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TMI Blog2019 (3) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... , AND SHRI B. V. BORHADE, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as "the CGST Act and MGST Act"] by TELSTRA TELECOMMUNICATION PVT.LTD., the applicant, seeking an advance ruling in respect of the following questions :- a) Whether in the facts and circumstances in the case of supply involving leased circuit services where in pan India contract for supply of such services is entered into without any State wise break up for the supply it would be in order for the supplier of such services to charge Integrated Tax (under IGST Act) pursuant to the Explanation to Section which provides that place of supply, where the leased circuit is installed in more than one State and the value for service cannot be determined in absence of a contract, shall be on such other basis as prescribed i.e. the same would be the location of recipient of service. b) In a case where the location of the service provider on pan Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular State /zone of the country. Further the Applicant enters into a contract/ agreement with a third party vendor who is providing leased circuit services across the country, such as Tata Teleservices, Bharti Airtel etc. to provide the last mile connectivity service. A flow diagram is attached as Annexure A to explain how the service is rendered to the customer via POP of the Applicant located in a State to the location of customer. 3. Interpretation of Law: At the outset, the Applicant would like to submit that it has Obtained registration in terms of Section 22 (2) of the CGST Act. Consequently, the Applicant shall qualify as a 'registered person' in terms of the CGST Act and the provisions of the CGST Act shall apply accordingly. The interpretation of applicable law with regard to the internet connectivity services provided by the Applicant is as follows: 3.1 Registration requirement: 3.1.1 The Applicant would like to submit that in terms of Section 22 of the CGST Act, a supplier is liable to be registered in the State from where he makes a taxable supply. In other words, the supplier is required to register in all the States which qualify as the location ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f supplier, which in the case of company would be the place where the said Company is incorporated or registered. 3.3 Place of Supply: 3.3.1 It is imperative to determine the place of supply in order to charge the correct tax i.e. Central Tax and State Tax in case of intra-state supply or Integrated Tax in case of inter-state supply. 3.3.2 Place of supply in case of telecommunications services including data transfer, broadcasting, cable and D2H television services has been provided under Section 12(11) of Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act'). The same is reproduced below: Section 12(11) of Integrated Tax Act, 2017 (a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, be the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services; (b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services; (c) in cases where mobile connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f mobile connection services for telecommunication, internet service and L)2H television services on pre-paid basis. 3.3.4 In the clauses referred above, internet connectivity service provided by Applicant is not covered and therefore the place of supply in case of internet connectivity service shall be determined in accordance with residual clause (d) of the said section. Clause (d) of Section 12(11) states that the place of supply in other cases i.e. in case the place of supply for telecom services cannot be determined in accordance with above clauses (clause a, b and c), shall be the address of recipient as on the records of supplier. Therefore, the place of supply in case of internet connectivity service would be determined on the basis of address of the recipient as per the records of the supplier. In case address of recipient is of a State other than location of supplier, it would be considered as inter-state supply, if it is in the same State then it will be considered as intra-state supply. Scenario 1: Applicant's location is Mumbai (Maharashtra), address on records of recipient is say Pune (Maharashtra), Central Tax and State Tax of Maharashtra shall be charged on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no mechanism to ascertain the value of a particular service, service tax cannot not be levied on the same. The principle which can be derived from this case is that if there is no procedure prescribed under a statue, the same would be considered as outside the levy of that particular statute. Hence, in case where place of supply cannot be determined as the statute has not prescribed a mechanism (explanation to Section 12 (11)(d)) the levy of tax whether CGST and SGST or IGST cannot be determined and therefore the particular service could be considered as outside the levy of tax. Alternatively a view can also be taken that in case there is no prescribed mechanism in law then the residuary rule can be resorted to. 3.3.5.4 Hence considering the alternative view, the residual clause can be referred to determine the place of supply in cases where vendor have leased circuit installed in multiple states and there is no provision in the Agreement or Contract to determine the value of service attributable to each state, the place of supply as per residual clause (Section 12 (2)) shall be the location of registered person. (Scenario 3) 3.4. Input tax credit 3.4.1 The Applicant has le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g leased circuit service is based in Haryana. In case the vendor determines place of supply in terms of Explanation to Section 12(11)(d), he may charge IGST (i.e. location of registered person which in the current scenario would be Maharashtra). Hence, the ITC of tax charged by vendor can be availed and utilized by Applicant. Legend: Last Mile - Service has been subscribed from Airtel/Tata to extend the physical connectivity from Service Provider POP to Customer Premises Router - Router is a networking device that forwards data packets between computer networks. A router is connected to two or more data lines from different networks and extended to customer LAN for using internet. Cisco & Juniper are major manufactures of network devices especially Routers, Switches & Security appliances. Additional submission of applicant on 24.12.2018 Submission on maintainability of Advance ruling application: - 1. As per Section 97(2) of Central Goods and Services Tax Act, 2017, following are the question on which advance ruling can be sought: a) classification of any goods or services or both; b) applicability of a notification issued under the provisions of this Act; c) determina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is to be gathered from the language used. It is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The court cannot add words to a statute or read words into it which are not there. The court cannot, on an assumption that there is a defect or an omission in the words used by the legislature, correct or make up assumed deficiency, when the words are clear and unambiguous. Courts have to decide what the law is and not what it should be. The courts adopt a construction which will carry out the obvious intention of the legislature but cannot set at naught legislative judgment because such course would be subversive of constitutional harmony" 5. Further, in case of B. Premanand v. Mohan Koikal (2011) 4 SCC 266 = 2011 (3) TMI 1590 - SUPREME COURT the Supreme Court observed that while interpreting a statute the basic principle of literal rule of interpretation has to be followed. The relevant extract of the decision is as follows: "9. It may be mentioned in this connection that the first and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is empowered to amend, substitute or delete, so as to change the structure and contents. A Court as an interpreter cannot alter or amend the law. It can only interpret the provision, to make it meaningful and workable so as to achieve the legislative object, when there is a vagueness, ambiguity or absurdity. The purpose of interpretation is not to make a provision what the Judge thinks it should be, but to make it what the Legislature intended it to be." 9. Thus, if the interpretation as drawn by the authorities is accepted, it would be a case of adding or deleting something from the provision, which is not permissible. Position under erstwhile regime: 10. Under service tax regime, an application for advance ruling can only made by certain specified applicants as defined under Section 96A(b) of the Finance Act, 1994. Further, the application for advance ruling can be made in relation to following questions: (a) classification of any service as a taxable service under Chapter V; (b) the valuation of taxable services for charging service tax; (c) the principles to be adopted for the purposes of determination of value of the taxable service under the provisions of Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in light of the Notification No. 13/2017- Central Tax (Rate), the applicant would be liable to pay tax in respect of the services received from Municipal authorities and therefore the question in the said case for which advance ruling is sought shall be entertained. In the said ruling, authority of advance ruling has evaluated who can make an advance ruling application. However, in the said ruling, it is nowhere stated that the recipient cannot seek an advance ruling. (d) Rajasthan Authority for Advance Ruling in the case of M/s. Umax Packaging (2018-TIOL- 321- AAR-GST) = 2018 (12) TMI 1089 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN, has held that in case of 'Bill-to ship to' model the supplier can charge IGST from the recipient (bill to party) against which the recipient is eligible to claim Input tax credit. 14. In view of the above rulings pronounced by advance ruling authorities, Applicant wish to submit that an applicant being the recipient of goods or services can seek an advance ruling under question (e) of Section 97(2) of CGST Act, 2017 i.e. determination of liability to pay tax on goods or services or both. 15. Therefore, Applicant humbly request the honorable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be referred and is as follows (a) "advance ruling" means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant ; Thus it is crystal clear from plain reading Of above section that only supplier can apply for advance ruling in relation to the Supply of goods or services or both being undertaken or proposed to be undertaken by applicant. Hence recipient cannot apply for advance being devoid of legal provision. Hence proposition (b) not maintainable before AAR Alternative Submission is as follows In respect of question A the levy and collection is governed by section 5 of IGST Act. The section 12 provides for place of supply of services were location of supplier and recipient is in India Section 12 of IGST Act, 12. Place of supply of services where location of supplier and recipient is in India. (1) The provisions of this section shall apply to determine the place of supplier of services where the location of supplier of services and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person, shall be the location of such person; 2. a person other than a registered person, shall be the location where the services are actually performed. (6) The place of supply of services provided by way of admission to a cultural, artistic, sporting, scientific, educational, entertainment event or amusement park or any other place and services ancillary thereto, shall be the place where the event is actually held or where the park or such other place is located. (7) The place of supply of services provided by way of, -- 1. Organisation of a cultural, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or 2. services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events, (i) to a registered person, shall be the location of such person; (ii) to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient: Explanation. Where the event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means, moms (i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or (ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold; 4. in other cases, be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services: Provided that where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services: Provided further that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of supply of such services. Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the place of supply shall be the location of the supplier of services. (3) The place of supply of the following services shall be the location where the services are actually performed, namely: 1. services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services: Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; 2. Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India Act, 1934; 3. "financial institution" shall have the same in eaning as assigned to it in clause (c) of section 45 of the Reserve Bank of India Act, 1934; 4. "non-banking financial company" means, (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or (iii) such other non-banking institution or class of such institutions, as the Reserve Bank of Inola hay with the previous approval of the Central Government and by notification in the Official Gazettte, specify (9) The place of supply of services of transportation of goods, other than by way of mail or to be the place of destination of such goods, (10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey (11) The place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e object of the Act it can help or assist the court in interpreting the true purport and intendment of the enactment; and e) It cannot however take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hinderance in the interpretation of the same. Thus explanation to the section of enactment does not acts as charging or levy section it only clarifies meaning of enactment. 2. In case of leased circuit is installed in more than one State and the value for service cannot be determined in absence of a contract the reliance can be made on following judgment. The interpretation of taxing statue is to be made harmoniously so as to make statue workable. The reliance can be made on following judgment. Machinery provisions:- Provisions for charge of interest on delayed payment have been added for tightening up the machinery for collection of tax and that as a deterrent measure so that the dealers may not evade or delay the payment of due tax. These are necessarily machinery provisions. Therefore, if more than one construction of such a provision is possible then that construction which preserves its workabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of GST since the said services are use in the course of furtherance of business namely provision of last mile connectivity services to the recipient of services. 04. HEARING The case was taken up for preliminary hearing on 11.12.2018 with respect to admission or rejection of the application when Sh. Harish Bindumadhavan, Advocate along with Sh. Sagar Shah, Manager, and Sh. Aakash Sarda, C.A. appeared and made oral submissions for admission of their ARA application. They were informed that their question would have to be reframed to enable their application to be admitted which they agreed to. They have requested for 15 days time to reframe their questions. Jurisdictional Officer Sh. Rajesh Jadhav, Dy. Commissioner of S.T.(E-638), L. T.U., Unit-4, Mumbai appeared and made written submissions and also raised no objection for giving the applicant time to reframe their questions. The applicant has submitted reframed questions on 27.122018. Preliminary hearing for admission or rejection as requested by the applicant earlier as above is again held on 22.01.2019 wherein Sh. Harish Bindumadhavan, Advocate along with Sh. Sagar Shah, Manager, and Sh. Aakash Sarda , C.A. appeared and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant, where the leased circuit is installed in more than one State or Union territory and the contract or agreement doesn't specifically provide the proportion of service provided in each state?" 2. Applicant also wishes to seek advance ruling in terms of Section 97(2)(d) of CGST Act 2017, "If the answer to the above question is affirmative, can the Applicant avail Input Tax Credit of the tax charged by the supplier of leased circuit facility?" We find from the statement of facts pertaining to first question "Whether the supplier is to charge Integrated Tax on supply of leased circuit facility to the Applicant, where the leased circuit is installed in more than one State or Union territory and the contract or agreement dosen't specifically provide the proportion of service provided in each state?" From the perusal of transaction as discussed above in details in their contention, it is clear that applicant is not supplier of services . He is recipient of services from their supplier who leased circuit facility to the applicant and as such by virtue of section 95 is not an applicant who an obtain advance ruling unless the recipient is paying the taxes under reverse c ..... 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