GIST OF RECENT PRONOUNCEMENTS ON GST (PART-XIII)

[Dr. Sanjiv Agarwal]

Goods and Services Tax (GST), introduced from July 1, 2017 is more than eleven months old now but has resulted in operational and implementation disruptions affecting all stakeholders.  GST law, as drafted and legislated, is not free from the interpretational hassles. GST Council his however, making regular changes to fix the anomalies and hardships faced by taxpayers.

Taxpayers have already started challenging various provisions of GST laws and rules framed thereunder with more than 180 writs being filed in different courts. High courts and Supreme court have taken a liberal stand so far in view of the fact that law is new and is yet evolving. However, CBIC may move to Supreme court where the verdict is against the Government. This has also been indicated in Circular No. 39 dated 03.04.2018 wherein it is has been hinted in relation to resolution of struck TRAN-1 and filing of GSTR-3B that Government has not accepted blanket opportunity to file TRAN-1 but only in cases where technical glitches crept in. It has advised the departmental officers that courts may be suitably informed and if needed review or appeal may be filed.  Further, we have now rulings from Authority for Advance Ruling and Anti-profiteering Authority also.

Here are few more judicial pronouncements for information and guidance of various stakeholders. It is expected that the litigation by way of writs is bound to go up as time passes by unless the Government comes out with proactive approach and solutions.

• In Kakali Bera v. Union of India  (2018) 66 GST 584 (Calcutta); (2018) 1 TMI 1003 (Calcutta);  where a tender process was initiated by Geological Survey of India.  It was a case of petitioner that when financial bid was opened, she was found to be lowest tenderer. Thereafter, authorities enquired as to whether amount quoted by participants included GST or not, in response to which enquiry, petitioner stated that amount quoted by her did not include GST as at time of initiation of tender process, GST was non in force. However, other participants apparently claimed that GST was included in their quoted price. Authorities found that petitioner was not lowest rate tendered as rates quoted by other tenderers were after factoring GST component was much lower.

Court Observed that the authorities enquired from the participants as to whether the bids of the participants included the imposition of GST or not. The authorities had, therefore, given a level playing field to all the participants participating in the tender process. The action of the authorities in obtaining information from the participants as to the tax implications cannot faulted. On evaluation, the authorities found the price quoted by C the successful bidder to be lower than that of the petitioner after taking GST implications. Such a decision cannot faulted as being perverse.

It was thus held that there was no material irregularity in the decision making process of the respondent authorities or their decision warranting an interference by the writ Court.  

• In Re: Nueclear Healthcare Ltd (2018) (5) TMI 855 (AAR-Maharashtra);  it was ruled that classification is based on applicable provisions and not on treatment by suppliers of similar goods. The product Fludeoxyglucose or 'FDG' is a compound of radioisotope 18F, covered under Heading 2844. Therefore, it is not classifiable under Chapter 3006 3000 of the Central Excise Tariff Act, 1985 or the Customs Tariff Act, 1975.

• In Re: Fermi Solar Farms (P.) Ltd  2018 (5) TMI 963 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA where applicant sought advance ruling on whether in case of separate contracts for supply of goods and services for a solar power plant, there would be separate taxability of goods as solar power generating system at 5 per cent and services at 18 per cent. However, impugned agreement contended to be for supply of goods was actually a works contract involving engineering, design, procurement and commissioning of solar power plant. Further, contract contended to be for supply of services was also one for executing a works contract involving a provision of goods as well as services. Thus, depending upon nature of supply, intra state or inter-state, rate of tax would be governed by Entry No. 3(ii) of the Notification No. 8/2017 – Integrated Tax (Rate under the Integrated Goods and Services Tax Act, 2017(IGST Act) or the Notification No. 11/2017 – Central Tax/State Tax (Rate) under the CGST Act and MGST Acts. The rate of tax would be 18 per cent under the IGST Act and 9 per cent each under the CGST Act and the MGST Act.

• In Re: JSW Energy Ltd (2018) 5 TMI 763 (AAR-Maharashtra);, where applicant-power company i.e. JEL generates power from coal supplied by JSL, a steel company, and JEL supplies power to JSL, activity undertaken by JEL amounts to manufacture of electricity from coal as supplied by JSL and is squarely covered in definition of ‘manufacture’ under GST Act and is a transaction of supply of goods. Such activity is therefore, not covered under scope of definition of ‘job work’ under GST Act.

• In Re: Simple Rajendra Shukla 2018 (5) TMI 648 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA, where the applicant runs private coaching institute and is engaged in providing the service of teaching to the students of Class XIth and XIIth science. This activity prepares the students for entrance examinations related to MBBS, Engineering and other sciences related examinations

The Authority for Advance Ruling ruled that the applicant’s institution is in no way covered in the definition of ‘educational institution’ as given in the Notification No. 12/2017–Central Tax (Rate). The private institute does not have any specific curriculum and does not conduct any examination or award any qualification recognized by any law which would be covered in the exemption notification. The activity of applicant is not covered by the specific definition provided for interpretation of exemption notification. Further, it was found that the education service provided in the instant case is taxable at the rate of 9 percent under CGST Act, 2017 and 9 percent under SGST Act, 2017, i.e. @ 18% in aggregate.

(Some more cases to follow)

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