In Re : Hafele India Private Limited

In Re : Hafele India Private Limited
GST
2018 (5) TMI 646 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (13) G. S. T. L. 65 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – AAR
Dated:- 20-3-2018
GST-ARA-10/2017/B-13
GST
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

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icant is engaged in the business of importation 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 be.

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goods as per the GST rate 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 t

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tions for filing the Advance Ruling in terms of Section 97 of the Central Goods 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 classificat

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lity polyester resins and pigments and is then compacted under intense vacuum and pressure into dense and non-porous slabs.
4.   The previously mentioned fact 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

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sarstone imported by the Applicant shall be construed as a Quartz.
9.   Further the tariff entry 2506 specifically excludes natural sand. Sand is a naturally occurring material composed of finely divided rock 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 dictio

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ed, 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.”
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

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g of the word “process” is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject matter in order to transform or reduce it to a certain-stage; “process” connotes 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

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A copy of the same is attached an annexed as Exhibit H.
16.   On a combined reading of the definition of the term mechanical process with the manufacturing process carried on by the Applicant's vendor, it can be construed that entire manufacturing process is within the scope of the term mechanical process. 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.

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ng or otherwise, into blocks or slabs of a rectangular (including square) shape. ”
19. It is pertinent to note that Chapter Note 1 to Chapter 25 of the HSN is identical to the Chapter Note 1 of the Customs Tariff Act and hence, the same is not replicated again for the sake of brevity, Therefore, on a harmonious reading of the Customs Tariff Act and HSN Explanatory note, it can 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 6

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crete boulder”.
a.   As per Rule 22 of the Madhya Pradesh Mineral Rules 1996, Flagstone is a natural sedimentary rock which is used for flooring, roof top, etc. and used in the cutting and polishing industry. The meaning of the term flagstone clarifies that the same is different from Caesarstone.
b.   We would also refer to the meaning of the term “concrete boulder”. The word concrete 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 6810

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the manner of determination of classification when the goods are classifiable under two or more headings. The analysis pertaining to the same is as follows:
a.   At the outset, it is submitted that due to a specific exclusion of goods falling under Chapter 25 in Chapter Note I to Chapter 68, it appears that there does not exist a possibility of a scenario where a particular product can be classified under Chapter 25 as well as Chapter 68 of the Customs Tariff Act.
b.   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&

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0008 (SC) = 2002 (5) TMI 51 – SUPREME COURT OF INDIA] has laid down the principle that while determining the classification of a product, the specific entry provided under the Tariff should prevail and overrule a general entry.
28.   From the above, it is evident that Caesarstone merits classification under heading 2506 of the GST Schedule on account of the following reasons:
a.   Although the manufacturing process carried on by the Applicant's vendor involves use of machines, the same is purely within the ambit of the term “mechanical 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

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de in the forgoing paragraphs;
b.   Any other relief as this Hon'ble Advance Ruling Authority may deem fit.”
03. CONTENTION – AS PER THE CONCERNED OFFICER
The submission, as reproduced verbatim, could be seen thus –
“1n case of above mentioned Advance Ruling Application No 10 dated 21.12.2017 filed by M/s Hafele India Pvt Ltd. Mumbai 400 042, it is respectfully submitted as under:
1.   M/s Hafele India Pvt Ltd.(hereinafter referred to as the applicant) are registered with Central Government under GST Act with GSTIN No 27AABCH2762A1Z5
2.   The applicant has filed an application with the Advance Ruling Authority (hereinafter 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

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n of any product is governed by Section & Chapter Notes, HSN explanatory notes and General Rules for interpretation. For classifying any product in particular chapter, the chapter notes are of utmost importance. Therefore it is very much essential to examine the chapter notes of both the chapters i.e. Chapter 25 & Chapter 68 before deciding to classify the product under particular chapter.
7.   The Chapter Note 1 of Chapter 25 clearly states that “, 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.”
8.   A

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classification of the product under any particular sub-heading of Chapter 25, the processes mentioned against the chapter sub heading are only required to be carried out and not beyond that. The processes mentioned against Chapter sub-heading are only cutting or mere trimming by sawing or otherwise and not beyond that. In the instant case as more processes are carried out than mentioned in chapter sub heading 2506, the product cannot be classified under chapter 2506.
10.   Thus, the classification of the product under Chapter 25 is ruled out in view of Chapter note 1 of Chapter 25.
11. The Chapter 68 includes Articles of Stone, plaster, Cement, asbestos, mica or similar material. Quartz being similar product, 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 p

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nbsp;31.01..2018  Ms. Farah Zachariah, Assistant Commissioner appeared and made oral submission. On dt.15.02.2018, Sh. Sudhakar Pandey, Dy. Commissioner GST & Central Excise, Div- II, Navi Mumbai attended and furnished a writ-ten submission.
05.   OBSERVATIONS
We have gone through the facts of the case. We have been called upon to decide the classification of the product 'Caesarstone' under the GST Act. Before we move on to determine the classification, we need to understand the product. Let us see how the product has been described –
Composition Caesarstone is 90 percent crushed quartz (silicon dioxide – SiO2), one of nature's hardest minerals. Quartz is combined with high-quality polyester resins and pigments, and then compacted 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 Caesa

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lants.
Concrete TM matte, textured finish which introduces an industrial aged feel to the surface. This unique finish never requires sealing and is designed to acquire a natural patina over time which adds to the character of the surface, yet remains easy to clean and maintain.
Motivo (R)  is a pattern-design application applying a patented embossed effect.
Caesarstone (R) is the original engineered quartz surface. Use it as an attractive, versatile, and distinctive finish for residential, commercial and institutional buildings.
Manufacturing Process Caesarstone has three state-of-the-art production facilities and five fully automated production lines servicing a global distribution network.
We use advanced Breton technologies, and employ highly skilled and trained 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 quali

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ction to ensure our customers receive a top quality product.
Labelling
Each slab is then marked and labelled with all relevant information necessary for the smooth operation of fabrication and logistics _
Use Caesarstone for:
* Countertops and backsplashes * Shower and tub surrounds * Lavatory and sinks * Interior wall cladding * Table and desk tops * Wainscots and wall bases * Toilet compartment partitions * Fireplace mantles and surrounds* * Elevator cab walls * Service counters * Stair and mezzanine railing systems*
Sustainable Standards and Certifications
ISO 14001 and 9001 Certification: Caesarstone IS the first quartz surfacing company to receive ISO 14001 and 9001 Environmental Management Systems certification.
Sustainable 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

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rectangular (including square) shape. A look at the information reproduced above reveals that the impugned product is not “quartz” per se. “Quartz” is one of the raw materials to produce the impugned product which is an engineered quartz surface and which has use as an attractive, versatile, and distinctive finish for residential, commercial and institutional buildings. Such a finished product containing polyester / polymer resins and pigments alongwith quartz is but certainly not envisaged by the description of the Heading 2506. Any arguments about composition of quartz in the impugned product being about 90% would lead to no different inference than the one had in the preceding sentence. It would be far-fetched a proposition to say that 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

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und, powdered, levigated (polish, smooth, to grind to a  fine smooth powder), sifted, screened, concentrated by flotation, magnetic separation or other mechanical or physical processes. The words “other mechanical or physical processes” in the Note cannot be taken to cover the manufacturing of the impugned product. These words take colour from the words “crude state, without changing the structure of the product, crushed, powdered, etc.”. The Chapter Note, by specific mention, states that it does not cover products that have been roasted, calcined or obtained by mixing. The impugned product is obtained by blending the raw materials which consist of quartz aggregates, pigments and polymer resins in a mixer. This mixture 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, o

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r Note 1.
(b)   It must not be of a variety and quality suitable for the manufacture of gem-stones (e.g., rock crystal and smoky quart, amethyst and rose quart). Such quart  is excluded (heading 71.03), even if intended to be used for technical purposes, e.g„ as pie-electric quartz or for the manufacture of parts of tools.”
All above help us understand that the 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. 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 b

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990

Other
We have reproduced hereinabove the description against the Heading 6810 for the purposes of the schedule entry under the GST Act. 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 Tariff Heading 6810 would fall in the description against the Heading 6810 for the purposes of the schedule entry under the GST Act.
Now, we see that the Heading covers artificial stone. Artificial stone is understood thus-
https://en.wikipedia.org/wiki/Artificial stone
Artificial stone is a name for various kinds of synthetic stone products used from the 18th century onward. As well as artistic uses, they have been used in building construction, civil engineering work, and industrial uses such as grindstones.
Engineered stone
See also: Engineered stone
Engineered stones are the latest development of artificial stones, it was invented in the early 1980s

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ed stone
Reconstituted stone (also known as Engineered, re-composed agglomerated and synthetic stone) is manufactured from a mix of stone aggregate chips (most commonly quartz or marble, but also igneous rocks such as granite und basalt); mineral fillers (generally the ground aggregate); a resin binder (typically an unsaturated polyester); pigments and additives.
The impugned product is described as ” Caesarsrone(R) is the original engineered quart surface”. It also contains quartz aggregates, pigments and polymer resins. We may also view some other information as available on the Internet –
https://www.washingtonpost.com/realestate/with-countertops-quartz-has-supplanted-granite-as-the-peoples-choic/2017/01/19/16a89ac2-dec9-11e6-acdf-14da832ae861 story.html?utm term=1d10fd5c785f
To fabricate the artificial stone, manufacturers such as Caesarstone, Silestone and Cambria blend crushed quartz with resins and pigments, pour the mixture into molds and apply pressure to compact the slabs

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from naturally forming quartz, a difference of up to two shade tones can be viewed between sample and slab, i.e. the sample you see may not be exactly the same as the slab. This is an important consideration if choosing engineered stone – which is a different process to if selecting natural stone, (where you can chose the specific slab).
 A look at all above helps understand that the impugned product is an article made from artificial stone. It is a product made using artificial or engineered stone. The product certification explains things, beyond doubt –
 
It can, therefore, be understood as to why the impugned product is being cleared under the Heading 6810. We have also found a Ruling   in respect of the product classification of Silestone TM (as seen above) agglomerated stone slabs under the Harmonized Tariff Schedule of the United States (HTSUS). The information about the product was thus – The slabs are composed of 93% quartz  and 7% resm binder. Afte

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ortations of worked stone classifiable in Chapter 68 are more common than importations of crude and slightly worked stone classifiable in Chapter 25.
Chapter 25 vs. Chapter 68
   While headings 2515 and 2516 cover crude or roughly trimmed monumental/building stone and monumental/building stone merely cut into rectangular (including square) blocks or slabs, stone worked beyond this point is classifiable in heading 6802.  Any cutting that goes beyond simple cutting from the quarry block requires classification in Chapter 68. 
   Operations that dictate classification in Chapter 68 include honing and other processes designed to create a smooth or flat surface; the same operations applied to the edges of a stone; polishing applied to either the face or edges of the stone; dressing, grinding, chamfering, molding, carving, etc.  All workings which goes beyond the simplest cutting associated with the quarry shifts the classification of stone from Chapter

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classifiable in heading 6802, assuming the stone is natural.  However, artificial stone is classifiable in heading 6810. 
   Artificial stone is formed when pieces of natural stone, or crushed or powdered natural stone, is agglomerated with plastic resins, cement or other binders.  In artificial (agglomerated) stone, the binding material and the natural stone are uniformly agglomerated throughout the body of the article.
   The classification of floor and wall tiles of agglomerated stone is dependent on the precise type of binding material used in the products.  Subheading 6810.19.12 provides for floor and wall tiles of stone agglomerated with binders other than cement (e.g., plastic resins).  Floor and wall tiles of stone agglomerated with cement are classifiable in subheading 6810.19.14.
All above leads to the inevitable inference that the impugned product would merit classification in Chapter 68 and the Heading 6810.
05.   I

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In Re : Cargill India Private Limited

In Re : Cargill India Private Limited
GST
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)
AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – AAR
Dated:- 20-3-2018
GST-ARA-08/2017/B-12
GST
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 (hereinafter referred to as ' Envirotemp FR3') fall under Serial no. 90 of Schedule

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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 7th, 701, South Block, Sacred World, Wanawadi, city Pune MCORP, T

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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

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end customer by reducing the overall cost.
2.5    Envirotemp 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

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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 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

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6
Animal fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinised, whether or not refined, but not further prepared.
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
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

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ster Dielectric Fluid can be said to be a mixture of inedible vegetable oil which is not elsewhere classified, hence, classifiable under Entry 27 of Schedule II of Notification No. 01/2017 – State Tax (Rate), under the MGST Act, and taxable at the rate of 6%. State Tax?
5.3  Pass such other Ruling as it may be deemed fit in the interest of 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 E

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hich is used as fuel for power transformers, In this regard, it is pertinent to analyze Entry 90 of Schedule II. The said Entry is reproduced below for ease of reference –
“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”  
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

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or, clearly falling within the ambit of the Entry 90 of Schedule I of the Notification No. 01/2017 – State Tax (Rate) under the MGST Act.
2.      THE PRODUCT IN QUESTION DOES NOT FALL IN ENTRY 27 OF SCHEDULE II
2.1  It is submitted that Entry 27 of Schedule II is not the proper classification for Natural Ester Dielectric Fluid. For the ease of reference, Entry 27 has been reproduced below –
” Animal fats 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

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this chapter, not elsewhere specified of included.
2.4.   In this regard, it is imperative to understand the meaning of inedible mixtures or preparation of vegetable fats or oils. The term inedible mixture or preparation of vegetable fats or oils will mean that the mixture or preparation shall be of different vegetable fats or oils. In other words. two or more vegetable fats or oils must be combined together to form an inedible mixture.
2.5.   In the present case, it is submitted 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 a

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ore specific entry as compared to Entry 27 of Schedule II which covers Only preparation and mixtures of vegetable fats and oil.
3.2.   Natural Ester Dielectric Fluid is derived by chemically modifying soybean oil by adding special additives. The process of conversion of the product in question is completely different as compared to mere mixing of two or more vegetable fats or oil.
3.3.   In this regard, it is pertinent to refer to Explanation 4 of Notification No: 1/2017-Central Tax (Rate) which provides the classification 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, 1

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the General Rules for interpretation of the First Schedule to the Customs Tariff Act makes it very clear that the heading which provides the most specific description shall be preferred to headings providing a more general description. The decision of the Hon'ble Supreme Court in the case of HPL Chemicals Ltd. v. Commissioner of Central Excise, Chandigarh (supra) is squarely on the point. In that case, the Hon'ble Apex Court held that since the goods in question were covered by a specific heading, the same could not be classified under the residuary heading. The Hon'ble Apex Court 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, wh

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n 5 mm. As per F. No. 1(11)/2011/TTC/Vol.XX, dated 7-2-2012 written to the appellant by Assistant Director, Govt. of India, Ministry of Textiles, Office of the Textile Commissioner, Mumbai appellant's unit has been registered as a technical textile unit in the records of the office of Textile Commissioner and has been allotted registration No. 05152007. As per the Technical Textile literature issued by office of Textile Commissioner, Ministry of Textile, Govt. of India “Agrotex'' includes technical textile products used in Agriculture, horticulture (incl. floriculture), fisheries and forestry. Example of Agrotex 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,

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es are specifically covered by Chapter 69 of the Tariff. This was also the view expressed by the Tribunal in the case of Emco Lenze Pvt. Ltd. v. CC [2003 (156) E.L.T. 905]. We, therefore, do not agree with the view of the Tribunal in the case of NTB Hitech Ceramics (supra) and hold that ceramics nozzles are classifiable under Heading 69.01 of the Central Excise Tariff. Reference is answered accordingly.”
3.6. Basis the above judicial precedents, it is clear that in case a specific entry exists, the goods must be classified in the said entry, even though there is a general/residual entry as well. It is further submitted that 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

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onceived and untenable. Tribunal has missed the words “not elsewhere specified or included”. In the present case, we find that “Denatured Salt” is specifically included in Chapter Heading No. 25.01.”
3.7. Further reliance   be placed on the case of Gopal Hosiery versus Assistant Collector Of Central Excise, reported in 1989 (41) E.L.T. 35 (Cal.) = 1988 (4) TMI 79 – CALCUTTA HIGH COURT , wherein the Hon'ble High Court of Calcutta held as under –
“The words “elsewhere” must mean elsewhere in the First Schedule. There is no dispute on this point. Some goods have been specified for the purpose of taxation under item nos. 1 to 67. In those 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

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w that classification in residuary entry can be done only if the goods cannot be classified in any entry of the schedule. In the present case, Natural Ester Dielectric Fluid is a chemically modified soybean oil is classifiable under Entry 90 of Schedule I of the said Notification. Hence, it is humbly submitted that the said product cannot be classified in the residuary entry no. 27.
4.      COMMON TRADE PARLANCE MEANING SHOULD BE CONSIDERED
4.1   Without prejudice to the above, it is humbly submitted that while classifying goods under any entry, how the product is known in common trade parlance should be given due consideration. In the present case, Natural Ester Dielectric 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. Vers

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mirror only, because the word 'glass' is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic and fundamental character of an article lies in its being a mirror. Therefore, glass mirror is not treated as glass and glassware ever in trade parlance”
4.3 It is humbly submitted that in common trade parlance the product in question is known as an alternative fuel for transformer derived by chemically modifying certain properties of vegetable / Soybean oil. Hence, going by the general trade understanding the said product ought to be classified under Entry 90 of Schedule I as chemically modified vegetable oil.
5.      PRINCIPLE OF EQUIVALENCE VIS-A-VIS THE ERSTWHILE INDIRECT TAX REGIME SHOULD 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

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x 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%
5.5.   Given the above, since the effective tax rate on the product under the erstwhile indirect tax regime was 6%, the intention of the GST Council would be to tax the said product under the GST regime at 5% to keep it close to the existing rate, following the principle of equivalence which has farmed the basis of classification of various goods and services into different rate  brackets under GST
5.6.   Thus, it is humbly submitted that following the principle of equivalence, the said product ought to be classified in Entry 90 of Schedule 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

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their fractions Chapter heading 1518 Schedule I (Notification No. 01/2017 29/06/2017
SGST – 2.5%
CGST-2.5%
1. Used for human consumption
 2. Commercial Identity in the common market as a edible products
 3. chemicals ate not added
 4. covered in Schedule I
2. Inedible mixtures or preparations of animal or vegetable fats or Oils or fractions of different fats. Chapter heading 1518 Schedule II (Notification No. 01/2017 dt, 29/06/2017
SGST – 6 % CGST-6%
1. It is nonedible mixture used as coolant in Transformer
2. It is chemically modified fluid
3 Additives are added into veg Oil thereby the basic characteristics of the vegetable Oils not remains same.
4. covered in Schedule II
5. Raw material is beg. Oil but in the process it loses its identity and character and final product does not remain veg. oil but a coolant. Hence the claim of the applicant is not acceptable.
The Product – Natural Ester Dielectric fluid commonly known as Envirotemp FR3 is basically ine

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arcotic or psychotropic substances:
Provided that the Central Government may declare, by notification in the Official Gazette, any other article as food for the purposes of this Act having regards to its use, nature, substance or quality;
The product EFR3 is Non edible Product i.e. it is mixture of veg oil & certain additive. Mainly following additives are used in EFR3 Product – as can be seen from another manufacturer's website information.
1. Blend of Natural Esters, Methacrylate resin, Phenol compounds and coloring
As per Provisions of Section 3 clause 'k' of FDA Act 2006 Definition of Food additive is as given below:
(k) “food additive” means any substance not normally consumed as a food by itself or used as a typical ingredient of the food, whether or not it has nutritive value, the intentional addition of which to food for a technological (including organoleptic) purpose in the manufacture, processing, preparation, treatment, packing, packaging, transport or holding

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/ transmission/ distribution establishments and not dealer in food products.
For classification of goods following theories are commonly resorted to arrive at correct conclusion.
A   Common Parlance Test –
The applicant's product, though claimed as vegetable oil, is commonly known as 'Trans former Coolant” in the trade and not a vegetable oil, Further, it can be seen from the leaflet of the product, it is termed as “fire Resistant natural Ester Dielectric  coolant.” Thus, it is basically Dielectric coolant- a soya oil based transformer fluid and not a vegetable- edible oil
B  End Use Theory –
Going by this theory also, the product cannot be termed as vegetable oil falling under HSN 1518, The end users of the product are Electricity generation/ transmission' distribution utilities. The product is never intended to be put to use as vegetable oil.
C. Dictionary Meaning –
Edible oil – Edible oils defined by govt as food substance composition manufactu

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f of the applicant and made submissions as well as orally argued and explained the difficulty that they were facing in classification of their product in the GST regime. The final hearing was had on dt.07.02 2018 when Sh. Rajat Bose, Advocate appeared and reiterated the contention as made in the written submission and further submitted case laws, copy of relevant HSN part to support their contentions. Sh. Rajat Bose was specifically informed that in this matter, the Authority intends to know as to what are the other chemicals or oils mixed with soyabean oil to make it their final product. He was requested to submit by dt.25.02.2018, a certified test report in this regard from an authorized Laboratory about the exact contents of their product. On hearing dt.28.02.2018, Sh. Rajat Bose, Advocate appeared and submitted manufacturing process flow of their products (self-certified), without revealing the exact contents of the final product. He was reminded about the specific request on dt.07

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roduct, as informed, is made up of refined soya beans oil after mixing some additives with the same. The process of manufacture, as informed is thus –
Step I
Hot water is added to crude soya bean oil for degumming. In water degumming, a sticky viscous oil-water emulsion or gum is removed by using water and a centrifuging process. By way of this process, gums, phospholipids, proteins etc., is separated from the crude oil. These are insoluble in oil when hydrated.
Step 2
After degumming, caustic soda is added to remove the free fatty acid This process neutralizers fatty free acids in the oil using caustic soda, thereby converting the acids into soaps, These soaps are easily removed by decantation or by centrifugal force.
Step 3
After Neutralization, bleaching earth is added for bleaching. In this process Clay adsorbent is mixed intimately With the Oil under specified conditions to remove unwanted color bodies and other contaminants. Through this process, Carotenoids are removed, ch

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do filtration.
Step 8
After filtration, quality check is done to see whether the oil is fit for further processing. If found fit, the oil is put through the next process.
Step 9
We add some further chemicals which is proprietary in nature.
Step 10
We remove moisture and other volatile component.
After the above process, another quality check is done to see whether the oil is fit for sale as transformer fuel.
Step 11
Once the quality check is cleared, the product Envirotemp FR3 is produced which is ready to be sold in the market.
As can be seen, 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 additives. In step 9, there is addition of some chemicals and again, the applicant has preferred not to divulge the details. To have a correct understanding of the product which would aid in ascertaining the correct classification, the applicant was asked to give a re

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e 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 could help classifying the impugned product.
The website of the applicant describes the product as –
Envirotemp FR3 fluid is a natural ester derived from renewable oils providing improved fire safety transformer life loadability and environmental benefits that are superior to mineral oil and unsurpassed by any other dielectric coolant.
The applicant themselves advertise the impugned product thus –
FR3 fluid is a soybean-oil based product for use as a coolant and insulator in high-voltage electric transformers. For the past 30 years, mineral oil has been the dominant dielectric fluid used in transformers. However, mineral oil is flammable and can be toxic to the environment.
FRB fluid is much less flammable than mineral oil; it biodegrades easily and is carbon neutral, nontoxic and non-haz

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her 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 Company
The newest versions of natural ester dielectric fluids have been in use in the electrical apparatus industry since approximately 1998 and are becoming more popular. Unlike transformer mineral oil, which is refi ned from petroleum derived from compressed plant and animal tissue (mostly microorganisms from 70 to 440 million years ago), these liquids are produced from renewable resources such as vegetable oils and seeds.
…………………………………….
The main purpose for development of many of these dielectric liquids was to create an environmentally friendly product that was not only stable when used as an insulating liquid in electrical apparatus but also readily biodegraded when exposed to the environment.
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h may be used independently or combined, include: soya, sunflower, and rapeseed (canola).
Cooper Power Systems
Coconut Oil
Coconut Oil
University of Moratuwa, Sri Lanka
What is a Natural Ester?
Esters can be natural, such as those derived from vegetable oils as discussed in this article, or they can be made synthetically from a group of chemicals chosen to yield certain properties. “Ester” is a term applied to chemical compounds with a certain structure.
Refining of a Natural Ester Dielectric Liquid?
Natural esters are refined in a totally different manner than transformer mineral oils. The first major difference is the source of the material for refining. In the case of transformer mineral oils, crude oil is extracted from the ground by drilling and goes through a series of air and vacuum distillation steps, followed by treatment with hydrogen, pressure, and catalyst. In the case of natural esters, the source materials are crops that are grown and then harvested. In this respe

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ss 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 distillation under vacuum up to 200 degrees Centigrade to remove unwanted volatile compounds. The last step, winterizing, which may be optional and depends on the starting material and the degree of refining, involves chilling the oil to remove excessive saturates. Because these refining techniques can be carefully controlled, a more consistent product is produced. In addition, the new natural ester dielectrics differ from their predecessors not only in the refining process but also in the additives used. Whereas the early natural esters had no additives, the new ones have a variety of additives enhancing performance.
Additives
The natural ester dielectric liquids contain additive packages consisting of chemicals to reduce the pour point, aid in oxygen stability, and in some cases have an antimicrobial agent or copper deactivato

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d 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 three percent of the liquid.
Possible Additives in BIOTEMP (r), BIOTRANS (r) and Envirotemp (r) FR3 TM
Liquid
Additive and Function
BIOTEMP
Oxidation Inhibitors: Phenolic antioxidants such as: BHA (butylated hydroxy anisole), TBHQ (mono-tertiary butyl hydroquinone), DBPC (BHT, 2,6-ditertiary-butyl paracresol/butylated hydrotoluene), and aklyated diphenylamines
Copper Deactivator: Benzotriazole derivative
Pour Point Depressant: PMA (polymethacrylate)
BIOTRANS
Oxidation Inhibitors: citric acid (mostly used as sequester of metals to avoid catalytic effect of those metals), TBHQ (mono-tertiary butyl hydroquinone)
Pour Point Depressant: diethylhexyl adipate, polyalkyl methacrylate
Envirotemp FR3
Oxidation Inhibitors: Phenolic antioxidants such as: BHA (butylated hydroxy anisole), TBHQ (mono-tert

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s 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 of vegetable oils in PT (power transformers).
With the above information, we see that certain ingredients in the form of additives and chemicals are added to vegetable oils to make them function as a substitute for mineral oil in transformers and other apparatus. The impugned product with the processes undergone to produce the end product of coolant for transformer does not remain vegetable oil per se. with this understanding, we come to the classification under the Customs Tariff.
The applicant's invoice for the period prior to GST shows the product being cleared under the Tariff Heading 15180039, Under GST, the applicant seeks a confirmation as to whether the impugned product is covered under the Heading 1518 as found in Schedule I or Schedule Il of the Notification No. 1/2017- Central / State Tax (Rate). The rate of

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EIR 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 OR INCLUDED
151800

Animal or vegetable fats and oils and their fractions, boiled, oxidized, dehydrated, sulphurised, blown, polymerized 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 or included :
 

Lin seed oil:
15180011

Edible grade
15180019

Other
 

Castor oil, dehydrated :
15180021

Edible grade
15180029

Other
 

Other Vegetable oil and its fats:
15180031

Edible grade
15180039

Other
15180040

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p;   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 modify their chemical structure thereby improving their viscosity, drying power (i.e., the property of absorbing oxygen when exposed to the air and forming elastic films) or modifying their other properties, provided they retain their original fundamental structure and are not more specifically covered elsewhere, e.g.:
Thus, the Notes make it clear that the animal or vegetable fats and oils and their fractions should retain their original fundamental structure.
e.       In the pres

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ected 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 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 w

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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 found any specific description which covers a “Fire Resistant Natural Ester Dielectric Coolant for transformers and related electrical apparatus”. We are not in doubts that entry 90 of Schedule I of the Notification No. 1/2017- Central / State Tax (Rate) would not cover the impugned product. It is felt that the description “inedible preparations of vegetable oils' perfectly fits the impugned product and hence, the entry 27 of Schedule II of the Notifica

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Commissioner of CGST Bhiwandi Versus VE Commercial Vehicles Ltd

Commissioner of CGST Bhiwandi Versus VE Commercial Vehicles Ltd
Central Excise
2018 (5) TMI 1050 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
APPEAL NO: E/87968/2017, CROSS-OBJECTION NO: E/CROSS-85103/2018 – A/86109/2018
Central Excise
Shri M V Ravindran, Member (Judicial)
Shri D.S. Chauhan, Superintendent (AR) for appellant
Shri Anil Mishra, Advocate for respondent
This appeal is filed by Revenue against Order-in-Appeal No: PK/19-20/Appeal Thane/BW/2017-18 dated 08/09/2017 passed by the Commissioner of GST & Central Excise (Appeals), Thane.
2. Heard both the sides and perused the records.
3. The issue that falls for consideration is regarding duty liability on the scrap generated at the job-worker&

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Exide Industries Ltd. Versus Commissioner of Central GST & Excise Pune I

Exide Industries Ltd. Versus Commissioner of Central GST & Excise Pune I
Central Excise
2018 (5) TMI 1052 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
APPEAL NO: E/85035/2018 – A/86139/2018
Central Excise
Shri M V Ravindran, Member (Judicial)
Shri Vinay S. Sejpal, Advocate for appellant
Shri S Hasija, Superintendent (AR) for the respondent
This appeal is directed against Order-in-Appeal No: PUN-EXCUS-001-APP-672/2017-18 dated 13/11/2017 passed by the Commissioner of Central Tax (Appeals), Pune-I.
2. Heard both the sides and perused the records.
3. The issue that falls for consideration is whether demand of MODVAT credit along with interest was rightly confirmed or otherwise and whether imposition of

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erein. 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 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. It is also to be noted that the issue is almost 21 years old, in my considered view, the same needs to be put to rest. Accordingly, interest liability and penalty imposed by the lower authorities are set aside as in the remand proceedings we had allowed CENVAT credit of various moulds which were received and subsequently removed to the job-workers. On this presumption it has to

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Neeta P Desai Versus Commissioner of CGST & Central Excise Mumbai West

Neeta P Desai Versus Commissioner of CGST & Central Excise Mumbai West
Service Tax
2018 (5) TMI 1060 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
APPEAL NO: ST/87919, 87922, 87938 & 87941/2017 – A/86100-86103/2018
Service Tax
Shri M V Ravindran, Member (Judicial)
Shri D.P. Bhave, Advocate for appellant
Shri V R. Reddy, Assistant Commissioner (AR) for respondent
All these appeals are directed against Order-in-Appeal No: IM/CGST A-III/MUM/14-17/17-18 dated 11/09/2017 passed by the Commissioner of Central Tax (Appeals – III), Mumbai.
Heard both the sides and perused the records.
2. The issue that falls for consideration in all these appeals is whether the activity of the appellant which is in the form of, business auxiliary service', as claimed by Revenue, in the multilevel marketing is taxable or otherwise. It is undisputed that appellant is one of the distributor in the multilevel marketing of products of Forever Living Products (India) Pvt

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ods from Amway at the Distributors h Acquisition Price (DAP)) and sell the same in retail at price not exceeding MRP fixed by the Amway. This activity of the Distributors, in our view, cannot be treated as promotion. marketing or sale of the goods produced or provided by or belonging to the client (Amway), as the sale of the goods purchased by the Distributors from Amway is not the sale of the goods belonging to their client – Amway. Once the Amway products have been purchased by a Distributor from Amway, those products cease to belong to Amway, but belong to the Distributor and sale of these goods by the Distributor would not constitute service to Amway. For the same reason, any incentive or commission received by a Distributor from Amway for buying certain quantum of goods from Amway during a month cannot be treated as the consideration received for promotion or marketing or sale of the goods produced by or provided by or belonging to the client, more so, as this commission is not li

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sideration for Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group. However, in the impugned orders Service tax has been demanded on the gross amount of commission and no distinction has been made between the commissioner earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him on the basis of the volume of purchases of Amway products made by his sales group i.e. group of second level of Distributors appointed by Amway on being sponsored by the Distributor. For quantifying the Service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributor's sales group, these matters would have to be remanded to the Original Adjudicating Authority.”
which needs to be conside

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Bekeart Mukand Wire Indus Pvt Ltd Versus Commissioner of CGST Kolhapur

Bekeart Mukand Wire Indus Pvt Ltd Versus Commissioner of CGST Kolhapur
Central Excise
2018 (6) TMI 311 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
E/85087/2018 – A/86113/2018
Central Excise
Shri M V Ravindran, Member (Judicial)
Ms Manasi Patil, Advocate for appellant
Shri A.B. Kulgod, Assistant Commissioner (AR) for respondent
ORDER
This appeal is directed against Order-in-Appeal No: PUN-EXCUS-001-APP-0538/2017-18 dated 31/10/2017 passed by the Commissioner of Central Excise (Appeals – II), Pune.
2.   Heard both the sides and perused the records.
3.   Learned Counsel submits that in this appeal they are only contesting the penalty of  imposed by the first appellate authority

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ule 15(1) of CENVAT Credit Rules, 2004 which was not in challenge before him by Revenue.
4.   When the matter cam up for disposal on 15/03/2018 I have directed the Learned Authorised Representative to ascertain whether Revenue is also in appeal against the impugned order. Learned Authorised Representative submits that as per his information and  knowledge no revenue's appeal is pending against the impugned order.
5.   On consideration of the submissions made, I do find merits in the arguments put forth by the Learned Counsel. The adjudicating authority by the order-in-original has only imposed penalties under Section 11AC read with Rule 15(2) of the CENVAT Credit Rules, 2004. It seems that against the said ord

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Commissioner of GST & Central Excise Nagpur Versus Malu Electrodes Pvt. Ltd.

Commissioner of GST & Central Excise Nagpur Versus Malu Electrodes Pvt. Ltd.
Service Tax
2018 (6) TMI 330 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-3-2018
ST/87990/2017 – A/86110/2018
Service Tax
Shri M V Ravindran, Member (Judicial)
Shri D. Shinde, Assistant Commissioner (AR) for appellant
None for respondent
ORDER
This appeal is directed against Order-in-Appeal No: NGPÆXCUS/000/APPL/212/17-18 dated 09/08/2017passed by the Commissioner of GST & Central Excise (Appeals), Nagpur.
2.  None appeared on behalf of respondent despite notice. On perusal of the records it transpires that the issue lies in a very narrow compass. Accordingly, the appeal is taken up for disposal even in the absence of any

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ned on them along with interest and penalty.
5.  On careful consideration of the submissions made, I find that the first appellate authority in the impugned order has in paragraph 28 and 30 categorically recorded the finding which is reproduced.
“28. Whereas, the appellant has submitted that the Man Power Supply Agencies had paid service tax on 100% of the gross amount charged and hence the entire amount of service tax leviable was paid to the credit of the Central Government. The Appellant had reimbursed them the total amount of gross amount charged for the service + the amount of service tax paid by them. As such recovery of service tax again from the Appellant would amount to double taxation, which is not considered by the lower a

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as well as their vendors to take note of the same and understand this new form of levy. Therefore the instant demand of Service tax as per Annexure-A of the instant SCN appears to be not sustainable. Since the basic demand does not sustain there shall be no question of interest and penalty under Section 78 ibid. However, it is observed that in the entire chain of events, there is a definite violation of legal provisions in this regard during the said period. Accordingly penalty imposed by the lower authority under Section 77 ibid is being kept intact.”
6.  Thus, the above said factual findings of the first appellate authority that the service providers have discharged the entire service tax due for the services provided is not contro

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In Re : M/s. Rapid Electrodes Pvt. Ltd.

In Re : M/s. Rapid Electrodes Pvt. Ltd.
GST
2018 (6) TMI 703 – AUTHORITY FOR ADVANCE RULING, GUJARAT – [2018] 2 GSTL (AAR) 94 (AAR)
AUTHORITY FOR ADVANCE RULING, GUJARAT – AAR
Dated:- 20-3-2018
ADVANCE RULING NO. GUJ/GAAR/R/2018/5 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2017-18/AR/12)
GST
R. B. Mankodi Member And G. C. Jain Member
For the Applicant : Shri Rajesh Brahmkshatriya, CTP
RULING
The applicant, M/s. Rapid Electrodes Pvt. Ltd., has submitted that the Company is carrying out manufacturing, assembling, fitting, repairing, renovation and installation of all kinds of 'Earthing Products' for electrical and electronic equipments, used for earthing purpose in industries, common buildings and other places. The materials required for manufacturing of 'Earthing Products' consists of Mild Steel (MS) and Stainless Steel (SS), in solid rods and pipes of various sizes. The applicant is also carrying on business in Back Fill Compound (BFC). The applicant manufac

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ate, Surat.
5.1 In respect of the product 'Lightning Arrester', it has been submitted by the applicant that the inputs for this product are Solid Iron Rods and Iron Strip, which are inspected for any damages, cut to sizes and machined on lathe machine for proper dimensions. The base of Lightning Arrester is fabricated and made so that the rod with other fitment fits with it. After inspection, the apparatus is sent for Electroplating of either Zinc or Copper as per vendor requirements. The coating thickness is measured with thickness meter and after inspection, the apparatus is cleaned and packed for dispatch.
5.2 We observe that the Tariff Heading 8535 covers the products 'Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, fuses, lightning arresters, voltage limiters, surge suppressors, plugs and other connectors, junction boxes), for a voltage exceeding 1,000 volts”. Thus, the product '

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with thickness meter and after inspection, the apparatus is cleaned and packed for dispatch.
6.2 It is observed from the manufacturing process and the submissions of the applicant that the product 'Earthing Pipe' is specifically processed to make usable solely and principally for lightning arrester system and it is placed below ground level and connected with the Lightning Arrester system. We observe that 'parts suitable for use solely or principally with the apparatus of headings 8535, 8536 or 8537' are covered under Tariff Heading 8538. Accordingly, the product 'Earthing Pipe' merit classification under Tariff Heading 8538.
7.1 It has been submitted that inputs for manufacturing product 'Solid Rod Earthing' is Solid Iron Rod, which is inspected for any damages and cut into different sizes as per vendor requirements. Thereafter, in one end, the terminal is made by machining on milling machine and lathe machine, then connection hole is drilled for connection. The other end is proces

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vendor requirements. After mixing, the mixed product is filled in fresh plastic bags of 25 kg each and is ready for dispatch. The applicant has opined that the said product may be classifiable under Heading 2508 or 2805.
8.2 It is observed that the product 'Back Fill Compound' is prepared by mixing Bentonite Powder, Wood Charcoal Powder and Graphite Powder. Tariff Heading 3824 covers 'Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included'. Accordingly, the product 'Back Fill Compound' merit classification under Tariff Heading 3824.
8.3 It is further observed that Tariff Heading 2508 covers 'Other clays (not including expanded clays of heading 6806), andalusite, kyanite and sillimanite, whether or not clacined; mullite; chamotte or dinas earths. Bentonite (Crore or other – including processed and ground) is covered under Tar

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In Re : M/s. Docsun Power Pvt. Ltd.

In Re : M/s. Docsun Power Pvt. Ltd.
GST
2018 (6) TMI 704 – AUTHORITY FOR ADVANCE RULING, GUJARAT – 2018 (14) G. S. T. L. 94 (A. A. R. – GST), [2018] 2 GSTL (AAR) 93 (AAR)
AUTHORITY FOR ADVANCE RULING, GUJARAT – AAR
Dated:- 20-3-2018
ADVANCE RULING NO. GUJ/GAAR/R/2018/6 (IN APPLICATION NO. Advance Ruling/SGST&CGST/2017-18/AR/13)
GST
R. B. Mankodi Member And G. C. Jain Member
For the Applicant : Shri Rajesh Brahmkshatriya, CTP
RULING
The applicant, M/s. Docsun Power Pvt. Ltd., has submitted that the Company is carrying out manufacturing, assembling, fitting, repairing, renovation and installation of all kinds of 'Earthing Products' for electrical and electronic equipments, used for earthing purpose in industries, common buildings and other places. The materials required for manufacturing of 'Earthing Products' consists of Mild Steel (MS) and Stainless Steel (SS), in solid rods and pipes of various sizes. The applicant is also carrying on business in Back Fill Com

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Tax & Central Excise Commissionerate, Surat.
5.1 In respect of the product 'Lightning Arrester', it has been submitted by the applicant that the inputs for this product are Solid Iron Rods and Iron Strip, which are inspected for any damages, cut to sizes and machined on lathe machine for proper dimensions. The base of Lightning Arrester is fabricated and made so that the rod with other fitment fits with it. After inspection, the apparatus is sent for Electroplating of either Zinc or Copper as per vendor requirements. The coating thickness is measured with thickness meter and after inspection, the apparatus is cleaned and packed for dispatch.
5.2 We observe that the Tariff Heading 8535 covers the products 'Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, fuses, lightning arresters, voltage limiters, surge suppressors, plugs and other connectors, junction boxes), for a voltage exceeding

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The coating thickness is measured with thickness meter and after inspection, the apparatus is cleaned and packed for dispatch.
6.2 It is observed from the manufacturing process and the submissions of the applicant that the product 'Earthing Pipe' is specifically processed to make usable solely and principally for lightning arrester system and it is placed below ground level and connected with the Lightning Arrester system. We observe that 'parts suitable for use solely or principally with the apparatus of headings 8535, 8536 or 8537' are covered under Tariff Heading 8538. Accordingly, the product 'Earthing Pipe' merit classification under Tariff Heading 8538.
7.1 It has been submitted that inputs for manufacturing product 'Solid Rod Earthing' is Solid Iron Rod, which is inspected for any damages and cut into different sizes as per vendor requirements. Thereafter, in one end, the terminal is made by machining on milling machine and lathe machine, then connection hole is drilled for c

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machine in different ratios as per vendor requirements. After mixing, the mixed product is filled in fresh plastic bags of 25 kg each and is ready for dispatch. The applicant has opined that the said product may be classifiable under Heading 2508 or 2805.
8.2 It is observed that the product 'Back Fill Compound' is prepared by mixing Bentonite Powder, Wood Charcoal Powder and Graphite Powder. Tariff Heading 3824 covers 'Prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included'. Accordingly, the product 'Back Fill Compound' merit classification under Tariff Heading 3824.
8.3 It is further observed that Tariff Heading 2508 covers 'Other clays (not including expanded clays of heading 6806), andalusite, kyanite and sillimanite, whether or not clacined; mullite; chamotte or dinas earths. Bentonite (Crore or other – including processe

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In Re : M/s. Rishi Shipping

In Re : M/s. Rishi Shipping
GST
2018 (6) TMI 1195 – AUTHORITY FOR ADVANCE RULING – GUJARAT – 2018 (14) G. S. T. L. 121 (A. A. R. – GST), [2018] 2 GSTL (AAR) 95 (AAR)
AUTHORITY FOR ADVANCE RULING – GUJARAT – AAR
Dated:- 20-3-2018
ADVANCE RULING NO. GUJ/GAAR/RULING/2018/4
GST
R.B. Mankodi, Member and G.C. Jain, Member
Present for the applicant : Shri Haresh Vaishnav
RULING
The applicant M/s. Rishi Shipping has submitted that the company is a Cargo Handling company operating at Kandla Port Trust under stevedoring license issued by Kandla Port and provide Cargo Handling Service which consists of loading / unloading; providing space for storage and its further forwarding as per direction of importer / exporter. The applicant has submitted that they do not have their own warehouse / godown space. They have occupied the same from Government / Private parties. As a part of their services, they provide service of warehouse / space on rent to their customers, where they

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ed on all inter-state supplies as per Section 5 of the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the 'IGST Act, 2017).
2.2  It has been opined by the Commissionerate that the activity carried out by the warehouse owner appears to be in the nature of renting of immovable property and is taxable in GST and activity carried out by the applicant appears to be in the nature of trading of storage space and the same is taxable, as the same is outside of negative list. Moreover, even if it is considered as “sub-letting”, then also it is classified as renting of immovable property (leasing and rental services – heading 9973)
2.3  It is further informed that exporter of agricultural produce in this scenario can avail exemption only if they make direct agreement with warehouse owner for provision of storage and warehousing services and providing documentary evidence that only agricultural produce are being stored in this warehouse and exemption is claime

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We have also considered the opinion, information, documents and views submitted by the Goods & Services Tax and Central Excise Commissionerate, Kutch (Gandhidham).
4. The applicant has requested for advance ruling on applicability of GST for invoices raised to their clients for storage charges for storing their imported agri product in godowns at Gandhidham.
5. On perusal of sample copies of invoices (Invoice No. RS/GR/17-18/027 dated 19.07.2017 and Invoice No. RS/GR/17-18/043 dated 29.07.2017) issued by the applicant, it is observed that the description of service is mentioned as Godown Rent (SAC – 997212) and Goods and Services Tax has been paid @ 18% (CGST 9% + SGST 9% or IGST 18%). The applicant has not submitted anything towards its interpretation of law and / or facts to support that the Goods and Services Tax is not applicable to the aforesaid activity carried out by them.
6.1  It is therefore imperative to examine the nature of service provided by the applicant.
6.2&n

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f service provided for storage or warehousing of goods.
6.4  The applicant has submitted in the application that as a part of their services, it provides service of warehouse / space on rent to their customers, where they (customers of applicant) store imported agricultural commodities. From the nature of service provided by the applicant, as described in the application, it is clear that the applicant only rent the storage premises. Once the storage premises is rented by the applicant to its customers, what use the customer makes of such premises doesn't have any bearing on the nature of service provided by the applicant.
6.5  In the sample copies of invoices (Invoice No. RS/GR/17-18/027 dated 19.07.2017 and Invoice No. RS/GR/17-18/043 dated 29.07.2017) of the applicant, the description of service is mentioned as Godown Rent (SAC – 997212).
6.6  Therefore, taking all these aspects into consideration, we hold that the applicant is required to pay Goods and Services Ta

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Notified the waiver of late fee for all registered persons who failed to furnish return in form GSTR-1.

Notified the waiver of late fee for all registered persons who failed to furnish return in form GSTR-1.
NO. 4/2018 – STATE TAX Dated:- 20-3-2018 Jharkhand SGST
GST – States
Jharkhand SGST
Jharkhand SGST
GOVERNMENT OF JHARKHAND
COMMERCIAL TAXES DEPARTMENT

NOTIFICATION NO. 4/2018 – STATE TAX
S.O. NO.10 [F.NO. VA KAR/GST/03/2018]
DATED 20-3-2018
In exercise of the powers conferred by section 128 of the Jharkhand Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in t

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Commissioner of CGST, Howrah Versus M/s Kolkata West International City Pvt. Ltd.

Commissioner of CGST, Howrah Versus M/s Kolkata West International City Pvt. Ltd.
Service Tax
2018 (7) TMI 1374 – CESTAT KOLKATA – TMI
CESTAT KOLKATA – AT
Dated:- 20-3-2018
S.T.Appeal No.76963/17 & CO-75146/18 – F/O/75640/2018
Service Tax
SHRI P. K. CHOUDHARY, JUDICIAL MEMBER
Shri S. S. Chattopadhyay, Supdt. (A.R.) for the Revenue (s)
Shri Sushil Goyal, C.A. for the Respondent (s)
ORDER
Per Shri P. K. Choudhary :
This is an appeal filed by the Revenue against the Order-in-Appeal No.102/HWH/ST/2017-18 dated 31.08.2017 passed by the Commissioner (Appeals) of Central Excise & CGST, Kol.II.
2. Briefly stated the facts of the case are that the appellant is registered with the Department as service tax assessee. On scrutiny of the documents, it was observed that the Respondent-Assessee has taken service tax credit amounting to Rs. 13,01,708/- during the period 2009-2010 on the input services. During the period 2010-2011, it was observed that the appellants have ava

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ion 70 of the Finance Act, 1994. A penalty of Rs. 40,000/- for delay in submission of ST-3 Returns was imposed for the period April, 2011 to September, 2011 and October, 2011 to March, 2012 under Section 70 of the Finance Act, 1994 and a penalty of Rs. 10,000/- has also been imposed under Section 77 for violation of provision of Section 70 of the Finance Act, 1994. Since the appellant had already deposited the entire amount of service tax along with interest, the same was appropriated. On appeal, the Commissioner (Appeals) set aside the imposition of penalty under Section 77 (2) and Section 78 and regarding imposition of penalty of Rs. 40,000/- for late submission of ST-3 Returns in terms of Section 70 (1), the Commissioner (Appeals) has observed as under :
“12. Regarding the imposition of penalty of Rs. 40,000/- for late submission of return in terms of Section 70 (1) of the Act, I find that the appellant contended that they had deposited the late fees towards late submission of retu

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the penalties.
4. Heard both sides and perused the appeal records.
5. I find that regarding service tax demand of Rs. 13,01,708/-, the appellants have reversed the amount. As regards, service tax demand for the period, 2010-2011 and 2011-2012, they have paid the entire demand of service tax along with interest and the same stands appropriated by the adjudicating authority. It is also observed that the demand of Rs. 40,000/- being late fees for the service tax return for the period April, 2011 to September, 2011 and October, 2011 to March, 2012, has also been paid and there is no occasion to impose and the separate penalty for the same and the Commissioner (Appeals) has rightly set aside the same. Since the appellant-assessee has paid the entire amount of service tax along with interest before issuance of show-cause notice, the Commissioner (Appeals) has rightly set aside the penalty by invoking the provisions of Section 80.
6. In view of the above discussions, I do not find any reas

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M/s Jyoti Petrochem Versus Commissioner of CGST & Central Excise, Service Tax II Kolkata

M/s Jyoti Petrochem Versus Commissioner of CGST & Central Excise, Service Tax II Kolkata
Service Tax
2018 (8) TMI 480 – CESTAT KOLKATA – TMI
CESTAT KOLKATA – AT
Dated:- 20-3-2018
S.T. Appeal No.76894/17 – FO/75641/2018
Service Tax
SHRI P.K. CHOUDHARY, JUDICIAL MEMBER
Shri Akshat Agarwal, Adv. for the Appellant (s)
Shri A.K. Biswas, Supdt. (A.R.) for the Revenue (s)
ORDER
Per Shri P. K. Choudhary:
This is an appeal filed by the Appellant against the Order-in- Appeal No.36/HWH/ST/2017-18 dated 31.07.2017 passed by the Commissioner (Appeals) of CGST & Central Excise, Kolkata.
2. Briefly stated the facts of the case are that the show-cause notice dated 13.04.14 was issued for the period 2009-2010 to 2012- 2013 for

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in receipt of the show-cause notice and accordingly, there was no occasion either to reply to the show-cause notice and no notice of personal hearing was received by them. They could know about the entire proceedings after the adjudication order was received by them on 10.03.2017. The adjudication order was passed ex parte.
4. Heard both sides and perused the appeal records. I find that the Commissioner (Appeals) observed that the service tax pertaining to the GTA service in respect of transport invoices issued by the transporter, had also been paid by the transporter, which in turn, was paid by the appellant to the transporter. It is his observation that demanding the same again from the appellant would tantamount to double taxation on b

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submits that there is no discrepancy in the figure of Rs. 13,261/- upto 30th June, 2012, but the demand of Rs. 59,349/- for the balance period, should be Rs. 38,848/- only. Since, the service tax to that extent had been charged by the transporter, which was duly paid by the appellant assessee. This fact has to be verified by the adjudicating authority.
5. In view of the above discussion, I set aside the penalty imposed under Section 77 (1)(c)(ii) and Section 78 by invoking the provision of Section 80. Regarding service tax demand of Rs. 59,349/-, the matter is remanded to the adjudicating authority to consider the submissions of the appellant. Needless to mention, a reasonable opportunity of hearing be granted to the appellant.
6. Appeal

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CBEC to verify GST transitional credit claims of 50,000 taxpayers

CBEC to verify GST transitional credit claims of 50,000 taxpayers
GST
Dated:- 19-3-2018

New Delhi, Mar 19 (PTI) – In order to check "frivolous and fraudulent" tax credit claims by businesses, the CBEC has decided to verify demands of top 50,000 tax payers claiming maximum GST transitional credit, starting with those where the quantum exceeds ₹ 25 lakh.
The verification of "unreasonable" transitional credit claims would be conducted in four phases, a source said, adding that credit verification will remain one of the focus areas in 2018-19.
As part of transition to GST last July, taxpayers were allowed to file Form TRAN-1 and avail tax credit on the basis of closing balance of the credit declared in

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emaining claims of 50,000 taxpayers will be verified in each of the three phases July-September, October-December and January-March (2019).
Taxpayers who have claimed transitional tax credit of more than ₹ 25 lakh and have reported 25 per cent increase in such claims are also likely to be asked to submit a detailed statement of purchases during October 1, 2016, to June 30, 2017, the source said.
According to revenue department data, as much as ₹ 65,000 crore of transitional input tax credit was claimed by businesses as on September 2017.
Concerned over large claims for which there was no "bona-fide explanation", the revenue department had asked taxpayers to revise their claim forms by December 27, 2017, or face enf

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REFUND TO CANTEEN(CSD) UNO, EMBASSY ETC

REFUND TO CANTEEN(CSD) UNO, EMBASSY ETC
Query (Issue) Started By: – VIKRAM SHARMA Dated:- 19-3-2018 Last Reply Date:- 26-3-2018 Goods and Services Tax – GST
Got 7 Replies
GST
Dear Members
As per section 54(2), A specialised agency of the UNO or any Multilateral Financial Institution, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55 i e CANTEEN STORE DEPOT, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.
CANTEEN STORE DEPOTS are eligible for

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ion of time limit.
Reply By Ganeshan Kalyani:
The Reply:
i agree with the view's of Sri Kasturi Sir.
Reply By Alkesh Jani:
The Reply:
Sir, please quote authority for 50% refund of GST, for my knowledge purpose.
Reply By SHOBHIT BANSAL:
The Reply:
Notification No. 6/2017-Central Tax (Rate) New Delhi, the 28th June, 2017
Reply By ANITA BHADRA:
The Reply:
Very informative discussion .
Thanks for sharing Notification details – 50% refund
Regards
Reply By Alkesh Jani:
The Reply:
Sir, Thanks for the information, the Section 25(9)(b) states that any other person or class of persons, as may be notified by the Commissioner. Please let me know the authority notifying CSD by the Commissioner for registration under above section. For

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GST rate – latest on scrap of computers, monitors, keyboards,mouse& multimeter

GST rate – latest on scrap of computers, monitors, keyboards,mouse& multimeter
Query (Issue) Started By: – BSNL STR Dated:- 19-3-2018 Last Reply Date:- 20-3-2018 Goods and Services Tax – GST
Got 5 Replies
GST
Sir/Madam,
What is the present rate of GST on scrap sale of computers, monitors, keyboards,mouse& multimeter ?
Regards,
CHANDRASHEKAR G
Reply By Alkesh Jani:
The Reply:
Sir, Please clarify that computer, monitor, keyboard, mouse are booked as Capital goods in your books of Account, so that our experts may get the clarity to reply.
Reply By BSNL STR:
The Reply:
Sir,
yes, these items are equipments booked as capital goods.
Regards,
CHANDRASHEKAR G.
Reply By Alkesh Jani:
The Reply:
Sir, In this regards, my point o

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manufacturer or provider of output services shall pay an amount equal to the Cenvat Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter or a year or part thereof from the date of taking the Cenvat Credit, namely.
(i) for computers and computer peripherals :
For each quarter in the first year @ 10%
For each quarter in the second year @ 8%
For each quarter in the third year @ 5%
For each quarter in the fourth and fifth year @ 1%
(ii) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter :
Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amoun

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Special provision for exemption from service tax in certain cases relating to services provided or agreed to be provided by Goods and Services Tax Network, retrospectively.

Special provision for exemption from service tax in certain cases relating to services provided or agreed to be provided by Goods and Services Tax Network, retrospectively.
Section 106
F. Acts / Amendment Acts
SERVICE TAX
Finance Act, 2018
Special provision for exemption from service tax in certain cases relating to services provided or agreed to be provided by Goods and Services Tax Network, retrospectively.
106. (1) Notwithstanding anything contained in section 66B of Chapter V of the Finance Act, 1994 (32 of 1994), as it stood prior to its omission vide section 173 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Chapter), no service tax shall be levied or collected in resp

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Credit Notes and accounting implications of Discounts & Incentives for GST

Credit Notes and accounting implications of Discounts & Incentives for GST
By: – Raginee Goyal
Goods and Services Tax – GST
Dated:- 19-3-2018

I. THE CONCEPT:
A. WHAT IS A CREDIT / DEBIT NOTE
A Credit or a debit note serves the purpose of accounting adjustment to settle the correct amount of value and tax for any invoice already issued in the same or earlier period. GSTR 1 is to capture information of all debit / credit note(s) issued by a registered person.
While furnishing details of a debit note/credit note, the details of the original debit note/credit note is required to be mentioned in the GSTR -1 which needs to be precise and correct to avoid any mismatch.
B. BASIC PURPOSE OF CN/ DN
* Credit/ Debit Note can be issued by a taxable person who had earlier issued a tax invoice for supply of any goods and/or services.
* Credit/ Debit note has to be issued where tax invoice has charged excess value and/or excess tax charged than required.
C. PARTICULARS TO BE C

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person can issue a credit note not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier.
[Refer Section 34 (2) of CGST Act, 2017]
Thus, for FY 2017-18, no credit note can be issued post September 30, 2018 or filing of annual return (due date of filing of annual return is December 31, 2018).
E. VARIOUS TRANSACTIONS RELATING TO THE SUBJECT OF CREDIT NOTES/ DEBIT NOTES
* SALES RETURNS (ALIAS RETURN OF GOODS SUPPLIED)
* DISCOUNTS (PRE SUPPLY / POST SUPPLY)
* CHANGE IN PRICE/ VALUE OF SUPPLY
* CANCELLATION / TERMINATION OF SUPPLY POST BILLING
* INCIDENTAL EXPENSES RELATING TO SUPPLY
* INCENTIVES/ COMMISSION/ BACK-ENDS
RETURN OF GOODS SUPPLIED :
There may be two broad scenarios is case of return of goods supplied in view of the transition to GST:
(a) Goods Supplied in Pre-GST period – returned in post GST period
(b) Goods supplied in Post GST period retu

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2017, no refund of tax so paid shall be given to the supplier under the old law.
[Refer Section 142 (1) of CGST Act]
(ii) Where the supplies were made before 01.01.2017:
When such goods are returned on or after 01.07.2017, no refund or reversal of tax so paid is allowed.
* DISCOUNTS
Credit Notes were popularly used for accounting of discounts in the pre-GST regime since discounts are inherent part of any commercial transaction. Discounts go on to reduce the amount recoverable from the customer. However, it is noteworthy that all discount shall not result in reversal of corresponding GST applied on them. Discounts can be classified in two broad categories -Pre supply discounts and Post Supply Discounts.
Pre Supply Discounts get captured in Invoice itself and tax is accordingly charged. Post Supply Discounts need to be treated as per provisions of law. The following situations may arise for accounting and tax treatment relating to rice revision and discounts:
(i) Post Suppl

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t any post-sale discount given post 01.07.2017 for any sales prior to 01.07.2017.
[Refer Proviso to Section 142(2) (b) of CGST Act, 2017]
(ii) Pre-Supply Discounts relating to post GST supplies (i.e. supplies made after 01.07.2017)
Pre Supply discounts like trade discount etc. are discounts which are given before or at the time of supply as part of the normal trade and commerce. Such discounts are pre-agreed/ contracted/ known and are recorded in the invoice itself and are allowed to be excluded while determining the taxable value and GST shall be levied on value of invoice after discount. No credit is required in such cases.
[Refer Section 15(3) of CGST Act, 2017]
(iii) Post-Supply Discounts relating to post GST supplies (i.e. supplies made after 01.07.2017)
Post Supply discounts are discounts which are given after the supply of goods is made. Any discount given post supply can be excluded while determining the taxable value for calculating GST liability subject to the fol

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alue only when two conditions are fulfilled simultaneously, viz.
i) Supplier and recipient are not related, and
ii) Price is the sole consideration.
Therefore, if no conditions are fulfilled or if only one of the two conditions are fulfilled, then the amount paid or payable shall not be considered as transaction value and recourse to Section 15(4) will be taken. In some industry segments like electronic goods, consumer durables, mobile handsets, computers, laptops, parts and peripherals, cement, etc., it is common practice that the manufacturer/ distributor supplies to the dealers/ resellers at a determined price, whereas, these dealers/ resellers supply to the consumers at a lower price offering store discounts/ bulk discounts for penetration. The discount so offered or price reduced for supply to the consumers is compensated by the manufacturer/ distributor at a pre agreed rate or at an agreed value later.
The questions that arise in the above situation is that whether credit n

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that all post sale discounts shall be excluded from the value of supply because, the Department will view it not with an angle of reversing ITC but to add the value of such discounts and incentives to the value of outward supplies. The logic behind this is that the company had agreed/ directed the dealer to supply the goods at lower prices, else the dealer will not supply at lower prices. The dealer would supply the goods at higher prices with a reasonable profits. Here, the dealer is aware that he would be substantially compensated by the company by way of credit notes and it is only for this reason, that he sells it off at such discounted prices. Hence, it is a pre contracted discount which may or may not be quantified before the supply is made to the dealer. As such, price is not the sole consideration, and therefore 15(4) will be invoked. Once it is established that 'price is not the sole consideration', it is not even necessary to examine whether the supplier and recipient are re

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nder which they are paid. No general view can be taken that a discount given is commission or incentive received.
The best practice shall be to examine the agreement and accordingly first decide, whether commission or incentive is to be paid to the dealer, in such case, an invoice should be issued by the dealer/ reseller claiming the same for supply of services in the nature of an agent for selling goods of the manufacturer/ distributor. The invoice shall be subject to GST, irrespective of the fact, whether the incentive is under a pre determined contract or agreement or not, or it is linked to specific invoices or not. The manufacturer/ distributor shall claim ITC of the said GST charged in the commission/ incentive invoice.
Whereas, if discount is extended to the dealer/ reseller by the manufacturer/ distributor, the same shall be treated as a price revision/ discount relating to the inward supply received by the dealer/ reseller, invoice cannot be issued by the recipient. A debit

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nts are specifically linked to specified invoices, and (c) the recipient has reversed its credit.
If the terms of discount was not agreed before making the supply or if the discount offered is not linked to specific invoice, the supplier cannot reduce the GST output liability which was charged in the original invoice. However, if both the above conditions are fulfilled and the supplier reduces the GST against original invoice, such reduction in output liability of supplier shall be subject to the fact that the recipient also reverses the ITC availed against the original invoice. If the supplier himself does not reduce the output liability in the credit note, there is no provision or law in GSTwhich mandates him to do so and the recipient also cannot be forced to reverse ITC, which was duly paid to the Government by the supplier. The consumer stands benefitted by such price reduction and the GST on the discount received by the dealer is also received by the Government. Reversal of ITC

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Operational Definition of Claimed vs Availed

Operational Definition of Claimed vs Availed
Query (Issue) Started By: – LAKSHMINARAYANAN TR Dated:- 19-3-2018 Last Reply Date:- 19-3-2018 Goods and Services Tax – GST
Got 3 Replies
GST
Section 50 (3) the act says any undue or excess credit claimed will be taxed to an extent of 24%.
However I would like to understand whether Claimed alone is exposed to interest or simple availed and not utilized will also be exposed to Interest of 24%
Reply By Rajagopalan Ranganathan:
The Reply:
Sir,
Section 50 (3) of CGST Act, 2017 stipulates that " a taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of

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een received physically in the factory.
(iii) Inputs are not in the list of (ineligible inputs/input services under Section 17(5) of CGST Act & other Sections, if relevant.
(iv) Payment has been made against the invoice.
(v) If under RCM, cash payment has been made.
and so on.
After crossing the stage of 'claim' you will avail ITC in your books of accounts and other statutory records i.e. in various returns and declarations.
Thus the words, "availed" and "Claimed" both are prior to utilization.
If you claim ITC in your books of accounts or other statutory records, you are prone to interest and penalty both.
For example : You file TRANS-1 wrongly. Thus you are claiming ITC wrongly . In this question avail

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GST Now Applies to Works Contracts Previously Under VAT; Clarification to Be Provided by Commissioner of Commercial Taxes.

GST Now Applies to Works Contracts Previously Under VAT; Clarification to Be Provided by Commissioner of Commercial Taxes.
Case-Laws
GST
Levy of GST – Works Contract, on which VAT was imposed

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Court Rules Tax on Goods for Export Sales Not Permissible Under TNGST Act Section 2(n) Explanation 3(a.

Court Rules Tax on Goods for Export Sales Not Permissible Under TNGST Act Section 2(n) Explanation 3(a.
Case-Laws
VAT and Sales Tax
Levy of tax on purchase of goods – since the export sale is

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Court Rules UPS Systems Differ from Inverters Under TNGST Act; Tax Classification Adjusted for Unique Features.

Court Rules UPS Systems Differ from Inverters Under TNGST Act; Tax Classification Adjusted for Unique Features.
Case-Laws
VAT and Sales Tax
Rate of tax – Un-interrupted Power Supply Systems (

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Shri Dutt India Private Limited Versus The Assistant State Tax Officer And Others

Shri Dutt India Private Limited Versus The Assistant State Tax Officer And Others
GST
2018 (4) TMI 1142 – KERALA HIGH COURT – [2018] 2 GSTL 120 (Ker)
KERALA HIGH COURT – HC
Dated:- 19-3-2018
WP (C). No. 9355 of 2018
GST
P. B. Suresh Kumar, J.
FOR THE PETITIONER : SRI.K.S.HARIHARAN NAIR
FOR THE RESPONDENT : BY SR.GOVERNMENT PLEADER SRI.V.K.SHAMSUDEEN  BY SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE & CUSTOMS
JUDGMENT
Goods owned by the petitioner as referred to in the writ petition have been detained by the first respondent in exercise of the powers under Section 129 of the Central Goods and Services Tax Act as also the Kerala State Goods and Services Tax Act. It is stated that the petitioner had to pay the

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In Re : CMS Info System Limited

In Re : CMS Info System Limited
GST
2018 (5) TMI 649 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (13) G. S. T. L. 486 (A. A. R. – GST), [2018] 2 GSTL (AAR) 73 (AAR)
AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – AAR
Dated:- 19-3-2018
GST-ARA-08/2017/B-11
GST
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 M/s. CMS Info Systems Limited, the applicant, seeking an advance ruling in respect of the applicability of GST on:
1.   Whether supply of such motor vehicles as scrap after its usage can be treated as 'supply' in the course or further

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PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“Statement of relevant facts having a bearing on the question(s) raised.
The applicant is having cash management network pan India. During the course of providing cash management services, the applicant is engaged in following activities:
* Providing ATMs and installing the same at various locations across India
* Managing cash circulation through transporting cash from currency chests to bank branches
* Cash pick up and delivery from and to dedicated banks
Such transportation of cash is done through security vans popularly known as cash carry vans. The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. The applicant also pays GST on fabrication. For this purpose, the applicant purchases motor vehicles and pays GST (Goods and Services tax). Credit of such GST is not availed by the Applicant presently. While purchasing cash carry vans un

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t is supplying motor vehicles as scrap after using the same. Therefore, the issue raised is whether such transaction can be considered to be 'supply' in the eyes of GST Law. In this regard, it would be worth analysing Section 7 of Central GST Act, 2017 which reads as under:
“Section 7. Scope of supply
(1) For the purposes of this Act, the expression “supply” includes
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.”
On analysing the above definition, it may be observed that only when the transaction is in the course or furtherance of business, the transaction would be treated as supply.
For reaching to a conclusion whether the transaction is supply or not, it is important is to understand

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profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;”
Clause (c) of the above definition may cause certain doubts that even if a stray transaction of selling scrap is covered under the definition of 'business'. However, it is very important to note that Clause (c) refers that such activity or transaction should be in the nature of any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity. Therefore, it is very important that to call some transaction/activity as business, it has to be in the nature of any 'trade', 'commerce' etc.
The terms trade or commerce are not defined in GST law and therefore, recourse may be taken to dictionaries. Trade:
Cambridge dictionary: “the activity o

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selling old gold jewellery is not the business of the said individual). and hence does not qualify to be a supply per se. Accordingly the sale of gold jewellery by an individual to a jeweller will nor attract The provisions of section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism on such purchases. However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply ”
From the above clarification given by the Finance Ministry, it clearly appears that the intention of Government is not to treat all the transactions as 'supply' unless the same are carried in the normal course of business activities which are carried with an intention to engage supplier into the activities of buy and sell of relevant commodities/services.
Another important point which needs to be noted is certain activities are deemed to be 'supply' when specified in Schedule I. Clause I of Schedule I reads as under:
&nbs

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used for cash management business and supplied post usage as scrap?
In any case, if the stray transaction of sell of cash carry van is considered to be supply then the bar of taking input tax credit under Section 17 (5) would not be applicable.
The relevant extract of Section 17 (5) reads as under:
“Section 17 (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
[Emphasis supplied]
The exception provided in clause (a) above stipulates that if the motor vehicles are used for making further taxable supply of such vehicles, input tax credit is availa

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“purposive interpretation. It is well settled law that while interpreting a statute the basic principle of literal rule of interpretation has to be followed. In light of the above submission, Applicant rely on the decision of Hon'ble Supreme Court in the case of B. Premanand v. Mohan Koikal, 2011 (3) TMI 1590 – SUPREME COURT = (2011) 4 SCC 266 , which is binding upon the Advance Ruling Authority also. The relevant portion of the said decision is as follows:
“9. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be

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transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(b)
[Emphasis supplied]
2)   The term “goods”, “money” and “motor vehicle” have been defined as per Section 2 of the said act, as follows:
   “Sec. 2 – In this act   unless the context otherwise requires.
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchang

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2017 is chargeable to Goods and Services Tax;
d. The Applicant on perusal of the provision of Law stated above wishes to claim Input Tax Credit paid on purchase of such vehicles based on following interpretation
–   As per provisions of Section 16 of the CGST Act – Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, 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. As the applicant is going to use the said vehicle in furtherance of the business of transporting valuables (cash and bullion), we feel Input Tax Credit shall be available relying provisions of Section 17(5)(a)(ii)  (supra);
–   The applicant feels the valuables (cash and bullion) as transported is goods and not money in the given context. The applicant is given a consignment by the

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ischarge of the debts and full payment for commodities; being accepted equally without reference to the character or credit of the person who offers it. and without the intention of the person Who receives it to consume it or apply it to any other use than In turn to tender it to others in discharge of debts or payment for commodities.: (per DARLING, J. Moss v Nancock, 68 LJQB  660  1899-22 B 111)- Reference – Advanced Law Lexicon, P Ramnatha Aiyar's – 4th Edition.
Therefore, the purpose of excluding money from these definitions is not to charge GST on mere supply of money.
4)   Without prejudice to above submissions, we would like to further submit the following;
a.   Reference is made to Central Goods and Services Tax Rules, 2017 ('CGST Rules') in relation to E-way bills. E-way bills Rules have been introduced in the GST regime vide Notification No. 27/2017 – Central Tax dated 30.08.2017, to monitor movement of goods from one location to anoth

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truments as may be notified by the Reserve Bank;
Accordingly, with reference to the above definition of the term currency, it may be noted that currency includes, inter alia, currency notes, cheques, draft.
b.   It is pertinent to note that the words used in the CGST rules are -'goods being transported”. Thus, e-way bill is not required to be generated when currency is transported. It may be appreciated that in spite of specific exclusion of money from the definition of goods, currency is considered as goods in the Annexure, Further, even in the case of applicant, currency is being 'transported' in a secured vehicle by the applicant.
c.   Accordingly, 'currency' should be treated as goods, And as the Applicant is transporting currency in the secured vans, which is treated as goods as per the said CGST Rules/ Notification, therefore applicant shall be eligible for input tax credit of CGST, MGST, IGST and Compensation Cess with respect to cash c

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sing of 'goods'. Here, It would be worthwhile to take note of decision delivered by Hon'ble Supreme Court under the erstwhile Central Sales Tax ('CST') Act, 1956. In case of Printers (Mysore) Ltd. vs. Asstd. Commissioner Tax Officer 1994 SCC (2) 434 = 1994 (2) TMI 261 – SUPREME COURT OF INDIA (copy attached for your reference as Annexure the issue on hand was 'newspaper' was excluded from the definition or 'goods' under CST Act, 1956. Consequently, department expressed the view that 'C' form would not be available for buying newsprint for printing newspapers. In other words, the purchasers were required to pay higher rate of tax and benefit of concessional rate of CST was not available to them. Having regard to the intention of exclusion of 'newspaper' from the definition of goods, Hon'ble Supreme Court observed that the definition of 'goods' was amended to adhere to Constitution of India i.e. not to levy CST on sale of ne

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y a vehicle except living persons. but does not include luggage or personal effects carried in a motor car or in trailer attached to a motor car or the personal luggage of passengers travelling in the vehicle.
On analysing the above definition, it can be observed that under Motor Vehicles Act, goods includes money and consequently, all cash carry vans of the applicant are considered as 'goods carriage'
Therefore, though there is express definition given in Central GST Act, 2017 for goods, the term 'goods' shall include 'money' for the purpose of Section 17 (5) (a) of Central GST Act. Consequently, the applicant Shall be eligible for input tax credit of CGST, MGST, IGST and Compensation Cess with respect to cash carry vans.
7)   Cash carry vans are also used for transportation of gold i.e. goods and therefore, Input tax Credit thereof shall be available to the applicant.
In the present case, the Applicant provides various cash management services in

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llery from one branch of the bank to safe vault where such gold is stored safely. Therefore, one needs to analyse Section 17 (5) of Central GST Act, 2017 in this factual matrix. The said Section is reproduced hereunder:
“Section 17 Apportionment of credit and blocked credits
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
[Emphasis supplied]
Therefore, as per the above provision, input tax credit is available in respect of motor vehicles and other conveyances when they are used for transportation of 'goods

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xure 'C' ,
There is no dispute to the fact that gold and silver are nothing but goods. In common parlance, gold is not considered as money; but a commodity which is capable of being bought and sold. Accordingly, gold and silver are movable properties squarely falling within the definition of 'goods'
Therefore, these cash carry vans are also used for transportation of gold and other valuable goods. Consequently, as per Section 17 (5) of Central GST Act, 2017, the input tax credit of CGST, MGST, IGST and Compensation Cess shall be available to the applicant.
In view of the above, we request you to pass a suitable Advance Ruling stating Input Tax Credit shall be eligible in respect of GST/Cess paid on purchase of cash carry vans to the Applicant
03.   CONTENTION – AS PER THE CONCERNED OFFICER
The submission, as reproduced verbatim, could be seen thus-
” (3) The Point wise comments are as follows:-
(i) AS per Section 7(1)(a) the activity of supply of vehicl

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of CGST Act, activities or transactions which shall be treated neither as a supply of goods nor a supply of services.
Schedule-III of the Act gives: –
(i) Services by an employee to the employer in the course of or in relation to his employment.
(ii) Services by any court or Tribunal established under any law for the time being in force.
(iii). (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
(iv) Services of funeral, burial, crematorium or mortuary including transportation of the

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es that;
“Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
Since the applicant is engaged in cash management services and the same does not fall within exceptional cases as mentioned above including clause (ii) of Section 17(5) (a) because as per definition of goods in Section 2(52) of CGST Act, 2017 “goods” means 'every kind of movable property other than money and securities but includes actionable claim, growing Crops, grass and things attached to or forming part of the land which are agreed to be severed befo

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sion was tendered during hearing and a request was made to make a further submission. The same has been tendered. None was present on behalf of the concerned officer from the Central Tax Office. However, a written submission has been furnished.
05.   OBSERVATIONS
We have gone through the facts of the case. Lt has been informed thus –
* The applicant is having cash management network pan India. Such transportation of cash is done through security vans popularly known as cash carry vans.
* The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. For this purpose, the applicant purchases motor vehicles and pays GST and also pays GST on fabrication.
* While purchasing cash carry vans under pre-GST era, the applicant had paid Central Excise Duty as well as Value Added tax. When these vans cannot be used further, the applicant sells these motor vehicles as scrap.
* In certain cases, instead of purchasing motor v

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, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
 7. (l) For the purposes of this Act, the expression “supply” includes-
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchang

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ash management network. As and when the vehicles become scrap, they have to be disposed off and the proceeds therefrom to be identified as income for the business which is reflected in the Profit & Loss Account of the business. Buying new assets and discarding the old and unusable assets is an activity in the course of carrying on of the business. Hence, we conclude that supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. However, we see that the applicant has referred to the following to make a claim that the impugned transaction would not be a 'supply' under the GST Act
SCHEDULE I [see section 7] – ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
SCHEDULE II [See section 71 – ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY

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r the reason that they lack the crucial element of 'consideration'. As regards Schedule IL the same classifies the supplies into supplies of goods or services. Schedule Il begins with the premise that the activities are 'supply'. For the facts before us, we find that there is a supply of cash vans, which are ' goods', for a consideration and the transaction is in the natural course of business. The transaction and the provisions are obvious. In view thereof, we do not find merit in the argument of the applicant.
Having seen that the transaction amounts to a 'supply' under the GST Act, we move on to the next aspect which the applicant desires to know and which is the rate of GST and Compensation Cess. Chapter 87 of the Customs Tariff covers motor vehicles. The applicant has not informed the Customs/ Excise Tariff Heading, Neither has any copy Of the invoice effecting the supply been tendered. The applicant has submitted a sample agreement copy which it e

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able to CST at various rates –
a.   Schedules I to III and V to VI do not cover the impugned goods.
b.   Entries in Schedule IV would cover the impugned goods.
3.   Notification No.1/2017-Compensation Cess (Rate) (as amended from time to time) enlisting the goods taxable to Compensation Cess under the Goods and Services Tax (Compensation to States) Act, 2017 at various rates –
a.   This Notification enlists goods from the Chapter 87.
In absence of the requisite details before us, we have to ask the applicant to go through the Notification No.1/2017-CentraI/State Tax (Rate) and Notification No. 1/2017-Compensation Cess (Rate), as amended from time to time. We would now turn to the next question.
Question 2
If the answer to Question 1 is in affirmative, whether Input tax Credit is available to CMS Info Systems Ltd. ('CMS' or 'the applicant') on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash

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under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.
Section 17 – Apportionment of credit and blocked credits.
(1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.
(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies
 (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax

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uch goods determined under section 15.
As can be seen from the above, except in certain situations as enumerated, ITC is not available in respect of motor vehicles. Hence, I see the exceptions.
As can be seen, the impugned activity of providing cash management services not being for transportation of passengers OR for imparting training on driving, flying, navigating such vehicles or conveyances, it would not be covered by the exceptions in (B) and (C) of sub-section 5(a)(i). Sub-section 5(a)(i)(A) is about making “further supply of such vehicles or conveyances”. The words “further supply” herein are m the nature of “resale”. It should be noted that it is not mentioned as being just “supply of such vehicles or conveyances”. The word “further” before the word “supply” has to be given its proper weightage. Here, the legislature intends to cover motor vehicles which are purchased for the purpose of being sold. In this category, we have the chain of the distributors/ dealers of motor veh

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ion which speaks about exception if the motor vehicles are used for transportation of goods. The word 'goods' has been defined thus –
“Definitions. 2. In this Act, unless the context otherwise requires,-
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
I find that the applicant has also mentioned that bes

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oney'.
The applicant has cited the case law in Printers (Mysore) Ltd. And Another V. Assistant Commercial Tax Officer And Others. (Civil Appeal No. 1550 of 1985). Indian Newspapers Society V. State of Karnataka. (Writ Petition No. 278 of 1991). (And Other Appeals) [93 STC 95]. We could look at the facts and the decision in this case thus –
“The publishers of newspapers require various goods, here inafier referred to as “the raw material”, for producing, i. e., for printing and publishing their newspapers. The publishers are registered as dealers under the Act. They purchase their raw material from other registered dealers. Most of these purchases are inter-State purchases; m the hands of the selling dealers they are inter-Stale sales exgible to tax.
Section 8, read as a whole, says, inter alia: where a dealer purchases goods (being non-declared goods) required by him for use in the manufacture or processing of goods for sale and issues form “C” to the selling dealer, the selling

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er alia, in the manufacture or processing of goods for sale. Of declared goods, the selling dealer has to pay tax at the rate applicable to sale of such goods within the appropriate State.). It necessarily means that the selling dealer will collect (pass on) tax from the purchasing dealer only at the said concessional rate. The idea behind this provision is self-evident. It is to ensure that the price of the product manufactured by such purchasing dealers does not go up to the detriment of the consumers of those goods. The Parliament does not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale of the finished goods. However, it is not necessary that the finished goods are actually subjected to tax on their sale-for they may be exempted

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on is this: before the amendment of the definition of the expression “goods” by the 1958 Amendment Act, the publishers of the newspapers [who held the certificate of registration contemplated by section 8(3)(b)] were issuing forms “C” [declarations contemplated by section 8(4)(a)] and on that basis the selling dealer was collecting from them Central sales tax at the concessional rate of 4 per cent (in the case of non-declared goods). They were like any other manufacturers in this respect. But after newspapers were excluded from the purview of the “goods” by the 1958 (Amendment) Act, the Central sales tax authorities took the stand that by virtue of the said amended definition, the printers/publishers of newspapers were not entitled to the benefit of section 8(3)(b) read with section 8(1)(b) and are, therefore, not entitled to issue forms “C”. Their reasoning was this: since the expression “goods” does not take in newspapers, it cannot be said that publishers of newspapers are purchasin

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ution and hold on that basis that the expression “goods” occurring in the latter half of clause (b) of section 8(3) does not exclude newspapers from its purview
[clause (b) of sub-section (3) :
“The goods referred to in clause (b) of sub-section (1) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.”……
Now coming back to the amendment of the definition of “goods” in section 2(d) of the Central Sales Tax Act, the said amendment, brought in with a view to bring the said definition in accord with the amendments brought in by the Constitution (Sixth Amendment) Act (referred to hereinbefore) was actuated by the very same concern, viz., to exempt the

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efined in section 2(d). In other words, the “goods” referred in the first half of clause (b) in section 8(3) refers to what may generally be referred to as raw material (in cases where they were purchased by a dealer for use in the manufacture of goods for sale) while the said word “goods” occurring for the fourth time (i.e., in the latter half) cannot obviously refer to raw material. It refers to manufactured “goods”, i.e., goods manufactured by such purchasing dealer-in this case, newspapers. If we attach the defined meaning to “goods” in the second half of section 8(3)(b), it would place the newspapers in a more unfavourable position than they were prior to the amendment of the definition in section 2(d). It should also be remembered that section 2 which defines certain expressions occurring in the Act opens with the words “in this Act, unless the context otherwise requires”. This shows that wherever the word “goods” occurs in the enactment, it is not mandatory that one should mecha

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goods which they required for printing and publishing newspapers. Their position could not be worse after the amendment which would be the case if we accept the contention of the Revenue. If the contention of the Revenue is accepted, the newspapers would now become liable to pay tax at 10 per cent on non-declared goods as prescribed in section 8(2). This would be the necessary consequence of the acceptance of Revenue's submission inasmuch as the newspapers would be deprived of the benefit of section 8(3)(b) read with section 8(1)(b). We do not think that such was the intention behind the amendment of definition of the expression “goods” by the 1958 (Amendment) Act. Even apart from the opening words in section 2 referred to above, it is well-settled that where the context does not permit or where it would lead to absurd or unintended result, the definition of an expression need not be mechanically applied.”
 It can be seen from the above case law that the Hon. Court went into

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that effect such a qualification is always implied.
18. There is no dispute with the proposition that the meaning of a word or expression defined may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in definition section, namely, “unless the context otherwise requires”. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section. But where there is no obscurity in the language of the section, there is no scope for the application of the rule ex visceribus actus. This rule is never allowed to alter the meaning of what is of itself clear and explicit. The authorities relied upon by the High Court are, therefore, not applicable.”
Thus, the Hon. Courts have laid down that the co

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ifying the Schedule for goods exempted specifying the goods “Rupee notes when sold to the Reserve Bank of India”. Notes become legal tender after they are issued by the Reserve bank of India. Till that time they are mere printed papers and not 'money' or 'currency' and hence, they are held exigible to GST, though at a NIL rate. In the present case, the ITC would be available when the motor vehicles are used for transportation of goods. Here, the ITC is of the tax paid in respect of the purchase of the motor vehicles and not Of the goods being transported. To restrict the ITC here to the case when only 'goods' as understood in GST are being transported in the motor vehicles would not be in the context of the provision. The applicant has rightly invited attention to the definition of 'goods' as appearing in the Motor Vehicles Act, 1988 which says thus –
(13)   “goods” includes livestock, and anything (other than equipment ordinarily used with th

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eration of the above, the impugned activity of providing cash management services involves use of the motor vehicles for transportation of 'goods'. The motor vehicles would be covered by the exception in sub-section 5(a)(ii) of section 17. Thus, the applicant would be entitled to the ITC on the purchase of the cash carry vans i.e motor vehicles used for transportation of goods, subject to the provisions of the Rules made in this regard.
As per Sh. Pankaj Kumar, Member
This question pertains to the eligibility to avail Input Tax Credit (ITC) on the purchase of cash carry vans which are used for the cash management business. I have seen above that the disposal of the cash carry vans as scrap vehicles is a 'supply' in the course of furtherance of business and is amenable to GST. In view thereof, the applicant queries as to whether ITC would be available on the purchase of cash carry vans which are later disposed off as scrap, For answering this, I would have to refer to

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nt of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including  zero-rated supplies.
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
 (6) In case of supply of capital goods or plant and machinery. on which input tax credit has been taken, the registered person shall pay an amount equal to the input lax credit taken on the said capital goods or plan,' and machinery reduced by such percentage points as may be prescribed or the tax on the transac

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The word “further” before the word “supply” has to be given its proper due. Here, the legislature intends to cover motor vehicles which are purchased for the purpose of being sold. In this category, we have the chain of the distributors/ dealers of motor vehicles who purchase from the manufacturers for the downward sale to the final customer. The use of the word “further” is indicative of a further supply and not such a supply as in the present case which is the disposal as a scrap and which happens after the motor vehicle has been used till its full working life. In view thereof, the impugned activity of providing cash management services not being for making a further supply of the motor vehicles would not be covered by the exception in (A) of sub-section 5(a)(i). I find that the applicant has argued that as per well-settled principle of law at first one has to apply “literal interpretation” and only in cases of absurd results, one has to apply “purposive interpretation”. However, th

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ank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
I find that the applicant has also mentioned that besides i cash', the cash carry vans are also used for transport of bullion. Bullion not being excluded from the definition of ' goods' , there arises no issue. However, the applicant has raised the question in terms of 'cash carry vans' and hence, “cash” would be the goods which would be transported. “Cash” here is the Indian legal tender which is 'money' and I find that 'money' has been excluded from the definition of 'goods' for the purposes of the GST Act. However, it is found that the applicant has specifically mentioned in his application that they are engaged in “cash management service” which they have specifically mentioned as under :
*   Providing ATMs and installing the sam

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as under :-
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; 
Thus from the above definition of 'goods', it very clear that 'money' is specifically excluded from the definition of 'goods' and therefore in no way input tax credit in respect of motor vehicles and other conveyances as envisaged in Section 17(5) (a) would be available in respect of transportation of money in motor vehicles as under GST law as money is specifically excluded from the definition of 'goods' and therefore 'money' is not to be treated as 'goods' because of specific exclusion.
The intent of the legislature in excluding 'money' from the definition of 'goods' can also  be visualized from a situation wherein if a person 'X' eng

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:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
We see that legislative intent to allow input tax credit in respect of vehicles is very restrictive and requires to be interpreted accordingly and credit in respect of motor vehicles shall not be available except to the four persons/entities as enumerated above when there is specific exclusion of 'money' from being considered as goods in GST Act and provisions. The judgement of the Hon'ble Supreme Court in the case of Printers (Mysore) Ltd Vs Asst. Commercial Tax Officer (cited supra) as referred by the applicant is in respect of very different statute i.e. the Central Sales Tax Act,1956 wherein the issue was whether purchase and use o

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e was no intent to not to treat newspapers as 'goods' but the only intent was to put them out of Sales Tax liability and Hon'ble Supreme Court has rightly interpreted as per intent and context of the Central Sales Tax statute.
However when we see definition of 'goods' as given in the GST Act, we see that the definition of 'goods' is as under –
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim. growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
We see that it specifically gives the exception that under the GST Act, 'money' will not be considered as ' goods' for the provisions of GST and therefore, in respect of GST Act wherever the word 'goods' comes it will specifically mean that money would not be covered in the same. The intent of legislature is further confirmed from the e

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a) (ii) of the GST Act which is reproduced as under –
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
And therefore, transportation of money is not covered in section 17(5)(a) (ii) of the GST Act and the applicant is not eligible for availing input tax credit in respect of motor vehicles used in transport of money.
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 Se

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Victory Production & Entertainment P. Ltd. Versus Commissioner of CGST Mumbai.

Victory Production & Entertainment P. Ltd. Versus Commissioner of CGST Mumbai.
Service Tax
2018 (5) TMI 1221 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 19-3-2018
Appeal No. ST/85617, 85618, 85620, 85621/18 – A/86158-86161/2018
Service Tax
Mr. M. V. Ravindran, Member (Judicial)
Shri Prashant Kandagal, Office Boy for appellant
Shri V.R. Reddy, Asst. Commr (AR) for respondent
Per: M. V. Ravindran
These four appeals are directed against order-in-appeal No. IM/CGST A-III/MUM/166 to 169/17-18 dated 10.10.2017.
2. An application for adjournment of the matter is received from the appellant.
3. On consideration of the application and perusal of records, I find that the appeals can be disposed of at this stage as t

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