RECENT ADVANCE RULINGS IN GST (PART-4)

[Dr. Sanjiv Agarwal]

Advance rulings are important in any tax law as it provides a forum for clarification and possible interpretation of statutory provisions. Moreover, it conveys the legislative intention from the revenue’s view point. Provisions of advance ruling are contained in section 95 to 106 of CGST Act, 2017 and State / UT GST enactment. Rules 103 to 107 of also provide for forms, manner, certification etc.

The Authority for Advance Rulings (AAR) have been set up in all the states and we have now over 100 advance rulings on different issues already pronounced by various State Authorities. The orders of Appellate Authority have also started pouring in. A major issue presently being faced is about multiple authorities (equal to number of States), each pronouncing a ruling of its own even if the matter is covered by some other State AAR’s rulings. There would be situations where we may have different rulings on same question(s). GST Council ought to decide on having a Centralized Authority as was there in erstwhile tax regime.

The summary of few more recent advance rulings pronounced by State Advance Ruling Authorities are discussed hereunder but these needs to be read in the background of the question involved:

Advance ruling on nature of supply i.e. whether composite or mixed

Advance Ruling was sought on nature of supply i.e., mixed or composite supply for supply of UPS along with battery. Applicant’s contention was that it amounts to composite supply. AAR ruled that the supply of UPS and battery is to be considered as mixed supply because they are two different and independent items which are supplied under a single contract at a combined single price, i.e., not being naturally bundled. [n Re; Switching Auto Electro Power Ltd., (2018) 4 TMI 810 (AAR-West Bengal);].

Advance ruling on export of service

Recruitment services provided to students of foreign university are not covered under export of services and are taxable services under GST. Such services are provided only as a representative of foreign university and not as an independent service provider. Therefore, place of supply shall be governed by section 13(8) (b) and not by section 13(2) of IGST Act. Place of supply of services shall be the location of service provider in India and it will not qualify as ‘export’ of service. [Global Reach Education Services Pvt. Ltd., In re. (2018) 4 TMI 808 (AAR, West Bengal); ]

Advance Ruling on applicability of GST on recovering charges

Applicant is engaged in business of generation, transmission and distribution of electricity which calls for laying and maintenance of power lines and other incidental work which require digging up of trenches. The Municipal Authorities grant the needful permissions, however, subject to charges for restoring the street or pavement which has been dug up. Thus, charges are recovered by the Municipal Authorities to restore that portion of the street or pavement which has been dug up. The restoration work can neither be equated to construction work nor to maintenance work as suo-moto undertaken by Municipal Authorities.

The Authority for Advance Ruling (AAR) ruled that recovering of charges for restoring patches which have been dug up by business entities/applicant cannot be equated to performing a sovereign function as envisaged under article 243W of the Constitution. Therefore, reinstatement charges would attract GST at the rate of 18 per cent. [In re; Reliance Infrastructure Ltd. (2018) 5 TMI 647 (AAR-Maharashtra); ].

Advance ruling on registration

The Applicant was not registered under any of the repealed Acts and desired to have a ruling on whether it is required to be registered under the CGST  Act, 2017 / WBGST Act, 2017.

In the instant case, where an applicant was engaged exclusively in supplying goods and services that are wholly exempt from tax, it was ruled that he will not be not liable to be registered in accordance with provisions under section 23(1) of GST Act, subject to condition that applicant is not otherwise liable to pay tax under Reverse Charge mechanism under section 9(3) of GST Act or section 5(3) of IGST Act. [In Re; Joint Plant Committee (2018) 67 GST 262 (AAR- West Bengal); (2018) 4 TMI 809 (AAR-West Bengal) ; ].

Advance Ruling on catering services to manufacturing industries

The applicant is an industrial canteen contractor who provides catering services to manufacturing industries at various places of their customers who have in house canteens at their factories. The applicant normally charges Goods & Services Tax at the rate of 18% classifying their services under heading 9963 as outdoor catering. One of the customer of the applicant asked the applicant to charge GST at the rate of 12%. The applicant therefore, sought a clarification regarding the rate of taxability, before the AAR.

The applicant submitted that as per the contract made between the applicant and client, the canteen space and all equipments was provided by the client to the applicant and the applicant is only providing the services pertaining to Food, edible preparation service.

The Authority found that the service recipient had engaged the applicant for running of the canteen for their workers/employees. The Authority observed that the rates of the meal, snack, tea have been fixed and payable by the service recipient. They thus concluded that the applicant providing service from other than his own premises to the recipient and that the service provided was that of outdoor catering service.

The AAR relying on the decision of the Allahabad High Court in the case of Indian Coffee Workers’ Co-Op Society Ltd vs. CCE & ST. ruled that the supply of services by M/s. Rashmi Hospitality Services Private Limited is covered under Sr. 7(v) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax at the rate 18%. [In Re; Rashmi Hospitality Services Private Limited  (2018) 5 TMI 1181 (AAR - Gujarat); ].

Advance Ruling on classification and rate of tax

Tariff item 83062120 covers "Trophies". This would be trophies of base metal and not of any other material. Mere mention of word "trophies" would not mean that trophies of any material would be covered by Heading. Chapter 83 is for miscellaneous articles of base metal. Hence, Heading 8306 falling in Chapter 83 would have to be understood in that sense only. Therefore, even though word ‘TROPHY’ is specifically mentioned under 83062920, all trophies made of any material cannot be classified under this HSN and are to be classified as per applicable provisions of Customs Tariff Headings.

Caesarstone which is original engineered quartz surface is an article made from artificial stone. It is a product made using artificial or engineered stone. It cannot be covered under Chapter 25 and being an agglomerated stone Caesarstone imported by applicant ought to be classified under HSN code 6810 in Chapter 68. [In Re; Acrymold (2018) 5 TMI 597 (AAR-Maharashtra); ]

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