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2023 (7) TMI 571 - AAR - GSTExemption from GST - Pure Services or composite supply? - services with a material value less than 25% of the total value provided by the contractors to KSEBL (being a Government Entity) - whether the taxes already collected by the contractor from KSEBL and remitted to the department can be refunded to KSEBL - input tax credit on Deposit works - Availability of proportionate credit by KSEBL for the quantum of taxable services provided based on the data available in GSTR-2A of KSEBL - applicability of reverse charge mechanism on Rent a Cab from Unregistered Suppliers - refund of GST (RCM) paid on the services received from unregistered rent a cab service provider - whether the practice of raising GST Invoice for Deposit works, after the completion of service and settlement of dues is in the line with the legal interpretations of the Law or not. Whether Pure Services or composite supply services with a material value less than 25% of the total value provided by the contractors to KSEBL (being a Government Entity) are exempt from GST Notification No. 12/2017-Central Tax (Rate) - SI. No 3,3A ? - If the answer to the above is Yes, whether the taxes already collected by the contractor from KSEBL and remitted to the department can be refunded to KSEBL? - HELD THAT - The applicant has sought the taxability of the services provided by the contractors to the applicant and hence the applicant is the recipient of the services. Therefore, the questions do not pertain to a transaction that is being undertaken or proposed to be undertaken by the applicant and hence do not fall within the purview of the definition of advance ruling. Further, it is categorically stated in Section 103 of the GGST Act that the ruling pronounced is binding only on the applicant and the jurisdictional authority of the applicant. Hence, if a recipient obtains a ruling on the taxability of his inward supply of goods or services or both the supplier of such goods or services and their jurisdictional authority is not bound by that ruling and the supplier and their jurisdictional authority is free to assess the supply according to their own. determination and the ruling has no relevance or applicability. Whether KSEBL can avail direct input tax credit on Deposit works? - If direct credit cannot be availed by KSEBL, whether proportionate credit can be availed by KSEBL for the quantum of taxable services provided based on the data available in GSTR-2A of KSEBL? - HELD THAT - The issue in the notice is not with respect to the eligibility of input tax credit as such but regarding the difference in the ITC claimed in GSTR-3B and the ITG available in GSTR-2A for the period. Hence, it can be considered that there are no pending proceedings within the meaning of first proviso to sub-section (2) of Section 98 of the CGST Act regarding this question raised in the application. Therefore, the question is admissible. Section 17 of CGST Act pertains to apportionment of credit and blocked credits. Sub-section (1) of Section 17 provides that where the goods or services or both are utilized by the registered person partially for the purpose of any business and partially for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business - Rule 42 and 43 of the Central Goods and Services Tax Rules, 2017, provides the manner of determination of input tax credit in respect of inputs and input services and in respect of capital goods respectively and its reversal thereof in cases where the provisions of sub-section (1) or sub-section (2) of Section 17 are attracted. These rules provide a formula restricting the input tax credit in respect of inputs, input services and capital goods which attract sub-section (1) and subsection (2) of Section 17 being partially used for making taxable supplies and partially for making exempt supplies. Thus, the outward supply of service by the applicant is subjected to applicable GST and hence the applicant is eligible for availing credit of tax paid on the inward supply of inputs, input services and capital goods used or intended to be used for the purpose of the outward supply of services, namely; Deposit Works, subject to the conditions and restrictions prescribed in Sections 16 and 17 of the CGST Ach 2017 read with Rules 42 and 43 of the CGST Rules, 2017. Liability of the applicant to pay GST under reverse charge on the rent a cab service received by them - HELD THAT - It is an admitted fact that the applicant is a body corporate as defined in clause (11) of Section 2 of the Companies Act, 2013. Since the Notification No, 13/2017 CT (Rate) dated 28.06.2017 as amended is issued under sub-section (3) of Section 9 of the CGST Act, 2017 the applicant is liable to pay GST as the recipient of services in respect of the services of renting of any motor vehicle designed to carry passengers deceived from any person other than a body corporate not issuing invoice charging central tax at the rate of 2.5% / 6% as the case may be; during the respective periods irrespective of the status of registration of the supplier. Time of supply of the services, namely; Deposit Works supplied by the applicant - Applicability of clause (c) of sub-section (2) of Section 97 of the CGST Act - HELD THAT - In terms of provisions of sub-section (2) of Section 31 of the CGST Act, 2017 read with Rule 47 of the CGST Rules, 2017 the applicant shall issue tax invoice in respect of the supply of services namely; Deposit Works within 30 days from the date of supply of the service. However, as the applicant is collecting the consideration as per the estimate prepared in advance from, the consumers, in view of the provisions contained in clause (a) of sub-section (2) and clause (i) of explanation to sub-section (2) of Section 13, the supply is deemed to have been made to the extent covered by the payment received and hence the time of supply of services to the extent of the payment received shall be the month in which the payment is received - the applicant shall issue a Receipt Voucher for the payment received in terms of clause (d) of sub-section (3) of Section 31 of the CGST Act read with Rule 50 of the CGST Rules and pay the applicable tax in respect of the same through the returns in Form GSTR-3B furnished for the month in terms of Section 39 of the CGST Act read with Rule 61 of the CGST Rules and also report the details of the payment of tax in Table 11 of the return in Form GSTR-1 furnished for the month in terms of Section 37 of the CGST Act read with Rule 59 of the CGST Rules for adjustment of the tax paid on the advance at the time of issue of tax invoice.
Issues Involved:
1. Exemption from GST for Pure Services or composite supply services with material value less than 25%. 2. Refund of taxes collected by the contractor and remitted to the department. 3. Eligibility of input tax credit on Deposit works. 4. Proportionate credit based on data in GSTR-2A. 5. Applicability of Reverse Charge on Rent a Cab from Unregistered Suppliers. 6. Practice of raising GST invoice for Deposit works after the completion of service. Summary: Issue 1: Exemption from GST for Pure Services or composite supply services with material value less than 25% The Authority ruled that no ruling can be given since the question does not pertain to a transaction undertaken or proposed to be undertaken by the applicant. Issue 2: Refund of taxes collected by the contractor and remitted to the department The question was deemed not relevant due to the ruling on Issue 1. Issue 3: Eligibility of input tax credit on Deposit works The Authority examined three scenarios: a) When the work is wholly outsourced to a third-party contractor and GST is paid to the contractor. b) When KSEBL purchases specific materials separately and outsources only the labor. c) When KSEBL uses materials from its stock and outsources only the labor. In all scenarios, the applicant is eligible for availing credit of tax paid on the inward supply of inputs, input services, and capital goods used or intended to be used for the purpose of the outward supply of services, subject to the conditions and restrictions prescribed in Sections 16 and 17 of the CGST Act, 2017 read with Rules 42 and 43 of the CGST Rules, 2017. Issue 4: Proportionate credit based on data in GSTR-2A The question was deemed not relevant due to the ruling on Issue 3. Issue 5: Applicability of Reverse Charge on Rent a Cab from Unregistered Suppliers The applicant is liable to pay GST as the recipient of services in respect of the services of renting any motor vehicle designed to carry passengers received from any person other than a body corporate, irrespective of the status of registration of the supplier as per entry at SI. No. 15 of Notification No. 13/2017 CT (Rate) dated 28.06.2017 as amended. Issue 6: Practice of raising GST invoice for Deposit works after the completion of service As per provisions of sub-section (2) of Section 31 of the CGST Act, 2017 read with Rule 47 of the CGST Rules, 2017, the applicant shall issue a tax invoice in respect of the supply of services, namely "Deposit Works," within 30 days from the date of supply of the service. The applicable GST in respect of the payments received in advance shall be discharged as mentioned in Para 7.22 above. Ruling: 1. No ruling on exemption from GST for Pure Services or composite supply services. 2. Refund of taxes not relevant. 3. Eligible for input tax credit on Deposit works in all scenarios. 4. Proportionate credit not relevant. 5. Liable to pay GST under Reverse Charge for Rent a Cab services from unregistered suppliers. 6. Must issue tax invoice within 30 days from the date of supply of service; applicable GST on advance payments must be discharged accordingly.
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