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TMI Blog2020 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... y of GST rate on security forfeited by Uttarakhand Forest Corporation - HELD THAT:- Section 7(1)(a) of the Act is relevant to the issue in hand which provides that it covers all forms of supply of goods or services made for a consideration by a person in the course or furtherance of business. In this context we observe that supply of goods viz. wood, in consideration of payment is one set of mutual transactions and forfeiture of an amount for not depositing the balance amount for the wood purchased is another set of mutual transactions. Thus indeed there is supply of goods as well as supply of services also. Therefore it satisfies the conditions of Section 7(1)(a) of the Act. Now comes the test in terms of Schedule II appended to the Act in respect of forfeited amount - the agreement for tolerating an act or situation which is unable to deposit balance amount for the wood purchased is a provision of service in terms of Entry No. 5(e) of Schedule II appended to the Act which provides that agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - thus the forfeited amount is covered under Service Code (Tariff) 9997 94 as agreeing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Service Code (Tariff) 9997 94 as agreeing to tolerate an act and leviable to GST @ 18%. - Ruling No. 01/2019-20, Application No. 19 - - - Dated:- 10-6-2019 - Shri Vipin Chandra and Amit Gupta, Members Shri Rakesh Gupta, CA, for the Assessee ORDER This is an application under sub-section (1) of Section 97 of the CGST/SGST Act, 2017 (hereinafter referred to as Act) and the rules made thereunder filed by M/s. Parvatiya Udyog (P) Ltd., Kashipur Road, Ramnagar, Nainital, Uttarakhand seeking an advance ruling on following issues : (a) applicability of GST rate and HSN/classification of wood scrap. (b) applicability of GST rate on security forfeited by Uttarakhand Forest Corporation. (c) refund of GST on supply turned into bad debts and supply lost/destroyed in transit. (d) applicability of GST on mandi fees on local purchase of wood and whether the same is covered under Reverse Charge Mechanism (hereinafter referred to as RCM) in terms of Section 9(3) of the Act. Whether exemption can be claimed if amount of mandi fee is below ₹ 5,000/- in individual consignment. (e) applicability of GST on penalty. 2. Advance Ruling under GST mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) in the manufacturing of plywood, they use wood (poplar and eucalyptus) for producing core veneer which is an intermediate product for them. Core veneer is produced by putting wood log between the peeling machines. Peeling machines peel 80% to 90% wood log and rest of the wood is sold by them as wood scrap. This wood scrap is sold to paper industries fog pulping and various other customers which is used in cricket wicket manufacturing, decorative fencing and firewood. Wood scrap should be classified as wood waste and scrap under GST Tariff 4401. (ii) they purchase wood from Uttarakhand Forest Corporation in auction. They deposit certain amount at the time of auction and pay the balance after approval. Sometimes they are unable to deposit balance amount for the wood purchased in auction, then Uttarakhand Forest Corporation forfeit the amount deposited by them and this forfeited amount is no more supply in terms of amendment made in Section 7 of the Act retrospectively by the Amendment Act, 2018 and will not attract GST. (iii) mandi fee is not a supply therefore no GST is payable on the same. (iv) Penalty recoverable for damage of material by labour is not chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (B.2) Section 7 of the Act was further amended on 29-8-2018 by the Central Goods and Service Tax (Amendment) Act, 2018. The relevant portion of the same is reproduced as under : (a) in sub-section (1), - (i) in clause (b), after the words or furtherance of business; , the word and shall be inserted and shall always be deemed to have been inserted; (ii) in clause (c), after the words a consideration , the word and shall be omitted and shall always be deemed to have been omitted; (iii) clause (d) shall be omitted and shall always be deemed to have been omitted; (b) after sub-section (1), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) and thus no ruling can be given on this issue. (D) As per the provisions of Section 15(2)(a) of the CGST/SGST Act, 2017, value of supply also includes any fee levied under any law other than CGST/SGST/UTGST Act. Therefore, fee levied under Agricultural Produce Marketing (Development and Regulation) Act, 2011 (Uttarakhand Act No. 9 of 2011) will become the part of the value of supply and will attract GST rate specified for a particular goods under the relevant chapter/ Heading/ sub-heading irrespective of the fact that whether GST is paid on forward charge basis or reverse charge basis. It is relevant to mention that under Section 9(3) of CGST/SGST Act, 2017, wood has not been notified as such goods supplied by unregistered person/farmer/Agriculturist, in respect of which GST shall be paid on reverse charge basis by the recipient. Further under Section 9(4) of CGST/SGST Act, 2017, which came into force from 1st of February 2019, wood has not been specified as a -category of goods received from an unregistered supplier on which the tax is to be paid on the reverse charge basis. Moreover prior to 1st February, 2019, in pursuance of the provision to tax the supply of taxab ..... 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