benefit was extended to sub-contractors also through MNRE certification. 7. The applicant has concluded their presentation as follows: I. that the Applicant is engaged in the business of supply of 'solar power generating system' and the same should be liab

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ly of turnkey Engineering, Procurement & Construction ( EPC ) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017. 2. If Yes, Whether the Principal Supply in such case can be said to be Solar Power Generating System which is taxable at 5% GST. 3. Whether benefit of concessional rate of 5% of solar power generation system and parts thereof would also be available to sub-contractors. 9. Question No. 1 is ―Whether supply of turnkey Engineering, Procurement & Construction ( EPC ) Contract for construction of solar power plant wherein both goods and services are supplied can be construed to be a Composite Supply in terms of Section 2(30) of CGST Act, 2017?‖. 9.1 Composite Supply is defined under Section 2(30) of the CGST Act, 2017 as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or

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ain intent is provision of the goods which constitute solar power generating system. 9.3 We thus proceed as follows to determine whether the intended supply constitutes a Composite Supply. 9.3.1 The scope of contract, as mentioned at clause 3 of the draft contract provides that the contractor (Applicant) shall supply all the equipment as per the terms of the said contract and in accordance with the execution schedule, to the plant site and complete development, installation and commissioning of the works in accordance with the technical specifications, applicable law, applicable permits and the terms of the contact, in addition to the detailed drawings / documents finalized during engineering. This clause indicates that the Applicant would supply all the required goods and also provide services related to installation and commissioning of the project. 9.3.2 The Applicant submits that the major component of Solar Power System is Solar Photovoltaic module (PV module), which comprises aro

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ransferred to the owner by way of High Sea Sale. Therefore the legal title of the goods shifts to the owner and also the Bill of Entry to clear goods from Customs Area is filed by the owner and not the Applicant. This indicates that the owner has procured the goods and made them available to the Applicant. This is in contrast to what the Applicant has claimed. Once the owner files the Bill of Entry at the time of import they become the titleholders in respect of those goods. After clearance of the goods once they are made available to the Applicant for further action of installation etc, then the Applicant cannot claim to have supplied the goods. 2. As per clause 1.1.45 of the contract ―Free Issue Equipment‖ is defined as Photovoltaic Modules to be supplied by the owner to the contractor as free issue equipment at the plant site for the installation and commissioning of the solar power plant. Hence it is clearly evident from this clause that the major equipment i.e PV modul

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ontract as discussed in the preceding para indicates that the major portion of contract, i.e. the PV module constituting 60% – 70% of the total contract value, is supplied by the owner and not the contractor. Therefore the contractor cannot claim that they will supply the PV Module & thereby there is no principle supply involved in the instant case. 9.3.6 This further raises the point whether the supply envisaged in the draft contract qualifies to be a composite supply. The different goods and /or services supplied should be naturally bundled. However here the draft contract opens up the question whether such supplies are indeed bundled or not. The draft contract clearly demonstrates that in such projects the owner can procure the major equipments involved on their own also and the contractor may carry out the supply and services portion in respect of the remaining portion. Thus the concept of natural bundling does not apply to the present envisaged supply. In other words the envis

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e of supply and no concessional rate of GST is provided to sub-contractor on the basis of main contractor. Hence the supply made by sub-contractor need to be viewed as an individual supply and thereby the appropriate rate of GST has to be applied. 10. In view of the foregoing, we rule as follows RULING 1. Question No. 1-The major component (PV Module) said to have been constituting 70% of the whole project can not be construed to be supplied by the applicant consequent upon High Sea Sale of the said product and hence it cannot be construed to be a principal supply of the project and thereby cannot be a composite supply. 2. Question No. 2- The question does not not remain relevant on account of answer to question number 1. 3. Question No. 3- The supply made by sub-contractor need to be viewed as an individual supply and thereby the appropriate rate of GST has to be applied depending on the specific nature of supply. – Case laws – Decisions – Judgements – Orders – Tax Management India

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2018 (7) TMI 312 – CESTAT KOLKATA – TMI – Penalty u/s 11AC – no suppression of facts – more than one SCN on same issue, however, the facts were all disclosed in first SCN – whether the non-mentioning of same facts in subsequent SCN, which were mentioned in first SCN would amount to suppression of facts? – Held that:- The principles as laid down in the cases of Nizam Sugar Factory v. Collector of Central Excise, A.P. [2006 (4) TMI 127 – SUPREME COURT OF INDIA] is squarely applicable to the facts of the present case, where it was held that When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities.
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Since an earlier show cause notice dated 30.09.2013 was issued for the earlier period in respect of the same subject matter, it ca

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her unit (at Pune) for consumption of the same in production of other articles leading to short payment of Central Excise duty. The adjudicating authority confirmed the demand of ₹ 10,75,967/- along with interest and imposed equal penalty under section 11AC of the Act. On appeal, the Commissioner(Appeals) set aside the penalty imposed on the assessee. Hence the present appeal by the Revenue before the Tribunal. 2. Ld.Supdt.(AR) appearing on behalf of the Revenue reiterates the grounds of appeal filed by the Revenue. 3. Ld.Counsel appearing on behalf of the Respondent assessee filed copies of the show cause notices issued as under:- SCN No & Date Period Demand, Rs O-in-O No. & Date Status 34/ADC/2013 : 30 9 2013 Sept 2008 to March 2011 6,66,680/- + Interest + Penalty 18/JC/CE/Kol- IV/Adjn/2014 : 07052014 Paid Entire Duty, Interest + 25% Penalty Issue closed 36/ADC/2015 : 03/11/2015 2011-12 & 2012-13 10,75,967/- +interest+ 100% Penalty 59/JC/CE/Kol- IV/Adjn/16 : 20/12/2

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f duty, I find it is the case of the appellant that there had been no contravention of the provisions of Rule 8 of the Valuation Rules, 2000 in as much as they had paid the duties on the basis of 110% of the cost of productionof each of the goods as ascertained on the basis of cost data available with them at the time of removal of the goods from their factory. Actual cost data for any goods can be ascertained only after close of the relevant year and that they cannot be, and hence are not, available at the time of removal of the goods any time during the year. Therefore, as per general practice in the trade, duties are paid at the time of removal of the goods on the basis of data available with them at the time of their clearances and shortfall if any are paid subsequently when final cost data are ascertained after close of the relevant year and on obtaining CAS-4 Certificate from specified authorities. Therefore, differences between the costs that are determined after close of the ac

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al duty in full with due interest under intimation to the Department vide their letter dated 06.03.2014 before issuance of impugned notice, which shows their bona fide intention. I further find that the impugned goods were cleared on the basis of stock transfer to the appellant s other unit at pune. That being the position, there cannot be any intention to evade payment of duty in a revenue neutral situation, since whatever duty is paid by the appellant is available as cenvat credit to its other unit receiving the goods along with the duty payment documents. I find that neither any credible evidence been adduced by the Department in support of the allegation of suppression with intent to evade duty nor has the aspect of such allegation been established clearly in the impugned order with corroborative evidence. Therefore, I am of the view that suppression of fact with intent to evade duty on their part is not tenable. 6. I am of the considered view that the principles as laid down in th

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2018 (7) TMI 1331 – AUTHORITY FOR ADVANCE RULING – UTTAR PRADESH – 2018 (14) G. S. T. L 299 (A. A. R. – GST) – Classification of supply – Manufacturing food as take away only with no sitting facility, is a restaurant service or manufacturing of goods? – scope of 'supply'. – Held that:- Since the supply of cooked food is mentioned in the Schedule-II (Sr. no. 6(b)) it is a supply of service.
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Rate of GST under the composition scheme will be 5% (i.e. 2.5% under CGST and 2.5% under SGAT). – Order No. 1 Dated:- 21-3-2018 – Shri Dinesh Kumar, Member and Sanjay Kumar Pathak, Member ORDER Manufacturing food as take away only with no sitting facility, is a restaurant service or manufacturing of goods. 6. Composite supply : The following compo

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joints which are providing a sitting facility. Nothing is said about only counter sale joints. Also in my opinion, our activity sore closely resembles the definition of Manufacture u/s 2(72) of the GST Act 2017 as we are processing a raw material and bringing into a new product. We are not providing any service so we should be considered a manufacturer I request you to kindly look into the matter and provide your decision regarding whether we fall under Restaurant Service with Rate of Tax @ 5% under Composition Scheme or under Manufacturer with Rate of Tax @ 1% under Composition Scheme 7. Scope of supply – (1) For the purposes of this Act, the expression supply: includes – (d) the activities to be treated as supply of goods or supply of ser

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2018 (9) TMI 689 – AUTHORITY FOR ADVANCE RULING, DAMAN, DIU AND DADAR AND NAGAR HAVELI – 2018 (16) G. S. T. L. 639 (A. A. R. – GST) – Classification of goods – Heat Shrinkable Cable Jointing Kits – whether the product of the applicant in question i.e. Heat Shrinkable Cable Jointing Kits is to be classified under HS Code 8546 or 8547?
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Held that:- The Chapter Head description under existing law i.e. Central Excise, GST and Customs are one and the same. Further, it is worth mentioning here that, at all the material times the said goods were classified for the purposes of basic and other Customs Duty by the Customs deptt. under heading 85.47 of Customs Tariff Act – The assessee, during the course of personal hearing, have accepted that they are running the same business for the last many years and were classifying the goods under Chapter Heading 8547 for their product Heat Shrinkable Wrap Around Sleeve in the existing law. This fact has been verified from the ER-1 Return filed by th

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nce Ruling alongwith statements of facts and copy of Challan bearing No. 17072500000009 dated 24.07.2017 evidencing the payment of required fee of ₹ 5000/-,In the said application the assessee has sought clarification for correct classification of their goods i.e. Heat Shrinkable Cable Jointing Kits to be classified under HS Code 8546 or 8547. 2. To verify the facts, application of the assessee was forward to the Assistant Commissioner,Div-V, GST & CE, Daman for examination and their detailed reports on the following points was called for:- i. Classification of the said goods under Central Excise Tariff Act, 1985; ii. Whether any issue on the subject matter has been decided by the appellate Authority in their own case of the assessee or other cases. If yes, please furnish the copy of the said orders; iii. What is prevailing practice of classification of the product in question? and iv. Their report on classification of the subject goods under GST regime with supporting Case L

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idence in support of their claim, if any. 3.1 In compliance of the said PH letter, Shri Arvind Nair, Director of the applicant assesse appeared for personal hearing on 07.03.2018. During the personal hearing, he submitted that that the major part of their finished goods is Heat Shrinkable and, therefore, their product merit classification under CH 8546 and instead of 8547. He also demonstrated/showed Parts/components of some of the product Heat Shrinkable Jointing Kit of Power Cable/Telephone Cable. He further submitted that they are classifying their product in the GST regime under Heading 8546 only as per the heading Heat Shrinkle Components provided in the GST Tariff. He, therefore, requested to consider their submission and pass an order classifying their product under HSC 8546 itself & not under HSC 8547. 3.2 Their Application was admitted under Sub Section 2 of Section 98 of the Central Goods and Service Tax Act, 2017 to decide the issue of correct classification as to whethe

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lators: 8546 20 31 – Below 6.6 kV kg. 9% +9% 18% 8546 20 32 – 6.6 kV or above but up to 11 kV kg. 9% +9% 18% 8546 20 33 – Above 11 kV but up to 66 kV kg. 9% +9% 18% 8546 20 39 – Above 66 kV kg. 9% +9% 18% 8546 20 40 – Other high tension porcelain solid core kg. 9% +9% 18% insulators 8546 20 50 – Other low tension porcelain insulators including kg. 9% +9% 18% Telegraph and telephone insulators 8546 20 90 – Other kg. 9%+9% 18% 8546 90 – Other: 8546 90 10 – Heat Shrinkable Components kg. 9% +9% 18% 8546 90 90 – Other kg. 9%+9% 18% 4.2 Now we refer to the Chapter Note of Heading 8546 under existing law i.e. under Central Excise Tariff Act, 1985, which reads as under – 8546 ELECTRICAL INSULATORS OF ANY MATERIAL 8546 10 00 – Of glass kg. 12.5% 8546 20 – Of ceramics: – Porcelain discs and strings : 8546 20 11 – Porcelain below 6.6 kV kg. 12.5% 8546 20 19 – Other kg. 12.5% – Porcelain post insulators : 8546 20 21 – Below 6.6 kV kg. 12.5% 8546 20 22 – 6.6 kV or above but up to 11 kV kg. 12.5% 8

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omenclature (HSN) is internationally recognized product/items coding system which has also been accepted in India. From the above detailed Chapter Sub Heading wise classification of the product in the existing law i.e. under Central Excise it is found that the classification of the above said product is one and the same under GST regime as well as under Customs law. No change in the classification under all the entire three Act have been noticed. Therefore, we do not find any change under Chapter heading 8546 under Central Excise and GST regime. It proves that there is no change in the classification of the product in existing Central Excise law as well as the newly introduced GST law under major head 8546. From 1stJuly, 2017, with the introduction of GST law from the existing law i.e. Central Excise, no change in the basic characteristics of the product is found, therefore, a sudden change in the classification of the product without having legal and reasonable backing is not tenable.

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mple, threaded sockets) incorporated during moulding solely for purposes of assembly, other than insulators of heading No. 8546; electrical conduit tubing and joints therefor, of base metal lined with insulating material . 5.1 We note that the Chapter Head description under existing law i.e. Central Excise, GST and Customs are one and the same. Further, it is worth mentioning here that, at all the material times the said goods were classified for the purposes of basic and other Customs Duty by the Customs deptt. under heading 85.47 of Customs Tariff Act. We further note that the kit in question comprises of more than 15 independent articles/items. Therefore, selection of its classification on the basis of single product out of 15-17 items, will be improper without considering individual and joint value of the remaining articles of the kit. We further note that the assessee, during the course of personal hearing, have accepted that they are running the same business for the last many ye

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thread of this principle runs all through even in the General Rules of Interpretation of Entries under the CTA. 10. In the circumstances, we declare that the subject goods merit classification under Heading 85-47 of the CTA and we quash the impugned decision of classifying them under Heading 39.26 5.2 The aforesaid judgment clearly answers the issue raised in the present application which is unambiguously covered by the ratio of the above referred judgment. We note that in Para 8 of the said judgment it is specifically observed by the Division Bench that raw material for manufacturing of components for cable jointing kits is described sometimes as insulating materials and sometime as unexpanded sleeves. The fact remains that said material is used as insulating material. The aforesaid judgment of the Division Bench has been accepted by the Revenue wherein it is specifically mentioned that certain doubts have been expressed regarding the classification of Cable Jointing Kits assembled f

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characteristic of insulation. 5.4 The fact remains that said material i.e. Cable Jointing Kits assembled from various components are classifiable under Chapter Heading No. 8547.00. We find that the Circular No 583/20/2001-CX dtd 20.08.2001 makes it clear that the judgment in the case of M/s XL Telecom P. Ltd. v. Union of India (cited supra) observed that the materials assembled in the kit has been uniformly classified at all departmental levels under (chapter Heading No. 85.47 of C.E.T.A 1985. The Court in the case of XL Telecom Ltd., (supra) has held that the components for cable jointing kits are classifiable under chapter heading 8547. 6. In view of the above discussing and findings, we hereby pronounce Advance Ruling under Sub-Section 2 of Section 97 using power vested in us under sub Section 6 of Section 98, Section 96 of the Central Goods and Service Tax Act, 2017 read with Rule 103 of the Central GST Rules, 2017 as under- Order/ Advance Ruling We hereby take decision against ap

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Goods and Services Tax – Classification of imported goods – GSL ARTEMIA BRINE SHRIMP EGGS – petitioner sought to avail concessional duty (preferential rate of 0% IGST as against 5% IGST) by relying up

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Goods and Services Tax – GST – By: – Priya Sharma – Dated:- 20-3-2018 – The difficulties in the new taxation regime have resulted in the reduction of the taxation revenue. The government marked the month of September after which the revenue started hitting the bottom. As the loss cannot be ignored, the government has assured the sustenance of the taxation processes like return filings and e-way billing. During the roll-out, the serviceableness of GST was not in its optimum state and hence toppled. However, the records show that the GST collections averaged around INR 90,000 till the month of September 2017. Not only had the taxpayers of the nation, but the IT industry also suffered due to the varying tax rates and processes of the Goods an

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Indian IT sector has witnessed a slight decline in the profit margins. Analysis declared evolving GST the reason behind the reduced revenue. Here s how software made the taxation regime simpler: Time and cost-effectiveness- With the help of GST software, the taxpayers have been able to cut short the tediousness of the entire regime. Otherwise, the businesses would hire tax consultants adding a huge cost to the company. And if done manually, the compliance would take time more than expected that resulted in the focus cutback in the core competencies. Automated processes- Every GST software comes integrated with a high-end technology. Such advanced technology requires the least input from the taxpayer s end. The user is not required to fill

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T software provider and the government. The enforcement along with an inspection Highlighting the positive aspects of the Goods and Services Tax Act, the government officials chew upon the factors that are hindering the regime s growth. The government has planned to enforce measures that could make GST compliance easy. For that matter, the e-way bill has been implemented and over hundreds of goods and services exempted. Still, there are few pressing issues that have been curbing the potential of the new taxation regime. The taxpayers complained about the delayed update of the tax payments on the GSTN portal. And most importantly, the blockage of the refunds have enraged the people the most. There are several other issues like multiplicity i

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Goods and Services Tax – GST – By: – Altamush Zafar – Dated:- 20-3-2018 Last Replied Date:- 21-3-2018 – Only few days left to file the TRAN-2 form. The taxpayers need to know some essential points which are often being ignored regarding the form: The form is only for traders. It is only for traders who were unregistered in VAT. The benefits of credits received are to be passed on by way of reduced pricing. This doesn't just mean that the benefits are to be passed on, it also means that details of all the tax payers who have filed this form will be sent to the Anti- Profiteering Committee and the tax officials will surely pay you a visit if it is a substantial amount. The document of procurement is required to avail the credit. This doc

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1 in serial 7 of whether having duty paying document- 'yes' or 'no' should not have given. – Reply By Ganeshan Kalyani – The Reply = nevertheless nice article and timely written. it will be an alarm to the querist. thanks. – Reply By Ashwarya Agarwal – The Reply = Sir in my opinion, there is no such condition that It is only for traders who were unregistered in VAT. – Reply By Altamush Zafar – The Reply = The availment of credit through TRAN-2 is allowed through proviso to section 140(3). Section 140(3) is for certain specific persons and those who were not liable to be registered under previous laws (meaning not registered). Therefore the proviso will be read subject to the section except for the sole condition written in t

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2018 (3) TMI 1265 – GUJARAT HIGH COURT – 2018 (14) G. S. T. L. 246 (Guj.) – Credit under new GST regime – proviso to sub-section (1) of section 140 of the Gujarat Goods and Service Tax – restriction of credit of VAT already taken – Held that: – the provision deprives a dealer to his vasted right and thus, the statute acts retrospectively and also imposed an unreasonable restriction – Notice returnable on 19.04.2018. – Special Civil Application No. 4252 of 2018 Dated:- 20-3-2018 – MR. AKIL KURE

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JCB India Limited, Suyaan Infrastructure Pvt. Ltd., Siddharth Auto Engineers Pvt. Ltd. And Ratnapprabbha Motors Versus Union of India, The Goods and Service Tax Council, The Commissioner Central Tax GST Nasik, The Commissioner Central Tax GST, Pune And Central Board of Excise and Customs – 2018 (4) TMI 585 – BOMBAY HIGH COURT – 2018 (15) G. S. T. L. 145 (Bom.) – Transitional credit – Transferring CENVAT credit u/s 174(1) and 174(3) of CGST Act, 2007 – validity of conditions imposed – transitional credit – right to aval the credit has already accrued under Rule 4(7) of the CENVAT Credit Rules, 2004 – argument is that the right to avail CENVAT credit is a matter of right accrued under the repealed Act, namely, the Central Excise Act, 1944. Once the right is accrued, the new enactment or repeal of the old Act cannot debar or disentitle the petitioner of the accrued right – Section 174 of the CGST Act, 2017.
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Held that: – The repeal of the Acts mentioned in subsection (1) of Section

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r conditional right. It is subject to fulfilment or satisfaction of certain requirements and conditions that the right can be availed of.
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The scheme of the new law that the object and purpose sought to be achieved after its introduction of the new law is of not permitting the existing law arrangement to continue endlessly. Some day or some time has been stipulated as appointed day for the new regime to come into force. For it to come into force and function effectively, the transitional arrangements have been made. They have clear nexus, therefore, with the object sought to be achieved. They cannot be struck down as having no such relation or nexus.
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We cannot also by any comparative analysis of the Central and State Law hold that this condition, as imposed, is unreasonable.
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Petition dismissed. – Writ Petition No.3142 OF 2017, Writ Petition No.3186 of 2017, Writ Petition No.3212 Of 2017, Writ Petition No.3187 of 2017, Civil Writ Petition No.12378 of 2017 And Civil Writ

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hat it is a company registered under the Companies Act and is engaged in the manufacture of Excavators, Loaders, Compactors, etc., falling under Chapter Heading 8429. The petitioner has its manufacturing facility/place of business at PlotsA & B, Talegaon Floriculture & Industrial Village, Ambi Navlakh – Umbhare, Talegaon, Dabhade, Pune410 507 from where it supplies machines manufactured by it to its dealers located in various parts of the country. The petitioner's manufacturing facility/factory was registered under the erstwhile Central Excise Act and the petitioner paid central excise duty on clearance of such machines from its factory. The petitioner has a Duty Paid Depot in the State of Maharashtra at PlotsA & B of the same village. The Duty Paid Depot was registered under the Maharashtra Value Added Tax Act prior to 172017, but was not registered under the Central Excise Act, 1944. Upon transitioning to GST, the petitioner's factory and depot obtained registrati

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again in case it removed/sold the machines from its depot. After the onset of the Goods and Services Tax ( GST ) regime whereby transitional provisions were introduced with the sole intention of allowing seamless flow of credit and the supplies under the GST regime which have already suffered tax once, do not suffer them again. This GST was introduced with effect from 172017. After its introduction, various duties such as excise duty, countervailing duty, special additional duty, etc., have been subsumed under the GST regime. Unlike the erstwhile levies, the GST is payable at all stages of supply right from the manufacturer/importer to the final customer with credit of input taxes available at each stage of value addition. This essentially makes the GST a tax only on value addition. This is to ensure elimination of cascading effect of taxes and provide a common market for all goods and services. Adverting to the Statement of Objects and Reasons, it is urged that the essential vision is

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ice provider. However, there were provisions through which an importer could pass on the credit of duty paid by registration as first stage dealers. By the GST and particularly by virtue of the provisions contained in Section 140(1) and Section 140(3) of the CGST Act, a situation of inequality amongst the manufacturer and the depot/trader as far as the stock on 172017, occurs and such ineligibility of credit under the GST regime causes discrimination between the petitioner and other manufacturers. It is put to a disadvantageous position as far as the closing stock on 172017 in respect of goods lying in stock prior to 3062016. 7. It is elaborated as to how a person who is not in possession of a duty paying document is also eligible to avail input tax credit on a presumptive basis, but the petitioner who is in possession of all the duty paid documents is barred from availing CENVAT credit where the invoice is issued on or prior to 3062016. It is contended that nonavailment of such credit

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ail to achieve the object and which is sought to be achieved by the transitional provisions of the CGST Act, that is of eliminating the cascading effect. The result of such provision would be that the petitioner would be forced to pay entire tax under the CGST Act on supplies without availing input tax credit of taxes paid earlier. There is no reasonable rationale beyond inflicting tax cascading effect on depot/traders while extending full credit to registered manufacturers and partial credit to traders who do not have the duty paying documents available with them. It is in these circumstances that the provisions and insofar as noted above are challenged as violating the mandate of Articles 14 and 19(1)(g) of the Constitution of India. 10. This challenge which we have summarised in the foregoing paragraphs is sought to be elaborated in the grounds set out in the Memo of the Petition. 11. Pertinently, there is no affidavit in reply to this petition. 12. The other petition being Writ Pet

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hydraulic and fuel injection pipes and tubes, boiler tubes and more. 14. The petitioner is registered under the provisions of Rule 9 of the Central Excise Rules, 2002 as a dealer under Central Excise in Pune. The registration is obtained with effect from 1352008. The petitioner also applied for registration under the GST Act. After referring to Section 6 of the Central Excise Rules, 2002, it is stated that the petitioner can be termed as first stage dealer. It procures various locally manufactured goods, imported goods and these goods were sold to the customers under the prescribed documents. They pass on the incidence of duty to the customers. After inviting our attention to the CENVAT Credit Rules, 2004 and the relevant definitions therein, it is submitted that the President of India assented to the Central Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017, Union Territory Goods and Services Tax, 2017 and the Goods and Services Tax (Compensation to States

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ods to the customers and pass on the credit irrespective of whether they had purchased the goods earlier to twelve months preceding the appointed day of 172017 or not. 15. It is in these circumstances that the petition is filed and in this petition the prayer is to declare that part of the law, namely, Clause (iv) of subsection (3) of Section 140, as unconstitutional, ultra vires Articles 14 and 19(1)(g) of the Constitution of India and unenforceable qua the first stage dealer. 16. To this petition, an affidavit in reply has been filed after notice of the same was served on the Attorney General. The affidavit is filed by the Commissioner of Central Tax (GST), Pune1. 17. It is stated that the petitioner has challenged a policy decision taken by the Parliament which is not subject to judicial scrutiny. It is stated that the challenge is completely misconceived and untenable. It is stated that in the Value Added Tax, there is a restriction on availing of such credit. The same cannot be pr

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the Fifth proviso to subrule (7) of Rule 4 of the erstwhile CENVAT Credit Rules, 2004. It is submitted that the power to restrict the flow of credit exists under Section 16(1) of the CGST Act. The Legislative intent is to grant input tax credit partially. The input tax credit provisions do not provide that all the taxes paid on all inputs should be available as credit. Some credits have been denied in the Act itself and to allow flexibility. The restrictions can be placed on availability of credit, as credit can be availed only as permitted by law. It is stated that the petitioner has erred in stating that the restriction/prohibition on taking of credit of CENVAT by a first stage dealer on the goods lying in stock where the invoice/prescribed documents are issued not later than twelve months preceding the appointed date, is unreasonable and arbitrary. It is contended that a reasonable period of twelve months has been provided for availing of credit for such invoices or other prescribed

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ule (7) thereof, would indicate that CENVAT credit in respect of input service shall be allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in Rule 9 is received. The Fifth proviso to this subrule is being relied upon but without any reasonable basis. It is submitted by the learned Senior Counsel that we should see these provisions in the backdrop of the object and that is to avoid the cascading effect. We must place reliance on the provision consistent with the object and purpose. It is submitted that merely because a new regime has been brought into force does not mean all the existing rights and conferred under the statute prevailing prior to the new law coming into force should be taken away. In other words, such of the restrictions and conditions as are now imposed cannot be said to be achieving the object and purpose or rather they have no nexus with the object sought to be achieved. 20. It is argued before us and with some vehemenc

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Constitution of India. 20th March, 2018 21. These contentions have been adopted but with several additions by the petitioner in Civil Writ Petition No.12378 of 2017. 22. Mr. Raghuraman, learned Counsel appearing for the petitioner would submit that in the petition which he is arguing, we must note, firstly, the factual difference. The factual difference being that the petitioner is a first stage dealer duly registered under the Central Excise Rules, 2002. The petitioner has been filing quarterly return periodically wherein the details are given and particularly set out at page 64 of the petition. Thus, there is description of goods, central excise tariff number, quantity of excisable goods and the amount of duty. 23. It is, therefore, argued by Mr. Raghuraman that we must peruse the Constitution's 101st Amendment Act, 2016 which brought into effect the CGST Act, 2017 and the transitional provisions. He would submit that the petitioner had divided the grounds of challenge under dist

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ods purchased, goods removed and closing stock along with duties payable on the said goods. This was maintained in the format of RG 23D. Further, they were also filing quarterly returns regularly as per Rule 12 of the Central Excise Rules, 2002. Further, it is submitted that the provisions of Rule 11 of the Central Excise Rules, 2002, for removal of goods from a factory or a warehouse under an invoice, shall apply mutatis mutandis to the first stage dealer. It is urged that as a first stage dealer, the petitioner had been purchasing various goods and passing on the credit of duty paid on the said goods to the customers by issuing invoice under the provisions of Rule 12 of the Central Excise Rules, 2002. In the scheme of the Central Excise Act, 1944 and the Rules framed thereunder, there was no restriction or prohibition on taking or carrying forward the CENVAT credit on the goods purchased by the first stage dealer irrespective of when the goods have been purchased. It is urged that th

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efore, why the present provisions and challenged in the petition differentiates between the manufacturer who was paying excise duty under the erstwhile Central Excise Act, 1944 without any time limit whereas the dealers are subjected to different treatment. This is not in consonance with the object and purpose of the CGST Act. The impugned provisions also violate the mandate of Article 19(1)(g) of the Constitution of India. That is subjected to only reasonable restrictions but the restrictions as prescribed, cannot be termed as reasonable. 24. Inviting our attention to Section 174 of the CGST Act, 2017, it is urged that this provision saves the rights and privileges accrued under the existing law. The argument is that the right to avail CENVAT credit is a matter of right accrued under the repealed Act, namely, the Central Excise Act, 1944. Once the right is accrued, the new enactment or repeal of the old Act cannot debar or disentitle the petitioner of the accrued right. It represents

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petitioner from time to time once they were registered under the Central Excise Law. If that right of the petitioner, as enumerated above, is taken away only on the strength of the transitional provision, then, even the principle of promissory estoppel would come into play. For all these reasons, it is submitted that the writ petition be allowed. Mr. Raghuraman has handed over a compilation for our perusal which would include the relevant legal provisions and the case law pointbypoint. 27. Mr. Raghuraman inter alia relied upon the Judgment of the Hon'ble Supreme Court and a very recently delivered and reported in (2017) 9 SCC 1. This is a Judgment delivered on the point of constitutionality and validity of Triple Talaq {Shayara Bano v. Union of India & Others}. It is submitted that in this Judgment the arbitrariness of the legislation is taken to be very much a facet of unreasonableness in terms of Article 19(2) to (6) and there is no reason why arbitrariness cannot be raised t

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pelled by the learned Additional Solicitor General. The learned Additional Solicitor General, Mr. Anil Singh, would argue that the impugned statutory condition does not take away the right to avail input credit. It is only a transitional provision. In all cases, other than these, Sections 16 and 18 would apply. Pertinently, there is no challenge to the constitutional validity of the substantive provisions. 30. Our attention has been invited by Mr. Anil Singh to the settled principle that insofar as economic legislation is concerned, the grounds on which its constitutionality can be challenged are extremely limited. In the sense, if that legislation incorporates a policy measure, then the wisdom thereof cannot be questioned by this Court. Mr. Anil Singh would submit that this matter is of a concession or relaxation. Nobody can claim a vested right in such measures evolved by the Legislature. It is entirely for the Legislature to make a provision and restrict the benefit or concession or

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new regime replaces a bundle of legislations seeking to tax the activity of manufacturers, sales and extension of service, then, it was deemed fit and proper that the transition to the new regime, from the old one, should be smooth. For it to be smooth and proper, a restriction has been placed on availment of CENVAT credit during the transitional period and by making the above statutory prescription. Mr. Anil Singh would submit that it is entirely for the Legislature to make such a provision and its power in that behalf is not questioned. If there is no challenge to the impugned condition on the ground of competence of the Legislature, then, the competent Legislature could have made a restrictive provision and which is precisely the intent. The transition from the old regime to the new one should be smooth and expedient. Hence, a reasonable period of twelve months has been provided. Why it is only twelve months and why it does not date back to the stage, the petitioners in these petiti

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uded. In such circumstances and by relying on the Judgments in the case of N.K. Bajpai v. Union of India & Another, reported in (2012) 4 SCC 653 and Virender Singh Hooda & Others v. State of Haryana & Another, reported in (2004) 12 SCC 588, it is urged that the writ petitions be dismissed. 32. Mr. Raghuraman sought to rejoin to these submissions of the learned Additional Solicitor General by urging that the input tax credit under the GST is an integral part of the GST law. It cannot be termed as a concession by the Government. Further, the attempt is to harmonise the indirect tax structure across the country. In the Constitution 122nd Amendment Bill, 2014, the Objects and Reasons clearly set out that it is intended to remove the cascading effect of taxes and to bring out a nation wide taxation system. Therefore, there is a clear intention to have input tax credit as a nationwide objective at the Constitutional level. Hence, all the decisions prior to the CGST would not be a

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f the CENVAT Credit Rules, 2004. The stage of concession has crossed and it has become a vested right. Hence, Section 140(3) of the CGST Act is not pari materia to Rule 4(7) of the CENVAT Credit Rules, 2004. The Rule 4(7) deals with fresh credits and not transitional credits. Further, in the CENVAT Credit Rules and later in point of time relating to transitional credits, no time restrictions are laid down. Insofar as the CGST Act is concerned, Section 18(2) is in pari materia with Rule 4(7) of the CENVAT Credit Rules, 2004. Both deal with fresh credits. Therefore, the comparison is erroneous. 34. Heavy reliance is placed on the Judgment of Elcher Motors (supra) wherein it was held that credit is a indefeasible right. 35. An attempt was made by Mr. Anil Singh to rely upon the Judgments in the case of Osram Surya (P) Ltd. v. Commissioner of Central Excise, Indore, reported in 2002 (142) E.L.T. 5 (SC) and Samtel India Ltd. v. Commissioner of Central Excise, Jaipur, reported in 2003 (155)

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al Excise Act is being discriminated by Section 140(3)(iv) of the CGST Act, 2017. In such circumstances, the plea raised of revenue loss or economic policy does not appear to be consistent. 37. For these reasons, it is submitted by Mr. Raghuraman that the writ petitions be allowed. 38. For properly appreciating the rival contentions, we must refer to the Central Goods and Services Tax Act, 2017. 39. The same is an Act to make a provision for levy and collection of tax of interState supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. Chapter I contains preliminary provisions. The Section 2 is a definition section and unless the context otherwise requires, the definitions would operate. By Section 2, Clause (21), the term central tax is defined to mean central goods and services tax levied under Section 9. The expression existing law is defined in Section 2, Clause (48) to mean any law, notification, order, rule or regu

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on 2, Clause 82 and 83. The word recipient is defined in Section 2, Clause (93) as recipient of supply of goods or services or both, to mean the person liable to pay the consideration for the supply of goods or services or both where a consideration is payable for it and where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available, and where no consideration is payable for the supply of a service, the person to whom the service is rendered. The term registered person is defined in Section 2, Clause (94) to mean a person who is registered under Section 25 but does not include a person having a Unique Identity Number. Then there are various words/terms which are defined and there are in all 121 Clauses to Section 2. Chapter II deals with administration and therein falls Section 9, which reads as under: 9. (1) Subject to the provisions of subsection (2), there s

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ply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intraState supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services: Provided that where an electronic commerce operator does n

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9, 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 and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation.For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either

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thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Incometax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. 40. A perusal of this Section would enable us to hold that, every registered

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it is stated that a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. 42. So much therefore for the argument that input tax credit in the new regime is unconditional or without any restriction. Thus the conditional input tax credit, as can be availed of and strictly within the four corners of the statute, particularly the substantive provisions, is not questioned nor the validity and legality of these provisions put in issue. Pertinently, by Section 17 apportionment of credit and blocked credits is dealt with and by Section 18, the availability of credit in special circumstances is provided. There as well as subsection (1) of Section

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tion of registration ending up to its revocation. These matters are covered by this Chapter, which contains Sections 22 to 30. 43. Chapter VII is titled as Tax Invoice, Credit and Debit Notes. The Section 31 and the provisions following it would enable the person concerned to place himself in a position so as to avail of the benefits of the legislation, including the input tax credit. A comprehensive chapter titled as Accounts and Records is inserted (Chapter VIII). 44. Chapter IX is titled as Returns and the whole mechanism of filing it is set out therein. Chapter X provides for Payment of Tax and Chapter XI deals with Refunds. Chapter XII titled as Assessment contains the provisions enabling assessment of levy/tax. Chapter XIII is titled as Audit and Chapter XIV is titled as Inspection, Search, Seizure and Arrest. Chapter XV is titled as Demands and Recovery and which contains provisions would enable the Legislature to indicate the liability to pay in certain cases (Chapter XVI). The

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n (2) of Section 139 and what are the consequences of a provisional registration being cancelled are set out in subsection (3) of Section 139. Such person shall be treated as not liable to registration under Section 22 or Section 24. 45. Then comes Section 140 with all its subsections and that reads as under: 140. (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely: (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediatel

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the taxable person under the existing law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law. (3) A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day subject to the following conditions, namely:- (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is

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ed in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944 or provision of taxable as well as exempted services under Chapter V of the Finance Act, 1994, but which are liable to tax under this Act, shall be entitled to take, in his electronic credit ledger, (a) the amount of CENVAT credit carried forward in a return furnished under the existing law by him in accordance with the provisions of subsection (1); and (b) the amount of CENVAT credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of subsection (3). (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under t

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used for making taxable supplies under this Act; (ii) the said registered person is not paying tax under section 10; (iii) the said registered person is eligible for input tax credit on such inputs under this Act; (iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. (7) Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day. (8) Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be al

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re any CENVAT credit availed for the input services provided under the existing law has been reversed due to nonpayment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day. (10) The amount of credit under subsections (3), (4) and (6) shall be calculated in such manner as may be prescribed. Explanation 1.For the purposes of subsections (3), (4) and (6), the expression eligible duties means- (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) the additional duty leviable under subsection (1) of section 3 of the Customs Tariff Act, 1975; (iii) the additional duty leviable under subsection (5) of section 3 of the Customs Tariff Act, 1975; (iv) the additional duty of excise leviable under section 3 o

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ditional Duties of Excise (Textile and Textile Articles) Act, 1978; (v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985; (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985; (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001; and (viii) the service tax leviable under section 66B of the Finance Act, 1994, in respect of inputs and input services received on or after the appointed day. A bare perusal thereof would indicate that transitional arrangements for input tax credit are set out therein. Pertinently, subsection (1) deals with a registered person, other than a person opting to pay tax under Section 10. He shall be entitled to take, in his electronic credit ledger, the amount of CENVAT carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as

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isting law or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of Notification No.26/2012, dated 2062012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, and he shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the appointed day, subject to the conditions inserted in Clauses (i) to (v). Out of all those who have been brought within the transitional arrangements for availing input tax credit, it is only some of them particularly the first stage dealer or a depot of a manufacturer who seem to question the stipulation in Clause (iii) of subsection (3) of Section 140. They are happy with the other clauses for they know that inputs or goods used or intended to be used for making taxa

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appointed day. Pertinently, the transitional provisions relating to job work, miscellaneous transitional provisions and other provisions of the law are not questioned. There are various other compliances which have to be made by the law which is now brought in and equally they are not questioned. In this behalf a reference can usefully be made to Section 140(4), (5), (6) and pertinently the Clauses of subSection 6 which contain similar conditions. The persons covered therein are not aggrieved nor are complaining about the conditions or restrictions all of which are to be found in a Taxing Statute. Secondly, they are inserted in a transitional provisions. Thirdly, while judging their legality and validity we are bound by the settled legal principles. In the case of P. M. Ashwathanarayana Setty and Others vs. State of Karnataka and Others reported in AIR 1989 SC 100 and in the case of Kerala Hotel and Restaurant Association and Ors. vs. State of Kerala and Ors., reported in AIR 1990 SC 9

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re methods of adjustments of an economic measure are available, the Legislative preference in favour of one of them cannot be questioned on the ground of lack of legislative wisdom or that the method adopted is not the best or that there were better ways of adjusting the competing interests and claims. The Legislature possesses the greatest freedom in such areas. The analogy of principles of the burden of tax may not also be inapposite in dealing with the validity of the distribution of the burden of a fee' as well. AIR 1990 SC 913 24. The scope for classification permitted in taxation is greater and unless the classification made can be termed to be palpably arbitrary, it must be left to the legislative wisdom to choose the yardstick for classification, in the background of the fiscal policy of the State to promote economic equality as well. It cannot be doubted that if the classification is made with the object of taxing only the economically stronger while leaving out the econom

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such amendment or amended Act , as the case may be) to the extent mentioned in the subsection (1) or section 173 shall not (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or (e) affect any investigati

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said Acts had not been amended or repealed. (3) The mention of the particular matters referred to in subsections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal. 49. Thus, the repeal of the Acts mentioned in subsection (1) of Section 174 would not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders made under such repealed or amended Acts. That is saved and except the proviso below subsection (2) of Section 174. 50. Ordinarily, the expression accrued right means a matured right, a right that is ripe for enforcement (as through) {See: the Advanced Law Lexicon by P. Ramanatha Aiyar.}. The expression vested right means an absolute or indefeasible right. 51. It is too wellsettled that right to take advantage of a statutory provision cannot be said to be an accrued right and similarly a right which wo

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e as required by Section 18(4)(a) and thereupon were deemed to have become owners of the lands by reason of the legal fiction contained in Clause (b) thereof, The Court was therefore dealing with a case where the tenants had acquired a vested right to purchase the lands and the case had gone beyond the stage of a mere application under Section 18(1). The Court accordingly held that the death of Teja, the large landholder, during the pendency of the appeal before the Financial Commissioner, on the happening of which event inheritance opened resulting in his legal heirs becoming small landholders, would not nullify or annul the order made by the Prescribed Authority in favour of the tenant who had acquired a vested right to the grant of relief on the day they made their application under Section 18(1) of the Act. The observations made by Krishna lyer, J. that the right of parties are determined by the facts as they exist on the date the action is instituted must be read in the context in

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l before the Financial Commissioner on which inheritance opened and his legal heirs became small landholders, could not impair the vested rights acquired by the tenants by virtue of the order passed by the Prescribed Authority and the deposit by them of the first instalment of the purchase price as required under Section 18(4)(a). 52. We are concerned in this case with an argument that the petitioners, be they a depot of a manufacturer or a first stage dealer, had secured a right to claim CENVAT credit or input tax credit. That right had accrued to them in terms of the existing law and that could have been claimed without any restriction or conditions. Once under the existing law no such preconditions were imposed for the enjoyment or availment of that right, then, the present regime which seeks to impose a condition which is unreasonable and arbitrary, therefore, would make the statutory provision violative of Articles 14 and 19(1)(g) of the Constitution of India. 53. What is asserted

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o issues an invoice on which CENVAT credit can be taken, shall get registered. The Rule 10 obligates maintenance of daily stock account and Rule 11 provides for removal of goods on invoice. Thereafter, there are further provisions enabling filing of return, etc.. 55. The CENVAT Credit Rules, 2004, after the definitions and particularly of the phrases exempted goods , exempted service , final product define first stage dealer to mean a dealer, who purchases the goods directly from the manufacturer under the cover of an invoice issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice, or an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice. The expression input is defin

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le. Similar is the stipulation with regard to availing of CENVAT credit on input service. By subrule (4) of Rule 3, CENVAT credit is permitted to be utilised and with the provisos thereto. What then follows and which is relied upon is Rule 4 of these Rules. This Rule sets out conditions for allowing CENVAT credit. One of the conditions and which is heavily relied upon by the learned Additional Solicitor General is to be found in subrule (7) of Rule 4. It is, therefore, evident that the fifth proviso to subrule (7) of Rule 4 would indicate that availment of CENVAT credit is conditional upon the satisfaction of all the provisos. Thus, there is a period stipulated for availment of this CENVAT credit. In addition thereto, there are conditions imposed for the availment. 56. To our mind, therefore, the learned Additional Solicitor General is right in his contention that a CENVAT credit is a mere concession and it cannot be claimed as a matter of right. If the CENVAT Credit Rules under the ex

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with the Counsel appearing for the petitioners that imposition of the condition vide Clause (iv) is arbitrary, unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India. 57. We would refer to the Judgments which are heavily relied upon in this context. It is stated that the rights and privileges accrued during the existing law have been specifically saved under Section 174 of the CGST Act, 2017. If what are saved are the rights and privileges of the nature noted above, then it cannot be said de hors the conditions or de hors the restriction on availment or enjoyment of that right they have been saved by the CGST Act. In other words, if rights are conferred with conditions under the existing law, then, they are saved by the CGST Act with such conditions and not otherwise. There must be clear provision to grant it otherwise than in terms of the existing Law or in other words, the restrictions or conditons on availment of that right are removed totally. No such p

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ht is sought to be taken away by the impugned Rule. The Central Government has no power under Section 37 of the Central Excise Act, 1944 or any other provision thereof to frame such a Rule. The impugned Rule is arbitrary and unreasonable as the same has been framed without due application of mind to the relevant facts and it has been exercised on the basis of nonexistent facts or which are patently erroneous. Then, the argument was that Section 37 of the Act does not enable the Central Government to frame a Rule enabling the lapsing of the balance in MODVAT account and is, therefore, ultra vires the rule making power. The argument of the other side was that the impugned Rule is only a part of the scheme providing for giving concessions under the taxation enactment. That cannot be continued for all times to come and could be put to an end at any time. 60. In para 5 of this Judgment, the introduction was traced and it was held that if on the inputs the assessee had already paid the taxes

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the latter legislation the Legislature deemed it fit and proper to continue the earlier or erstwhile arrangement by terming it as a transition or transitional one. That continuation was with conditions and one of the conditions which is questioned here is consistent with the conditions imposed under the existing law. Such a situation was not dealt with in Elcher Motors. Thus, the decision is clearly distinguishable. 62. Reliance is then placed on another decision in the case of Jayam & Company (supra). Once again we must see what was dealt with in Jayam & Company. The argument before the Hon'ble Supreme Court in Jayam & Company was whether subsection (20) of Section 19 of the Tamil Nadu Value Added Tax Act, 2006 could be given retrospective effect. The appellants were dealers and registered as such under the provisions of the above VAT Act. They argued that they had dealt in electronic home appliances. They purchased them from local registered dealers on payment of VAT

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ods at a price lesser than the price of the goods purchased by him, he had to reverse the amount of input tax credit over and above the output tax of those goods. It was such an issue which was considered and in considering that the definitions and substantive provisions of the Tamil Nadu Value Added Tax Act, 2006 were referred. The Supreme Court noted that input tax credit is a form of concession provided by the Legislature. It is not permissible to all kinds of sales and certain specified sales are specifically excluded. The concession of input tax credit is available on certain conditions mentioned in this section, namely, Section 19 and one of the most important condition was that, in order to enable the dealer to claim that credit it has to produce the original tax invoice, complete in all respect, evidencing the amount of input tax. It is in these circumstances that the Hon'ble Supreme Court held that the challenge to the constitutional validity had to fail. It clearly held t

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iled of. In the absence of a substantive provision granting such concession, there would have been no concession at all. Thus, one cannot pick and choose a condition for challenge by alleging that the availment is undisputedly conditional but one of the conditions, though having nexus with the availment, is unconstitutional or arbitrary and excessive. The nature of that condition, its placement consistent with the scheme is then conveniently ignored. We cannot allow this argument to be built on the basis of reliance on para 18 of the Judgment in Jayam (supra) 63. Once we take this view, we do not think that the Judgment in the case of Shayara Bano (supra) or some paragraphs therefrom can be of any assistance. True it is that arbitrariness in legislation is termed to be very much a facet of unreasonableness, and arbitrariness can be used to strike down the legislation when it is challenged as violative of Article 14 of the Constitution of India. However, once we find nothing arbitrary i

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ct violates the principle of promissory estoppel. As is rightly contended before us, there cannot be a estoppel against a statute. Apart therefrom, we do not find any promise which was absolute and unconditional from inception having been breached or resiled by the Executive or the State. From inception, the concession or right based on the same was extended but with conditions. Now that the new regime has taken over and which does away with all the existing laws on the subject, then, in the transitional phase and for the transition to be smooth and proper necessary provisions are inserted in the New Law. With these in place, even the conditional arrangement under the existing laws is saved for a particular duration. To our mind, therefore, we do not see how when the imposition of the condition has a clear nexus with the object sought to be achieved, then, that can be termed as violative of the principle of promissory estoppel either. In this behalf a reference can usefully be made to

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tion should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealing, which have taken place or are intended to take between the parties. 13. It has been settled by the Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. There is preponderance of judicial opinion that to invoke the doctrine of promissory estoppel clear sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect

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he last quarter of a century through successive decision of this Court starting with Union of India v. Anglo Afgan Agencies Pvt. Limited (AIR 1968 SC 718). Reference in this connection may be made with advantage to Century Spinning & Manufacturing Co. Ltd. and Anr. v. The Ulhasnagar Municipal Council and Anr. (AIR 1971 SC 1021); Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of UP and Ors. (AIR 1979 SC 621); Jit Ram Shiv Kumar and Ors. etc v. State of Haryana and Anr. (AIR 1980 SC 1285); Union of India v. Godfrey Philips India Ltd. (AIR 1986 SC 806); Indian Express Newspapers (Bom) Pvt. Ltd. and Ors. v. Union of India and Ors. (AIR AIR 1986 SC 515); Pornami Oil Mills and Ors. v. State of Kerala and Anr. [1986] Supp. SCC 728 : Bakul Oil Industries and Anr. v. State of Gujarat and Anr. (AIR 1987 SC 142); Asst. Commissioner of Commercial Taxes & Ors v. Dharmendra Trading Co. and Ors. (AIR 1988 SC 1247); Amrit Banaspati Co. Ltd. and Anr. v. State of Punjab and Anr. (1992 AIR SC

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Allahabad etc. etc. v. Ram Kumar etc. etc. four learned Judges of this Court observed : The fact that sales of country liquor had been exempted from sales tax vide Notification No. ST 1149/X-802 (33)- 51 dated April 6, 1959 could not operate as an estoppel against the State Government and preclude it from subjecting the sales to tax if it felt impelled to do so in the interest of the Revenues of the State which are required for execution of the plans designed to meet the ever increasing pressing needs of the developing society. It is now well settled by catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers. Prof. S.A. De Smith in his celebrated treatise Judicial Review of Administrative Action , 3rd Edn. at p.279 sums up the position thus : Contracts and Covenants entered into by the Crown are not to be construed as being subject to implied terms that would exclude the exercise of general d

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4) Jeevan Reddy, J. Speaking for the Bench observed: In Statutes like Customs Act and Customs Tariff Act one has also to keep in mind that such legislation can be properly administered only by constantly adjusting it to the needs of the situation. This calls for a goods amount of discretion to be allowed to the delegate. As is often pointed out 'flexibility is essential (in law-making) and it is one of the advantages of rules and regulations that they can be altered much more quickly and easily than can Acts of Parliament. We have pointed out hereinbefore the necessity of constant and continuous monitoring of the nation's economy by the Government (and its various institutions) and the relevance of these enactments as a means of ensuring a proper and healthy growth. 16. The learned Judge went on to opine (para 12 of AIR): The Parliament has appointed two authorities i.e., Central Government and the Board to make rules/regulations to carry out the purposes of the Act generally.

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ise of legislative power. ….. 20. The facts of the appeals before us are not analogous to the facts in Anglo Afgan Agencies (AIR 1968 SC 718) (supra) or M. P. Sugar Mills (AIR 1979 SC 621) (supra). In the first case the petitioner therein had acted upon the unequivocal promises held out to it and exported goods on the specific assurance given to it and it was in that fact situation that it was held that Textile Commissioner who had enunciated the scheme was bound by the assurances thereof and obliged to carry out the promise made thereunder. As already noticed, in the present batch of cases neither the Notification is of an executive character nor does it represents a scheme designed to achieve a particular purpose. It was a Notification issued in public interest and again withdrawn in public interest. So far as the second case (M. P. Sugar Mills case) is concerned the facts were totally different. In the correspondence exchanged between the State and the petitioners therein it

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customs duty etc. as items not leviable to such duty. It only suspends the levy and collection of customs duty etc., wholly or partially and subject to such conditions as may be laid down in the Notification by the Government in public interest . Such an exemption by its very nature is susceptible of being revoked or modified or subjected to other conditions. The supersession or revocation of an exemption notification, in the public interest , is an exercise of the statutory power of the State under the law itself as is obvious from the language of Section 25 of the Act. Under the General Clauses Act an authority which has the power to issue a notification has the undoubted power to rescind or modify the notification in a like manner. From the very nature of power of exemption granted to the Government under Section 25 of the Act, it follows that the same is with a view to enabling the Government to regulate, control and promote the industries and industrial production in the country.

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lding out of any such unequivocal promise by the Government which was intended to create any legal relationship between the Government and the party drawing benefit flowing from the said Notification. It is, therefore, futile to contend that even if the public interest so demanded and the Central Government was satisfied that the exemption did not require to be extended any further, it could still not withdraw the exemption. 22. The argument on behalf of the appellants, vehemently pressed by Mr.Ashoka Desai and Mr. Harish Salve, their learned senior advocates, is to the effect that since the Notification 66/79 had itself indicated that it shall be operative till 31st March 1981, the Government could not withdraw the same before the expiry of the date. It was argued that the appellants had placed orders for the import of PVC resin relying upon the exemption Notification on the understanding that it was to remain operative till 31st March 1981 and had made arrangements for importing the

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66/79 indicating that it was to remain operative till 31st March 1981, it could not be rescinded or modified before the expiry of that date would amount to prohibiting the Government from discharging its statutory obligation under Section 25(1) of the Act, if it was satisfied that it was in the public interest to withdraw, modify or rescind the earlier Notification. The plain language of Section 25 of the Act is indicative of the position that it is the public interest and public interest alone which is the dominant factor. It is not the case of the appellants that the withdrawal of Notification 66/79 by the impugned Notification was not 'public interest'. Their case, however, is that relying upon the earlier Notifications they had acted and the Government should not be permitted to go back on its assurance as otherwise they would be put to huge loss. The courts have to balance the equities between the parties and indeed the courts would bind the Government by its promise to pr

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y was not the object with which the Notification had been issued. The withdrawal of exemption in public interest is a matter of policy and the court would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the public interest . The courts, do not interfere with the fiscal policy where the Government acts in public interest and neither any fraud or lack of bonafides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption Notification under Section 25(1) of the Act. 66. In fact, we have found from the scheme of the new law that the object and purpose sought to be achieved after its introduction of the new law is of not permitting the existing law arrangement to continue endlessly. Some day or some time has

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2018 (5) TMI 82 – KERALA HIGH COURT – TMI – Refund of input tax credit – grievance of the petitioner in the writ petition concerns the inaction on the part of the first respondent in passing orders on the same – Held that: – materials on record indicate that the assessment of the petitioner has been revised on the basis of the audit objection and the petitioner has satisfied the demand for additional tax made pursuant to the revision.
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Want of confirmation from the Accountant General as to the steps taken on the basis of the audit objection cannot be a reason for delaying consideration of application for input tax refund. If an assessee is entitled to input tax refund in accordance with the provisions contained in the Act and the Rule

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rned Government Pleader. 3. It is seen from Ext.P15 communication issued by the first respondent that the application preferred by the petitioner is not being considered since the assessing authority is yet to receive confirmation from the Accountant General as to the steps taken for revising the assessment of the petitioner on the basis of the audit objection. 4. The materials on record indicate that the assessment of the petitioner has been revised on the basis of the audit objection and the petitioner has satisfied the demand for additional tax made pursuant to the revision. Be that as it may, want of confirmation from the Accountant General as to the steps taken on the basis of the audit objection cannot be a reason for delaying conside

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2018 (5) TMI 274 – ALLAHABAD HIGH COURT – 2018 (12) G. S. T. L. 10 (All.) – Levy of Administrative Charges – post GST situation – sale and supply of molasses under the provision of the U.P. Sheera Niyantran Adhiniyam, 1964 – the contention is that once the realization of tax has been subject to maintenance of separate accounts, the demand by the respondents of GST, as also Administrative Charges, would again amount to double taxation – Held that: – A Division Bench of this Court in the case of M/S SAF Yeast Company Private Ltd. Vs. State of U.P. & Anr.[2010 (3) TMI 933 – SUPREME COURT] held that the demand of Trade Tax on purchase of molasses was arbitrary illegal and unjust and accordingly allowed the Writ Petition to that extent.
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The petitioners have prayed for stay on the demand of Administrative Charges, as they are ready and willing to pay the GST at the rate of 28% (14% Central GST and 14% UPGST). However, they agree to maintain separate accounts and even the State would m

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Charges under the 1964 Adhiniyam as also the Trade Tax under the U.P. Sales Tax Act, 1948, later on replaced by U.P. Trade Tax Act, 1948. Administrative charges was also said to be a tax and as such, petitions were filed before this Court challenging the demand of Trade Tax along with Administrative Charges as being double taxation. A Division Bench of this Court in the case of M/S SAF Yeast Company Private Ltd. Vs. State of U.P. & Anr., reported in 2008 NTN (Vol. 38) Pg. 296 held that the demand of Trade Tax on purchase of molasses was arbitrary illegal and unjust and accordingly allowed the Writ Petition to that extent. The operative portion of the said judgment is as follows as contained in the paragraphs 19 and 20 of the petition:- 19. In the result, the writ petition succeeds and is partly allowed. The opposite parties on the basis of the Notification dated 7.9.1981 issued under the provisions of the U.P. Sales Tax Act, 1948 now U.P. Trade Tax Act read with Section 21 of the

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be entitled to interest which would be imposed on the State at the final hearing of the matter. Shri Nikhil Agrawal, learned counsel for the petitioner states that the matter is still pending before the Supreme Court, which is not disputed by the learned counsel for the respondents. In the meantime, during the pendency of the Special Leave to Appeal (Civil) before the Supreme Court, several petitions were filed, in which this Court disposed off the petitions providing the same protection as granted by the Supreme Court, requiring the parties to maintain separate accounts for sale and purchase of molasses during the pendency of the Special Leave to Appeal (Civil) before the Supreme Court, so that in the event the State succeeds or the Appeal fails, neither the State would be prejudiced nor the distillers would be prejudiced and depending upon the outcome, the tax revenue could be realized. Some of the orders passed by the different Division Bench have been placed before us, in which th

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thwhile to record the existing Entry No. 54 and Entry No. 54 before amendment respectively:- Entry 54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods. Entry 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I. Further, in exercise of powers under Article 246A of the Constitution of India and amended Entry 54 of List II of Seventh Schedule, the State Government and the Central Government enacted the UPGST Act, 2017 and Central GST Act, 2017 respectively. Now, as a result of the aforesaid amendments and implementation of the new Acts, GST alone is to be applied on supply or services of all goods. Before us, the contention is that once the realization of tax h

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2018 (5) TMI 646 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (13) G. S. T. L. 65 (A. A. R. – GST) – Classification of Caesarstone – an article made from artificial stone – MGST Act – whether the product “Caesarstone” imported by the applicant can be classified under HSN Code 2506 or 6810?
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Held that: – Chapter 25 covers the naturally occurring quartz which has undergone changes without changing the structure of the product. The way the impugned product comes into existence should leave no doubt that the same would not be covered by the Chapter 25 and the Heading 2506. The rules for interpretation of the Customs Tariff would not apply herein as the Chapter 25 specifically excludes goods of the nature as the impugned product – the impugned product would not be covered by the Heading 2506.
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The entire description as appearing in the Customs Tariff Heading 6810 has been taken for the purposes of the GST entry. It, therefore, means that all item falling in the Customs Tar

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, HTSUS, which provides for other articles of artificial stone.
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Ruling:- Caesarstone imported by the applicant is to be classified under HSN code 6810. – GST-ARA-10/2017/B-13 Dated:- 20-3-2018 – Shri B.V. Borhade, Joint Commissioner of State Tax and Shri Pankaj Kumar, Joint Commissioner of Central Tax 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 the MGST Act"] by Hafele India Pvt. Ltd., seeking an Advance Ruling for determination of the correct classification of Caesarstone under the MGST Act. 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 m

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rtation of kitchen and bathroom fittings along with furniture and other home accessories (hereinafter called as goods) for onward selling. The Petitioner while importing these goods is subject to Basic Customs Duty and Integrated Goods and Services Tax ("IGST") under Customs Tariff Act, 1975 on goods cleared for home consumption. 3. The Applicant also imports Caesarstone quartz surfaces (hereinafter referred to as "Caesarstone/impugned goods") for onward sale to domestic customers in India. The Applicant while importing the impugned goods is liable to pay Basic Customs Duty, Integrated Goods and Services Tax ("IGST") under Customs Tariff Act 1975 on goods cleared for home consumption. Further on making the outward supply of the impugned goods, depending on the nature of supply, the applicant is liable to discharge the applicable tax i.e. Central Goods and Services Tax ("CGST") and State Goods and Services Tax ("SGST) or IGST as the case may

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e Schedules has been aligned as per the classification adopted in the tariff entries provided under the First Schedule of the Customs Tariff Act, 1975 (hereinafter referred to as the "Customs Tariff Act"). However, in certain cases, there is an inconsistency in classification, resulting in a situation wherein the goods could be classified in a different heading for import whereas the same may fall in the different entry under the respective states schedule for levy of tax on outward supply. Considering the said inconsistency between the classification of the product as per the GST rate Schedule vis-a-vis the Customs Tariff Act Schedule, it becomes necessary for the Applicant to re-determine classification of Caesarstone under the GST regime instead of continuing the classification adopted under the pre-GST era. 7. Based on the examination, the Applicant realized that Caesarstone merits classification under HSN 2506 or 6810 of the GST Schedule. At the time of importation, the

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and Services Tax Act 2017 ("CGST Act"). For ready reference, these conditions are reproduced hereunder: a. The Applicant has obtained registration in Maharashtra and would therefore be covered within the scope of the term "applicant" as defined under Section 95(c) of the CGST Act; b. The question on which advance ruling is sought is in relation to the classification Of Caesarstone thereby fulfilling the condition provided under Section 97(2) of the CGST Act; and c. The question raised in the application is neither pending nor decided in any proceedings in the case of the Applicant under any provisions of the CGST Act. 2. Having complied with the pre-requisite conditions for filing the present Advance Ruling Application, we may now proceed to determine the classification of Caesarstone under the GST regime. The guiding principles determining the classification of a product under the GST regime can be broadly bifurcated as under: a. Classification under the Customs Ta

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is substantiated from the Technical Data Manual – Section 6 ("TDM") issued by the Applicant's vendor. A copy of the TDM issued by the vendor is attached and annexed as Exhibit F. 5. Quartz is a mineral composed of silicon and Oxygen atoms in a continuous framework of SiO4 Silicon-Oxygen tetrahedra. It is the second-most abundant mineral in Earth's continental crust behind feldspar, 6. Section V of the First Schedule to the Customs Tariff Act deals with various Mineral Products. Section V is further bifurcated into 3 Chapters viz., Chapter 25, Chapter 26 and Chapter 27. Chapter 25 covers "Salt; Sulphur-, earths and stone; plastering materials, lime and cement". The Customs Tariff provides that quartz of the following description can be classified under Chapter heading 2506 of the Customs Tariff: "Quartz (other than natural sands); quartzite, whether or not roughly trimmed or merely cur, by sawing or otherwise, into blocks or slabs of a rectangular (inclu

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k and mineral particles. Sand is characterized by the size which is finer than gravel and coarser than silt. However, Caesarstone is the processed form of quartz in the form of slabs and thus, the same would not be construed as a natural sand. 10. Although the GST' regime do not seek to classify goods in excess of 4-digit classification, for a better co-relation of classification under the Customs Tariff Act, we are hereby evaluating the 8-digit classification provided under the Customs Tariff Act. In this connection, it is pertinent to note that Quartz under heading 2506 can either be in powder form or in the form of lumps. 11. The term lump has not been defined under the Customs Tariff Act. Therefore, recourse needs to be made to the dictionary definition of the term lump. This has been defined in The Concise Oxford Dictionary [Pg. 8461] as "A compact mass, especially the one without a definite or regular shape". Applying the aforesaid definition, one may construe that

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n each heading. 13. In view of the above, it can be construed that only such products that are in crude form or have undergone inter alia the mechanical or physical processes are permitted to be classified under Chapter 25 of the Customs Tariff. Thus, while a product may not be supplied in crude form, if the same is subjected to the processes mentioned under Chapter Note 1 to Chapter 25, such product would also be construed to form part of Chapter 25 of the Customs Tariff Act Schedule. For this, it needs to be evaluated whether the processes carried on by the Applicant's vendor falls within the purview of the term "mechanical process" as specified in Chapter Note 1 to Chapter 25. 14. The term "mechanical process" has been defined in the Advanced Law Lexicon (5th Edition) as "A process involving the use of machine". While this definition explains the meaning of the term "mechanical process", we can also refer to the individual meanings of the

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nnotes a substantial measure of uniformity of treatment or system of treatment. According to the Oxford English Dictionary, it means a continuous and regular actions, taking place or carried on in definite manner' [Advanced Law Lexicon Edition)]. Copies of the relevant extract of the aforesaid definitions have been collectively attached and annexed as Exhibit G. 15. In view of the above, the term mechanical process can be understood to mean a series of operations with the use of machines. We shall co-relate this with the manufacturing processes carried on by the Applicant's vendor. The entire process of manufacturing Caesarstone is set out hereunder: a. Inspection of raw materials: The manufacturing process begins with a rigorous inspection of all incoming materials so as to ensure only high quality raw materials are used in the manufacture of Caesarstone. b. Feeding and mixing: The best quality raw materials are blended at a ratio of up to 93% natural quartz aggregates with pi

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Consequently, in terms of Chapter Note I to Chapter 25, the manufacturing operations conducted by the Applicant's vendor are within the ambit of permissible processes. 17. Besides this, the Applicant further submits that the HSN system of coding goods is based on the HSN developed by the World Customs Organization ("WCO"). The WCO, periodically releases an Explanatory Note to each of the Chapters / Products of the HSN. 18. We refer to the Explanatory Notes released by the WCO which are annexed to Chapter heading 2506 of the HSN Code. The relevant extract of the same is as under: Quartz is the naturally occurring crystal form of silica. It falls in this heading only if complying with both of the following two conditions : (a) It must be in the crude state or have not undergone any process beyond that allowed in Note 1 to this Chapter; for this purpose, heat treatment designed solely to facilitate crushing is regarded as a process permitted by Chapter Note 1. (b) It must no

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be construed that the impugned goods merit classification under tariff heading 2506 of the Customs Tari ff Act. 20. It may also be noted that the description of the product used by the vendor in its invoice is "Agglomerated Fabricated Quart: Slab". Thus, further substantiating classification under Chapter heading 2506 of the Customs Tariff Act. 21. In light of the aforesaid analysis, it is beyond doubt that Caesarstone merits classification under Chapter 2506 of the Customs Tariff Act. However, before concluding on the classification, it would be imperative to evaluate tariff heading 68 10 of the Customs Tariff Act. Classification of Caesarstone under heading 2506 of the Customs Tariff Act 22. The other heading that merits consideration for determining the classification of Caesarstone is 6810 of the Customs Tariff. Chapter heading 6810 covers "Articles of cement, of concrete or of artificial stone, whether or not reinforced'. In this connection, it is humbly submitt

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ete boulder has not be defined anywhere and thus, we would refer to the dictionary definitions. As per The Concise Oxford Dictionary, the word concrete refers to the building material made from a mixture of gravel, sand, cement and water. Further, the word boulder refers to a large rock. Thus, on a combined reading of both the aforementioned definitions, it can be construed that a concrete boulder would mean a large rock made from a mixture of gravel, sand, cement and water. In view of the above, the product can merit classification only under the residuary category of tariff entry 68109990. 24. Further, it would be worthwhile to refer to Chapter Note I to Chapter 68 which clearly provides that Chapter does not cover goods falling under Chapter 25. The relevant extract of the same is as follows: " 1. This Chapter does not' cover: a. Goods of Chapter 25; 25. Thus, if Caesarstone qualifies to be classified under Chapter heading 2506, it automatically gets excluded from the appli

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Without prejudice to the aforesaid argument, if one intends to apply Rule 3(a) of the General Rules for Interpretation, the said rule provides that a specific description should be prevailed over a generic description. In the instant case, the two headings that merit consideration is Quartz – In lumps (2506) and Other Artificial Stones (6810). In the instant case, the most specific description that relates to the nature of the impugned goods is under tariff entry' 2506, c. The Hon'ble Apex Court, in plethora of judgments held that the heading that provides a more specific description shall be preferred to the headings providing a more general description. i. In Indian Metals & Ferro Alloys Ltd., Cuttack vs. Collector of Central Excise, Bhubaneshwar, [1991 Supp (1) SCC 125 = 1990 (11) TMI 143 – SUPREME COURT OF INDIA], the Hon'ble Apex Court held that a residuary item can be referred to and such item can be applied only when goods are shown to be not falling under any o

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ical process" and accordingly, is within the scope of the processes permitted by Chapter Note 1 to Chapter 25 of the Customs Tariff; b. Chapter Note I to Chapter 68 specifically excludes goods falling under Chapter 25. Thus, if the goods are capable to be classified under Chapter 25, classification under Chapter 68 is automatically excluded; c. On analyzing the dominant-composition test, it appears that the product has approximately 90% quartz sand classifiable under Chapter 25 of the Customs Tariff Act. Consequently, applying the Rule 2 / Rule 3(b) of the General Rules for Interpretation, Caesarstone would also be classified under Chapter heading 2506 of the Customs Tariff; and d. The description used by the vendor is in line with the Explanatory Notes to Chapter 25 issued by the WCO. 29. However, the GST law in India is at its infancy and the Applicant intends to ensure minimum litigations under the GST regime, Therefore, the Applicant has approached this Hon'ble Advance Rul

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r referred to as "authority" for brevity) for determination of classification of the product '"Caesarstone" imported and sold in domestic market by the applicant. 3. The question before the authority is to decide whether the product "Caesarstone" imported by the applicant can be classified under HSN Code 2506 or 6810. 4. The applicant while submitting their case before the authority have submitted the manufacturing process by which the product "Caesarstone" is manufactured and it's composition. In para 3 of Exhibit B, it has been submitted by the applicant that the said product is manufactured by combining Quartz with high quality polyster resin and pigments which is then compacted under intense vibration, vacuum and pressure into dense and nonporous slabs. The submission is supported by the technical literature (pg 41) submitted by the applicant alongwith the application. 5. The HSN Code 2506 & 6810 describies the product as under :

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d, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. 8. As per chapter note 1 of Chapter 25 only mineral products which are in crude state or have been mechanically or physically processed without changing the character of the mineral product can only be classified under Chapter 25. 9. As submitted by the claimant, the mineral product "quartz" is crushed, combined with pigments and resins and then under intense vacuum and pressure the product caesarstone is manufactured. The processes adopted for manufacturing the said product are not only mechanical Or physical but also chemical in nature by which the quartz which is a mineral product gets converted into a differently identifiable product, commercially known as Caesarstone". As per th

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uct, the articles made of quartz i.e. "Caesarstone" can be classified under Chapter 68. Chapter 6810 specifically mentions "Articles of Cement, of concrete or of artificial stone, whether or not reinforced" and includes Tiles, flagstones, bricks and similar articles. The product Caesarstone being similar article as Tiles, the same is correctly classifiable under Chapter 6810. 12. In view of the above submission it is prayed that the authority may give ruling that the product "Caesarstone" is appropriately classifiable under Chapter 6810 and not 2506. 13. As the above submission is interim in nature, we reserve our right to make further submission before the authority give it's ruling." 04. HEARING The case was taken up for preliminary hearing on dt. 31.01.2018. However, none attended on behalf of the applicant. Since one opportunity was decided to be given, the hearing was scheduled on dt.06.02.2018. On dt.06.02.2018 and on dt.15.02.2018 (the fina

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ed under intense vibration, vacuum, and pressure into dense, non-porous slabs. The slabs are gauged to precise thickness, and polished to an enduring shine or attractive honed finish, After passing inspection, the back of each Caesarstonc slab is imprinted with a zigzag trademark to simplify jobsite identification. Colors and Styles Caesarstone offers the widest spectrum of design options in the quartz surface industry. Our styles range from fine-grained salt-and-pepper patterns to coarse-grained color blends with a variegated visual texture. See our website or contact Caesarstone for color brochures and samples. Stocked Standards: 59 colors are available with a polished finish – 8 of them are also available in a honed (matte) finish. Three colors are available with a concrete finish. Finishes Caesarstone offers 4 distinctive surface finishes that Offer added character beyond the color offering. Caesarstone can be finished on two faces by special order requiring a minimum order quantit

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ed staff members to ensure a quality product that is unrivaled in the industry today. Caesarstone quartz surfaces meet exacting standards of excellence from the initial procurement of raw materials to the final quality control check. one's manufacturing process begins with a rigorous inspection of all incoming raw materials. Only the best quality raw materials are blended at a ratio of up to 93% natural quartz aggregates with pigments and polymer resins. Our strictly monitored automated process includes the following: Feeding & Mixing Raw materials are inspected, then into mixers and blended together. Molding The mixture is then poured into a mould and formed into slab sizes of 3050 x 1440mm Pressing The slab is then compacted by a special vacuum and vibration process at a pressure of 100 tons. Curing The slabs are moved to the curing kiln and heated to 900C for 45 minutes which gives Caesarstone its ultimate strength and solidity. Polishing Slabs are then gauged, calibrated an

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e Composition of Product Approximately 90% quartz, an abundant natural resource and by-product from mining other minerals. Low volatile organic compound (VOC) emissions, contributing to indoor-air quality. Less toxic than wood according to the UPITT standard in New York City building code. Continually developing recycled colors to add to our product line. Having seen as above, let us reproduce the schedule entry in respect of which claim is being laid and also, the entry which is claimed as being not applicable – S. No. Chapter/Heading/subheading/Tariff item Description of Goods GST Rate (CGST+MGST] 114. 2506 Quartz (other than natural sands) quartzite, whether or not roughly trimmed or merely cut by sawing or otherwise in to blocks or slabs of a rectangular (including square) shape 5% [2.5% + 2.5%] 181. 6810 Articles of cement of concrete or of artificial stone whether or not reinforces 18% [9% + 9%] It can be seen that the Heading 2506 covers "Quartz". However, the entry sa

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hat the impugned product surface containing quartz as its major raw material is covered by the natural quartz as falling in the Heading 2606. What we say finds confirmation from the Harmonized Commodity Description and Coding System Explanatory Notes (HSN) Notes of Chapter 25 – 1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes (except crystallization), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading. The impugned product is not in the crude state. The addition of polyester / polymer resins and pigments alongwith quartz changes

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is put through processes which includes heating in a kiln. We see above that even roasting is not allowed by the Chapter Note. The General Notes of this Chapter further say that- "Minerals which have been otherwise processed (e.g., purified by re-crystallisation, obtained by mixing minerals falling in the same or different headings of this Chapter, made up into articles by shaping, carving, etc.) generally fall in later Chapters (for example, Chapter 28 or 68). As can be seen the above General notes throw light on the words "otherwise processed" It can be seen that these words do not cover activities such as mixing with other minerals, let alone polymers or pigments. Further, the words " otherwise processed" do not cover activities such as making up of articles by shaping, curving, etc. HSN Notes of the Heading 2506 make things clearer when they say – Quartz is the naturally occurring crystal form of silica. It falls in this heading only if complying with both

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excludes goods of the nature as the impugned product. None of the arguments and case laws in support of this Heading fail to make a point. Without any further discussion, we would conclude that the impugned product would not be covered by the Heading 2506. The applicant has argued that the impugned product would not be covered by the Heading 6810 as it falls in Heading 2506. Import documents submitted by the applicant reveals import from Caesarstone, Israel thus- Agglomerated Fabricated Quartz Slab of different grades is under Customs Tariff Heading (CTH) 68109990. Agglomerated Slabs (Artificial Slabs) of different grades under Customs Tariff Heading (CTH) 68109100. Let us look at the Customs Tariff Heading 6810 – 6810 ARTICLES OF CEMENT , OF CONCRETE OR OF ARTIFICIAL STONE , WHETHER OR NOT REINFORCED – Tiles , flagstones , bricks and similar articles : 681011 – Building blocks and bricks : 68101110 Cement bricks 68101190 Other 681019 – Other : 68101910 Cement tiles for mosaic 6810

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ineered stone See also: Engineered stone Engineered stones are the latest development of artificial stones, it was invented in the early 1980s and have since been continuously developed by the Italian company Breton S.P.A.'s late founder Marcello Toncelli Engineered stones are a mix of marble powder, resin, and pigment cast using vacuum oscillation to form blocks. Slabs are then produced by cutting, grinding, and polishing. Some factories have developed a special, low-viscosity, high-strength polyester resin to improve hardness, strength, and gloss and to reduce water absorption. There are two major varieties of engineered stones based on the main composition of its aggregates (stone powders), marbles and quartz. The process is more or less similar except in certain details, however the two product have different commercial applications. Engineered marbles are most commonly used as flooring for large commercial projects. Engineered quartz is widely used in the developed world for c

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stone, Silestone and Cambria blend crushed quartz with resins and pigments, pour the mixture into molds and apply pressure to compact the slabs, which are cured and polished into the final product. The quartz is then cut and finished like real stone. http://www.veritas.lt/en/artificial-stone/caesarstone/ The Caesarsrone (R) artificial stone surface is very comfortable in size and lightness. http:/townsvillestone.com. au/articles/naturaI-stone-vs-engineered-stone-kitchen-bathroom Engineered stone is a man-made product and was introduced into the market in the late 1980 s. The need for a manufactured stone arose due to a demand for more consistency in the look of the finished product, and a denser product. The main component in engineered stone is naturally forming quartz which is a highly strong mineral. Engineered stone has general consistency in colour and style due to each piece being made to exact recipes. It contains almost nil porosity which makes it resistant to scratches, chips

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duct was thus – The slabs are composed of 93% quartz and 7% resm binder. After 'he slabs are imported. they are sold only to U.S distributors who use then to produce various counter tops. vanities and fireplace surrounds. It was held that the agglomerated quartz sheets are classified under subheading 6810.99.00, HTSUS, which provides for other articles of artificial stone. We have also come across an article explaining the nuances of classification of stones as can be seen thus – http://stonebusiness.us/index.php?option=com_content&view=article&id=380:us-customs-classification-of-building-stone&catid=22&showall=1&limitstart=&itemid=234 Published 18 DECEMBER 2008 – By Jacob Bunin -National Import Specialist -U.S. Customs and Border Protection Generally, Chapter 25 of the Harmonized Tariff Schedule of the United States (HTS) covers crude stone and minerals, as well as stone and minerals worked in very simple physical ways (e.g., crushed, ground, powdered, wash

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rry shifts the classification of stone from Chapter 25 to Chapter 68. Heading 6802 covers monumental or building stone worked beyond the point allowed in Chapter 25 – i.e., stone processed beyond the stage of simple shaping into blocks, sheets or slabs by splitting, roughly cutting or squaring. Heading 6802 covers the forms of stone created by the mason or sculptor. This heading includes roughly sawn blanks and non-rectangular sheets. The 6802 forms also encompass any stone (including blocks, slabs or sheets) that has been polished, dressed, furrowed, planed, ground, chamfered, molded, carved, ornamented, beveled, edge worked, etc. In addition to worked monumental or building stone, heading 6802 covers articles of monumental and building stone. A significant exception to this rule involves articles of precious or semiprecious stone classifiable in Chapter 71 Heading 6802 (Worked Natural Stone) vs. Heading 6810 (Artificial Stone) Worked monumental/building stone is classifiable in headi

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2018 (5) TMI 810 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (12) G. S. T. L. 585 (A. A. R. – GST), [2018] 2 GSTL (AAR) 71 (AAR) – Applicability of GST – Classification of goods – Natural Easter Dielectric Fluid (Envirotemp FR3) – soyabean oil has to be modified or adapted for use in the transformers – falling under Sr. no. 27 of Schedule I or Serial no, 27 of Schedule II of Notification No. 1/2017 – Rate of GST would be 5% or 12% (i.e. 2.5% / 6% each of CGST and SGST)
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Held that: – The product before us is described as “Envirotemp FR3”. The packing of the product describes “Envirotemp FR3 Fluid” as Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus. The product, as informed, is made up of refined soya beans oil after mixing some additives with the same.
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Various processes are involved in the manufacture of the impugned product. In step 6, some additives are added. But the applicant has not informed the details of these

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ould not mean that a new commodity has not been produced. We have seen above an extract from an article that while there are data and international standards galore for mineral oils, there are as yet no IEC standards addressing the composition or testing of the natural ester oils with their different chemical composition. Each manufacturer has his own set of ingredients to obtain a coolant for transformer. That is precisely the reason that the applicant has not preferred to divulge the details, Thus, by addition of the needful additives and chemicals, we have different transformer coolants made from vegetable oils, each with their different chemical composition. The requirement of retaining the original fundamental structure would not be possible by the use of the additives and chemicals.
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The product is not being sold as a modified vegetable oil but as the product which is resulting from the adaptation of the vegetable oils to obtain a coolant for a transformer – the impugned pro

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scription would be applicable.
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Ruling:- Envirotemp FR3 falls under Serial no. 27 of Schedule II of Notification No. 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the MGST Act, 2017 and Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 issued under the CGST Act, 2017 is taxable at the rate of 6%. – GST-ARA-08/2017/B-12 Dated:- 20-3-2018 – Shri B.V. Borhade, Joint Commissioner of State Tax and Shri Pankaj Kumar, Joint Commissioner of Central Tax 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 CARGILL INDIA PRIVATE LIMITED, the applicant, seeking an advance ruling in respect of the applicability of GST on: Whether Natural Easter Dielectric Fluid (hereinaf

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sions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act" 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVANCE RULING IS REQUIRED. The present Advance Ruling application is being filed by M/s. Cargill India Private Limited ("hereinafter referred to as the "The Applicant'), a company incorporated under the laws of India, having its registered office at Y-65, Ground Floor, Hauz Khas, New Delhi- 16. The applicant is registered in the State of Maharashtra under Maharashtra Goods and Service Tax Act. 2017 having GST registration number 7AAACC3269JIZK with its principal place of business at

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e oils. Offering high quality food ingredients to serve food manufacturers and food service industry Origination, processing, storing, Trading and marketing a wide range of agricultural commodities such as grains, oilseeds, sugar and cotton Offering premix, compound feed and therapeutic care products to nourish and treat animals 1.3 In India, under food segment of Applicant's business there are three manufacturing units at Kandla, Gujarat, Kurkumbh, Maharashtra and Devengere, Karnataka. In addition to the manufacturing plants, the Applicant has depots, warehouses and branches across 23 states in India. 2. ABOUT THE PRODUCT-NATURAL ESTER DIELECTRIC FLUID 2.1 One of the products manufactured by the Applicant is Natural Ester Dielectric Fluid, commonly known as Envirotemp FR3. The said product is manufactured by the Applicant in its Kurkumbh plant in Maharashtra and thereafter sold from there. 2.2 Natural ester dielectric fluid is a proficiently emerging product/technology in the fiel

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virotemp FR3 has immensely helped utility companies and end consumers globally by increasing cost savings and efficiency without requiring major operational changes or capital investments. In India, the procurement of Natural Ester fluid is done through the tendering process. In most cases, the fluid is procured by the Original Equipment Manufacturers (OEMs) who further supply the fluid to the end user along with the transformer. The end user is generally a utility or an industrial client. In certain cases, these utilities directly procure the fluid as well. Due to this reason, the end customer buying or placing the purchase order to the Applicant varies from different transformer manufacturers present in the market to the different categories of end users. 3. MANUFACTURING PROCESS 3.1 The starting point in the production of vegetable oil based dielectric fluid is the vegetable seeds from trees. In case of the Applicant, the ester fluid is made from Soybean oil. After separation of sol

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f different fats or oils of this chapter , not elsewhere specified or included 4.2 As per First schedule of Central Excise Tariff Act, 1985, Excise duty was levied at the rate of 6% on all the products falling under Chapter heading 1518. Further, the said tariff heading was exempted by way of Notification no. 12/2012 – Central Excise dated 17th March 2012, implying that the effective Excise duty rate on this product was Nil under Excise law. 4.3 It is further submitted that under the erstwhile Maharashtra Value Added Tax Act, 2002 tariff heading 1518 was classified under serial no. 54 of the Schedule C as an Industrial input read with MVAT notification no. VAT-1505/CR-234/Taxation-I dated 1st September 2005, (Sl. No, 14). Thus, the effective rate of VAT on the said goods was 6%. 4.4 Under the Maharashtra Goods and Service Tax Act, 2017, Chapter heading 1518 is appearing under Schedule I and Schedule II of Notification No. 01/2017 – State Tax (Rate) dated 29th June 2017. The relevant ex

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heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516; inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, not elsewhere specified of included 4.5 The product in question, i.e., natural ester dielectric fluid is nothing but vegetable oil which is chemically modified to make it fit for transformers and other electricity storage devices. From a reading of the above entries, it appears that the product in question falls under Entry 90 of Schedule I of the MGST Act and taxable at 2.5%. 4.6 Further, it also appears that Entry 27 of Schedule II of the said Notification covers animal fats and oil only. However, the Second part of the said entry, i.e., inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, not elsewhere specified of included creates an ambiguity with respect to the classification of th

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equity and good conscience. It is submitted that the Applicant is of the humble view that the product in question should be classified under Entry 90 of Schedule I of the said Notification and not under Entry 27 of Schedule II. In support of its view, the Applicant, hereby humbly submits its interpretation of the relevant Entries of Schedule I and II. It is submitted that the Applicant is of the humble view that the product in question should be classified under Entry 90 of Schedule I of the said Notification and not under Entry 27 of Schedule II. In support of its view, the Applicant, hereby humbly submits its interpretation of the relevant Entries of Schedule I and II in Annexure II below. STATEMENT CONTAINING THE APPLICANT'S INTERPRETATION OF LAW AND 'OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION(S) ON WHICH THE ADVANCEE RULING REQUIRED The Applicant humbly submits that Natural Ester Dielectric Fluid, being a processed vegetable/soybean oil is classifiable under E

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cluding those of heading 1516 1.3 The above Entry essentially has three aspects namely – I.3.1 The Entry covers only vegetable fats and oils: 1.3.2 The vegetable fat and oil should have undergone one of the processes mentioned in the said entry, i.e., boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas 1.3.3 The vegetable fat or oil may otherwise be chemically modified 1.4 It is submitted that the said Entry no. 90 is wide enough to cover all vegetable oils and fats which are chemically modified, Chemical modification is a process whereby, certain properties of the base oil is changed by adding chemicals to make the same Suitable for certain specific purpose. Owing to the unfavorable impact on the environment of mineral oil-based lubricants, there has been a steady increase in the demand for biodegradable, environment-friendly lubricants. Vegetable oils including soya bean oil is recognized as rapidly biodegradable and are thus promising cand

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and animal oils and their fractions, boiled oxidised, dehydrated suphaurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of the this chapter not eleswher specified of included 2.2. From a reading of the above entry, it appears the following points emerge – 2.2.1. The said Entry has two parts', the first part covers animal fats and animal oils and their fractions and the second part covers inedible mixtures or preparations of animal or vegetable fats and oils 2.2.2 The first part, i.e., animal fats and oils should have undergone one of the processes mentioned in the said entry, i.e., boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas 2.2.3. Animal fat or oil may otherwise be chemically modified 2.2.4, The second part of the entry covers inedible mixture

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ted that there is no mixing or preparation of vegetable oil which is taking place. The process in the present case if purely of chemical modification of only soybean oil to convert it into a biodiesel fuel. Given the above. it is humbly submitted that in Natural Ester Dielectric Fluid. there is no mixture of or preparation of multiple vegetable oils or fats or their fractions. Hence, the product in question ought not to be classified in this Entry. 2.6. Without prejudice to the above, it is humbly submitted that the said entry covers only animal fats and oils which are chemically modified. When it comes to vegetable fats and oil, the said entry covers only mixtures and preparations of the same. Chemically modified vegetable fats and oil is only covered in Entry no. 90 of Schedule I of the Notification No. 01/2017 State Tax (Rate) under the MGST Act. Given the above, it is humbly submitted that Entry no. 27 of Schedule II of the Notification No. 01/2017 – State Tax (Rate) under the MGST

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cation and rate of various products under GST. As per the said Explanation, the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes or the First Schedule shall, so far as may be, apply to the interpretation of the said Notification No. 01/2017. 3.4. In terms of Rule 3(a) of Interpretative Rules of the Customs Tariff Act, 1975, when a specific entry is available for Classification, goods cannot be classified in a general entry, Taking a cue from the above, it is submitted that Entry no. 90 of Schedule I which covers chemically modified vegetable oil is much more specific entry as compared to Entry 27 of Schedule II which covers only preparation and mixtures of vegetable fats and oil and hence, the product in question ought to be classified in Entry 90 of Schedule I. 3.5. In this regard, reliance may be placed on the following judicial pronouncements – A. In the ease of

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further held that if the Department intends to classify the goods in question under a heading which is different from the heading under which an assessee classifies such goods, the burden of proof is on the Department which has to be discharged by adducing proper evidence. In the instant case, the onus was on the Department to justify the change of classification sought to be made by the impugned Circular, which onus, in my opinion, has not been discharged by the Department. Thus, it is evident that the impugned Circular is blatantly contrary to the said Rule and is thus, not sustainable. B. In the Case of Flora Agrotech versus The Commissioner of Central Excise, Vapi reported in 2015 (319) E.L.T. 333 (Tri. – Ahmd.) = 2014 (11) TMI 114 – CESTAT AHMEDABAD it was held as under A specific entry in the CETA, 1985 has to be the proper classification than a general entry in Chapter 39 of the CETA, 1985, as per the Rules of interpretation to the CETA, 1985. The Synthetic & Art Silk Mills

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grotex technical textile include Shed nets, mulch mats, crop covers, anti-hail nets, brid protection nets, fisheries nets, etc. Further office of Joint DGFT Surat while issuing Authorisation No. 5230009764, dated 15-11-2011 has held their product Warp Knitted Fabrics to be classifiable under ITCHS Code 60059000. As per Indian Standard ICS 59.080.70; 65.020.20 Agro Textiles-Shed Nets, for Agriculture & Horticulture purposes are fabrics made from plastic materials. C. In the case of The Commissioner of Central Excise, Aurangabad versus IVP Ltd. reported in 2004 (173) E.L.T. 128 (Tri. – LB) = 2004 (9) TMI 135 – CESTAT, NEW DELHI it Was held as under We also find force in the submissions of learned Senior Departmental Representative, that a specific Heading takes precedence over the general one. Heading 69.01 is a specific Heading for nozzles whereas its classification under Heading 85.15 is as general as parts of welding machines. Further, Rule 3 of the Interpretative Rules also provi

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the Entry no.27 of Schedule II is a residual or a general entry as the said entry ends with the words – not elsewhere specified or included. It is humbly submitted that by adding these words in the Entry, the intention of the legislature is to render this entry as a residual entry. Thus, if the products can be classified in any other more specific entry, it should be done as such and such specific entry shall be considered over the general entry In this regard, reference can be drawn from the case of H.P.L. Chemicals Ltd. versus Commissioner of Central Excise, Chandigarh, reported in 2006 (197) E.L.T. 324 (S.C.) = 2006 (4) TMI 1 – SUPREME COURT OF INDIA , wherein the hon'ble Supreme Court has held as under – The aforesaid reasoning of the Tribunal in our view is incorrect. Heading No. 38.23 (which was subsequently renumbered as Heading No. 38.24) is a residuary heading which applied only to residual products of chemical and allied industries, not elsewhere specified or included .

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categories of goods some goods have been specified as exempt from duty. The goods which have been specified for the purpose of exemption do not cease to stand as specified in the First Schedule only because those goods have been mentioned for the purpose of exemption. In other words, the residuary item No. 68 only deals with goods have not been specified also where in the First Schedule either for the purpose of imposition of duty or granting exemption from duty. That appears to be the clear and natural meaning of the phrase not elsewhere specified . To say not elsewhere specified means only not elsewhere specified for the purpose of imposition of duty is to introduce words of limitation which were not there in the statute. In my judgment, this appears to be the proper construction of tariff item No. 68. Even if two constructions are possible of the phrase not elsewhere specified the construction which favours the tax-payer must be preferred. Therefore, in my judgment, the expression a

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ectric Fluid is known as chemically modified biodiesel which is used as transformer fuel in general trade parlance. It is not known as mixture or preparation of vegetable fats or oils. 4.2. In this regard, reference may be made to the case of Atul Glass Industries Ltd. Versus Collector of Central Excise reported in 1986 (25) E.L.T. 473 (S.C.) = 1986 (7) TMI 90 – SUPREME COURT OF INDIA wherein the Hon'ble Supreme Court has held as under- The test commonly applied to such cases is how is the product identified by the class or section of the people dealing with or using the product. That is a test which is attracted whenever a statute does not contain any definition. It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between an article and

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HOULD BE FOLLOWED 5.1. It is submitted that while fixing the rates of goods and services under GST, the GST council largely followed the principle of equivalence vis-a-vis the rate structure under the pre-GST regime. 5.2 In this regard, it is pertinent to mention that under Central Excise, the said product was classified under Chapter Heading 1518 under the description, Animal or vegetable fats and oils and their fractions, boiled oxidised, dehydrated suphaurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of the this chapter not eleswher specified of included 5.3. As per First schedule of Central Excise Tariff Act, 1985, Excise duty was levied at the rate of 6% on all the products falling under Chapter heading 1518. Further, the said tariff item was exempted by way of Notification no. 12/2012 – Centr

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dule I of the Notification No. 01/2017 – State Tax (Rate) under the MGST Act and be subject to 2.5% State tax. PRAYER IN VIEW OF THE FACTS OF THE CASE AND SUBMISSIONS MADE IT IS HUMBLY PRAYED THAT THE HON'BLE AUTHORITY MAY KINDLY PASS THE FOLLOWING RULING – A. Declare Natural Ester Dielectric Oil to be classified under Entry 90 of Schedule I of Notification No. 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the Maharashtra Goods and Services Tax Act, 2017 B. Declare the rate of State Tax under the Maharashtra Goods and Service Tax Act, 2017 for Natural Ester Dielectric Oil to be 2.5% ad voleram; C. Pass such other Ruling as this Authority may deem fit in the interest of justice, equity and good conscience. 03. CONTENTION – AS PER THE CONCERNED OFFICER The submission of the Assessing authority as follow – 'In respect of above dealers application for advance ruling, in deciding the correct rate of tax on the product NATURAL ESTER DIELECTRICAL FLUID viz. (Envirotemp FR

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nvirotemp FR3 is basically inedible mixture of vegetable oil & additive. This product is covered under schedule II and taxable rate of 6% state tax (SGST) and 6% central tax (CGST) i.e. covered in sr.no. 27 of schedule II on following material fact- 1. Definition of food as given in the Food Safety and Standard Act , 2006 is given below As per sec 3 clause J of FDA Act 2006 (j) food means any substance, whether processed, partially processed or unprocessed, which is intended for human consumption and includes primary food, to the extent defined in clause (ZK) genetically modified or engineered food or food containing such ingredients, infant food, packaged drinking water, alcoholic drink, chewing gum, and any substance, including water used into the food during its manufacture, preparation or treatment but does not include any animal feed, live animals unless they are prepared or processed for placing on the market for human consumption, plants prior to harvesting, drugs and medici

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, transport or holding of such food results, or may be reasonably expected to result (directly or indirectly), in it or its by-products becoming a component of or otherwise affecting the characteristics of such food but does not include contaminants or substances added to food for maintaining or improving nutritional qualities; The list of additives approved by Food Safety & Standard Act 2006 is attached separately. The additives required for production of EFR3 are not seen covered in the Food additives list approved by FDA Act. As per provision of FDA Act Food license is mandatory for each food product. In the instant case, the applicant has not furnished any document showing the product as has been approved by FDA as food products. If at all impugned product is a food item & the applicant has been approved by the FDA for the same then the subsequent dealer's would also require food product license. In the present case, going by names, as stated by applicant, the customers

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n manufactured for human consumption only. It is categorically being pointed out that, the applicant's product is inedible mixture or preparation of vegetable fats or oil or fractions of different fats. As per applicant s say and information available for the same product of another manufacturer [Cooper Envirotemp FR 3] the product is derived by mixing some additives to soya bean oil. As per the competitor manufacturer s literature 5% mass fraction is related to additives & 95% mass fraction relates to Degummed soya bean oil. Thus considering all factors, discussed at length in the foregoing paras, it is once again re-iterated that the applicant's product is a inedible mixture of vegetable oil/ fats falling under HSN 1518 and therefore liable for 12% GST [6% CGST + 6% SGST] covered by entry No. 27 of schedule II of Notification No. 01/2017 dtd 29.06.2017." 04. HEARING The case was taken up for hearing on dt.18.01.2018 when Sh. Rajat Bose, Advocate, attended on behalf o

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2018 to submit a certified test report from an authorized Laboratory by dt.25.02.2018 for decision in the matter as the Authority intends to know as to what are the other chemicals or oils mixed with soyabean oil to make it their final product. However, the details as asked for were not submitted. He requested to grant him time till dt.08.03.2018 to submit the information as called for. They submitted a copy of an Analysis Report as given by Fare Labs Private Limited, Gurgaon, Haryana on dt.14.03.2018. The jurisdictional officer, Sh. S.A. Rajput, Dy. Commissioner of State Tax (LTU-E-614) Pune was present on all the three hearings. He has tendered a written submission in the matter. 05. OBSERVATIONS We have gone through the facts of the case. The product before us is described as "Envirotemp FR3". The packing of the product describes "Envirotemp FR3 Fluid" as Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus. The produ

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and its decomposition products are removed, Gossypol-like pigments are removed, Toxic agents, such as polycyclic aromatic hydrocarbons are removed (if carbon is used in quantity). Step 4 After bleaching, the soya bean oil is deodorized. Deodorizing is essential for removing undesired components such as moisture, color, and odor that negatively impact the taste, smell, and appearance of the final product. Effective deodorization is a complex vacuum steam distillation process that involves using high-pressure steam to heat the oil to a precise temperature for stripping impurities and then cooling it to retain the natural oil characteristics. Step 5 After the above process, Refined, Bleached and Deodorized (RBD) Soya Bean Oil is obtained. Step 6 We add some additives to RBD Soya Bean oil and do pre-treatment, after pre-treatment filtration process is undertaken to strain out any impurities that may exist in the oil to make it pure. Step 7 After addition of additive we do filtration. Step

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. The report as submitted by the applicant states as under – "FARELABS FOOD ANALYSIS & RESEARCH LABORATORY Testing, Calibration, Proficiency Testing & Training Services Test Report Sample Particulars: Nature of sample & No. of samples Envirotemp FR3 Fluid (One Sample) Brand Name, if any None Batch No. 214 Sample Quality & Packing 500ml, Pet Bottle Date of Performance of test 10th – 13th March, 2018 Method of Sampling Sample is provided by Cargill India Pvt. Ltd. Analysis Report S. No. Parameter Test Result Protocol 1. Vegetable Oil, % by wt. 98.5 AOCS Ea 8 -58 2 Number of Vegetable present Oils 1 FL/SOP/HPLC -09 3 Other Chemicals, % 1.0 FL/SOP/FC – 280 Inference : The sample is one single Vegetable oil only, there is no blending with any other oil is detected." As can be seen, the test report also gives no details of the additives and chemicals which are added while manufacturing the impugned product, Let us see how the inference and the incomplete particulars

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illed transformers 15-20 percent smaller and can deliver up to 20 percent overload capacity. What 's more, FR3 fluid actually protects the transformer insulation paper, making it last longer-in fact, five to eight times longer than transformers filled with mineral oil. https://www.cargill.com/doc/1432076502628/s10-storage-and-handling-tds.pdf Envirotemp™ FR3™ fluid is a natural ester-based dielectric coolant formulated for use in distribution and power transformers. Envirotemp FR3 fluid is primarily used in new transformer applications. It has also been applied in transformer retrofill, new switchgear, specialty power supplies, and other applications. ENVIRONMENTAL Envirotemp FR3 fluid is formulated from vegetable Oils and performance enhancing additives. Some other information can also be had a look at – http://www.netaworld.org/sites/default/files/public/neta-journals/NWfa04-Chem%20Per.pdf-'Natural Ester Dielectric Fluids" by Lance R. Lewand Doble Engineering

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ME TYPE MANUFACTURER BIOTEMP ® Comprised mostly of mono-un­saturated high oleic acid triglyceride vegetable oils. The oleic acid group is defined as having one carbon double bond, part of the eighteen carbon atoms in the hydrocarbon chain of a carboxylic acid. Examples of high oleic oils are sunflower, safflower, and rapeseed (canola). ABB Inc. BIOTRANS ® A mixture of partially hydrogenated soybean oil high in oleic acid con­tent, methyl esters produced from soybeans, palm or coconut oils used to thin the dielectric liquid Cargill Envirotemp ® FR3 Edible-seed oil based dielectric liq­uid. It is a natural ester (triglyceride – fatty acid ester) containing a mixture of saturated and unsaturated fatty acids with 14 to 22 carbon length chains containing one to three dou­ble bonds. Suitable vegetable oils, which may be used independently or combined, include: soya, sunflower, and rapeseed (canola). Cooper Power Systems Coconut Oil Coconut Oil University of Moratu

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g several techniques. Two techniques are used for obtaining the crude oil from oil seeds. Batch pressing is the first technique and has been used for some time. Batch processing consists of applying either hydraulic pressure to the vegetable seed or pulp via hydraulic press or through the use of a rotating screw or worm and is best suited for softer crops like sunflower and rapeseed. Another refining process involves crushing the seeds and extracting the oil with a solvent such a hexane and is better suited for harder crops such as soybeans. A degumming step is necessary to remove materials other than oil, such as chlorophyll. This is performed either by physical separation, which takes time, or by combining the material with water and caustic material to accelerate the separation process. The next step, a bleaching process that is part of a neutralization process, also subjects the oil to clay treatment to remove polar compounds. Deodorizing the oil is accomplished via steam distillat

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e only allowed to contain DBPC (2,6-ditertiary-butyl paracresol, BHT) or DBP (2,6-ditertiary-butyl phenol) in concentrations up to 0.3 percent. DBPC and DBP have had a lengthy history of use in transformer oil and no adverse effects have been documented. The U.S. patents for BIOTEMP ®, BIOTRANS ® and Envirotemp ® FR3 ® incorporate enough variation into the descriptions of each liquid that the exact combination and concentration cannot be determined. Most of these additives have been well-established in the chemical and food industries for some time, but it is not fully known if there are any adverse characteristics when used in transformers over a long period. The table below provides a listing of the additives and their described use. It must be emphasized that not all of these additives are used but the possibility for some or combination thereof to be used does exist. In some of the dielectric liquids listed in the table, the additive package can make up as much as t

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d/or acrylic oligomers and polymers) Antimicrobial agent: (BHA, potassium sorbate, sorbic acid, monoglycerides and/or Vitamin E) Conclusions Natural esters have been used as a dielectric liquid since the invention of the oil-filled transformer. Because of their chemistry these liquids have some limitations in their use. Recent advances in research and refining and additive packages have produced a new breed of natural esters that try to address these limitations …………………… http://www.gegridsolutions.com/alstomenergy/grid/Global/CleanGrid/Resources/Documents/Ester%20Oils%20-%20Think%20Grid%20n%C2%B07%20.pfd While there are data and international standards galore for mineral oils, there are as yet no IEC standards addressing the composition or testing of the natural ester oils with their different chemical composition. This lack of standards could be seen as one of the limiting factors with regard to the initial rale of implementation

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scription of Goods Rate [CGST + MGST] 27. 1518 Animal fats and animal oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516; inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, not elsewhere specified of included 5% [2.5 + 2.5] 90. 1518 Vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 12% [6+6] We shall also reproduce herein the position as appearing in the Customs Tariff Heading 1518 ANIMAL OR VEGETABLE FATS AND OILS AND THEIR FRACTIONS , BOILED, OXIDISED, DEHYDRATED, SULPHURISED, BLOWN, POLYMERISED BY HEAT IN VACUUM OR IN INERT GAS OR OTHERWISE CHEMICALLY MODIFIED, EXCLUDING THOSE OF HEADING 1516 ; INEDIBLE MIXTURES OR PR

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oiled, oxidized, dehydrated, sulphurised, blown, polymerized by hear in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516; • Part 2 – Inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this Chapter, not elsewhere specified or included. b. Of the Tariff Heading 1518, schedule entry 90 covers portion relating to vegetable fats and oils and their fractions AND schedule entry 27 covers portion relating to animal fats and oils and their fractions. c. The schedule entry 27, additionally, covers the portion of the Tariff Heading 1518 pertaining to inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of Chapter of 15. d. The HSN Notes in respect of the part 1 (as reproduced above) of Heading 1518 say thus- "This part covers animal or vegetable fats and oils and their fractions which have been subjected to processes which mod

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om vegetable oils. The final product obtained after subjecting soyabean oil to different processes is used as a coolant for transformers. The end product has a distinct identity in the sense that when one desires to have vegetable oil, the impugned product would not be accepted. The short point that we would like to make is that the impugned product is not soyabean oil per se. The part I (as reproduced above) of Heading 1518 speaks of certain processes which have been subjected to vegetable and animal oils. But the HSN Notes say that despite undergoing these processes, the vegetable or animal oils should retain their original fundamental structure. In the present case, we have a final product which is a transformer coolant. Though the Test Report shows the percentage of the chemicals to be 1% or the vegetable oils to be at 98.5% would not mean that a new commodity has not been produced. We have seen above an extract from an article that while there are data and international standards

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is described as a "fluid". Is a fluid same as an oil? A fluid is different from even a liquid, let alone oil. The product is not being sold as a modified vegetable oil but as the product which is resulting from the adaptation of the vegetable oils to obtain a coolant for a transformer. In view thereof, we are convinced that the impugned product would not be covered by the part 1 (as reproduced above) of Heading 1518. f. We now come to part 2 (as reproduced above) of Heading 1518. This part covers inedible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of the Chapter 15. The present product, as discussed above, is a preparation from vegetable oil. It is derived from soya bean oil. In addition, it is inedible. Therefore, it could very well be covered by the description "inedible preparations of vegetable oils'. Now the aspect which remains to be seen is " not elsewhere specified or included". We have not

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easons as discussed in the body of the order, the questions are answered thus – Q. Whether Natural Easter Dielectric Fluid (hereinafter referred to as 'Envirotemp FR3') fall under Serial no. 90 of Schedule I of Notification No, 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the MGST Act, 2017 and Notification No. 1/2017- Central Tax (Rate) dated 28th June, 2017 issued under the CGST Act, 2017 is taxable at the rate of 2.5 0/0 (State tax and Central tax)? A. Answered in the negative. Q. Whether Envirotemp FR3 falls under Serial no. 27 of Schedule II of Notification No. 1/2017-State Tax (Rate) dated 29th June, 2017 issued under the MGST Act, 2017 and Notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 issued under the CGST Act, 2017 is taxable at the rate of 6% (State tax and Central tax)? A. Answered in the affirmative. – Case laws – Decisions – Judgements – Orders – Tax Management India – taxmanagementindia – taxmanagement – taxmanagementindia.com – T

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2018 (5) TMI 1050 – CESTAT MUMBAI – TMI – Liability of duty – scrap generated at the job-worker's premises – Held that: – the issue came up before the Tribunal in respondent assessee's own case M/s VE Commercial Vehicles Ltd. Versus Commissioner of Central Excise, Thane-I [2016 (2) TMI 554 – CESTAT MUMBAI], and has decided in their favor by holding that there is no liability of the assessee sending in the inputs for job work in respect of scrap generated at job workers end – appeal dismissed – decided against Revenue. – APPEAL NO: E/87968/2017, CROSS-OBJECTION NO: E/CROSS-85103/2018 – A/86109/2018 – Dated:- 20-3-2018 – Shri M V Ravindran, Member (Judicial) Shri D.S. Chauhan, Superintendent (AR) for appellant Shri Anil Mishra, Advocate for

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ity relying upon the decision of the Tribunal in respondent-assessee's own case for earlier period has set aside the order-in-original and allowed the appeal of the respondent. 4. I find that the first appellate authority was correct in following the law which has been decided by the higher judicial forum in respect of the very same issue and in the assessee-respondent's own case. I had also find that the issue came up before the Tribunal in respondent assessee's own case and has decided in their favour as reported at 2016 (2) TMI 554-CESTAT-MUM by order dated 07/01/2016. I do not find any reason to interfere with such an order passed by the first appellate authority. 5. Accordingly, I hold that the impugned order is correct and

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2018 (5) TMI 1052 – CESTAT MUMBAI – TMI – CENVAT/MODVAT credit – interest – penalty – Central Excise duty paid on 10 moulds during the period prior to 21/07/1995 were factually installed in the factory and subsequently removed to the job-workers – Held that: – the appellant herein was unable to at forth any evidence that the 10 moulds in question were in fact received in the factory and subsequently removed to job-worker post 21/071995 – demand of MODVAT credit upheld.
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Interest and penalty – Held that: – the period involved in this case is being prior to 1995 and the issue being disputed, which could have been argued on limitation, the question of imposing equivalent amount of penalty does not arise – interest also set aside.
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A

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ing authority in respect of the appreciation of the facts whether CENVAT credit availed of the Central Excise duty paid on 10 moulds during the period prior to 21/07/1995 were factually installed in the factory and subsequently removed to the job-workers or otherwise. It is noticed that the appellant herein was unable to at forth any evidence that the 10 moulds in question were in fact received in the factory and subsequently removed to job-worker post 21/071995. I find that the remand by the Tribunal was only for this limited purpose which has not been satisfied by the appellant herein. In view of this, I hold that the demands confirmed by the lower authorities are correct and is to be upheld. 5. As regards the interest and penalty, I find

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