9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 661 - AAR - GSTClassification of supply - whether supply of goods or supply of services - receipt of compensation - the project of setting of SEZ was terminated due to protest by the People - obligation to refrain from an Act, or to tolerate an Act or a situation - HELD THAT - The applicant is a Government of Goa Undertaking and had entered into an agreement leasing land to parties for setting up Special Economic Zone (SEZ). However, this could not materialize due to protest from the people. As a result, deposit taken from the parties had to be refunded. However, GIDC refused to pay compensation on this deposit. As the original Deed of Lease never mentioned such clause. The parties approached the Supreme Court, who intervened and directed GIDC to compensate them @ 8.25% - In the process the applicant has agreed to do an act of vacating the claim by parties of setting up SEZ units for which GSIDC has paid consideration. Thus the original amount which is paid back along with compensation would clearly qualify as Supply of Services .
Issues:
- Whether an obligation to refrain from an act or to tolerate an act or a situation is treated as a supply of Goods/Services under Schedule II U/s 7 Scope of Supply. Analysis: The application was filed under section 97 of the Goa Goods and Services Tax Act, 2017, seeking an Advance Ruling on whether an obligation to refrain from an act or to tolerate an act or a situation constitutes a supply of Goods/Services. The applicant, a Government of Goa Undertaking, leased land to parties for setting up a Special Economic Zone (SEZ), which could not materialize due to protests. The deposit taken from the parties had to be refunded, leading to a compensation dispute. The Supreme Court intervened, directing the Government to compensate the parties at 8.25%. The ruling focused on interpreting the definition of 'Supply' under section 7 of the CGST Act, which includes various forms of supply of goods or services for consideration in the course or furtherance of business. The analysis delved into the definitions and classifications provided in Schedule II of the GST Act. It highlighted that agreeing to the obligation to refrain from an act, tolerate an act, or a situation falls under the category of 'Supply of Services' as per clause 5(e) of Schedule II. The ruling emphasized that the compensation paid by the Government of Goa Undertaking would qualify as a 'Supply' under the mentioned clause, thereby attracting tax liability. The decision was based on the understanding that the compensation amount, paid in the context of the SEZ dispute, constituted a supply of services according to the provisions of the GST Act. In conclusion, the Authority for Advance Ruling in Goa determined that the compensation paid by the Government of Goa Undertaking in the SEZ dispute scenario qualifies as a 'Supply' under Schedule II of the GST Act, specifically falling under the definition of 'Supply of Services' as per clause 5(e). Therefore, the amount involved in the compensation is subject to tax liability as per the provisions of the Act.
|
