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2019 (2) TMI 1526 - AAR - GSTRate of IGST - Imported of specified Equipments delivered to the Eligible Institutions - liability of IGST on such imported Equipments by the OEM suppliers of imported equipment - Applicability of 51/1996-Customs, Dt. 23.07.1996 read with Notification No-43/2017-Customs, Dt 30.06.2017 - Held that - The applicability of Notification No. 51/96-Customs dated 23.07.1996 as amended vide Notification No-43/2017-Customs, Dt 30.06.2017 to OEM Suppliers needs to be examined. In this case, the OEM supplier is a supplier located in India and the supply of equipments by such supplier to the specified Research Institutions is undeniably a case of domestic supply. The nature of such domestic supply can be intrastate or interstate depending on the location of such supplier. The equipments supplied might have been imported from other countries and such import might be with the sole intention of supply to some pre-determined Research Institutions, which might be entitled for IGST exemption provided through the aforesaid Notifications, such as the Applicant. In spite of that, such preceding import or the intent behind such import will not alter the nature of the transactions - the GST liability will be on the importer (in this case the Applicant) and exemption from the said liability can be claimed and availed. The Applicant cannot claim exemption from the liability of another taxable person. Further, Notification No. 51/96-customs dated 23.07.1996 is restricted to importers like Public funded research institution or a university or an Indian Institute of Technology or Indian Institute of Science, Bangalore or a Regional Engineering College, other than a hospital - In the instant case, the intended beneficiary is the specified eligible institutions such as the Applicant but not the OEM suppliers. The said notification is restricted to the public funded and non-commercial research institutions and I.I.T. etc. So, by any stretch of the imagination, the said notification read with notification no. 43/2017-customs dated 30.06.2017 cannot be extended to the OEM suppliers. Whether the decision of the GST Council granting the exemption is binding on the Department in the absence of non-issuance of corresponding Notification by the Central/State Government to give effect to such decision of the Council? - Held that - Obviously the decision of GST Council is final and binding on the State and Central Government and accordingly, as per the decision of the council, Notification No.51/96-customs dated 23.07.1996 was amended providing for exemption from levy of IGST on import of goods. GST council is a constitutional body to formulate GST policies and to make recommendation to the Union and the State. Accordingly, every notification, circular or orders issued by the Central and State Governments are duly vetted by the GST Council. However issues pertaining to rate of tax and tax concessions/ exemption have to be as per the statutory notifications. Concessional rate of GST/IGST at the 5% vide Notification No-45- CGST(Rate), Dt 14.11.2017 and Notification No-47-lGST(Rate), Dt 14.11.2017 - whether applicable only for supply of specified Indigenous Equipments to the eligible Institutions fulfilling conditions as specified under Column-(4) of the said notification with effect from 15.11.2017? - Held that - It is clarified that Government of India, Ministry of Finance (Department of Revenue) vide the aforesaid notifications exempts in access of 5% (2.5% in case of CGST) the specified goods as listed under column (3) of the said notification to specific institutions subject to the conditions as specified in the corresponding entry in column (4) Of the said notification. The said notifications do not distinguish between imported and indigenous goods. Therefore, concessional rate of IGST at 5%, CGST @ 2.5% and SGST @2.5% vide the aforesaid Notifications is applicable to supply of all the specified goods as mentioned above whether imported or indigenous.
Issues Involved:
1. Applicability of Notification No-51/1996-Customs, Dt. 23.07.1996 read with Notification No-43/2017-Customs, Dt: 30.06.2017 and Minutes of the 14th GST Council Decision Dt: 18th/19th May 2017 for specified imported equipment delivered to eligible institutions. 2. Binding nature of GST Council's decision granting exemption in the absence of corresponding notification by the Central/State Government. 3. Applicability of concessional rate of GST/IGST at 5% vide Notification No-45-CGST(Rate), Dt:14.11.2017 and Notification No-47-IGST(Rate), Dt:14.11.2017 for supply of specified indigenous equipment to eligible institutions. Detailed Analysis: 1. Applicability of Notification No-51/1996-Customs and Notification No-43/2017-Customs: The applicant sought clarification on whether the specified imported equipment delivered to eligible institutions is exempt from IGST under the mentioned notifications. The ruling clarified that Notification No-51/1996-Customs, Dt: 23.07.1996, as amended by Notification No-43/2017-Customs, Dt: 30.06.2017, is applicable to the applicant for the import of specified equipment. However, it does not extend to OEM suppliers of such imported equipment. The ruling emphasized that the exemption applies only to direct imports by eligible institutions and not to domestic supplies by OEM suppliers, who must charge IGST as per the prevailing rates. 2. Binding Nature of GST Council's Decision: The applicant questioned whether the GST Council's decision to grant exemptions is binding on the department without corresponding notifications from the Central/State Government. The ruling stated that while the GST Council's decisions are binding on the government, the authority for advance ruling does not have the mandate to rule on this matter. The authority's scope is limited to the provisions prescribed in sub-section (2) of Section 97 of the OGST/CGST Act, and it cannot adjudicate on the binding nature of the GST Council's decisions. 3. Applicability of Concessional Rate of GST/IGST at 5%: The applicant sought clarification on whether the concessional rate of GST/IGST at 5% applies to specified indigenous equipment supplied to eligible institutions. The ruling confirmed that the concessional rate of GST/IGST at 5% as per Notification No-45-CGST(Rate), Dt:14.11.2017 and Notification No-47-IGST(Rate), Dt:14.11.2017 applies to the specified goods listed in the notifications, regardless of whether they are imported or indigenous. The specified goods include scientific and technical instruments, apparatus, equipment, accessories, parts, consumables, live animals for experimental purposes, computer software, CD-ROMs, recorded magnetic tapes, microfilms, microfiches, and prototypes with a CIF value not exceeding fifty thousand rupees in a financial year. Ruling: 1. The notifications are applicable to the applicant for the import of specified equipment but not to OEM suppliers of imported equipment. 2. The authority does not have the competence to rule on whether the GST Council's decision is binding without corresponding notifications. 3. The concessional rate of GST/IGST at 5% applies to the specified goods, whether imported or indigenous. Appeal: The applicant or the jurisdictional officer may appeal to the Odisha State Appellate Authority for Advance Ruling under Section 100 of the OGST/CGST Act, 2017 within 30 days from the date of receipt of the Advance Ruling.
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