Goods and Services Tax – Page 352

THE PUNJAB GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2018.

THE PUNJAB GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2018.
26-Leg./2018 Dated:- 23-10-2018 Punjab SGST
GST – States
Punjab SGST
Punjab SGST
GOVERNMENT OF PUNJAB
DEPARTMENT OF LEGAL AND LEGISLATIVE AFFAIRS, PUNJAB
NOTIFICATION
The 23rd October, 2018
No. 26-Leg./2018.-The following Ordinance of the Governor of Punjab, promulgated under clause (1) of article 213 of the Constitution of India on the 18th day of October, 2018, is hereby published for general information:-
THE PUNJAB GOODS AND SERVICES TAX (AMENDMENT) ORDINANCE, 2018
(Punjab Ordinance No. 2 of 2018)
AN
ORDINANCE
further to amend the Punjab Goods and Services Tax Act, 2017.
Promulgated by the Governor of Punjab in the Sixty-ninth Year of the Republic of India.
Whereas, the Legislative Assembly of the State of Punjab is not in session and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action;
Now, therefore, in exercise of the powers conferre

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ty, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171″ shall be substituted;
(ii) in clause (16), for the words “Central Board of Excise and Customs”, the words “Central Board of Indirect Taxes and Customs” shall be substituted;
(iii) in clause (17), for sub-clause (h), the following sub-clause shall be substituted, namely:-
“(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and”;
(iv) clause (18) shall be omitted;
(v) in clause (35), for the word, brackets and letter “clause (c)”, the word, brackets and letter “clause (b)” shall be substituted;
(vi) in clause (69), in sub-clause (f), after the word and figures “article 371”, the words, figures and letter “and article 371J” shall be inserted; and
(vii) in clause (102), the following Explanation shall be inserted, namely:-
“Explanation.-For the removal of doubts, it is hereby clarified that the expre

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n sub-section (3), for the words, brackets and figures “sub-sections (1) and (2)”, the words, brackets, sign, figures and letter “sub-sections (1), (1A) and (2)” shall be substituted.
Amendment of section 9 of Punjab Act 5 of 2017.
4. In the principal Act, in section 9, for sub-section (4), the following sub-section shall be substituted, namely:-
“(4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”.
Amendment of section 10 of Punjab Act 5 of 2017.
5. In the principal Act, in section 10,-
(i) in sub-section (1),-
(a) for the si

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section (1), he is not engaged in the supply of services;”.
Amendment of section 12 of Punjab Act 5 of 2017.
6. In the principal Act, in section 12, in sub-section (2), in clause (a), the words, brackets and figure “sub-section (1) of” shall be omitted.
Amendment of section 13 of Punjab Act 5 of 2017.
7. In the principal Act, in section 13, in sub-section (2), the words, brackets and figure “sub-section (2) of” occurring at both the places, shall be omitted.
Amendment of section 16 of Punjab Act 5 of 2017.
8. In the principal Act, in section 16, in sub-section (2),-
(i) in clause (b), for the Explanation, the following Explanation shall be substituted, namely:-
“Explanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise,

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than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:-
(A) further supply of such motor vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving such motor vehicles;
(aa) vessels and aircraft except when they are used-
(i) for making the following taxable supplies, namely:-
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods;
(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be available-
(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specifi

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entre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession:
Provided further that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide to its employees under any law for the time being in force.”.
Amendment of section 20 of Punjab Act 5 of 2017.
10. In the principal Act, in section 20, in the Explanation, in clause (c), for the words and figures “under entry 84”, the words, figures and letter “under entries 84 and 92A” shall be substituted.
Amendment of section 22 of Punjab Act 5 of 2017.
11. In the principal Act, in section 22, –
(i) in sub-section (1), after the proviso, the following proviso shall be inserted, namely:-
“Provided further that where such person makes taxable supplies of goods or services or both from a special category State in respect of which the Central Government has enhanced the aggregate turnover referred to in the first pro

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omic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the State."; and
(ii) in sub-section (2), for the proviso, the following proviso shall be substituted, namely:-
"Provided that a person having multiple places of business in the State may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.".
Amendment of section 29 of Punjab Act 5 of 2017.
14. In the principal Act, in section 29,-
(i) in the marginal heading, after the word “Cancellation”, the words “or suspension” shall be inserted;
(ii) in sub-section (1), after clause (c), the following proviso shall be inserted, namely:-
“Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.”; and
(iii) in

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he principal Act, in section 35, in sub-section (5), the following proviso shall be inserted, namely:-
“Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”.
Amendment of section 39 of Punjab Act 5 of 2017.
17. In the principal Act, in section 39,-
(i) in sub-section (1),-
(a) for the words “in such form and manner as may be prescribed”, the words “in such form, manner and within such time as may be prescribed” shall be substituted;
(b) the words “on or before the twentieth day of the month succeeding such calendar month or part thereof” shall be omitted;
(c) the following proviso shall be inserted, namely:-
“Provided that the Government may, on the recommendations of the C

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n” shall be substituted.
Insertion of section 43A in Punjab Act 5 of 2017.
18. In the principal Act, after section 43, the following section shall be inserted, namely:-
Procedure for furnishing return and availing input tax credit.
“43A. (1) Notwithstanding anything contained in sub-section (2) of section 16, section 37 or section 38, every registered person shall in the returns furnished under sub-section (1) of section 39 verify, validate, modify or delete the details of supplies furnished by the suppliers.
(2) Notwithstanding anything contained in section 41, section 42 or section 43, the procedure for availing of input tax credit by the recipient and verification thereof shall be such as may be prescribed.
(3) The procedure for furnishing the details of outward supplies by the supplier on the common portal, for the purposes of availing input tax credit by the recipient shall be such as may be prescribed.
(4) The procedure for availing input tax credit in respect of outward s

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overy of an amount of tax or input tax credit wrongly availed not exceeding one thousand rupees.
(8) The procedure, safeguards and threshold of the tax amount in relation to outward supplies, the details of which can be furnished under sub-section (3) by a registered person,-
(i) within six months of taking registration;
(ii) who has defaulted in payment of tax and where such default has continued for more than two months from the due date of payment of such defaulted amount,
shall be such as may be prescribed.”.
Amendment of section 48 of Punjab Act 5 of 2017.
19. In the principal Act, in section 48, in sub-section (2), after the word and figures “section 45”, the words “and to perform such other functions” shall be inserted.
Amendment of section 49 of Punjab Act 5 of 2017.
20. In the principal Act, in section 49,-
(i) in sub-section (2), for the word and figures “section 41”, the words, figures and letter “section 41 or section 43A” shall be substituted; and
(ii) in sub-s

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ted tax or State tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully towards such payment.
Order of utilisation of the input tax credit.
49B. Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of subsection (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.”.
Amendment of section 52 of Punjab Act 5 of 2017.
22. In the principal Act, in section 52, in sub-section (9), for the word and figures “section 37”, the words and figures “section 37 or section 39” shall be substituted.
Amendment of section 54 of Punjab Act 5 of 2017.
23. In the principal Act, in section 54,-
(i) in sub-section (8), in clause (a), for the words “zero-rat

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n 25.”.
Amendment of section 107 of Punjab Act 5 of 2017.
25. In the principal Act, in section 107, in sub-section (6), in clause (b), after the words and sign “arising from the said order,”, the words and sign “subject to a maximum of twenty-five crore rupees,” shall be inserted.
Amendment of section 112 of Punjab Act 5 of 2017.
26. In the principal Act, in section 112, in sub-section (8), in clause (b), after the words and sign “arising from the said order,” the words and sign “subject to a maximum of fifty crore rupees,” shall be inserted.
Amendment of section 129 of Punjab Act 5 of 2017.
27. In the principal Act, in section 129, in sub-section (6), for the words “seven days” occurring at both the places, the words “fourteen days” shall be substituted.
Amendment of section 143 of Punjab Act 5 of 2017.
28. In the principal Act, in section 143, in sub-section (1), in clause (b), after the proviso, the following proviso shall be inserted, namely:-
“Provided further that the pe

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CLARIFICATION REGARDING APPLICABILITY OF GST ON VARIOUS GOODS AND SERVICES

CLARIFICATION REGARDING APPLICABILITY OF GST ON VARIOUS GOODS AND SERVICES
Circular No. 1819054/828 Dated:- 23-10-2018 Uttar Pradesh SGST
GST – States
Enclosed Circular No.52/26/2018-GST
=============
Document 1
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tified Toned Milk: Representations have been received
seeking clarification regarding applicability of GST on Fortified Toned Milk.
3.2 Milk is classified under heading 0401 and as per S.No. 25 of notification No. 2/2017-
Central Tax (Rate) dated 28.06.2017, fresh milk and pasteurised milk, including separated
milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter,
excluding Ultra High Temperature (UHT) milk falling under tariff head 0401 attracts NIL rate
of GST. Further, as per HSN Explanatory Notes, milk enriched with vitamins and minerals is
classifiable under HSN code 0401. Thus, it is clarified that toned milk fortified (with vitamins
'A' and 'D') attracts NIL rate of GST under HSN Code 0401.
4.1
Applicable GST rate on refined beet and cane sugar: Doubts have been raised
regarding GST rate applicable on refined beet and cane sugar. Vide S. No. 91 of schedule I of
notification No. 1/2017-Central Tax (Rate) dated 28.06.2017, 5% GST

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including refined beet and cane
sugar, will fall under heading 1701 and attract 5% GST rate.
5.1
Applicable GST rate on treated (modified) tamarind kernel powder and plain
(unmodified) tamarind kernel powder : Representation have been received seeking
clarification regarding GST rate applicable on treated (modified) tamarind kernel powder and
plain (unmodified) tamarind kernel powder.
5.2
There are two grades of Tamarind Kernel Powder (TKP):- Plain (unmodified) form
(hot, water soluble) and Chemically treated (modified) form (cold, water soluble).
5.3
As per S. No. 76 A of schedule I of notification No. 1/2017-Central Tax (Rate) dated
28.06.2017, 5% GST rate was prescribed on Tamarind Kernel powder falling under chapter 13.
However, certain doubts have been expressed regarding GST rate on Tamarind kernel powder,
as the said notification does not specifically mention the word “modified”.
5.4 As both plain (unmodified) tamarind kernel powder and treated (modified) tamarin

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rate on Human Blood Plasma: References have been received about the varying
practices being followed in different parts of the country regarding the GST rates on “human
blood plasma”.
7.2
Plasma is the clear, straw coloured liquid portion of blood that remains after red blood
cells, white blood cells, platelets and other cellular components have been removed. As per the
explanatory notes to the Harmonized System of Nomenclature (HSN), plasma would fall under
the description antisera and other blood fractions, whether or not modified or obtained by
means of biotechnological processes and would fall under HS code 3002.
7.3
Normal human plasma is specifically mentioned at S. No. 186 of List I under S. No.
180 of Schedule I of the notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017, and
attracts 5% GST. Other items falling under HS Code 3002 (including plasma products) would
attract 12% GST under S. No. 61 of Schedule II of the said notification, not specifically

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alized water and various chemicals and fragrances, which impart the essential character
to the product. The base raw materials are moisturising and cleansing agents, preservatives,
aqua base, cooling agents, perfumes etc. The textile material is present as a carrying medium
of these cleaning/wiping components.
8.3
According to the General Rules for Interpretation [GRI- 3(b)] of the First Schedule to
the Customs Tariff Act (CTA), 1975, “Mixtures, composite goods consisting of different
materials or made up of different components, and goods put up in sets for retail sale, which
cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material
or component which gives them their essential character, insofar as this criterion is
applicable.” Since primary function of the article should be taken into consideration while
deciding the classification, it is clear that the essential character of the wipes in the instant case
is imparted by the com

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HSN, the heading 3307 includes wadding,
felt and nonwovens impregnated, coated or covered with perfume or cosmetics. Similarly, as
per explanatory notes to the HSN, the heading 3401 includes wipes made of paper, wadding,
felt and nonwovens, impregnated, coated or covered with soap or detergent, whether or not
perfumed or put up for retail sale.
8.6
Thus, the wipes of various kinds (as stated above) are classifiable under heading 3307
or 3401 depending upon their constituents as discussed above. Therefore, if the baby wipes are
impregnated with perfumes or cosmetics, then the same would fall under HS code 3307 and
would attract 18% GST rate. Similarly, if they are coated with soap or detergent, then it would
fall under HS code 3401 and would attract 18% GST.
9.1
Classification and applicable GST rate on real zari Kasab (thread): Certain doubts
have been raised regarding the classification and applicable GST rate on Kasab thread (a
metallised yarn) as yarn falling under he

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g under this heading attract 12% GST.
Accordingly, kasab (yarn) would attract 12% GST along with other metallised yarn, whether
or not gimped, being textile yarn, combined with metal in the form of thread, strip or powder
or covered with metal including imitation zari thread (S. No. 137 of the Schedule-II-12%).
Therefore, it is clarified that imitation zari thread or yarn known as “Kasab” or by any other
name in trade parlance, would attract a uniform GST rate of 12% under tariff heading 5605.
10.1 Applicability of GST on marine engine: Reference has been received seeking
clarification regarding GST rates on Marine Engine. The fishing vessels are classifiable under
heading 8902, and attract GST @ 5%, as per S. No. 247 of Schedule I of the notification No.
01/2017-Central Tax (rate) dated 28.06.2017. Further, parts of goods of heading 8902, falling
under any chapter also attracts GST rate of 5%, vide S. No. 252 of Schedule I of the said
notification. The Marine engine for fis

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ether a quilt filled with cotton with cover of cotton, or filled with cotton but
cover made of some other material, or filled with material other than cotton.
11.3
The matter has been examined. The essential character of the cotton quilt is imparted
by the filling material. Therefore, a quilt filled with cotton constitutes a cotton quilt,
irrespective of the material of the cover of the quilt. The GST rate would accordingly apply.
12.1 Applicable GST rate for bus body building activity: Representations have been
received seeking clarifications on GST rates on the activity of bus body building. The doubts
have arisen on account of the fact that while GST applicable on job work services is 18%, the
supply of motor vehicles attracts GST @ 28%.
12.2 Buses [motor vehicles for the transport of ten or more persons, including the driver] fall
under headings 8702 and attract 28% GST. Further, chassis fitted with engines [8705] and
whole bodies (including cabs) for buses [8707] also

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d accordingly.
13.1
Applicable GST rate on Disc Brake Pad: Representations have been received seeking
clarification on disc brake pad for automobiles. It is stated that divergent practices of
classifying these products, in Chapter 68 or heading 8708 are being followed. Chapter 68
attracts a GST rate of 18%, while heading 8708 attracts a GST rate of 28%.
13.2 Parts and accessories of motor vehicles of headings 8701 to 8705 are classified under
heading 8708 and attract 28% GST. Further, friction material and articles thereof (for example,
sheets, rolls, strips, segments, discs, washers, pads), not mounted, for brakes, for clutches or
the like, with a basis of asbestos, of other mineral substances or of cellulose, whether or not
combined with textiles or other mineral substances or of cellulose, whether or not combined
with textiles or other materials are classifiable under heading 6813 and attract 18% GST.
13.3 In the above context, it is mentioned that as per HSN Explanatory

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fficulty, if any, may be brought to the notice of the Board immediately. Hindi version
shall follow.
Yours faithfully
Dr. Ajay K. Chikara
Technical Officer (TRU)
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CLARIFICATION REGARDING APPLICABILITY OF GST ON THE PETROLEUM GASES

CLARIFICATION REGARDING APPLICABILITY OF GST ON THE PETROLEUM GASES
Circular No. 1819052/829 Dated:- 23-10-2018 Uttar Pradesh SGST
GST – States
Enclosed Circular No.53/27/2018-GST
=============
Document 1
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he petroleum gases retained for
the manufacture of petrochemical and chemical products – regarding.
References have been received regarding the applicability of GST on the petroleum
gases retained for the manufacture of petrochemical and chemical products during the course
of continuous supply, such as Methyl Ethyl Ketone (MEK) feedstock, petroleum gases etc.
2.
In this context, it may be recalled that clarifications on similar issues for specific
products have already been issued vide circular Nos. 12/12/2017-GST dated 26th October, 2017
and 29/3/2018-GST dated 25th January, 2018. These circulars apply mutatis mutandis to other
cases involving same manner of supply as mentioned in these circulars. However, references
have again been received from some of the manufacturers of other petrochemical and chemical
products for issue of clarification on applicability of GST on petroleum gases, which are
supplied by oil refineries to them on a continuous basis through dedicated pip

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he manufacture of petrochemical and chemical products. Though, the refinery would be
liable to pay GST on such returned quantity of petroleum gases, when the same is supplied by
it to any other person. It is reiterated that this clarification would be applicable mutatis mutandis
on other cases involving supply of goods, where feed stock is retained by the recipient and
remaining residual material is returned back to the supplier. The net billing is done on the
amount retained by the recipient.
5.
This clarification is issued in the context of the Goods and Service Tax (GST) law only
and past issues, if any, will be dealt in accordance with the law prevailing at the material time.
Yours faithfully,
Dr. Ajay K. Chikara
Technical Officer (TRU)
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Ã Â¤Â«Ã Â¤Â¾Ã

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IN RE: M/s. UNITED BREWERIES LIMITED

IN RE: M/s. UNITED BREWERIES LIMITED
GST
2018 (11) TMI 283 – APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA – 2018 (18) G. S. T. L. 855 (App. A. A. R. – GST)
APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA – AAAR
Dated:- 23-10-2018
KAR/AAAR/03/2018-19
GST
SHRI. A.K. JYOTISHI, AND SHRI. M.S. SRIKAR, MEMBER
Represented by: Sri. Shivadass Advocate.
PROCEEDINGS
(Under section 101 of the CGST Act, 2017 and the KGST Act, 2017)
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act,2017 and the Karnataka Goods and Service Tax (hereinafter referred to as CGST Act, 2017 and KGST Act,2017) are identical, except in certain provisions, As such, unless a mention is made specifically to any such dissimilar provision, a reference to the CGST Act would also mean a reference to the corresponding similar provision under the KGST Act.
The present appeal has been filed under Section 100 of CGST Act, 2017 and the KGST

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BUs, upon the sale of such goods, pay the statutory levies and taxes. The CBUs further account for all the manufacturing cost and distribution overheads in their books of account since it is they who procured all resources for the manufacture -of the beer. Further, CBUs retain a certain amount of profit. After accounting all these revenues and deducting the part of their share from the total turnover that is had from the sale of such beer in each period, the CBUs transfer the balance of amount from the total turnover to the Appellant.
3. The appellant filed an application on 10.01.2018 before the Karnataka Authority for Advance Ruling (hereinafter referred to as 'Authority”) under Section 97 of CGST/KGST Act; 2017 read with Rule 104 of CGST/KGST Rules, 2017 in form GST ARA-01, seeking a ruling on the following:
a. Whether, beer bearing brand/s owned by the Appellant manufactured by Contract Brewing Units out of the raw materials, packaging materials, and other input materials procure

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ds from the sale of beer made So, the CBUs pay all the statutory levies and taxes. Besides this the CBUs retain the manufacturing Cost, the manufacturing and distribution overheads and its portion of net profit. The balance of the sale proceeds, after the CBUs have apportioned part of the proceeds as enumerated above, is transferred to the Appellant as surplus/profit earned by the brand owner.
6. The contract manufacturing arrangement empowers the CBUs to use the brand name of the Appellant for the limited purpose of facilitating manufacture of Appellant's own brands of beer and this usage is in accordance with Section 48(2) of Trademark Act.
7. The Appellants submitted that the Ievy of service tax in relation to the activity of production/process of alcoholic liquor for or on behalf of the brand owners like the Appellant commenced on 01.09.2009 under Business Auxiliary Service and continued up to 30.06.2012, They further state that thereafter, w.e.f 01.07.2012 the activity of produc

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ther, such amount is paid by BO or by CBU, they have no nexus with the provisions of service. As such these levies will not be included for charging service tax.
4. Similarly, the surplus/profit earned by the BO being in the name of Business Profit (which falls within the purview of direct taxes) will not be chargeable to service tax.
9. Further, the Appellant submitted before the Authority that during the period from 23.09.2009 to 30.06.2012 and 01.06.2015 to 30.06.2017, the CBUs have discharged Service Tax on the agreed bottling charges (comprising of manufacturing overheads and margin of profit) and the amounts reimbursed by the Appellant towards agreed expenses.
10. Further, the appellant had cited past litigations (pre-GST period) before the Authority, in respect of the matter regarding taxability at the hands -of the BO in respect of the amount received by them from the CBUs; that even though CBEC had clarified that there was no service provided by the brand owner to the CBUs

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e Appellant presented that in the GST regime, post 01.07.2017, alcoholic liquor for human consumptions has been kept out of the levy of GST. With respect to the manufacturing activity carried out by the CBUs the levy of GST would arise only on the activity of 'treatment or process which is applied to another persons' goods as per Schedule II to the CGST Act, 2017. They further submitted that since the CBUs procure the materials on their own account and are not applying any treatment or process on the goods belonging to the Appellant, GST would not be applicable on the activity. In respect of the income earned by the brand owner, they submitted that the CBEC had already clarified that there is no service from the brand owner.
13. Before the Authority, the Appellant also drew attention to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 to drive home the point that the activity of manufacture would amount to supply of service only if manufacturing is carried out on physical

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ty of permitting the CBU to manufacture alcoholic beverages on behalf of the principal does not amount to rendering of taxable service under the category of IPR service. The appellant has further stated that there has been no change in the law during the GST regime as compared to the law existing during the prior period for which the issue was decided by the Supreme Court. Consequently, the ratio of the judgments applies to the present law and therefore they are not liable to pay GST on the surplus profit earned by Appellant.
15. On a detailed examination of the issue, the Authority, vide Advance Ruling No. KAR ADRG 09/2018, dated 28.06.2018 = 2018 (7) TMI 835 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA (hereinafter referred to as 'Impugned Order) made the following observations:
a. The CBUs are not engaged in supply of Service to the applicant and therefore there does not arise any liability to pay GST on the amount retained by the CBC's as their profit.
b. GST is payable by the Bra

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ff) 999799 would apply to the amount of Surplus Profit transferred by the CBUs to the Appellant when there is no rendition of service by the Appellant to the CBC's in the first place.
iii. The appellant submitted that the activity of supply of alcoholic liquor for human consumption is outside the purview of GST and the sale proceeds from the supply of alcoholic liquor for human consumption or any part thereof would not become exigible to GST for the reason that it is shared between CBUs and the Appellant as per agreement.
iv. The appellant submitted that the Authority erred in holding that GST is leviable on surplus profit without following the already settled principles in the Appellant's own case under the erstwhile Service Tax regime wherein it was held that Appellant's share of surplus profit is not liable to Service Tax.
v. The Authority erred in holding that there was a supply of service under Central/State Goods and Service Tax Act,2017, whereas there is only a monetary trans

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AR. Another hearing was fixed on 25.09.2018 and the Appellant was represented by Mr. Shivadass, Advocate who made detailed submissions before the Appellate Authority. It was made clear that the clarification given by the Authority pertaining to the levy of GST on the activities of the CBU was accepted by the Appellant and is not a subject matter of challenge in the present appeal. The Advocate for the Appellant explained in detail the business model of the Appellant and took the Members through the various clauses of the agreements entered into with the CBUs to drive home the point that the amount which comes to the Appellant (UBL) is a sharing of profit and not a consideration for rendering any service. It was submitted that in order to levy GST there has to be a conscious supply of service by the Appellant and not a default Supply of Service as held by the Authority; that in their case there is no 'supply' per se as defined under Section 7 of the CGST Act; that it is not there case t

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llants branded beer, it is in the Appellant's own interest to ensure that the quality standards of the raw material procured by the CBUs and the manufacturing process followed by the CBUs are within standards commensurate with the brand image of the Appellant. For this purpose, the Appellant deputes a process executive, commercial executive and other key personnel as may be required by it to the CBU's brewery to guide the procurement of raw material, supervise the manufacturing process and packaging of finished goods; that the true intent of such supervision is only in the interest of the Appellant's own business and not an activity for the CBUs; that therefore, the question of supply of service does not arise.
19. They further submitted that the Appellant does not provide any right on the trademark/brands owned by it to the CBUs either and the impugned order itself holds that the Appellant is not providing any services relating to intellectual property owned by it to the CBUs. They s

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e character of consideration; that this was clearly clarified by the CBIC vide Circular dated 30.10.2009 in relation to service tax wherein it was clarified that the surplus profit earned by the brand owner being in the nature of business profit (which falls within the purview of direct taxes) Will not be chargeable to service tax.
20. They reiterated that for any payment of money to amount to consideration, it should be directly relatable to the supply of service or goods; that in the present case, the Authority has held that there is no supply of goods from the Appellant to the CBUs then it is logical to assume that there might be a service which is provided by the Appellant to the CBUs; that the line of reasoning by the Authority that, even though the present arrangement is not covered under Section 7(1)(a) to Section 7(1)(d) of the CGST Act, even activities which do not fit within the aforesaid clauses would be in the nature of supply is erroneous and the ruling is to be set aside

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ertaken by the Company to ensure that the manufacturing undertaken by the CBUs is of the desired quality of beer so as to ensure the business of the Company and its brand image is not compromised; that the cost incurred in appointing these executives is borne by the Company and is not recovered from the CBUs; that the representational right for manufacture and supply merely enables the CBU to affix the brand logo of the Company on the bottles of beer manufactured by the CBU; that it does not authorize the CBU to exploit the brand for its own business or interest. Therefore, there is no supply in relation to the brand either.
22. They submitted that 'consideration' has been defined under the CGST Act as any -payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both; that there must be a conceivable correlation between the supply and the payment; that unless an actual link is established be

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ntal Consultants and Technocrats Pvt Ltd reported at 2018 (10) GSTL 401 (SC) =2018 (3) TMI 357 – SUPREME COURT OF INDIA and Commissioner of Service Tax vs Bhyana Builders (P) Ltd reported at 2018 (10) GSTL 118 (SC) = 2018 (2) TMI 1325 – SUPREME COURT OF INDIA. In view of the above, they submitted that the surplus profit received by the Company can in no way be said to be 'consideration' received by the Company and therefore the question of levy of GST on the said amount does not arise.
DISCUSSION AND FINDINGS:
23. We have gone through the records in detail and have taken into consideration the submissions made by the Appellant in writing as well as the detailed arguments made by their Advocate during the personal hearing.
24. To frame the matters that lie for a decision before us, the facts are briefly summarized hereunder:
The Appellant, M/s. United Breweries Ltd has held itself out as being engaged in the manufacture and supply of beer under various brand names. Apart from manufa

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nd the process of making beer followed by the CBUs are within the standards commensurate with the brand image of the Appellant, the Appellant deputes a Process Executive, Commercial Executive and other key personnel to the CBU's brewery to guide the procurement of raw material, supervise the manufacturing process and packaging of finished goods. As per the agreement, the CBU makes a specified quantity of beer per annum that it has been mutually agreed to and which it then causes to be sold in the market ultimately, through the Government corporations/or in wholesale depending on State market regulations. The Appellant has permitted the CBUs to use its labels for branding of its beer for sale pursuant to the terms of the agreement and such representational right is granted only for making and supply of beer but for no other purpose.
26. As per the agreement, the CBUs shall pay a brand fee of Rs. 5/- per case to the Appellant in consideration of the representational right to make and su

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w material, PM and other consumables)
(Y)
Less: Bottle cost (at prevailing market rates)
(Z)
Less: Retention for energy and fixed cost by the brewer
73
Balance payable to UBL

Brand fee
5
Remaining as reimbursement to UBL
(W)
27. In the background of the above facts, two questions were raised before the Karnataka Authority for Advance Ruling (AAR) viz:
a) Whether manufacture of beer (bearing brand owned by the Appellant) by the CBUs under its invoicing would be considered as a supply of service and whether GST is payable by the CBUs on the profit earned out of such manufacturing and supply of beer?
b) Whether GST is payable by the brand owner on the 'surplus profit' transferred by the CBU to the Brand Owner out of such manufacturing activity?
28. On the first question, the Authority ruled that the activity undertaken by the CBUs is not in the nature of job-work, and hence no GST is payable. The ruling on this aspect has been accepted by the Appellant and is not cha

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o tax under the existing laws were the events of manufacture, sale and the provision of a taxable service. Under the GST regime of taxation, the taxable event which attracts the levy of GST is the 'supply' of goods or services, in terms of Section 9 of the CGST (and SGST) Act or Section 5 of the IGST Act, depending on whether the transaction of 'supply' is intrastate or interstate.
It thus appears that the object of tax in GST is clear and far more comprehensive and is certainly broader than any single earlier law that has been subsumed in it. The object of tax in GST is 'supply' as understood in Section 7 of the Act. It is a concept which, going purely by what has been written down in the GST law, is wider than the concepts of 'manufacture', 'Sale of goods', 'provision of services' etc. which were the objects of taxation in respective laws Concerning Central Excise, VAT or Service Tax. The broader object of taxation in GST, in effect, also integrates and irons out the disputes that e

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ness;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as-
(a) a supply of goods and not as a supply of services;

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se. Clause (b) recognizes imports of services for a consideration to an activity that would be construed as a 'supply' even if it is not made in course of furtherance of business. Clause (c) lays down that the activities that are classed in Schedule I would be deemed to be falling within the meaning of 'supply' even when such a transaction is made or agreed to be made without a 'Consideration' or recompense. Clause (d) refers to Schedule II which lays down the activities to be treated as supply of goods or supply of services.
Sub-section (2) of Section 7 indicate which are the activities which will be interpreted to not be a supply, and Subsection (3), enables the the Government to on the recommendations of the Council, specify, by notification, the transactions that are to be treated as a supply of goods and not as a supply of services and vice- versa.
31. Therefore, for an activity to qualify as “supply” in terms of Section 7 of the CGST Act, the following conditions are to be fulf

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CGST Act.
The CGST Act 2017 in CHAPTER III dealing with LEVY AND COLLECFION OF TAX lays down in Section 9:
9. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.
(2) The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goo

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onic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
The levy clearly excludes the supply of alcoholic liquor for human consumption.
This is in line with the Amendment of the following clause of Article 366 effected vide The Constitution (One Hundred And First Amendment) Act, 2016 that received the assent of the President on the 8th September, 2016,

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workable. In proceeding to apply the above principles to the instant case to determine whether the activity undertaken by the Appellant qualifies as a 'supply' within the Scope of Section 7 of the CGST Act, we have gone through the actual Brewing and Distribution Agreement entered into by the Appellant with M/s. Master (India) Brewing Company. The Appellant has also submitted copies of the agreement entered into with M/s. Denzong Albrew Private Ltd that is identical to the agreement with Master Brewing Company and hence at this moment it appears to be a reasonable presupposition with regard to the consideration or the matters that lie before us, we can generalise to state that any reference to 'Agreement' in our discussion will mean the agreement with Masters (India) but the conclusions will apply to all the agreements entered into by the Appellant with different brewers as they are in essence the same.
The clauses of the agreement which are relevant to the issue at hand are reproduce

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UBL shall, at its own cost throughout the duration of this Agreement, arrange for its Process Executive to be deputed to the Brewery, and UBL will inform Brewer about the deputation of such Process Executive and his replacements from time to time. Such Process Executive shall be responsible for the brew as per specifications provided from time to time, inspection of brewery, laboratory and other departments and advice on processing and quality control of beer produced for and on behalf of UBL
3.2 UBL Shall depute other key personnel, as may be required by UBL to the brewery for supervising the production, processing and quality control of the beer manufactured. UBL may also depute a Commercial Executive who shall guide the procurement of raw materials, packaging and such other materials used in the manufacture of beer.
4. Confidentiality
4.6 All know-how acquired by Brewer under the terms of this Agreement and any improvement in the specifications made by Brewer relating to the pro

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e used including crown corks, lables and materials, shape and text of exterior cartons and cases shall be procured by Brewer as per UBL directions and / or specifications and Brewer shall adopt and comply with any requests made by UBL in such matter which shall not infringe any relevant laws or Statutory regulations. Procurement and payment for raw materials, packing materials and such other materials shall be under the guidance of the Commercial Executive deputed by UBL.
5.8. Brewer shall adhere strictly to the Process Executive's advice on the brewing, fermentation and lagering time for UBL's beer.
7. Brand Fee
Brewer agrees that in consideration of the representational right for manufacture and supply of beer under labels mentioned in Annexure I having been granted by UBL, Brewer shall pay a Brand Fee of Rs. 5 per case.
Such payment shall be made on a monthly basis and not later than 10th day of the following month.
8: Reimbursement
Balance due towards reimbursement of expense

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eps taken by Brewer or UBL for recordal under the relevant provisions of the Trade Marks Act shall be to the benefit of UBL alone.
33. The terms of the Agreement as mentioned above make it is evident that the parties to the Agreement have clearly defined roles. The Brewer shall make beer bearing the brand of UBL and shall dispose off the beer under the concerned States' Excise laws, to those who are authorised to purchase ideal in beer in terms of the relevant regulations. The brewer will make the beer in strict conformity to the brew specifications and quality parameters laid down by the Appellant. In order to make the UBL beer, the brewer procurers the raw material, packaging material and other materials, at their own cost. The UBL beer is made by the brewer in his own distillery using his own equipment. The proceeds from the sale of the UBL beer are used by the brewer to cover his Operational costs like purchase of raw materials, packaging materials, consumables, bottle cost, cost

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ST is not leviable on these sales. The CBUs incur expenses in making the beer which among other things include the expenditures in procurement of different goods (example hops, yeast, bottles, cans etc.) and services (for example, transport, banking etc.). Out of these goods and services that the CBUs spend on, many are exigible to GST levies as they may apply – there being no general exemption being available under GST, to such raw materials/ services that are used in making the alcoholic liquor for human consumption. The income so had from CBU operations are then partially disposed of by being charged as the expenses and the profit for CBU and as the payments for use of brand name etc. The remaining amounts which represent the sales turnover or income from the sale of beer (termed as surplus profits by the Appellant) are transferred to the Appellant.
35. As regards the role of the Appellant in the contractual agreement, they, on their part, give the brewer the right to use their pro

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ed by the brand owner”. This amount is not fixed but is variable depending on the sales in a particular month, the adjustment from the sale proceeds towards the variable costs incurred by the brewer, the brewer's profit and the brand fee paid by the Brewer to the Appellant. The surplus remaining after this, if any (denoted as W in the Agreement), is transferred to the Appellant's account. Therefore. it is evident that the Appellant receives two kinds of amount from the Brewer in terms of the Agreement.
a) One is the Brand Fee which is fixed at Rs. 5 per case, and
b) The other is the variable component 'W' which is the surplus amount remaining in balance after the sale proceeds have been apportioned towards the brewer's operational costs and brand fee.
37. The question on which a ruling was sought from the Authority was whether, GST is payable on both the amounts received by UBL i.e Brand Fee of Rs. 5/- per case and on the Component 'W'. The ruling held in the affirmative in respect

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doing an activity does so at the desire of the person for whom the activity is done in exchange for a consideration. There is no dispute that the amount transferred to the Appellant's account is a Brand Fee which is fixed at Rs. 5 per case as per the agreement. This Brand Fee being a fixed rate is paid to the Appellant every month based on the volume of sales of beer. As regards, the amount denoting a reimbursement of expenses, this amount which is denoted as 'W' in the Agreement, is variable and depends on the balance remaining if any, after adjusting components 'Y', 'Z', Rs. 73 per case, and Rs. 5 per case from the turnover of UBL brand beer sales. The Appellant in his submission has stated that in some months no amount as surplus is transferred to the Appellant.
38. As regards Brand Fee, clause 7 of the Agreement states that ''Brewer agrees that in consideration of the representational right for manufacture and supply of beer under labels mentioned in Annexure I having been grante

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The term 'Goods' has been defined in Section 2 (52) of the CGST Act, to mean 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”. The term 'Services' has been defined in Section 2(102) of the said Act to mean “anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a Separate consideration is charged.” Given the above definitions, in the instant case, the Brand Fee will clearly not be categorised as 'goods'. It is important to note that the arrangement with the CBUs is for contract manufacturing of beer but under the strict supervisions and as per the guidance and specifications of the Appellant. The Appellant has d

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by UBL in such matter. Therefore, it is seen that at every stage in the manufacture, starting from the procurement of raw materials to the methods of brewing, fermentation, lagering, bottling, packing and labelling, the Brewer is provided with technical know-how and supervision by the Appellant and is also using the right vested on him to use the Trademarks and labels of the Appellant on the UBL branded beer manufactured and sold by him. The entire know-how regarding the manufacture of Beer, such as nature of raw materials to be procured, the ratio and proportion of mixing the raw materials, the manner of packing the beer, etc being the sole intellectual property of the Appellant is shared with the Brewer under an agreement. The purpose of entering into such an arrangement with other breweries is purely for economic and commercial reasons taking into consideration the restrictions in availability of Excise licences in other States and the huge investment in setting up its own manufact

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In terms of Section 7(1) of the CGST Act, 'supply' also includes within its scope, the activities referred to in Schedule II of the Act which have been categorised as either a supply of goods or a supply of service. Clause 5(c) of the said Schedule II, refers to “temporary transfer or permitting the use or enjoyment of any intellectual property right” as a supply of service. The phrase “intellectual property right” has not been defined under the GST law. In a general sense, the term intellectual property right would include the following:
(i) Copyright
(ii) Patents
(iii) Trademarks
(iv) Designs
(v) Any other similar right to an intangible property
In the erstwhile Service Tax law, the Finance Act, 1994, had defined 'intellectual property right” to mean “any right to intangible property, namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright”. There is a clear difference between per

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rarily transferring any intellectual property right or permitting the use of or enjoyment of any intellectual property right has been categorised as a supply of service. In the instant case, the Appellant has permitted the CBUs to use the trademarks Owned by it, permitted the Brewer to acquire the know-how relating to the production and packaging of UBL's beer, which is the sole property of UBL and has permitted the Brewer to use the Labels for branding of beer for sale by the Brewer. All these amount to permitting the Brewer to use intellectual property rights. Therefore, by virtue of clause 5(c) of Schedule II of the CGST Act, the said activity amounts to a supply of service. To this extent we differ with the findings of the Authority, wherein, in Para 14.6 of the Order dated 28.06.2018, they stated that, “it becomes evident that the applicant is engaged in supply of service which is not covered under Schedule ll.” We hold that the activity of the Appellant undertaken with contractin

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e Government”. In this case, the 'Brand Fee' is the consideration for grant of the representational right to manufacture and sell beer bearing the UBL brand name. The Agreement also, in clause 7, recognises that the Brand Fee is a consideration for the representational right for manufacture and supply of beer.
43. As regards the reimbursed expenses received by the Appellant, clause 8 of the Agreement provides for the reimbursement of the expenses incurred by the brand owner which is arrived at after servicing all the operational costs, retention cost and brand fee from the sale proceeds of the beer. The surplus if any, will be transferred to the Appellant's account. This surplus, as the agreement denotes, is a reimbursement for the 'expenses incurred' by the brand owner. It is evident from the agreement that the Appellant incurs expenses towards deputing his personnel to the CBU's distillery; expenses are incurred by the Appellant in ensuring that its business interests are secured by

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t 'UBL…'. shall, at its own cost throughout the duration of this Agreement, arrange for its Process Executives to be deputed to the Brewery.” Further, clause 6.3 of the Agreement states that 'Registration of labels and payment of fees thereof shall be the responsibility of UBL..', This indicates that the Appellant has on its part incurred some expenditure to enable the Brewer to manufacture and sell its branded beer. This expenditure incurred is in connection with according the representational rights for the manufacture and sale of branded beer to the CBUs. We have already held in the preceeding paras, that the Appellants have rendered a service to the Brewer which is categorised as a 'supply' taxable to GST. In connection with rendering the taxable service, the Appellants have incurred expenditure which is being reimbursed by the Brewer out of his surplus profit. In other words, the reimbursement of expenses by the Brewer to the Appellant is a form of payment made in connection wit

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i.e Brand Fee as well as the reimbursed expenses, received by the Appellant as a consideration for the supply of service is chargeable to GST.
44. We observe that in the pre-GST regime, this Brand Fee of Rs. 5 per case was charged to service tax under the category of Intellectual Property Service. The Appellant has disputed this levy of service tax and their appeals are pending in various fora. In the course of these proceedings, to determine whether GST is leviable on the said amount, the Appellant has heavily relied on the decisions given by the CESTAT and the Courts on the subject matter of levy of service tax on the Brand Fee. We have taken note of the said case laws. We note that the Bombay HC quoted the following observations of Earl of Halsbury in the case of Qumin vs. Leathem (1901) AC 495 (HL) in Blue star Ltd. vs, CIT (1996) 217 ITR 514 520. = 1994 (12) TMI 7 – BOMBAY HIGH COURT –
“Every judgment must be read, as applicable to the particular facts proved or assumed to be p

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the price from the notified Indenter of the appellant as fixed by the appellant. Taking these facts into consideration, the Tribunal held that no services have been provided by the appellant to FIPL. The facts in the instant case are not identical and hence this case cannot be relied upon.
b) BDA Pvt Ltd vs Commissioner of C.Ex, Meerut reported in 2015 (40) STR 352 (Tri-Dei) = 2015 (6) TMI 586 – CESTAT NEW DELHI : The facts in this case are that the appellant (BDA) gets IMFL manufactured by M/s. Pilkhani (CBU) on job work basis; as per the agreement, the cost of raw material and other expenses were either paid by the appellant or reimbursed by the appellant; the State levies such as excise levy or taxes were also reimbursed to M/s. Pilkhani by the appellant; the IMFL was sold by or as per the directions of the appellant ; profit/loss on account of the manufacturing and sale of IMFL is entirely on account of appellant who holds the property risk and reward of the product. The Tribunal

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supplied only to the assessee or to its indentors; no right was given to the CBUs to directly sell the beer to its own customers; the CBUs neither had any right over the product nor did they have any right to sell or exploit the beer so produced, nor fix any price of the product. The High Court concluded that the CBU was only the captive manufacturer of the assessee and hence the brand franchise fee of Rs. 10 per case is not subjected to KST. This case again is on a different footing on basic facts and hence Cannot be Considered for the present issue at hand.
d) Radico Khaitan Ltd vs Commissioner Of Service Tax, Delhi reported in 2016 (44) STR 133 (Tri-Del) = 2016 (6) TMI 366 – CESTAT NEW DELHI: In this case too the Tribunal held that, in terms of the agreement, the CBUs are actually manufacturing the branded liquor as job workers for the appellant (Radico) for which they are getting fixed amount as per the rate approved in terms of the agreement; the CBU has no freedom of marketing t

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is whether the brand owner (the Appellant in this case) has rendered any service to the CBU and whether GST is required to be paid by the brand owner.
45. Thus, the different cases cited by the Appellant in support of its contentions may be applicable to the definitions, to what were the objects of taxation in the existing laws – each of such objects of taxation in the existing laws, covers only partially, at best, the idea of what is sought to be taxed as supply in GST. In view of the above, the reliance placed by the Appellant on the decisions taken by the High Court and the Tribunals in the pre-GST scenario will not come to their assistance in deciding their liability under GST. The concept of GST is based on the taxable event of 'supply'. We have already observed that there has been a supply of service by the Appellants to the CBUs for which a consideration is received from the CBUs in the form of Brand Fee and a reimbursement of expenses
46. The Authority had classified the ser

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tivities performed by the Appellant, it may be difficult to arrive at any nomenclature for the services delivered by the Appellant to the CBU. While the Brand fee end the reimbursed expenses, are received by the Appellant in (direct) consideration for permitting the CBUs the use of the representational right to make and sell their branded beer, the service supplied can at times have the colour and character of being an erstwhile “franchise' service or/ and “IPR service' in terms of the Finance Act 1994. On the other hand, the so termed 'surplus profit' amounts received have the characteristics of being a consideration received for a 'mixed supply'.
While in overall terms, at times the service supplied assumes the character of permitting the use of intellectual property rights, or of being a franchise service, at other times it takes on the colour and character of being secondment of personnel. The varied nature in the character of the services supplied by the Appellant, makes it diffi

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te that there is a standard rate of which applies across the whole range of services that are taxed under GST. However, this fact of having one predominant supply that may be constant across tax periods, does not do anything to negate exigibility of the service supplied. The framework of the Service Tariff Codes under GST still provides a possible solution by categorising such services under Service Code 99979 as “Other Miscellaneous Services'. The sub-heading under this service code is 999799 which is “other services nowhere else classified'. The GST applicable under this category of service is 18%.
48. In view of the above discussions, the Ruling dated 28.06.2018 passed by the Karnataka Authority for Advance Ruling is modified as under:
a) The activity engaged in by the Appellant by way of granting the contracting brewing units the representational right to manufacture and supply beer bearing its brand name, in return for a consideration, is a supply of service as mandated in Secti

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M/s U.P. Projects Corporation Ltd. Versus Commissioner (Appeals), CGST & Central Excise, Allahabad

M/s U.P. Projects Corporation Ltd. Versus Commissioner (Appeals), CGST & Central Excise, Allahabad
Service Tax
2018 (11) TMI 30 – CESTAT ALLAHABAD – 2019 (370) E.L.T. 851 (Tri. – All.)
CESTAT ALLAHABAD – AT
Dated:- 23-10-2018
APPEAL No. ST/70493-70495 & 70564/2018—ST[SM] – FINAL ORDER NOs. 72465-72468/2018
Service Tax
Mrs. Archana Wadhwa, Member (Judicial)
Request for Adjournment for Appellant(s)
Shri Pawan Kumar Singh (Supdt.) AR for Respondent(s)
ORDER
Per: Archana Wadhwa
All the four appeals are being disposed of by a common order as they are arising out of the same impugned order passed by the Authorities below.
2. As per facts on record the appellants had paid service tax, during 01.04.2015 to 01.03.2016, on 'Works Contract service' taxable under the Finance Act, 1994 (hereinafter referred to as “the Act”), provided to various departments of the Government of Uttar Pradesh, as vide Notification No.06/2016-ST dated 01.03.2015 effective from 01.04.20

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ture or any other original works meant predominantly for use other than for commerce, industry or any business or profession;
(b) a structure meant predominantly for use as –
(i) an educational establishment;
(ii) a clinical establishment; or
(iii) an art or cultural establishment;
(c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of Section 65B of the said Act,
Under which a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been before that date.
(2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all the material times.
(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Fin

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d claims of the appellants, on the grounds that (i) the appellants did not submit any documents to show that the conditions specified in Section 102 of the Act were satisfied, (ii) they failed to prove that they had borne the incidence of Service Tax and (iii) they had filed refund claims with the wrong jurisdiction.
7. Aggrieved with the impugned orders, the appellants filed appeals before the Commissioner (Appeals) mainly, on the grounds that (i) they had filed the refund claims alongwith all the relevant documents, (ii) the incidence of Service Tax had been borne by them and they had not charged Service Tax from the service recipients, i.e., the departments of the Government of Uttar Pradesh, (iii) the jurisdiction of a Service Tax assessee depends on the location of the office/premises of the service provider and (iv) thus, their refund claims were wrongly rejected.
8. While disposing all the said appeals, Commissioner (Appeals) observed that as the Branch Office had not shown th

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d that it cannot be claimed that they had shown taxable services and value thereof and service tax paid in the ST-3 returns of the Head Office at Lucknow on account of the centralized registration. This observation of the Appellate Authority is self contradictory to the earlier observation made by him that all the taxes were paid by Head Office and reflected in their ST-3 returns as Centralized registration for such payments is not necessary.
10. I further note that the Appellate Authority has relied upon the Hon'ble Allahabad High Court's decision in the case of Vandana Travels & Tours vs. Commissioner of Central Excise & Service Tax (Appeals), reported at 2015 (37) STR 417 (All.) wherein it was held that where an authority lacks inherent jurisdiction to pass a decree or order, the decree or order shown passed by such authority would be non-est and void ab initio.
Though the said decision of the Hon'ble Allahabad High Court is in respect of the basic jurisdiction to be exercised by

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puty Commissioner to deal with the refund claims. The objection is on area based jurisdiction. If the Revenue was of the view that the refund claims should have been filed with the jurisdictional officer of the Head Office, they were within their rights to transfer the same to the officer having the proper jurisdiction. Adopting an analogy that if an appeal against the orders of the Lower Authorities is to be filed before Delhi Benches of the Tribunal and same stands filed before the Allahabad Benches, the normal and accepted course of action would be to transfer the appeal to Delhi in spite of rejecting the same on the point of jurisdiction.
13. In view of the foregoing, I set aside the impugned order of Commissioner (Appeals) and remand the matters to the Original Adjudication Authority. In case the officer feels that he does not have the jurisdiction, based upon the area, to deal with the refund claims in question, the same would be transferred to the appropriate authority for furt

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Officer authorized for extending the time for recording of the final report in Part B of FORM GST EWB-03, for a further period not exceeding three days

Officer authorized for extending the time for recording of the final report in Part B of FORM GST EWB-03, for a further period not exceeding three days
3476 /GST-II Dated:- 23-10-2018 Haryana SGST
GST – States
Order
Subject: Officer authorized for extending the time for recording of the final report in Part B of FORM GST EWB-03, for a further period not exceeding three days.
In exercise of powers conferred by proviso to sub-rule (1) of the rule 138C of the Haryana Goods and Services T

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Kaydour Cables (I) Pvt. Ltd. Versus The Central GST Commissionerate

Kaydour Cables (I) Pvt. Ltd. Versus The Central GST Commissionerate
Central Excise
2018 (10) TMI 1550 – BOMBAY HIGH COURT – TMI
BOMBAY HIGH COURT – HC
Dated:- 23-10-2018
CENTRAL EXCISE APPEAL NO. 62 OF 2018
Central Excise
M.S. SANKLECHA & RIYAZ I. CHAGLA, JJ.
Mr. Mahesh Raichandani, i/b UBR Legal, for the Appellant.
Mr. Sham Walve, a/w Ms. Sneha Prabhu, for the Respondent.
ORDER :
1. This Appeal under Section 35G of the Central Excise Act, 1944 (“the Act”) challenges the order dated 27th December 2017 passed by the Customs, Excise and Service Tax Appellate Tribunal (for short “the Tribunal”).
2. The Revenue urges the following questions of law for our consideration:
(a) Whether on the facts and in the circumstanc

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rrect and justified in passing a nonspeaking order which does not give any finding on the merits of the matter and the submissions of the Appellant regarding demand of interest?
3. Regarding Question (a) :
(a) The impugned order of the Tribunal records the fact that the Appellant has neither contested the demands on merits before the Lower Authority or before it. Thus, it had no occasion to deal with the merits of the demands.
(b) Shri. Raichandani, the learned Counsel appearing in support of the Appeal, states that the grounds were urged in the Memo of Appeal with regard to the challenge of the demand on merits. Therefore, it is his submission that the Tribunal is not correct in holding that the demand was not contested before the Tribu

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bove view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
4. Regarding Question (b) :
(a) This question as raised is not an issue which has been urged by the Appellant before the Tribunal and therefore, the question does not arise from the impugned order of the Tribunal.
(b) However, Shri. Raichandani seeks to invite our attention to the order of the Commissioner where this submission of the Appellant was recorded. It is on that basis Shri. Raichandani submits that this issue arises in this case and warrants admission.
(c) In our view, unless the issue as raised before the Tribunal and the Tribunal has occasion to decide/adjudicate upon the issue, no substantial question of law can

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Emerson Process Management Ltd. Versus Commissioner of GST & CE Chennai South

Emerson Process Management Ltd. Versus Commissioner of GST & CE Chennai South
Central Excise
2018 (10) TMI 1541 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 23-10-2018
Appeal No. E/40310/2018 – FINAL ORDER No. 42658/2018
Central Excise
Ms. Sulekha Beevi, C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
Shri Adithya Srinivasan, Consultant, Ms. Meghna Arvind, Advocate For the Appellant
Shri S. Govindarajan, AC (AR) For the Respondent
ORDER
Per Bench
The facts of the case are that appellants are engaged in manufacture of Industrial Valves, Gaskets etc. During verification of their ER-1 returns, it emerged that appellants had manufactured and supplied industrial valves to Mega Power Projects. It appeared to the department that for such supplies, the appellants were required to discharge excise duty under Notification No.12/2012-CE dt. 17.03.2012 as amended which was not done by them. Department also took the view that benefit of

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s, 2004 is exempt from paying duty on intermediate goods even though the Final product is exempted. The appellant has discharged the NIL obligation arising out of Rule 6 of the CENVAT Credit Rules, 2004, since they are absolved from the provisions of Rule 6 by virtue of Rule 6 (6)(vii) of the CCR, 2004.
ii) The matter is no longer res integra and is squarely covered by the following Tribunal decisions :
– Bharat Aluminium Co. Ltd. vs. CCE Raipur – 2017 (345) ELT 685 (Tri.Del.)
– Thermo Cables Ltd. vs. CCE Hyderabad – 2012 (202) ELT 412 (Tri. – Bang.)
iii) All such clearances to Mega Power Projects have been made under an intimation to the Central Excise Department and hence there is no question of Suppression of facts let alone with an intention to evade duty. Even assuming that the duty is payable, it is entirely a revenue-neutral exercise. Further, malafide intention cannot be fastened in a case where interpretation of the statute is involved.
3. On the other hand, Ld. A.R Shri

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i) of sub-rule (6) of Rule 6 of Cenvat Credit Rules, 2004 read with proviso to Notification 67/95 makes it clear that the exemption for captive consumption of intermediate products has been correctly claimed by the appellant in the present case.”
4.3 In Thermo Cables Ltd. Vs CCE Hyderabad – 2012 (202) ELT 412 (Tri.-Bang.), the Tribunal inter alia held as under
“6. From the above proviso to Notification No. 67/95-C.E. ibid, it appears that the bar created therein is not applicable to the inputs used in or in relation to the manufacture of exempted final products cleared by a manufacturer of such exempted final products as well as dutiable final products. In other words, where the manufacturer manufactures both dutiable and exempted final products and uses the inputs in question in the manufacture of the exempted final products, he is entitled to the benefit of exemption from payment of duty on such inputs in terms of the opening paragraph of the Notification. This right is not hit by

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In Re: M/s. Five Star Shipping

In Re: M/s. Five Star Shipping
GST
2018 (10) TMI 1517 – APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA – 2018 (18) G. S. T. L. 701 (App. A. A. R. – GST)
APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA – AAAR
Dated:- 23-10-2018
MAH/AAAR/SS-RJ/11/2018-19
GST
SMT. SUNGITA SHARMA, AND SHRI RAJIV JALOTA, MEMBER
PROCEEDINGS
(Under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.
The present appeal has been filed under Section 100 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

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yage execution, which is the ancillary service offering of the Appellant, Consultancy Service and the consequential Support Service provided by the Appellant are generically referred to as Marine Consultancy Service (“MCS”) together by the Appellant.
C. MCS is provided by the Appellant in terms of a typical Consultancy Agreement executed by and between the Appellant and the ship owners. Details of service provided by the Appellants are provided in the Annexure attached to the agreement entered with FSO.
D. This appeal (as also the Application for Advance Ruling) concerns only supplies made to overseas clients known as Foreign Ship Owners (“FSO”) and is accordingly limited and worded.
E. MCS service of the Appellant is provided to the FSOs who wish to have and therefore seek out potential employment (charterers) for their vessels. Entire engagement between the Appellant and FSO is on principal to principal (“P2P”) basis and has the essential nature of consultancy, that is, provision

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ion of the contract i.e., it is paid upon the agreed additional support services, lay time calculations, etc. being provided to FSO by the Appellant.
I. As an industry and market practice, fee is a percentage of revenue, which has been contractually agreed between the FSO and the charterer. This arrangement is premised on concept of value added service i.e., 'no contract' will result in 'no fee'.
J. No state level taxes were applicable on the service offerings of MCS by the Appellant. The Appellant had obtained Service Tax registration as per the erstwhile indirect tax regime in the State of Maharashtra. MCS service provided by the Appellant to FSO and Indian ship owners qualifies as Business Auxiliary service (“BAS”) in terms of Chapter V of the Finance Act, 1994 (“the Act”). Hitherto, MCS provided by the Appellant was treated as “bundled service” comprising of Consultancy Service and Support Service, wherein Consultancy Service was the principal service giving essential characteris

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this Hon'ble Authority in respect of the composite supplies of MCS by the Appellant to FSO. Specifically, the advance ruling is sought on the following questions:
A.1 Whether MCS provided to FSO constitutes “composite supply” with the principal supply of consultancy service?
A.2 Whether MCS provided to FSO will qualify as an export of service in terms of Section 2(6) of the IGST Act as the place of supply of MCS (as a composite supply) will be determined in terms of Section 13(2)(a) of the IGST Act, i.e. the 'location of recipient of service'?
B.1 In the alternate, where services are provided to FSO distinctively as supply of consultancy service and support service with separate and demarcated fees for their consultancy service and for support service:
a. Whether consultancy service will qualify as business consultancy service in terms of the scheme of classification of services [Annexure to Notification 11/ 2017 – Central Tax (Rate), dated 28th June, Notification”)]?
b. Whether t

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ication of services provided in Notification No. 11/ 2017 – Central Tax (Rate) dated 28th June, 2017. As regards Question 3, the Authority has held that the Support Service provided by the Appellant qualifies as “intermediary service”.
M. Aggrieved by the Impugned Order, the Appellant is filing the present Appeal, on the following grounds which are without prejudice to one another.
GROUNDS OF APPEAL
1. The grounds of appeal are set out in detail herein after, which are taken in the alternative and are without prejudice to one another.
The supply of MCS by the Appellant constitutes 'composite supply' with the principal supply of Consultancy Service
2. The Appellant is an Indian service provider who provides supply of MCS service to foreign parties known as FSOs. The offering of MCS service by the Appellant is in the form of composite supply of services with the principal supply being Consultancy Service. The Support Service provided by the Appellant is in conjunction with the Consu

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as a supply of two or more services which are 'naturally bundled' and supplied in conjunction with each other in the ordinary course of business one of which is the 'principal supply'
4. A composite supply is defined in Section 2(30) of the CGST Act as below:
“Section 2(30) – “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply”
5. The concept of composite supply is similar to the concept of 'naturally bundled service' under the erstwhile negative list regime. Appellant is supplying MCS to the FSO which is a composite supply of Consultancy Services and Support Services (may include services for or completing employment) which are inherently tied up (bundled) and integrally enjoined, as a commercial offering. Consultancy S

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r causes which have prospects to impact trade.
6. The foregoing services are provided as a single offering of Consultancy Service, failing which the provision of service will not be meaningful. Consultancy Service helps the client (i.e. FSO) with market intelligence and trade analysis, etc. which helps them in identifying potential charterers and thereafter zeroing on one or more such potential charterers. Thus, the Consultancy Service provided by FSO in tune helps the FSO to augment its business and expand its client base and all these services are provided as one service.
7. Support Services, on the other hand, provided by the Appellant to FSO (client) is a relatively newer offering, and a requirement emerging in recent times as markets became more competitive. This offering is usually at the end of the employment of vessel and involves Appellant merely monitoring voyage execution, examining the lay time calculations and arranging for reconciliation of accounts to crystalize receiv

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lant to the FSO and Support Service is provided at the end of supply at the time of completion of employment of the FSO by the charterer. The Appellant has appointed numerous research analysts to undertake market research, track, collate, analyse the geo-political situation, suggest a suitable rate for the transaction and monitor port development. No FSO separately ever seeks provision of Support Service although academically it is possible. It has not been appreciated that MCS has evolved over a period of time and Support Service is typically provided as value addition to the FSO. Consultancy Service, in the ordinary course of business is provided in tandem with Support Service as a value addition and this is the industry practice.
10. One of the service provided by the Appellant amidst the gamut of service is the principal supply or the main/ primary supply. In case of the Appellant, the principal or the primary supply by the Appellant is the Consultancy Service which helps the FSO

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s concept has been carried forward from the Service tax law. Reference is therefore made to taxation of Services: An Education Guide (June 20, 2012), which provides that to demonstrate that a service is supplied in conjunction with each other in the ordinary course of business, the supply of services should meet some of the following criterion which are indicative, not conclusive and in fact satisfied by the Appellant:
* The perception of the recipient of service i.e., a large number of service receivers expect these services to be provided as a package. Appellant is providing the service as a package as the FSO prefers to engage with one service provider to receive gamut of services which augments their business and it is convenient to pay singular consideration which is a percentage of the value of freight received by the FSO.
* Majority of similar service provider in the industry provide similar bundle of service. Service provided by Appellant to FSO has an evolving nature. Previo

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etc. helps FSO to reach out to potential charterers which is the main objective of FSO's business. Once FSO enters into a contract with the charterers, Appellant is also called upon to provide Support Service in relation to the voyage. Therefore, without Consultancy Service FSO will not be able to efficiently contract with potential charterers and provide services and Appellant may not be called upon to provide Support Service. Rather, practically and anecdotally, it has never been the case where Support Service is given alone and without Consultancy Service.
* The service recipient pays single price regardless of the services within the package, Appellant is obliged to provide all services under the Agreement including the Consultancy Service and Support Service. These services are provided by Appellant to and for FSO on need basis. MCS is never provided to or for Charterer and fee for MCS is only paid by the FSO. This is another important indicator of the perception in Service recip

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India and owing to this expect Consultancy Service and Support Service together as MCS and as a result it is commercially inexpedient for Appellant to so offer it.
* Different elements are integral to one overall supply. Service recipient's end objective is employment of vessel. Appellant provides Consultancy Service to FSO. The information disseminated by Appellant under Consultancy Service is used by FSO for employment of vessels. Once FSO itself fixes the charterer, Appellant is required to provide Support to FSO by enabling conclusion of the transaction inasmuch as reconciliation and calculation of lay time to receive charter hire earnings for the employed vessel. Thus, the supply is intrinsically linked and are integral to one another and so clearly in conjunction.
13. The Education Guide on Service tax which has also been referred in the GST flyer issued by the Central Board of Indirect Tax and Customs (“CBIC”) on Composite Supply and Mixed Supply and has been extensively reli

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Status' clause of the sample Consultancy Agreement dated 01.03.2017 (“Agreement”) to conclude that the supply of MCS by the Appellant would not constitute “composite supply” with the principal supply of service being supply of Consultancy Service. The Impugned Order's observation regarding the perception of the FSO is completely flawed. In this regard, the Impugned Order provides that the perception of the FSO is that the services listed in Exhibit A of the Agreement need not be bundled and could be performed by different service providers or from his staff too. This observation is in complete contrast to the prevailing market practice surrounding transactions of this kind. The general practice is that an FSO avails Consultancy Service and Support Service bundled together as MCS from the same supplier as it increases effectiveness and helps in cost economization.
16. Further, the Agreement annexed shows the general arrangement between parties in transactions of this nature and is the

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. Contracts represent business understandings between the parties. Commercial dealings between persons who are well versed in the transaction of business are regulated by contracts which parties opt to govern themselves. The law regulates those contracts and provides an ordered framework in which business dealings can be implemented. The duty of the Court when called upon to assess where the balance lies in a contractual dispute, is to read the contract as a whole in order to understand the business meaning which the parties attributed to their obligations. Interpretation in law must ensure in commercial matters that the view which the Court takes records the sense which the parties to an arms length transaction attribute to the terms which they incorporate. The law is not divorced from business realities nor can the vision of the Judge who interprets the law be disjointed from the modern necessities to make business sense to business dealings.”
17. The supplier of MCS begins by suppl

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hough the clause on 'Independent Contractor Status' of the Agreement permits the FSO to opt out from any of the service offered under the Agreement, this does not alter or reduce the consideration which is charged by the Appellant from the FSO. Regardless of this option given to and opted by the FSO, the FSO remit the consideration agreed under the Agreement and availing of such option by the FSO does not affect the consideration that he is obliged under the Agreement to pay to the Appellant. The Impugned Order has failed to appreciate and factor this aspect in its findings, thereby rendering the Impugned findings unsustainable.
18. Without prejudice, it is relevant to note that the Authority has concluded that the Agreement is in respect of a particular contract (MV AM OCEAN PRIDE/ MARUBENI CEMENT CHARTER PARTY CONTRACT DATED 3RD MARCH 2017) and not a general agreement. Therefore, a generalization regarding the perception of an FSO on the basis of the clause on 'Independent Contracto

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stion related to the transaction.
ii. Union of India (UOI) and Ors. v. Playworld Electronics Pvt. Ltd and Ors, 1988 (38) ELT 733 (S.C.) = 1989 (5) TMI 57 – SUPREME COURT – The same position was reiterated in this case where the Hon'ble Supreme Court pointed out that it was necessary to find out the true nature of the transaction before deciding upon it.
20. Therefore, even if a prima facie reading of the 'Independent Contractor Status' clause portrays that the services provided by the Appellant can be availed separately, on delving into the intention of the parties, it could have easily been confirmed that the services were intended to be provided bundled together and in the facts of the present case, the Appellant had provided the FSO with both Consultancy Service as well as Support Service. The findings of the Authority are based on fundamental misunderstandings of vital facts and fundamental mis-appreciation or misapplication of the relevant law and therefore the Impugned Order is

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clause of an agreement and isolating the other indicative parameters like market practice, how consideration is charged and collected, etc. renders the Impugned Order erroneous and unsustainable.
22. Further, the observation of the Impugned Order that there exists no service which can be identified to be a principal supply of service from the services listed in the exhibit to the Agreement is erroneous and flawed. Consultancy Service provided by Appellant to FSO augments its business viability and profitability. It is the Appellant's advice on vessel positioning, bunker trends, commodity market, etc. which helps FSO to reach out to potential charterers which is the main objective of FSO's business. The Appellant by utilizing the market intelligence gathered by the research analysts employed by it, with respect to vessel positioning, bunker trends, commodity market, inter alia others, suggests potential charterers that may require the services of the FSO. Thereafter, FSO indulges in n

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nt. Accordingly, Consultancy Service provided by the Appellant must be considered to be the principal supply of service.
24. It is relevant to note that the State Tax Officer in his submission before the Hon'ble authority on March 13, 2018 (“Revenue Submission”) acknowledged that that MCS is a composite supply of service in terms of Section 2(30) of the CGST Act, and despite this the Authority concluded contrarily.
The Impugned Order fails to rule on the classification of services provided by the Appellant
25. It is now well known that the Authority for Advance Ruling of other states and indeed this state too have ruled on and provided classification entry for goods and services provided.
26. The Impugned Order is flawed to the extent that the Authority has failed to exercise its jurisdiction and rule on the issue raised by the Appellant before it regarding the classification of MCS provided by the Appellant (which is Consultancy Service and Support Service bundled together) in ter

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ices for water transport nowhere else classified”) is the specific entry which provides the appropriate description of activities provided by Appellant. Therefore, MCS will be classified therein and leviable to GST at the rate of 18%.
Explanatory notes to the Scheme of Classification of Service
28. Explanatory notes to the scheme of classification issued by the Central Board of Indirect taxes and Customs provide which “indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services. These may be used by the assessee and the tax administration as a guiding tool for classification of services”. Explanatory note to SAC 996759 which deals with “other support services for water transport” provides the following:
“This service code includes water transport supporting services directly connected with vessel operations not elsewhere classified and also include services not directly connected with vessel operations such as ice breaking, ve

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s for maritime transport (745)]. Thus, it can be safely concluded that MCS provided by Appellant to FSO would be classified as Support Services in transport, other than GTA.
31. In the invoice raised by Appellant on FSO, which categorizes the supply of service by Appellant to FSO as MCS, supports the commercial understanding. Consequently, in the financials of Appellant for the year 2017-18 in the Profit and Loss accounts income from MCS has been reflected as revenue.
MCS cannot be classified under Heading 9983 of the Notification
32. Further, MCS will not be classified under Heading 9983(ii) at Serial No. 21 as “other professional, technical and business services other than (i) above” Relevant entry under Heading 9983 is SAC 998399 at Serial No. 364 of the Annexure which is “other professional, technical and business services nowhere else classified”. Services classified under this head are leviable to GST at the same rate of 18%. It is evident that this is the residuary entry whic

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of MCS by the Appellant to an FSO would qualify as an export of service under Section 2(6) of the IGST Act, and subsequently the tax liability on the supply of MCS.
Export of service is defined under Section 2(6) of the IGST Act as following:
'2(6) 'export of services' means the supply of any service when,-
i. the supplier of service is located in India;
ii. the recipient of service is located outside India;
iii. the place of supply of service is outside India;
iv. the payment for such service has been received by the supplier of service in convertible foreign exchange; and
v. the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8″
34. The Appellant satisfies the conditions (i), (ii), (iv) and (v) prescribed above as the supplier of service i.e. the Appellant is located in India, the recipient of service i.e. the FSO is located outside India, payment for supply of MCS service

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vices. If the supply of MCS does not qualify as an export of service under Section 2(6) of IGST Act even though it satisfies all the conditions prescribed under Section 2(6) of IGST Act, it would amount to export of taxes which is against what the Government intended.
36. Therefore, the Authority defeats the purpose of making an application for advance ruling by not ruling on the question of classification of services, which is well within the ambit of Section 97(2) of CGST Act and is essential to be determined to decide the place of supply and consequentially the taxability of a transaction is flawed and bad in law. Non-consideration of the question relating to place of supply which has direct nexus with the taxability of the transaction has caused grave hardship to the Appellant.
GST cannot be levied on a transaction which is outside the jurisdiction of GST law
37. In arguendo, if the Appellant's services that is, Support Services is characterized as an “intermediary service”, it

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erms of the doctrine of territorial nexus as laid down by the Hon'ble Apex Court in GVK Inds. Ltd. & Anr. vs. Income Tax Officer & Anr. [(2011) 332 ITR 130 (SC)] =2011 (3) TMI 1 – SUPREME COURT OF INDIA (“GVK Industries case”). In this case the Hon'ble Apex Court has held that:
Para 18
“It is obvious that Parliament is empowered to make laws with respect to aspects or causes that occur, arise or exist, or may be expected to do so, within the territory of India, and also with respect to extra-territorial aspects or causes that have an impact on or nexus with India as explained above in the answer to question No. 1 above. Such laws would fall within the meaning, purport and ambit of the grant of powers to Parliament to make laws ” for the whole or any part of the territory of India”, and they may not be invalidated on the ground that they may require extra-territorial operation. Any laws enacted by Parliament with respect to extra-territorial aspects or causes that have no impact

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service provided by the Appellant does not qualify as a “composite supply” within the terms of Section 2(30) of CGST Act, there would be no bundling of Consultancy Service and Support Service. Essentially, both the services would be provided independent of each other and the consideration for the services rendered would be obtained separately. Since, both the service would be availed separately by the FSO, the Support Service provided by the Appellant cannot be termed as an “intermediary service” as it would not be for the facilitation of any other supply of service but would be a service provided independently on his own account.
42. The Impugned Order is erroneous and misdirected, in as much as that the supply of Support Service provided by the Appellant would not qualify as an “intermediary service” within the terms of Section 2(13) of IGST Act. An intermediary service in terms of Section 2(13) of the IGST Act, is extracted below:
“Section 2(13) – “intermediary” means a broker, a

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and is purely for Appellant to provide its services to FSO. Additionally, the supply of service is for the purpose of fulfilling the contractual obligations between the FSO and the Appellant by undertaking to do all activities necessary for the successful completion of the MCS service rendered by it on its own account. Therefore, the Support Service provided by the Appellant cannot be considered as a service rendered for the purpose of helping or aiding the FSO in its contract with the charterer. It must be understood as an ancillary service provided for the successful completion of the service rendered by the Appellant to the FSO.
44. Further, it is relevant to note that Section 2(13) of CGST Act which defines “intermediary service” intends for the participation of three parties, namely, the supplier of goods or services, the recipient of goods or services and a facilitator. Section 2(13) evidences the establishment of a link between all the three parties, which is absent in the fac

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a Principal to Principal (“P2P”) basis. Further, the Appellant has no role to play in negotiating the terms of the contract between the FSO and potential charterer. The Appellant's role involves the provision of market intelligence to the FSO which helps the FSO in identifying potential charterers that would be interested in contracting with it and thereafter to provide Support Service for the transport of goods by ship.
46. The Appellant enters into a contract with the FSO for the supply of MCS service which consists of Consultancy Service and Support Service, and the fee for the provision of service will be a percentage of the gross revenue of the transaction and would be predetermined by the FSO and the Appellant and would be paid only on the successful completion of the voyage of the vessel chartered. The Appellant employs research analysts who gather the requisite market intelligence and on the basis of this intelligence gathered, the Appellant provides the FSO with a list of pot

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thority has merely relied on the part of the Agreement which provides that the FSOs may elect to avail any of the services. However, the same clause also provides that the service shall be provided on a non-exclusive basis and neither party has the authority to bind the other party. Thus, this clause selectively referred by the authority should be looked at in its entirety to understand that the Appellant does not have the ability or power to enter into contracts, etc. and actions of the Appellant were not binding on the FSO.
49. Reference in this regard is made to the Advance Ruling in the case of In Re: Godaddy lndia Web Services Pvt. Ltd. [2016 (46) S.T.R. 806 (A.A.R.)] = 2016 (3) TMI 355 – AUTHORITY FOR ADVANCE RULINGS. In this case, the applicant was involved in providing Support Services in relation to marketing, branding, offline marketing, oversight of quality of third party customer care centre and payment processing, on a principal to principal basis to a domain service prov

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he charterers who are the customers of the FSO.
50. Similarly, reference is made to the decision of the Authority of Advance Ruling in the case of In Re : Universal Services India Pvt. Ltd [2016 (42) S.T.R. 585 (A.A.R.)] = 2016 (5) TMI 750 – AUTHORITY FOR ADVANCE RULINGS. In this case, the service provider providing payment processing facilities to a domain service provider was held not to be a provider of “intermediary service” within Rule 2(f) of the Place of Provisions of Services Rules, 2012, as the service provided by him was on his own account and remuneration entitled to him was payable by the domain service provider alone and no remuneration of any kind was obtained from any of the customers of the domain service providers. As is the case of the Applicant where MCS is provided by the Applicant on its own account and remuneration to him is payable by the FSO and no remuneration of any kind is paid or payable by the charterer.
51. Further, it is relevant to note that there exis

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e” within the terms of Section 2(13) of IGST Act. This is contrary to fact record.
53. Appellant and the FSO are in a fiduciary relationship in terms of which the Appellant is obligated to act for the benefit and interest of FSO. In this regard, the appellant may be required to interact with the charterer for the successful completion of the service provided by the FSO. But, this interaction does not give rise to any contractual obligation between the Appellant and the charterer. Further, any interaction of this kind is only to fulfil the contractual obligations with respect to the services provided by the Appellant to the FSO and cannot be construed as provision of services by the Appellant to the charterer. Therefore, any interaction of this nature must not be understood as facilitation of services between the FSO and charterer by the Appellant and must be perceived as ministerial acts carried out by the Appellant in the course of fulfilling the contractual obligations that exist be

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mployed by the Appellant. Thus, they are rendering the consultancy services to their clients. In addition to this consultancy services, they are also providing support services after the contracts between the FSOs and their clients for the chartering of the vessels owned by the FSO are finalised and the actual navigation of the vessels commence, when they are required to monitor the vessels' voyage execution for smooth and efficient operations so as to optimize performance for the ship owners along with the other ancillary services like examining lay time calculations, accounts settlements with the charterers etc. They termed their above said activities as a package of services called Marine Consultancy Services (herein after referred to as “MCS”), which is the comprehensive combination of the consultancy services and support services.
57. However, Smt. Rukmani S. lyer, State Tax Officer, appearing on behalf of the Department, countered all the arguments made by the Appellant either o

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ntermediary service” in terms of Section 2(13) of IGST Act. The other questions regarding determination of the 'place of supply' in respect of the above mentioned services and under the above discussed circumstances, which have been raised in the Application filed before the Authority for Advance Ruling has not been taken up since the Appellant have agreed and acceded to the findings of the Advance Ruling Authority, wherein the members of the AAR have observed that since, the determination of the place of supply of a service is not covered under the spectrum of the specific issues/questions, which may be raised before the Advance Ruling Authority for the purpose of the clarification, as provided under the Section 97(2) of the CGST Act, 2017.
59. Coming to the issue no. 1, first of all, we will discuss the meaning of the 'Composite Supply'. As per Section 2(30), “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods

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ine the lay time calculations and account reconciliation etc., which the appellant are classifying as support services. Thus, consultancy services are followed by the support services.
61. The Appellant has further submitted that while exploring the potential charterers for the vessels owned by the FSO, they have to interact with those potential charterers, to know their requirements and expectations related to the chartering services. They further added that they do not play any role in the eventual agreements entered between the FSO and the charterers for the chartering of the vessels. They also submitted that they do not have any obligation towards or agreement/contracts with these charterers.
62. Further, on perusal of the sample agreement dated 01.03.2017 entered between Singapore Shipping International Pte. Ltd. (FSO) and Five Star Shipping (the consultant/Appellant) under and pursuant to the MV AM Ocean Pride/Marubeni Cement Charterer Party Contract dated 03.03.2017 submitted

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ded by the Appellant. To decide this issue, first we would like to discuss the scope of the intermediary services, which is being reproduced herein below as provided in the Section 2(13) of the IGST Act, 2017:-
2(13) “Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;
Thus, necessary conditions for any activity to be an intermediary service are asunder:-
(i) There should be supply of goods or services or both;
(ii) There should be the involvement of three persons (i) the supplier of the goods or services or both (ii) the receiver of the supply of the goods or services or both and (iii) the intermediary who arranges or facilitates the said supply of goods or services or both subject to the condition the said supply is not made by

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lying this service i.e. chartering of vessel service, as the vessels are not owned by them but the by the FSO. Thus, all the conditions or parameters for the intermediary services have been fulfilled by the services being provided by the Appellant to the FSO.
65. In view of the above, it is conspicuously evident that the Appellant is acting as an intermediary for the FSO. Though the Appellant is insisting that they are not having formal contracts with any of the potential charterers of the vessels, this is not the requirement or criterion for supply of the intermediary services, as can be seen from the definition of the intermediary, as reproduced above.
66. The Appellant, in their appeal submissions, have also been highlighting the industrial practice, wherein a FSO avails Consultancy Service and Support Service bundled together as Marine Consultancy Service from the same supplier for it increases effectiveness and helps in cost economization. However, from the study of market pract

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, with offers and counteroffers by either side; if main terms cannot be resolved, there is little or no point in negotiating further details.
5. Negotiations “on subjects”, e.g. “subject stem”, “subject receiver's approval”, etc., where the main terms have been agreed, but final agreement is subject to various secondary conditions being agreed.
6. Fixture, i.e. the full and final agreement, with all “subjects” removed.
Following fixture is a “post-fixture” or follow-up period during which the broker may undertake various administrative functions on behalf of his principal, such as (in some cases) collection of freight or hire.
Shipbrokers are remunerated by commission, called “brokerage”, payable by the ship owner to each broker involved in arranging a contract. In voyage or time charters the brokerage payable is stipulated in a Brokerage Clause and is normally 1.25% of the ship owner's gross receipts from hire, freight, dead freight and demurrage, payable to each broker involved.

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ounts for eventual settlement with the vessel charterers; which are the essential requirements for receiving the payment from the FSO. This brokerage or commission amount is a fixed percentage of the gross amount received from the charterers as consideration for this vessel chartering services.
68. In the sample agreement dated 01.03.2017 entered between Singapore Shipping International Pte. Ltd. (FSO) and Five Star Shipping (the consultant) under and pursuant to the MV AM Ocean Pride/Marubeni Cement Charterer Party Contract dated 03.03.2017, on perusal of the Compensation and reimbursement clause at Sr. No. 3 therein, it is discerned that the FSO is paying, in each particular charter party contract, to the Appellant a fee of 1.25% of Gross Revenue (here “Gross Revenue” meaning the freight, dead freight and demurrage received under contracts through the consultant). Thus, by looking into the details of the above said agreement, which, inter-alia, stipulates the activities to be perfor

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the their principal i.e. the FSO. Thus, the Appellant is actually facilitating the supply of the main services i.e. chartering of the vessels by the FSO to their clients i.e. charterers, thereby clearly acting as an intermediary, as the chartering of the vessels is not the main service of the Appellant, but their principal i.e. the FSO. Appellant are performing all these services on behalf of their principal i.e. the FSO, thus acting as an intermediary. The above said intermediary services can be classified under the Service Accounting Code 999799, which is “Other Miscellaneous Services”, as per the Annexure to the Notification 11/2017 -C. T. (Rate) dated 28.06.2017 as the intermediary activities cannot be classified in any other service head/group of the above mentioned Annexure.
69. Further, in addition to the above intermediary activities, they are obliged to perform the other administrative activities like examination of lay time calculation, voyage account reconciliation for even

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on etc. Remaining administrative activities like examination of the lay time calculation, voyage accounts reconciliation and settlement thereafter etc. which is in the nature of 'accounting services' provided to the FSO, can be covered under the incidental services to the main services of the Appellant, which is the intermediary services, as the Appellant are obliged to provide all these services to the FSO as per the list of activities enlisted in the Annexure A to the above mentioned agreement. Thus, the entire gamut of the activities of the appellant can be considered as composite supply of the intermediary services and accounting services, of which the intermediary service is the principal service.
71. As regards the Appellant's submission made in the para K, that they had been classifying the above discussed activities as the Business Auxiliary services prior to the GST regime, where they have taken service tax registration under Business Auxiliary Services, and not under the Sup

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M/s Jaycee Strips & Fastners Pvt. Ltd. Versus Union of India and others

M/s Jaycee Strips & Fastners Pvt. Ltd. Versus Union of India and others
GST
2018 (10) TMI 1388 – PUNJAB AND HARYANA HIGH COURT – TMI
PUNJAB AND HARYANA HIGH COURT – HC
Dated:- 23-10-2018
CWP-27209-2018 (O&M)
GST
MR RAJESH BINDAL AND MR MAHABIR SINGH SINDHU, JJ.
For The Petitioner : Mr. Jagmohan Bansal, Advocate
For The Respondent : Mr.Saurabh Goel, Advocate
ORDER
RAJESH BINDAL, J.
The petitioner has filed the present petition with a prayer that the period for filing

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Seeks to exempt post audit authorities under MoD from TDS compliance

Seeks to exempt post audit authorities under MoD from TDS compliance
57/2018 Dated:- 23-10-2018 Central GST (CGST)
GST
CGST
CGST
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. 57/2018 – Central Tax
New Delhi, the 23rd October, 2018
G.S.R. 1057 (E).- In exercise of the powers conferred by sub-section (3) of section 1 of the Central Goods and Services Tax Act, 2017 (12 of 2017) read with section 51 of the Central Goods and Services Tax Act, 2017 (hereafter in this notification referred to as the said Act), the Central Government, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Govern

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ary to the Government of India
Note:- The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R 868 (E), dated the 13th September, 2018.
ANNEXURE 'A'
CODE NUMBERS ALLOTTED TO
THE PRINCIPAL CONTROLLERS/CONTROLLERS OF DEFENCE ACCOUNTS
Sl. No.
Designation of Controller / Office
Code No.
1.
Controller of Defence Accounts, Patna
00
2.
Pr. Controller of Defence Accounts (Pensions), Allahabad
01
3.
Pr. Controller of Defence Accounts (Officers), Pune
02
4.
Controller of Defence Accounts, (Army), Meerut
03
5.
Pr. Controller of Defence Accounts, Southern Command, Pune
04
6.
Pr. Controller of Defence Accounts, Bangalore
05
7.
Pr. Controller of Defen

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Exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration – But, e-way bill is required.

Exemption to a casual taxable person making taxable supplies of handicraft goods from the requirement to obtain registration – But, e-way bill is required.
56/2018 Dated:- 23-10-2018 Central GST (CGST)
GST
CGST
CGST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
Notification No. 56/2018 – Central Tax
New Delhi, the 23rd October, 2018
G.S.R. 1056 (E).-In exercise of the powers conferred by sub-section (2) of section 23 of the Central Goods and Services Tax Act, 2017 (12 of 2017), hereinafter referred to as the “said Act”, the Central Government, on the recommendations of the Council and in supersession of the notification of the Government of India in the Ministr

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on 3, Sub-section (i) vide number G.S.R.695 (E), dated the 26th July, 2018 and falling under the Chapter, Heading, Sub-heading or Tariff item specified in column (2) of the Table contained in the said notification and the Description specified in the corresponding entry in column (3) of the Table contained in the said notification;
or
(ii) such persons making inter-State taxable supplies of the products mentioned in column (2) of the Table below and the Harmonised System of Nomenclature (HSN) code mentioned in the corresponding entry in column (3) of the said Table, when made by the craftsmen predominantly by hand even though some machinery may also be used in the process:-
Table
Sl. No.
Products
HSN Code
(1)
(2)
(3)
1.
Leather a

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705, 9404
16.
Leather footwear
6403, 6405
17.
Carved stone products (including statues, statuettes, figures of animals, writing sets, ashtray, candle stand)
6802
18.
Stones inlay work
68
19.
Pottery and clay products, including terracotta
6901, 6909, 6911, 6912, 6913, 6914
20.
Metal table and kitchen ware (copper, brass ware)
7418
21.
Metal statues, images/statues vases, urns and crosses of the type used for decoration of metals of Chapters 73 and 74
8306
22.
Metal bidriware
8306
23.
Musical instruments
92
24.
Horn and bone products
96
25.
Conch shell crafts
96
26.
Bamboo furniture, cane/Rattan furniture
94
27.
Dolls and toys
9503
28.
Folk paintings, madhubani, patchitra, Rajasthani miniature
97
Provi

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Bond Wavier Certificate of goods supplied under Deemed Exports after implementation of GST.

Bond Wavier Certificate of goods supplied under Deemed Exports after implementation of GST.
Query (Issue) Started By: – harkirat singh Dated:- 22-10-2018 Goods and Services Tax – GST
GST
Dear Sir,
After implementation of Good and Service Tax in India, we have supplied goods under Deemed Exports Scheme to domestic Buyer. We have obtained Advance Authorisations vide invalidation letter provided by domestic Buyer.
Now goods have been supplied, Invoices were issued at the time of dispatc

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reversal of GST ITC on Sale of MEIS/SEIS at nil rate under GST

reversal of GST ITC on Sale of MEIS/SEIS at nil rate under GST
Query (Issue) Started By: – SHAHID HASHMI Dated:- 22-10-2018 Last Reply Date:- 24-10-2018 Goods and Services Tax – GST
Got 1 Reply
GST
Sir, We are manufacturer and exporter of Wires & Cables. We are selling our products in domestic market as well as also exporting its outside India. We are getting MEIS Script. Now we are selling the MEIS Script in domestic market. Earlier there was IGST 12% /5%. As per recent Notification , Sales of script is come under exempted supply under Chapter heading 4907.
My queries are as follows:
(i) Whether at the time of supply of MEIS as goods covered under 4907 as exempt supply, is it fulfill the provisions of section 17(2) of the ac

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Is Government SEZ Authority required to deducts TDS

Is Government SEZ Authority required to deducts TDS
Query (Issue) Started By: – CASeetharaman KC Dated:- 22-10-2018 Last Reply Date:- 24-10-2018 Goods and Services Tax – GST
Got 5 Replies
GST
Is a Government SEZ Authority formed by Act of parliament required to deduct TDS or would it be excluded under the proviso to Section 51 "Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient."
Reply By DR.MARIAPPAN GOVINDARAJAN:
The Reply:
In my view it is not required.
Reply By CASeetharaman KC:
The Reply:
Sir I subscribe to your view and wish it is correct but there are some areas which may be looked at
1. CGST Act Section 51 read with Section 20 of IGST Act TDS would be applicable to both intra and inter state transactions
2. The proviso says the the no deduction is required if location

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S is to be deducted as IGST Tax.
The fliers issued by the Board also clarifies the same and relevant portion is reproduced below:-
“Registration of TDS deductors: A TDS deductor has to compulsorily register without any threshold limit. The deductor has a privilege of obtaining registration under GST without having required to obtain PAN. He can obtain registration using his Tax Deduction and Collection Account Number (TAN) issued under the Income Tax Act,1961.
……..This can be explained in the following situations.
a) Supplier, place of supply and recipient are in the same state. It would be intra-state supply and TDS (Central plus State tax) shall be deducted. It would be possible for the supplier (i.e. the deductee) to take credit of TDS in his electronic cash ledger.
b) Supplier as well as place of supply are in different states. In such cases, integrated tax would be levied. TDS to be deducted would be TDS (Integrated tax) and it would be possible for the supplier (i.e. the

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me can be taken by the local supplier to pay CGST and SGST so even if the TDS is deducted the input can be availed by the supplier
2. The question which arises here is that by virtue of Section 7 (5) of the IGST Act all supplies to SEZ units are interstate transactions – Does this mean that the Location of the Supplier and the Place of Supply is in a different state from the state of registration of the recepient ?
Request your thoughts on these two points which would be very helpful
Reply By Alkesh Jani:
The Reply:
Sir,
I acknowledge your concern. In this regards, as far as my knowledge permits me, I have following comments to offer:-
In terms of Section 51 of CGST Act, 2017, the notified person is required to obtain registration as TDS. Normally, the TDS registration will be based on TAN, although holding PAN. Some Govt. Department such as Railway and postal department are example of holding PAN as well as TAN. TDS is required to deduct Tax if the contract value is more than &#

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LEVY OF GST ON LOTTERY

LEVY OF GST ON LOTTERY
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 22-10-2018

Goods
Section 2(52) of the Central Goods and Services Tax Act, 2017 ('Act' for short) defines the term 'goods' as 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.
Actionable claim
Section 2(1) of the Act defines the expression 'actionable claim' as that shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882
Section 3 of the Transfer of Property Act, 1882, defines the expression 'actionable claim' as a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of moveable property, or to any beneficial interest in moveable property not in possession either actual or constructive, of th

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pply of lottery tickets would need to be taxed as supply of goods.
GST rate on lottery
In respect of the Agenda Item on Lottery (17th GST Council Meeting) , the Council approved the following –
* The supply of lottery shall attract GST rates as under –
* Lottery run by State Governments – 12% of face value of lottery ticket (Face value to be inclusive of GST)
* Lottery authorized by State Governments – 28% of face value of lottery ticket (Face Value to be inclusive of GST )
* Tax can be levied by the State Governments on the first point of sale by the State Government to the lottery distributor or the sole selling agent appointed by the State Government on reverse charge basis and to exempt agents/stockists below the distributor.
Challenge before High Court on levy of GST on lotteries
In 'Teesta Distributors and others v. Union of India and others' – 2018 (10) TMI 941 – Calcutta High Court, the petitioners have sought a declaration that, lotteries are exempt from tax under

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ct, 2017 or any of the SGST Acts.
* Since lottery is neither 'goods' nor 'service', no levy under the Integrated Goods and Services Tax Act, 2017 can be made.
* When CGST, 2017 and IGST, 2017 propose to tax a lottery, it goes beyond the constitutional definition of 'goods'.
* Since lottery is not 'goods' within the meaning of the Constitution, neither Central nor the State Governments can enact any law for the purpose of levying sales tax on the lottery.
* Treating lottery to be a 'goods' would do violence to the provisions of the Lotteries (Regulation) Act, 1998.
* Sale of lottery ticket is a trade under Article 301 to 304 of the Constitution.
* Differential rates of tax cannot be fixed for lottery tickets imported from other States and lottery tickets produced in the States.
* The discrimination in rates varies between 12 and 28 per cent. It is per se unsustainable and is required to be stuck down. All lottery tickets organized by the States have to be treated at par.

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ts, Central and State Legislations.
* Article 366(12) of the Constitution defines 'goods' to include all material commodities and articles. Accordingly the lotteries are 'goods'.
* The term 'goods' used in Article 366(12) of the Constitution of India is very wide and includes all types of movable properties whether those properties are tangible or intangible and is an inclusive one.
* Lotteries are 'actionable claim' and are included in the definition of 'goods'.
* Lottery is not a commodity in the market which can be bought against consideration and on payment of consideration the property passes to the purchaser
* The Union Parliament and the State Legislature have the competence to levy tax on any item including lottery.
* The State is allowed to pick and choose districts, objects, persons, methods and rates of taxation, if the State, does so reasonably.
* The Legislature enjoys very wide latitude in classification for taxation.
* A statute cannot be declared uncons

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uthorized by the State Government in another State attracts in aggregate 28 per cent, with 14 per cent each under the CGST and SGST.
* The notifications have been issued pursuant to the recommendations made by the GST Council in its 17th meeting. The rates are not discriminatory and are intended to preserve economic uniformity and the interest of the constituent States. According to him, the tax component is included in the price of the ticket. The end customer who purchased the ticket is not saddled with any additional tax burden.
Union of India submitted the following before the High Court-
* Imposition of GST on lottery was discussed at length during the 17th GST Council meeting held on June 18, 2017. The States who are parties to the present writ petition were present in such Council meeting. The GST Council approved and resolved that, sale of lottery ticket will attract GST. The rates were also agreed upon. Therefore, the States should not be permitted to contend contrary to

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vices Tax Act, 2017?
* If so, is differential levy of tax permissible?
* To what reliefs, if any, are the parties entitled to?
First issue – Lottery – an actionable claim?
The High Court analyzed the various provisions of the Act for the term 'goods'. It also analyzed the various judgments of Supreme Court. In 'H Anraj v. State of Tamil Nadu' – 1985 (10) TMI 258 – Supreme Court, it was held that lottery tickets to the extent that they comprise the entitlement to participate in the draw are 'goods' falling within the definition of 'goods' as given in Tamilnadu General Sales Tax Act, 1954 and Bengal Finance (Sales Tax) Act, 1941. Independent of the two state Acts under consideration therein, it has held that, a trade of a lottery ticket confers on the purchaser two rights.
The High Court observed that a sale of a lottery ticket confers on the purchaser thereof two rights-
* a right to participate in the draw; and
* a right to claim a prize contingent upon his being successfu

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cond issue – levy of GST on lotteries
In tune with the constitutional amendments incorporated, Central Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017 and the respective State Goods and Services Tax Act, 2017 were enacted. The High Court analyzed the provisions of CGST Act regarding 'goods' , 'actionable claims', 'reverse charge', 'scope of supply', 'levy and collection' which have also been found the State Goods and Services Tax Act. It regulates the levy and collection of tax on intra-State supply of goods or services or both in the State of West Bengal. Legislature enjoys very wide latitude in classification for taxation.
Legislation or a provision contained in a statute can be invalidated on two grounds, namely,
* it is not within the competence of the legislature which passed the law; and/or
* it is in contravention of any of the fundamental rights stipulated in Part III of the Constitution or any other right/provision of the Constitution of I

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teries are kept out of the purview of 'actionable claims' which do not attract the CGST Act, 2017, lottery can therefore be charged to tax under the CGST Act, 2017. On the parity of the same reasoning, lottery is chargeable to tax under WB GST Act, 2017 also.
The High Court therefore held that lottery can be taxed under the CGST Act, 2017 and WB GST Act, 2017.
Third issue – levy of different taxes on lottery
The rationale for imposing differential rates appears from the minutes of the 17th meeting of the GST Council. The rationale for the differential rate or the rates by themselves has not been substantiated to be breach of any provision of the Constitution. The State Government cannot challenge its own notification as unconstitutional as, it has the wherewithal to set the wrong, right. In the present case, the States of Sikkim, Mizoram, Nagaland and Arunachal Pradesh have supported the writ petitioner on the score that the rates of taxes are discriminatory. Such States were prese

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Whether ITC for FY 2017-18 can be availed only till October 20, 2018

Whether ITC for FY 2017-18 can be availed only till October 20, 2018
By: – Bimal jain
Goods and Services Tax – GST
Dated:- 22-10-2018

Considering the first year of implementation of GST, major challenge is being faced by the Industry Inc in availing GST input tax credit (“ITC”) for the financial year 2017-18 after implementation of GST (i.e. July 2017 to March 2018) and lot of divergent views are floating with respect to the last date till which such ITC can be availed.
Amongst others, most prominent apprehension is that the ITC for the period July 2017 to March 2018, can be claimed on or before due date of filing of the return in Form GSTR-3B for the month of September 2018, which is October 20, 2018. This view is engendered in the light of provisions of Section 16(4) of the CGST Act, 2017 (“the CGST Act”), which draws a time limit to avail ITC for a financial year as the earliest of due date of furnishing return under Section 39 for the month of September following t

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f furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier”.
Section 39 of the CGST Act, deals with the monthly return to be filed electronically, for every calendar month or part thereof, in such form and manner as may be prescribed, of inward and outward supplies of goods or services, ITC availed, tax payable, tax paid and other prescribed particulars, on or before the 20th day of the month succeeding such calendar month or part thereof.
In this regard, Rule 61(1) of the CGST Rules, 2017 (“the CGST Rules”), prescribes Form GSTR-3 as the return to be furnished under Section 39(1) of the CGST Act.
Further, Rule 61(5) provides that where the time limit for furnishing of details in Form GSTR-1 under Section 37 and in FORM GSTR-2 under Section 38 has been extended and the circumstances so warrant, the Com

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claim of ITC shall also be extended accordingly.
Analyses on last date to avail ITC:
In view of the above discussed provisions, following views are possible in the context of last date to avail ITC for the period from July 2017 to March 2018:
* ITC for FY 2017-18 can be availed till the date of furnishing Annual return (i.e. December 31, 2018) – Section 16(4) of the CGST Act talks about the return filed under Section 39, which is Form GSTR-3 as per Rule 61(1) of the CGST Rules. Hence, Form GSTR-3B cannot be assumed to be a substitution for Form GSTR-3. Though, Rule 61(5) as amended provides that where the time limit for furnishing details in Form GSTR-1 and Form GSTR-2 has been extended, the Commissioner may specify the manner and condition subject to which the return shall be furnished through Form GSTR-3B.
Therefore, the last date for availing ITC of any invoice/debit note for a financial year 2017-18, would be the earlier of the due dates for filing the GSTR-3 for September 2

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gregate turnover up to ₹ 1.5 crores, for the quarters from July, 2017 to September, 2018, till October 31, 2018.
Further, vide Notifications No. 45 to 47/2018 – Central Tax dated September 10, 2018, due date of GSTR-1 and GSTR-3B for taxpayers who are migrating to GST as per procedure specified in Notification No. 31/2018 – Central tax dated August 6, 2018 was extended till December 31, 2018 for the period July 2017 to November 2018.
Going by the provisions of first proviso to Rule 69 of the CGST Rules, a view may be taken to state that since the time limit for furnishing Form GSTR-1 has been extended till October 31, 2018 for July 2017 to September 2018, while Form GSTR-2 remains suspended, the date of matching relating to claim of ITC shall also be extended accordingly till October 31, 2018 for all regular taxable persons and till December 31, 2018 in case of recently migrated taxpayers as per procedure specified in Notification No. 31/2018 – Central tax dated August 6, 2018.

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er 2018 but entry passed in books in the month of October 2018 due to closure of books for the month of September – Continuing with the above liberal interpretation of Section 16(4) of the CGST Act, one may consciously defer to file GSTR-3B for September till October 31, 2018, but it may happen that books of the Company for FY 2017-18 is closed by 30th September, 2018 and accordingly, any such entry booked in the month of October 2018, while ITC as per GSTR-3B will be reflected in the month of September, 2018. In such cases, there will be a reconciliation issue while filing Annual Return in Form GSTR-9 and GST Audit Report in Form GSTR-9C, in addition to late fees and interest as discussed supra.
Suitable clarification required from the CBIC to clear the mist:
It is highly important that the Government should come out with suitable clarification on last date till when the ITC for July 2017 to March 2018 can be availed. Apart from considering the legal jigsaw of multiple provisions un

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Extension of due date to 25th October, 2018 for furnishing return in the FORM GSTR-3B for the month of September, 2018

Extension of due date to 25th October, 2018 for furnishing return in the FORM GSTR-3B for the month of September, 2018
GST
Dated:- 22-10-2018

It has been brought to notice that there have been apprehensions by trade and industry relating to the last date for availment of ITC for the period July, 2017 to March, 2018. In order to remove doubts, it was clarified that as per the law, the last date for availing ITC in relation to the period from July, 2017 to March, 2018 is the last date for the filing of return in the FORM GSTR-3B for the month of September, 2018.
In view of the said apprehensions and with a view to give some more time to the trade and industry, the last date for furnishing return in the FORM GSTR-3B for the mont

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Applicant Eligible for Full Input Tax Credit on Taxable Services in Road Construction Under CGST Act Section 16(1.

Applicant Eligible for Full Input Tax Credit on Taxable Services in Road Construction Under CGST Act Section 16(1.
Case-Laws
GST
Input Tax Credit – The applicant is rendering taxable services

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GST Applicability on Washed Away or Cancelled Contracts: Taxable or Not? Insights on Forward Contract Obligations.

GST Applicability on Washed Away or Cancelled Contracts: Taxable or Not? Insights on Forward Contract Obligations.
Case-Laws
GST
Levy of GST – charges received on account of washed away / cancelled contracts for supply of goods – Forward Contracts – agreeing to the obligation to refrain from an act, agreeing to the obligation to tolerate an act or a situation, or agreeing to the obligation to do an act – Taxable in one situation and not taxable in other situations.
TMI Updates – Hig

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Pollution Under Control Certificates for vehicles taxed under residual entry, not SAC 9991, with 18% GST rate.

Pollution Under Control Certificates for vehicles taxed under residual entry, not SAC 9991, with 18% GST rate.
Case-Laws
GST
Levy of GST – services of Pollution Testing of Vehicles – The Acti

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Advance Payment for Villa Sale Taxed at 12% Under GST Act Before Completion Certificate Issuance.

Advance Payment for Villa Sale Taxed at 12% Under GST Act Before Completion Certificate Issuance.
Case-Laws
GST
Liability of tax – The applicant has received advance towards sale of villa pri

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GST Exemption on Charges for Cold Storage of Fresh Poultry Eggs from Animal Rearing or Poultry Farming.

GST Exemption on Charges for Cold Storage of Fresh Poultry Eggs from Animal Rearing or Poultry Farming.
Case-Laws
GST
Levy of GST – cold storage services for poultry eggs – The charges receiv

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Partners' Share Activity Classified as Service Supply Under CGST and TGST Act, 2017.

Partners' Share Activity Classified as Service Supply Under CGST and TGST Act, 2017.
Case-Laws
GST
Supply or not? – The activity undertaken with respect to the share belonging to the partners

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Goods Detained Over Invalid E-Way Bill; Release Possible with Bond After Part-B Upload Fails to Correct Issue.

Goods Detained Over Invalid E-Way Bill; Release Possible with Bond After Part-B Upload Fails to Correct Issue.
Case-Laws
GST
Detained of goods – invalid e-way bill – subsequent uploading of t

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