2022 (5) TMI 1356 - AAR - GST

Levy of GST - services provided by the applicant to NMMT under the Agreement by way of supplying operating and maintaining air-conditioned electrically operated buses - appropriate SAC (Services Accounting Code) for classifying the services provided by the applicant - applicable GST rate - input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement. HELD THAT - In view of powers under provisions of Section 102 and 104 of CGST Act this authority is empowered to take decision as per law after affording opportunity of hearing to the applicant. In response to the notice for the hearing to be held on 15.03.2022 the applicant sought further date of one month which was granted. Hence sufficient time has been granted to the applicant to put forth their case. The applicant has failed to prove how the provisions of the said circular dated 6/10/2021 are not applicable to the facts of the case of the applicant. In fact the applicant has not argued the case on merits in view of the provisions of the Circular mentioned above and had also not brought out the fact that the said Circular was in existence during the earlier hearing which led to the issuance of Order No. 60/2020-21/B-116 dated 21/12/2021. The arguments were made by the Authorised representatives only on non applicability of Sections 102 and 104 to their case which are not at all acceptable in view of the relevant GST provisions. There is no denial by the applicant that provisions of said circular are not applicable to the facts of present case. The applicant has nowhere explained that on facts provisions of said circular are not applicable in present case. On the contrary this is indirect admission by the applicant that the provisions of the said circular are very much applicable to the facts of the present case. Thus the decision given earlier cannot be said to be founded on sound legal footing. Hence the above mentioned provisions of the GST Laws come into play. This Authority directs the applicant to follow the provisions of the circular dated 6/10/2021 which is of prior date than the date of the decision of this Authority in the earlier ARA order dated 21.12.2021. The grounds raised during present hearing by the applicant are merely and purely of technical nature and in substance the facts of the present case warrant application of the said circular. The technical objections are also not founded on sound principles of law because if one reads the texts of above sections under which present order is being passed a reasonable mind will come to conclusion that there is no merit in the objections taken by the applicant.

Summary

Issues Involved:
1. Taxability of services provided by the applicant to NMMT under the Agreement.
2. Appropriate SAC (Services Accounting Code) and applicable GST rate for the services.
3. Eligibility of the applicant to avail input tax credit (ITC) on the procurement of input supplies used in supplying services to NMMT.

Detailed Analysis:

Issue 1: Taxability of Services Provided by the Applicant to NMMT
Original Decision:
The Authority initially ruled that the services provided by the applicant to NMMT, by way of supplying, operating, and maintaining air-conditioned electrically operated buses, were taxable and subject to GST. This decision was based on the classification of the services under Tariff Heading 9966 with a GST rate of 12% (with availment of ITC) or 5% (without availment of ITC).

Revised Decision:
Upon reconsideration, taking into account Circular No. 164/20/2021-GST dated 6/10/2021, the Authority revised its decision. The circular clarified that the expression "giving on hire" in SI. No. 22 of Notification No. 12/2017-CT (Rate) includes renting of vehicles. Consequently, services where vehicles are rented or given on hire to State Transport Undertakings or Local Authorities are eligible for the said exemption. Therefore, the services provided by the applicant to NMMT are exempt from GST.

Final Answer:
The services provided by the applicant to NMMT under the Agreement are not taxable and are exempt from GST.

Issue 2: Appropriate SAC and Applicable GST Rate
Original Decision:
The services were classified under Tariff Heading 9966, with a GST rate of 12% (with availment of ITC) or 5% (without availment of ITC).

Revised Decision:
Given that the services are now considered exempt from GST, the question of appropriate SAC and applicable GST rate becomes irrelevant.

Final Answer:
Not applicable, in view of the answer given to question no.1 above.

Issue 3: Eligibility to Avail Input Tax Credit (ITC)
Original Decision:
The applicant was eligible to avail the input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement, provided they paid tax at the rate of 12% on the output service.

Revised Decision:
Since the basic supply itself is now considered an exempt supply and not liable to tax, the applicant is not eligible to avail the input tax credit of tax paid on the procurement of input supplies.

Final Answer:
The applicant is not eligible to avail the input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement.

Conclusion:
The Authority rectified its initial ruling based on the provisions of Circular No. 164/20/2021-GST, leading to the conclusion that the services provided by the applicant to NMMT are exempt from GST. Consequently, the applicant is not eligible to avail input tax credit for the procurement of input supplies. The revised decision aligns with the clarification provided in the circular, ensuring compliance with the updated legal provisions.