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TMI Blog2021 (12) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that, the applicant is liable to pay tax under Reverse Charge Mechanism. Applicant has cited Notification No. 18/2017- I.T.(Rate) to state that the renting of immovable property services are imported by them and are therefore exempted from IGST. Applicant has cited Section 2 (o) of SEZ Act 2005, which defines the term Import and have come to a conclusion that, receiving goods or services by a SEZ Unit from a SEZ Developer of same SEZ or different SEZ tantamounts to import of goods under the SEZ Act, 2005 and since, based on the Lohani Committee report, GST laws were aligned with the SEZ laws in 2018 the benefit of tax free procurement in terms of Notification No 18/ 2017- I.T. (Rate) dated 05.07.2017 is available to them. The applicant, a SEZ Unit, is situated in an Exclusive Economic Zone and as per the aforesaid definition mentioned above; the term India includes an exclusive economic zone. Therefore in the subject case both, the recipient and supplier of services are situated in India. Hence, Notification No. 18/2017 is not applicable in this case. We agree with the submissions of the jurisdictional officer on this issue. Zero Rated supplies - HELD THAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Notification No. 03/2018 - Central Tax (Rate) dated 25th January 2018? 2. Whether Portescap India Pvt. Ltd. is required to pay tax under reverse charge mechanism on any other services in accordance with Notification No. 13/2017 dated 28th June, 2017 read with Notification No. 03/2018 - Central Tax (Rate) dated 25th January 2018? 3. If, answer to the above point is in the affirmative, then the tax under reverse charge mechanism is required to be paid under which tax head i.e., IGST or CGST and SGST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions of the applicant are as follows:- 2.1 M/s. Portescap India Pvt. Ltd., the Applicant, a SEZ Unit, situated in Maharashtra, is engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Services Supplier of Service Recipient of Service 5A Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017). Central Government, State Government, Union territory or local authority Any person registered under the Central Goods Tax Act, 2017. 2.10 From a perusal of the aforementioned notification and the relevant entry, it is appears that any registered person is liable to pay tax under reverse charge basis on procurement of services of renting of immovable property from Central Government, State Government, Union territory or local authority. 2.11 Applicant has reproduced Section 16 of the 1GST Act as under:- 16. (1) zero rated supply means any of the following supplies of goods or services or both, namely:- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2017 read with Notification No. 03/2018 - C.T. (Rate) dated 25.01.2018 for any or all services mentioned therein. 2.19 Preliminary hearing, for admission of the application, in the matter was held on 11.02.2020. Shri Jai Lokwani and Shri NUM Kiwi both, Authorized Representatives, appeared and requested for admission of the application. Jurisdictional Officer was also present. However the case was adjourned for submission of documents with respect to the subject Rent Agreement. Preliminary hearing was held again on 03.03.2020. Shri Jai Lokwani, Authorized Representative appeared, made oral and written submissions. Jurisdictional Officer was also present. 2.20 Based on the submissions made and hearings conducted, the application made by the applicant was rejected as being non-maintainable as per Section 95 of the CGST Act, 2017 because the applicant had raised questions as a recipient of services. 2.21 Against the Order No. GST/ARA/93/2019-20/B-31, Mumbai, dated 12.03.2020 passed by this authority, the applicant preferred an appeal with the Appellate Authority for Advance Ruling, Maharashtra State. The Appellate Authority for Advance Ruling, Maharashtra State, vide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed supplier. Therefore, SEZ has to pay GST in this case. 3.5 Applicant has stated that Notification No. 18/2017- I.T.(R) will prevail over Notification No.13/2017 dt 28.06.2017 read with Notification No. 03/2018-C. T. (R) dt 25.01.2018. 3.6 A combined reading of sections 2 (11) and 2 (56) of the IGST Act, 2017, makes it clear that, when recipient and supplier both are situated in SEZ, India, there is no question of import of services Hence, Notification No. 18/2017 is not applicable in this case. 3.7 Applicant submitted that reverse charge notification is a general notification and will have to yield to the specific provision made in Sec 16 of IGST Act. In this regard, again it is to be noted that Notification No. 13/2017 dated 28.06.2017 as amended or Notification No. 10/2017- IT. (Rate) dated 28.06.2017, as amended specifically define the conditions, detailing each and every service specifically and further putting on conditions on recipient and suppliers specifically. In fact, it specifically covers Renting of Immovable property , hence the notification cannot be treated as a general notification. 3.8 Further, in respect of Zero Rated supplies, section 16(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (and not DTA). Hence, the arguments made by the applicant are totally null and void. 3.13 Applicant has further submitted that the Default List of Services approved by the Department of Commerce (F.No. D. 12/19/2013-SEZ dated 02.01.2018) for authorized operations specifically includes Renting of Immovable Property within its ambit. 3.14 In the instant case, SEZ developer is providing services to SEZ unit, which is covered under Reverse Charge Mechanism. Hence, the applicability of above notification cannot be determined in the absence of specific mention for Reverse Charge. Furthermore, the above notification is not included within any notification/circular/orders etc. issued by GST Council, and hence, it cannot over-ride CGST Act, 2017/IGST Act, 2017 or notification/circulars etc. issued the GST Council. Consequently, the liability of the applicant to pay under RCM remains intact as proved earlier. 3.15 Applicant has cited Andhra Pradesh and Telangana HC judgement in the case of GMR Aerospace Engineering Limited and another vs Union of India and others (2019(8) TMI 748) in support of the contention that the SEZ Act -Section 51 has overriding effect. 3.16 The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse charge the recipient will become supplier (or deemed supplier), it is just that the all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax. But still, the recipient would remain as recipient alone and supplier would remain as the supplier. Further, section 16(3) of IGST is applicable to the supplier alone. The applicant in the instant case is a recipient and thus, is not covered under the said section, thus there is no option for him to avail LUT. Hence the applicant is liable to pay under Reverse Charge Mechanism. 3.21 In view of the above, Applicant is required to discharge liability under RCM for procurement of renting of immovable property services from SEEPZ SEZ. Notification No. 13/2017 dated 28.06.2017, as amended notifies only specific category of services. Hence, applicability of the said notification cannot be decided in a general/blanket manner for all services. Hence, their second question which is quite general in nature and not specific and cannot be commented upon in absence of further information provided by the applicant. Finally, the applicants falls within the purview of Inter-state Supply leviable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading of the aforementioned points, it is evident that a supply to SEZ will be considered as an inter-state supply and as long as the same supply is used for authorized operations of the SEZ, the same will be zero-rated. As a recipient of supplies made by DTA to SEZ the Applicant is entitled to the option available under Sec 16 for zero-rated supplies to provide a LUT for the supplies received from the SEEPZ SEZ and used for the authorized activities of the SEZ. Hence Applicant is not required to make cash payment under reverse charge but receive supplies on the basis of an LUT at its option. 4.4 Reference to the jurisdictional officer s submissions that brings out the relevant extract from Notifications when recipient and supplier both are situated in SEZ, there is no question of import of services in the present case as both are located within India and thereby Notification No. 18/2017- Integrated Tax (Rate) dated 05.07.2017 is not applicable. 4.5 As per Section 2 (a) of SEZ Act 2005; Import means- (i) ..; or (ii) Receiving goods, or services by a Unit or Developer from another Unit or Developer of the same Special Economic Zone or a different Specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are applicable in terms of Sec 5(3) of the IGST with respect to the applicant, they will be a recipient and supplier at the same time. Therefore as a supplier to the SEZ, the Applicant is entitled to the option available under Sec 16 for zero-rated supplies and to provide a LUT for the supplies received from the SEEPZ SEZ and in turn used for the authorized activities of the SEZ. Hence the Applicant is not required to make cash payment under reverse charge but effect supplies on the basis of an LUT at his option. APPLICANT S SUBMISSIONS DATED 24.08.2021 4.10 Applicant has submitted that Ministry of Finance vide F. No 334/335/2017-TRU dated December 18, 201 7 has issued letter in the context of reverse charge mechanism liability on procurement of service by International Financial Services Centre, SEZ which clarifies that - a Unit in SEZ or SEZ developer can procure such services, where they are required to pay GST under reverse charge, without payment of integrated tax provided the actual recipient i.e., unit in SEZ or SEZ developer, furnishes a Letter of Undertaking in place . 4.11 Additionally, in the said letter, it has been clarified that - The above provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Commissioner of Central Excise, Mumbai-III Versus M/s. Narendrakumar and Co - The respondents under the RTI Act, sought information of the identical products, as is manufactured by them, from various Commissionerates. We find that the various Commissionerates spread all over India, had clearly spelt out, that the products in question are classified under Chapter 09 and in some of the Commissionerates, the assesses had not taken out the Central Excise registration certificate also. We find from the chart produced by the Ld. Counsel, the ingredients of the products in question are identical to the products which are manufactured by other assessee situated in different Commissionerates. The question of uniformity taxation is of prime importance. We find that the Hon ble Supreme Court in the case of Damodar J. Malpani Vs. Collector of Central Excise as reported at [2002 (146) E.L.T 483 (S.C.)] , Therefore, we submit that the authorities should take into consideration the clarification issued by Ministry of Finance vide F. No 334/335/2017-TRU dated December 18, 2017. 05. HEARING 5.1 Online e-hearing in the case was held on 21.01.2021. On the final online e-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal Authority) in accordance with Notification No. 13/2017 dated 28.06.2017 read with Notification No. 03/2018 - C.T. (Rate) dated 25.01.2018. The second question is also similar, the only difference is that, in the second question they have asked whether they are required to pay tax under reverse charge mechanism on procurement of other services from the said Authority under the said Notification. 6.4 The applicant, in their submissions have stated that they procure Rental Services from SEEPZ, SEZ Authority, Mumbai-400096 which is a Local authority having GST1N 27AAALS4995G. Applicant is a SEZ Unit while the SEEPZ SEZ Authority is a SEZ Developer. 6.5 As per Section 7(5) (b) of the IGST Act, 2017, Supply of goods or services or both, to or by a special Economic Zone developer or a Special Economic Zone unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Thus the subject transaction will be in the course of Inter-State trade or commerce and therefore the provisions of the IGST Act, 2017 will be applicable in the subject case. Therefore we look at some of the provisions of the IGST Act, 2017 in the following paras. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17- I.T. (Rate) dated 28.06.2017 was amended by Notification No. 3/2018- l.T.(Rate)-dated 25.01.2018 so as to insert Sr. No 6A after Sr. No. 6. The amended Notification is as under:- Sr.No. Category of Supply of Services Supplier of service Recipient of service 1 2 3 4 6A Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017). Central Government, State Government, Union territory or local authority Any person registered under the Central Goods and Services Tax Act, 2017 read with clause (v) of section 20 of Integrated Goods and Services Tax Act, 2017. 6.6.2 While the government, vide the said Section 5 (3) of the IGST Act, has notified specified categories of goods and services where tax shall be paid by the recipient on reverse charge basis, Notification No. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e report, GST laws were aligned with the SEZ laws in 2018 the benefit of tax free procurement in terms of Notification No 18/ 2017- I.T. (Rate) dated 05.07.2017 is available to them. 6.8 As per Section 2 (11) of the IGST Act, 2017 import of services means the supply of any service, where- (i) the supplier of service is located outside India; (ii) the recipient of service is located in India; and (iii) the place of supply of service is in India; 6.8.1 Further, as per sub-section 2(56) of CGST Act, 2017 India means the territory of India as referred to in Article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters. 6.8.2 The applicant, a SEZ Unit, is situated in an Exclusive Economic Zone and as per the aforesaid definition mentioned above; the term India includes an exclusive economic zone. Therefore in the subject case both, the recipient and supplier of services ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant is recipient and thus it is not covered under section 16(3). Overall, a harmonious construction of section 5 (3) of IGST Act, 2017 read with relevant notifications and section 16 of IGST Act, 2017 clearly stipulates that applicant is liable to pay tax under Reverse Charge mechanism. 6.11 With reference to Applicant s submissions that Section 26 of SEZ Act, 2005 deals with exemption of taxes in respect of services provided to a developer or unit to carry out the authorized operations in SEZ, we find that Section 26 of SEZ Act, 2005 has not yet been aligned with the CGST Act, 2017 and/or IGST Act, 2017 and the list of taxes under Section 26 of SEZ Act, 2005 for exemption, does not cover IGST/CGST/SGST. There is absence of any mention in the said section 26, to provide for IGST/CGST/SGAT/ exemptions. 6.12 The applicant has cited a couple of case laws/judicial pronouncements in support of their contention that they are not liable to pay tax under reverse charge mechanism. We find that the case laws referred by the applicant pertains to service tax matters and therefore will not be applicable in the subject case. 6.13 Alternatively, the Applicant has submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18, 2017 has issued letter in the context of reverse charge mechanism liability on procurement of service by International Financial Services Centre, SEZ which clarifies that - a Unit in SEZ or SEZ developer can procure such services, where they are required to pay GST under reverse charge, without payment of integrated tax provided the actual recipient i.e., unit in SEZ or SEZ developer, furnishes a Letter of Undertaking in place . The applicant filed an RTI application to find out details pertaining to the aforesaid letter dated 18.12.2017 and the concerned RTI Authority has stated that the said communication F. No. 334/335/2017-TRU dated December 18, 2017 is not circular perse and was issued to the recipient on request for clarification of a certain issue. 6.17 From the documents submitted by the applicant, we find that the said clarification dated 18.12.2017 was given to M/s Gujarat International Finance Tee-City Co. Ltd.. Gujarat, in respect of clarification sought on whether input services such as legal service, sponsorship service, etc., received by a unit in International Financial Services Centre, SEZ for procurement of input services from a unit in Domestic Tariff Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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