2019 (7) TMI 47 - AAAR - GST

Levy of IGST - specified imported equipments delivered to the eligible institutions - Whether benefit of customs exemption notification as applicable to Importer (OEM) is also applicable to supply of material by the importer to Domestic supplier - specified institution - Applicability of N/N. 51/ 1996-Customs, Dt 23.07.1996 read with N/N. 43.2017-Customs, Dt 30.06.2017 and Minutes of the 14th GST Council Decision Dated 18th/19th May, 2017 - non-issuance of corresponding Notification by the Central/ State Government to give effect to such decision of the Council - concessional rate of GST/IGST at the rate of 5% vide Notification No-45-CGST (Rate), Dt 14.11.2017 and Notification No-47-1GST (Rate), Dt 14.11.2017 on supply of specified Indigenous Equipments to the eligible Institutions fulfilling conditions as specified under Column-(4) of the said notification with effect from 15.11.2017. HELD THAT - The AAR, Odisha observed that the appellant satisfies the requirement of being a Public funded research institution as provided in Notification No-51/1996-Customs, dated 23.07.1996 read with Notification No-43/2017-Customs dated 30.06.2017 and ruled accordingly for being entitled to the exemption from levy of IGST on import of specified goods as listed under column (3) of the aforesaid notification. Non-applicability of Notification no 51/1996-Customs, dated 23.07.1996 as amended - OEM suppliers of imported equipments - HELD THAT - The Appellant is before us but not OEM suppliers of the Appellant. The relevant contract/ agreement/ purchase order of the Appellant with the OEM supplier, purchase order of the OEM supplier with the overseas supplier, import documents such as invoice, bill of lading, and import general manifesto are not part of the Appeal Memorandum. In the absence of such documents, it is not possible on our part to examine the status of the Appellant vis- -vis the OEM supplier, when import undertaken through such supplier. Further, OEM suppliers of the Appellant are not party to this appeal. Therefore, we are refraining ourselves to pass any specific order with respect to import by such OEM supplier. The AAR, Odisha in their rulings ordered in favour of the Appellant that Notification No-51/ 1996-Customs, dated 23.07.1996 read with Notification No-43/2017-Customs dated 30.06.2017 is applicable to the Appellant for import of specified goods as listed under column (3) of the aforesaid notifications. The Rulings pronounced by the Advance Ruling Authority, Odisha is thus correct and justified - appeal dismissed.

Summary

Issues Involved:
1. Applicability of Notification No-51/1996-Customs and related notifications to OEM suppliers.
2. Binding nature of GST Council decisions on the Department without corresponding notifications.
3. Applicability of concessional GST/IGST rates to imported and indigenous goods.

Detailed Analysis:

1. Applicability of Notification No-51/1996-Customs and Related Notifications to OEM Suppliers:
The appellant argued that Notification No-51/1996-Customs, read with Notification No-43/2017-Customs, should exempt them from IGST on imported equipment, even when procured through OEM suppliers. The AAR, Odisha, held that the exemption applies only to direct imports by eligible institutions and not to domestic transactions involving OEM suppliers. The AAR clarified that the OEM suppliers' transactions are domestic supplies subject to IGST or CGST and SGST, depending on the nature of the supply. The appellant can only claim exemption if they directly import the goods.

2. Binding Nature of GST Council Decisions on the Department Without Corresponding Notifications:
The appellant questioned whether the GST Council's decision granting exemptions is binding on the Department without the issuance of corresponding notifications. The AAR, Odisha, noted that while the GST Council's decisions are binding, tax rates and exemptions must be implemented through statutory notifications. Therefore, the absence of such notifications means the Council's decisions alone do not grant exemptions.

3. Applicability of Concessional GST/IGST Rates to Imported and Indigenous Goods:
The appellant sought clarity on whether the concessional GST/IGST rates at 5% apply to both imported and indigenous goods. The AAR confirmed that the concessional rates apply to specified goods, whether imported or indigenous, as listed in Notification No-45-CGST (Rate) and Notification No-47-IGST (Rate), effective from 15.11.2017. The specified goods include scientific instruments, accessories, computer software, and prototypes.

Appellate Authority's Decision:
The Appellate Authority upheld the AAR's rulings, confirming that:
1. Notification No-51/1996-Customs and related notifications apply only to direct imports by eligible institutions, not to OEM suppliers.
2. The GST Council's decisions require corresponding statutory notifications to be binding.
3. The concessional GST/IGST rates at 5% apply to both imported and indigenous specified goods.

The appeal was dismissed, and the AAR's order was upheld. The appellant's claims regarding overcharging by suppliers were deemed unsupported by evidence and academic in nature. The appellant was advised to report any overcharging to the jurisdictional officers for necessary action.