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TMI Blog2023 (7) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... 302013 Rajasthan (hereinafter referred to as "applicant"). Applicant is registered and involve in manufacturing of MS ingots. The issue raised by applicant is not fit to pronounce advance ruling but it falls under the ambit of the Section 97(2) (c), (d) & (e) given as under: (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both A Submission of The Applicant: (in brief) The applicant is a manufacturer of MS ingots which falls under HSN 72061090 B Interpretation and understanding of applicant on question rose (in Brief) The applicant submitted his interpretation which is under- 1. ITC should be eligible on the GST paid on the advertisement expenses mentioned in the question as these expenses are part and parcel of the business. Section 16 (1) of the CGST Act, 2017 specifies that every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d up and maintain public image of the company. The company keeps certain yearly budget for such advertisement expenses. 2. The directors of the company provide personal bank guarantee for sanctioning loan/credit limits to the company. Is there any mandatory minimum percentage of the value of loan that should be charged by the directors from the company in lieu of giving personal bank guarantee for sanctioning loan/credit limits to the company or it is the discretion of the directors to charge the consideration as per their choice, if the recipient is eligible for full input tax credit. Here in the case, whether the consideration charged by the director shall be the value of supply of services? 3. As per sub-section (6) of section 18 "in case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C) Further first proviso of sub-section (2) of section 98 specifics as "Provided that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act". The above-referred proviso specifically confines the scope of advance ruling as when question raised in the advance ruling application is pending or decided in any proceeding, the authority cannot accept the application; simultaneously, it signifies that when the question raised is neither pending nor decided in any proceeding in the case of the applicant: for the activities being undertaken or proposed to be undertaken, the advance ruling can be given. 3) That the applicant seeks the advance ruling for the activities being undertaken or proposed to be undertaken by it and the application is not submitted for any past activities, further, the question raised in the application is not already pending or decided in any proceedings in the case of the applicant under any of the provisions of this Act; therefore, your good self may appreciate that the present application is fit to issue rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Central Excise V/s M/s Edelweiss Financial Services Limited, 2023 Taxscan (SC) 142., E. COMMENTS OF THE JURISDICTIONAL OFFICER The Jurisdictional Deputy Commissioner State Tax, Circle-A, Zone-4, Jaipur has given his comments vide his letter 1397 dated 15.11.2022 which is as under- QUESTION AND ANSWER FOR WHICH THE PRESENT AAR HAS BENN FILED 1. Whether ITC would be eligible on the GST paid on the advertisement expenses like calendars, t-shirts, pens, open bags etc. printed with company name/logo and distributed in business meetings, workshops for advertisement, business promotion, marketing and to build up and maintain public image of the company. The company keeps certain yearly budget for such advertisement expenses. This question is permissible as per Section 97 (2)(d) of the CGST Act, 2017. Ans. Yes, As per section 16 and 17 of CGST/RGAT Act 2017 2. The directors of the company provides personal bank guarantee for sanctioning loan/credit limits to the company. Is there any mandatory minimum percentage of the value of loan that should be charged by the directors from the company in lieu of giving personal bank guarantee for sanctioning loan/credit limits to the company o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as well as Taxpayer are related persons. Hence, as per Schedule-I, such service/transaction is taxable service even without consideration. Further, A bank guarantee refers to a commercial or financial instrument that is provided by a bank in case the actual customer fails to meet his/her obligations. The bank will pay on behalf of the guarantee assures that money will be repaid if the party does not complete a particular project or operation entirely, According to financial guarantee agreement when there is delay in completion of the project, the bank will make the payment." 3. Q-As per sub-section (6) of section 18 "in case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, moulds and Dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanctioning loan/credit limits to the company or it is the discretion of the directors to charge the consideration as per their choice, if the recipient is eligible for full input tax credit. Here in the case, whether the consideration charged by the director shall be the value of supply of services? (iii) As per sub-section (6) of section 18 "in case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, molds and Dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15. Whereas, the applicant uses rolling mill metal rolls in production process of TMT bars, whether, the applicant is permitted under the proviso of sub-section (6) of the section 15 to pay the tax on the transaction value of such goods determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken, by the applicant and "Authority" means the Authority for Advance Ruling, constituted under Section 96, Thus Section 95 allows this authority only to decide on matters or on questions in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant i.e. in the subject case this application can be entertained only if the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant itself. In this case, we find that the Applicant already taken place the supply in question, GST is being paid since implementation of GST law and monthly GST returns also being filed. Thus Section 95 allows this authority only to decide on matters or on questions in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant i.e. in the subject case this application can be entertained only if the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant itself. The applicant is not supplier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) & 17 (5) (h) on question no one, Section 15 (1) & Section 15(5) on question no 2, and Section 18 (6) on question no 3 are very much clear and there is no ambiguity in these section. We observe that the applicant is well aware about the sections and discharging his tax liability in accordance to them. (v) We observe that applicant motto is to find out whether the mechanism opted by him for payment of GST on said service is right or wrong, which is against the spirit of advance ruling. (vi) We observe as the ruling given by the AAR is binding on the applicant and the Government authorities, applicant who is registered since beginning in GST and a manufacturer, sought ruling after around 611 months. Applicant has not submitted the practice being followed by them on the question raised before AAR. (vii) From the above definition, it is very much clear that the scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken on the matters which are not sorted out. In the instant case, the application seeking advance ruling was filed on 15.10.2022 before the RAAR with respect to supplies already being under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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