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2020 (1) TMI 1127 - AAAR - GSTClassification of supply - supply of goods or supply of services - supply of food items at GMUs (General Minor Units) at Railway Platforms which include only counter sale of packed food items, drinks and cooked item - input tax credit - benefit of Serial No. 7(ia) of Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 - Input Tax Credit (ITC) of GST paid on license fees to Indian Railway or IRCTC - consequences for wrong availing of ITC - challenge to AAR decision. HELD THAT - After addition of Entry No. 7(ia) in the Notification No. 11/2017, the issue, regarding classification of the supply of goods, by the Indian Railways, Indian Railways Catering and Tourism Corporation Ltd., or their licensees, whether in trains or at platforms, has attained finality that the same would be classified as Supply of Service - it is not the duty of the Authority either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The Authority cannot add words to a statute or read words into it which are not there. Hence, it is the bounden duty and obligation to interpret the statute as it is. It is contrary to all rules of construction to read words into a statute which the legislature in its wisdom has deliberately not incorporated. Thus we are in unison with the Advance Ruling Authority that the activity provided by the appellant correctly falls under Entry No. 7(ia) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (as amended). The contention of the appellant that they involved in the Supply of goods is not tenable in the light of letter dated 15-4-2019 and License Agreement entered into between Divisional Railway Manager (Commercial), NCR, Agra and the appellant, which clearly spells the nature of work provided by the appellant as Supply of Catering Service . Accordingly, the N/N. 11/2017-Central Tax (Rate), dated 28-6-2017(as amended) is squarely applicable on them. The appellant has quoted case laws prior to GST era, whereas with the introduction of GST, the ambiguity in taxation has been removed to a greater extent. We observe that after introduction of Sl. No. 7(ia) in the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 '(as amended) the Law is very much clear that the GST rate on supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms, will be 5% without ITC. The order passed by the Authority for Advance Ruling is just and proper and no interference is required in the said ruling - appeal disposed off.
Issues Involved
1. Classification of supply of food items at General Minor Units (GMUs) at railway platforms as "Sale of Goods" or "Sale of Services". 2. Applicable tax rate and eligibility for Input Tax Credit (ITC) for the supply of food items at GMUs. 3. Consequences of wrong availing of ITC. Detailed Analysis Issue 1: Classification of Supply of Food Items at GMUs The primary issue was whether the supply of food items at GMUs at railway platforms should be treated as "Sale of Goods" or "Sale of Services". The appellant argued that their activity should be considered as "Supply of Goods" because they only engage in counter sales of packed food items, drinks, and cooked items without providing additional services like waiters, table service, or sitting arrangements. However, the License Agreement between the appellant and the Divisional Railway Manager (Commercial), NCR, Agra, explicitly describes the activity as "operate, manage and supply catering service on the GMU". The agreement mandates that the appellant can only sell items approved by the Railways and allows Railway inspections. Additionally, vendors are allowed to take goods to customers away from their stalls, indicating a service component. The appellate authority concluded that the activity falls under "Supply of Catering Service" as per the agreement and Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, as amended by Notification No. 13/2018-Central Tax (Rate), dated 26th July 2018. This notification classifies the supply of food items by Indian Railways or their licensees as "Supply of Service". Issue 2: Applicable Tax Rate and ITC Eligibility The appellant contended that if the supply is classified as a service, it should be taxed at 5% without ITC under Serial No. 7(ia) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. They also argued that they should be eligible to claim ITC on GST paid on license fees to Indian Railways or IRCTC. The appellate authority upheld the Advance Ruling Authority's decision that the entire revenue should be taxed at 5% without ITC under Serial No. 7(ia) of Notification No. 11/2017-Central Tax (Rate). Consequently, the appellant cannot claim ITC on GST paid on license fees. Issue 3: Consequences of Wrong Availing of ITC The Advance Ruling Authority had ruled that the question of consequences for wrong availing of ITC is out of the purview of their mandate under Section 95(a) of the CGST Act. This ruling was not contested further in the appellate decision. Case Law References The appellant cited several case laws to support their claim, including: - Kundan Misthan Bhandar (2019) 105 taxmann.com 364 (AAAR-Uttarakhand) - Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi {AIR 1980 SC 674} - State of Himachal Pradesh v. Associated Hotels of India {1972 2 SCR 937} - Govind Ram and Ors. v. State of Rajasthan {AIR 1982 Raj 265} - Sangu Chakra Hotels Private Limited v. State of Tamil Nadu {1985 60 STC 125} The appellate authority found that these cases were either not applicable due to different facts and circumstances or were decided under the pre-GST regime, making them irrelevant to the current GST framework. Conclusion The appellate authority upheld the Advance Ruling Order No. 32, dated 30-6-2019, confirming that the supply of food items at GMUs is classified as "Supply of Services" and should be taxed at 5% without ITC under Serial No. 7(ia) of Notification No. 11/2017-Central Tax (Rate). The appeal was disposed of accordingly.
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