2020 (7) TMI 83 - AAR - GST

Maintainability of Advance Ruling Application - Levy of IGST or CGST and SGST - Renting of Immovable Property Service - reverse charge mechanism - applicability of N/N. 13/2017 dated 28th June, 2017 read with Notification No. 03/2018 - Central Tax (Rate) dated 25th January 2018 - HELD THAT - Section 95 of the CGST Act, 2017 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. The applicant has not undertaken the supply in the subject case. We find that, the applicant is a recipient of services pertaining to renting of immovable property in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and therefore, the subject application cannot be admitted as per the provisions of Section 95 of the GST Act. The present application filed for advance ruling is rejected, as being non-maintainable as per the provisions of law.

Summary

Issues Involved:
1. Whether a company is required to pay tax under reverse charge mechanism on renting of immovable property services from a local authority in a Special Economic Zone (SEZ) as per specific notifications.
2. Whether the company is required to pay tax under reverse charge mechanism on any other services as per the same notifications.
3. If tax is applicable, under which tax head the reverse charge mechanism should be paid.

Analysis:

Issue 1: Tax on Renting of Immovable Property Services
The applicant, a SEZ unit, contended that services procured from a SEZ authority should be exempt from reverse charge mechanism as per SEZ Act provisions. They argued that the SEZ Act overrides other laws, including taxation laws. The applicant cited relevant notifications and provisions to support their claim that services to SEZ units are zero-rated supplies. They also referred to a High Court judgment supporting exemption for services used for authorized SEZ operations. However, the Advance Ruling Authority rejected the application, stating that the applicant, in this case, was a recipient of services, not a supplier, and thus the application was not maintainable under the GST Act.

Issue 2: Tax on Other Services
The applicant sought clarification on whether reverse charge mechanism applied to other services as per the same notifications. They argued that since services to SEZ are considered inter-state supplies, they should be zero-rated. The applicant referenced specific FAQs and notifications to support their stance that no GST was payable on services procured within India for SEZ units. However, the Authority rejected the application on the grounds that the applicant was a recipient of services, not a supplier, and thus the application was not maintainable under the GST Act.

Issue 3: Tax Head for Reverse Charge Mechanism
The applicant also questioned under which tax head the reverse charge mechanism should be paid if applicable. However, since the application was rejected on procedural grounds, this issue was not addressed in the final ruling.

In conclusion, the Advance Ruling Authority rejected the application on the basis that the applicant was a recipient of services, not a supplier, and thus the application was not maintainable under the GST Act. The Authority did not delve into the merits of the case regarding the tax liability under reverse charge mechanism for the services procured by the SEZ unit.