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TMI Blog2021 (3) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CGST Act to rectify errors which apparently have occurred in the appeal order No KAR/AAAR-04/2020-21 passed by us in appeal proceedings on 27th Sept 2020. 3. An appeal was filed under Section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by the Applicant against the advance ruling No. KAR/ADRG 07/2020 dated: 10th March 2020. The said appeal was heard and decided by us vide order KAR/AAAR-04/2020-21 dated 27th Sept 2020. 4. The Applicant vide the present ROM application has submitted that certain errors / mistakes of facts and law have crept into the order dated 27-09-2020 which merit rectification in terms of Section 102 of the CGST Act. The submissions in this regard are as follows: 4.1 The Applicant submits that the lower authority (AAR) had held that their activity would qualify as supply of goods attracting 12% whereas in the impugned order dated 27.9.2020, their activity has been classified as attracting 18%; that the appeal was on the limited point of exemption; that the Appellant had stated in its alternative grounds that if the exemption is not upheld, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to satisfy the 25% criteria' under Entry 3A of the subject notification; that this is factually incorrect and misconstruction of the submissions made by the Appellant; that the Appellant did not make any assertion that it is not in a position to meet the 25% criteria; that the contract revenue in terms of the agreed formula is based on the energy savings which would be billed to TMC; that on this basis the appellant had submitted that its projected revenue of approx. 21 crores, it clearly expects to meet the 25% criteria specified in Entry 3A; that the onus of complying with the 25% criteria has been mistakenly concluded as not having been discharged by the appellant. The conclusion drawn in para 13 is erroneous and is apparent from the face of the record, which calls for rectification; that this is also apparent from the appellant's submission in para 2 of the additional submissions and in the impugned order, that the monthly invoices being raised are only for services and there is no supply of goods being involved in the monthly invoices. The Applicant also submits that to justify the claim of exemption under Entry 3A factual assertion was made in para 3 (h) of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing which was also not been offered." 4.5. The Appellant submits that the impugned order has failed to appreciate the Appellate Advance Ruling in the case of Super Wealth Financial Enterprises Pvt. ltd in 2019 (24) G.S.T.L. 771 (App. A.A.R. - GST) and deviated from the conclusion of the concurrent authority on identical contract which held it to 12%; that the Revenue has accepted this order and not under appeal on this matter; that the Appellant in this case cannot be discriminated on the identical contract with a 18% rate; that this is a gross error of law and amenable to rectification on grounds of law and equity. 4.6. In view of the above errors, they prayed that the impugned order dated 27.9.2020 be rectified in the manner indicated above and accordingly modify the ruling after grant of personal hearing. 5. The appellant was called for a virtual hearing on 7th January 2021 which was conducted on the Webex platform following the guidelines issued by the CBIC vide Instruction F.No 390/Misc/3/2019-JC dated 21st August 2020. The Applicant was represented by Shri. Rishabh Singhvi as authorised representative. 5.1. The Applicant explained the background of the case and pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods and there is no supply of goods during the tenure of the ESCO contract; that when there is no supply of goods during the tenure of the ESCO contract, the 25% criteria stands satisfied. It is submitted that the advance ruling is sought in advance for a transaction which has recently commenced based on estimates of the expected turnover from such contract. Therefore, to make a conclusive statement that criteria of 25% has not been met would render an unjust treatment to the applicant; that the Appellant had submitted that from its projected revenue of approx. 21 crores it clearly expects to meet the 25% criteria specified in Entry 3A; that the said AAAR order denies this exemption without giving any opportunity to the applicant to establish the satisfaction of the criteria under the contract based on actual numbers / values. Mere apprehension (without evidence) that the criteria would not be met cannot be the basis of denial of the exemption entry. It is for this particular reason that there are safeguards in terms of section 104 which makes the advance ruling inapplicable in case of alteration in facts. It is further the applicant has been denied this opportunity at the ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter referred. It has no precedent value. However, even for persons other than applicant, it does have persuasive value. Reliance is also placed on the FAQ on Government Services wherein the scope of "pure services" mentioned in exemption Notification No 12/2017 CT (R) was answered; that without depicting any intelligible differentia from the facts of the case in Super Wealth Financial Services (supra) & FAQ on Government Services coupled with the fact that the revenue has accepted the decision, the applicant cannot be put to a worse of situation than the 12% prescribed in the said Ruling. This is a mistake of fact and law which warrants rectification. 6. The Applicant reiterated the above issues in their additional submissions filed by e-mail on 13th January 2021. The Applicant also submitted vide e-mail dated 3rd February 2021, the copies of the advance ruling passed by the Odisha Advance Ruling Authority in the context of similar contracts in the case of Surya Roshni LED Lighting Projects Ltd and Pinnacles Lighting Project Pvt Ltd. DISCUSSIONS AND FINDINGS 7. We have gone through the ROM application filed by the Applicant and also taken into consideration the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the supply made by the Appellant as well as the rate of tax which is applicable on the said supply. These were the issues which were part of the original application for advance ruling and which were also before us in appeal. We find that the applicant has invoked the principle of "no reformatio in peius" in this ROM application. The expression is a principle of procedure according to which, using the remedy of law should not aggravate the situation of the one who exercises it. The applicant has relied on certain decisions of the Supreme Court and High Court in support of this claim. The question is not whether the appellant should be made to suffer and be deprived of the benefit given to him by the lower authority when the other side has not appealed, rather, should the law be interpreted or applied so as to confer on an appellant a relief to which he is not entitled. 11. In this case, the question on which an advance ruling was sought was whether the supply is a supply of goods or supply of service or a composite supply. Additionally, a ruling was also sought on the rate of tax applicable for the nature of supply. The lower Authority had held that the supply in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case as being a supply of service eligible for exemption as a pure service. This argument was not accepted by the lower Authority who held the supply to be a composite supply with the principal supply being supply of goods and the rate of tax was held as 12% being the rate as applicable to the goods. The applicant was aggrieved by this decision and preferred the appeal before us. Even before us, the Appellant maintained the same line of argument. We have held that the supply is a composite supply with the principal supply being a supply of service. Since the determination of the rate of tax was also a subject matter in appeal before us, we have examined the applicant's eligibility to exemption as pure services under entry 3 of Notf No 12/2017 CT(R), and also their alternate claim for exemption under entry 3A of the said exemption notification. Having found that they are not eligible for either entry under the exemption notification, we have proceeded to pass an order on the applicable rate of tax for the said service which we held to be 18%. Therefore, we hold that there is no error in the impugned order which requires to be rectified. 13. As regards the other alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressly and specifically conferred by law. It has no plenary powers as are available with courts established under the Constitution or Codes of Civil Procedure or Criminal Procedure. This Authority under no circumstance can recall an order passed or issued under the guise of "rectification of mistake". Once this Authority has passed an order under Section 101 of the CGST Act, it becomes functus officio and will not be able to re-open the discussion on the matter which was before us in appeal. This Authority is not vested with the power of review of its own orders. Only obvious and patent mistakes/errors in the order passed by us are permitted to be corrected. The Larger Bench of the Appellate Tribunal (CESTAT) in the case of DinkarKhindria v. CCE, New Delhi, 2000 (118) E.L.T. 77 (T-LB) has held that "rectification of mistake is by-no means an appeal in disguise whereby an order even if it is not valid, is re-heard and re-decided. Rectification of mistake application lies only for patent mistake. Only in a case where the mistake stares one in the face and there could reasonably be no two opinions entertained about it, a case for rectification of mistake could be made out." Larger ..... X X X X Extracts X X X X X X X X Extracts X X X X
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