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2021 (2) TMI 930 - AAAR - GSTApplicability of Transitional Provision under Section 142(11)(c), (Chapter XX) of TNGST Act, 2017/CGST Act, 2017 for the remaining installments of Mobilization Advance , which transitioned into the GST regime and to be adjusted/ deducted by them post the implementation of GST (i.e. Post July 1, 2017) - Levy of GST - Input tax Credit (ITC) on Service Tax paid which was transferred from Pre-GST period through TRAN-1 Return filed in terms of the section 142(11)(c), under Transitional Provisions (Chapter XX) of both TNGST Act, 2017/CGST Act, 2017. HELD THAT - On the applicability of GST on the Mobilization Advance which is transitioned to GST, the lower authority has ruled that the transition provision applicable to the case at hand is as per Section 142(11)(b) of the act and Mobilisation advance to the extent received prior to the implementation of GST towards supply of Works Contract Service is not to be subjected to GST as per the provisions of Section 142(11)(b) of the GST Act 2017 . We find that the appellant seeks a clarification before us as to whether they are liable to pay GST on that portion of the transitioned Mobilization advance on which Service Tax was not leviable/payable under the existing law or there is no GST liability on the entire Mobilization advance received by them prior to the implementation of GST. Thus, we find that the issue to be decided is whether GST is payable on that portion of Mobilization advance transitioned into GST and on which no tax has been paid in the Pre-GST regime Mobilisation Advance has been paid to the appellant by his service receiver against the bank guarantee executed by the appellant for the entire amount. This shows that the amount received by the appellant is consideration towards the supply to be made. It is also to be noted that the appellant holds the amount received as advance and considers as payment towards supply only when he raises the RA bills against the supplies made by him to the receiver, i.e., his client. Further, the transition provision 142 (11) (b) considering such scenario provides for payment of GST on the consideration which has not suffered service tax under Chapter V of the Finance Act and the Non-obstante clause with regard to Section 13 in the said provision also points to the leviability/payment of GST on such consideration which has not suffered Service Tax in the Pre-GST regime - In the case of the appellant, on 01.07.2017, the advance amount received is accounted and maintained as Advance and applying the provisions of Section 142(11)(b) of the Act, GST is liable to be paid on the said amount reduced by the Service Tax paid under Chapter V of the Finance Act 1994 on 01.07.2017. As per Section 101(3), there is no advance ruling issued on the Time of Supply of the Mobilization advance transitioned into GST, which has not suffered any tax in the Pre-GST regime and the applicability of Sec. 142(11)(b) to the facts of this case. Eligibility to credit based on the transitional provisions which has not been answered by the Lower Authority - Scope of Advance Ruling authority - HELD THAT - The Authority is to rule only on the issues spelt in Section 97 (2) of the Act and only to those who are eligible to seek such ruling under Section 95 of the Act. The lower authority in Para 6 of the ruling, has considered all the three questions raised and found that the question relating to eligibility to credit under transitional provisions is not in the ambit of this authority, to which we do not see any reason to disagree. This authority can rule only on the questions within the scope of the authority. While we understand the appellant s grievance of not answering all the questions raised by them in complete manner, we re-iterate that Advance Ruling Authority has their limits defined and could act only within its authority.
Issues Involved:
1. Applicability of Section 142(11)(c) of the CGST/TNGST Act 2017 on Mobilization Advance transitioned into GST. 2. Liability to pay GST on the installments of Mobilization Advance transitioned into GST. 3. Eligibility to avail Input Tax Credit (ITC) on Service Tax paid during the Pre-GST period. Detailed Analysis: 1. Applicability of Section 142(11)(c) of the CGST/TNGST Act 2017 on Mobilization Advance transitioned into GST: The appellant, engaged in the construction business, received Mobilization Advance from a client before the implementation of GST. They paid Service Tax on 40% of the amount received but did not pay VAT. The appellant argued that Section 142(11)(c) should apply to the remaining installments transitioned into the GST regime. The lower authority ruled that Section 142(11)(c) is applicable only when both VAT and Service Tax were paid in the Pre-GST regime, which was not the case here. The appellant contended that Section 142(11)(c) should apply even if only one tax was paid. However, the appellate authority upheld the lower authority’s decision, stating that Section 142(11)(c) does not apply since no VAT was paid on the Mobilization Advance. 2. Liability to pay GST on the installments of Mobilization Advance transitioned into GST: The lower authority ruled that the Mobilization Advance received before the implementation of GST is not subject to GST under Section 142(11)(b). The appellant sought clarification on whether GST is payable on the portion of the Mobilization Advance transitioned into GST. The appellate authority members had differing opinions: - SGST Member's Opinion: GST is not leviable on the Mobilization Advance paid before the appointed date as the time of supply falls in the Pre-GST era. - CGST Member's Opinion: GST is applicable on the Mobilization Advance transitioned into GST, reduced by the Service Tax paid. The levy under GST is as per Section 9, and the time of supply is determined under Section 13. Due to the divergence of opinions, no advance ruling could be issued on this matter as per Section 101(3) of the GST Act. 3. Eligibility to avail Input Tax Credit (ITC) on Service Tax paid during the Pre-GST period: The appellant sought a ruling on their eligibility to avail ITC on Service Tax paid, which was transitioned into the GST regime through TRAN-1. The lower authority did not answer this question, stating it is not covered under the questions on which advance ruling can be sought under Section 97(2) of the Act. The appellate authority agreed, reiterating that the scope of advance ruling is limited to the issues specified under Section 97(2). Summary: 1. The applicability of Section 142(11)(c) on the Mobilization Advance transitioned into GST was ruled out as it requires both VAT and Service Tax to be paid in the Pre-GST regime. 2. No consensus was reached on the liability to pay GST on the Mobilization Advance transitioned into GST, resulting in no advance ruling being issued on this matter. 3. The eligibility to avail ITC on Service Tax paid during the Pre-GST period was not addressed as it falls outside the purview of advance ruling. The appellate authority upheld the lower authority's decision on the applicability of Section 142(11)(c) and agreed that the question of ITC eligibility is not within the scope of advance ruling. The divergence of opinions on GST liability for transitioned Mobilization Advance led to no ruling being issued on that issue.
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