2020 (11) TMI 1050 - AAAR - GST

Maintainability of Advance Ruling application - Levy of tax - reverse charge mechanism - procurement of domestic services like renting of immovable property services from SEEPZ SEZ - applicability of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 amended by Notification No. 03/2018- Central Tax (Rate) dated 25.01.2018 - whether the Advance Ruling application filed by the Appellant is maintainable in terms of Section 95 (a) read with Section 97(2) of the CGST Act 2017 or not? - HELD THAT - On plain reading of the texts of Section 95(a) of the CGST Act 2017 it is amply clear that the Advance Ruling can be sought only in respect of such supplies which have been undertaken or proposed to be undertaken by the applicant. In other words it can be said that only supplier- of goods or services or both can seek the Advance Ruling and not the recipient- of such supplies. Thus we agree with the observations made by the Maharashtra Advance Ruling Authority to the extent that it is only the supplier of goods or services or both who is eligible to file the application for Advance Ruling in respect of the questions specified under Section 97(2) of the CGST Act 2017. Section 9 of the CGST Act 2017 is the section dealing with levy and collection . It provides for the levy of CGST on all intra-state supplies of goods or services or both. Section 9(3) of the CGST Act 2017 in keeping with the tenor of the Section also speaks about the liability to pay tax - all the provisions of the CGST Act 2017 including the provisions related to the Advance Ruling as laid down under Chapter XVII of the CGST Act 2017 will be applicable to such recipients. Also Section 31 (3)(f) of the CGST Act which deals with Tax Invoice requires a registered person who is liable to pay tax under section 9(3) to issue a tax invoice in respect of goods or services received by him. As per Rule 36 (1)(b) the recipient is also eligible to take input tax credit on the basis of the tax invoice. This makes it clear that the recipient deemed to be liable to pay tax he is well within his rights to make an application for Advance Ruling to know whether he is liable to pay tax . Liability to pay tax on the receipt of renting of immovable property services from the SEEPZ SEZ Authority as well as on the other services procured - HELD THAT - The said questions asked by the Appellant can aptly be construed to be covered under the clause (e) of Section 97(2) of the CGST Act 2017 which provides for the determination of the liability to pay tax on any goods or services or both. The aforesaid observation also finds support from the Kerala High Court Judgment in the case of SUTHERLAND MORTGAGE SERVICES INC VERSUS THE PRINCIPAL COMMISSIONER OFFICE OF THE PRINCIPAL COMMISSIONER OF CUSTOMS CENTRAL GST AND CENTRAL EXCISE KOCHI THE COMMISSIONER OF STATE TAX ASSISTANT COMMISSIONER KAKKANAD RANGE-4 2020 (3) TMI 186 - KERALA HIGH COURT wherein the High Court during the course of the judicial review of the Advance Ruling pronounced by the Kerala Advance Ruling Authority inter-alia observed that the provision as per clause (e) of sub-section (2) of Section 97 of the CGST Act 2017 is in wide terms and the Advance Ruling Authority is obliged to provide the Advance Ruling in all the matters pertaining to the determination of the liability to pay tax on any goods or services or both so that the applicant could get due clarity and precision about various aspects of taxation in the transactions undertaken by them. Thus it is evident from the aforesaid High Court Judgment that the clause (e) of Section 97(2) of the CGST Act 2017 has got a very wide connotation and would cover all sorts of transactions where the Advance Ruling on the questions related to the determination of the liability to pay tax including the liability under RCM (Reverse Charge Mechanism) can be sought by the Applicant in terms of the provisions related to the Advance Ruling as provided under Chapter XVII of the CGST Act 2017. The Appellant is eligible to file the subject Advance Ruling application wherein they have sought the Advance Ruling as to whether they are liable to pay tax under RCM on the services of renting of immovable property- received from the SEZ Authority and also on any other services liable for payment of GST under RCM in terms of the Notification No. 13/2017-C.T. (Rate). dated 28.06.2017 as amended.

Summary

Issues Involved:

1. Maintainability of the Advance Ruling application.
2. Liability to pay tax under reverse charge mechanism (RCM) on renting of immovable property services.
3. Liability to pay tax under RCM on other services.
4. Tax head under which RCM tax is to be paid (IGST or CGST and SGST).

Detailed Analysis:

1. Maintainability of the Advance Ruling Application:

The primary issue was whether the Advance Ruling application filed by the Appellant was maintainable under Section 95(a) read with Section 97(2) of the CGST Act, 2017. The Maharashtra Advance Ruling Authority (MAAR) had rejected the application on the grounds that the Appellant, being the recipient of the service (renting of immovable property), was not eligible to seek an Advance Ruling as per Section 95(a), which allows only the supplier of goods or services to file such an application.

However, upon appeal, it was argued that under Section 9(3) of the CGST Act, 2017, the recipient of services liable to pay tax under reverse charge mechanism (RCM) should be treated as the supplier for the purposes of tax liability. The Appellate Authority noted that Section 9(3) deems the recipient liable to pay tax and all provisions of the Act apply to them as if they were the supplier. This includes the provisions related to Advance Ruling. The Kerala High Court judgment in Sutherland Mortgage Services Inc. vs. Principal Commissioner of Customs, Central GST and Central Excise, Kochi, supported this interpretation, emphasizing that the determination of tax liability under RCM falls within the scope of Advance Ruling.

2. Liability to Pay Tax Under RCM on Renting of Immovable Property Services:

The Appellant sought clarity on whether they were required to pay tax under RCM for renting immovable property services received from the SEEPZ SEZ Authority. The MAAR had not addressed this question on merits due to the initial rejection of the application. The Appellate Authority highlighted that such questions are covered under clause (e) of Section 97(2) of the CGST Act, 2017, which pertains to the determination of liability to pay tax on any goods or services. The Kerala High Court's interpretation further supported that such matters fall within the jurisdiction of Advance Ruling Authorities.

3. Liability to Pay Tax Under RCM on Other Services:

The Appellant also questioned whether they were liable to pay tax under RCM on other services as per Notification No. 13/2017-C.T. (Rate), dated 28.06.2017, as amended by Notification No. 03/2018-C.T. (Rate), dated 25.01.2018. The Appellate Authority noted that this question, similar to the one regarding renting of immovable property, also falls under the determination of tax liability and should be addressed by the Advance Ruling Authority on merits.

4. Tax Head Under Which RCM Tax is to be Paid (IGST or CGST and SGST):

The Appellant sought clarification on the tax head under which the RCM tax should be paid. This issue was also not addressed by the MAAR due to the initial rejection. The Appellate Authority indicated that this question is integral to the determination of tax liability and should be considered by the Advance Ruling Authority.

Conclusion:

The Appellate Authority set aside the ruling of the MAAR, which had declared the Advance Ruling application as non-maintainable. It was held that the Appellant is eligible to seek an Advance Ruling on the questions raised, including the liability to pay tax under RCM on renting of immovable property and other services, and the applicable tax head. The case was remitted to the MAAR for fresh consideration on merits.