9911796707
TMI Blog2023 (8) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... et called "The Almond". The restaurant service is provided from the premises located at Haute Street Building, 86A, Topsia Road South, Kolkata while the banquet/catering services is being provided from the premise located at Bengal Eco Intelligent Park. EM-3, EM Block, Sector V, Bidhannagar, Kolkata. The appellant supplies various goods and services from the said premises and pays appropriate GST. 4. Along with such supplies or on a standalone basis, at times, the appellant is also engaged in selling/serving of alcoholic liquor for human consumption to its customers from GRID and no alcoholic liquor for human consumption is being sold or served at the banquet of the appellant. 5. The appellant procures various inputs and input services and pays GST at the time of procurement of such inputs and input services. While restaurant services attracts 5% GST with no ITC, banquet rentals from Almond attracts GST 47 18% with full ITC. Accordingly, the appellant only avails credit to the extent of inputs and input services procured for banquet (Almond) and no ITC is being availed in respect of procurement of any goods or services related to the restaurant (GRID). Therefore, the principal qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act includes non-taxable supply. A conjoint reading of section 2(47) and 2(78) thus denotes clearly that the aforesaid supply would also be treated as 'exempt supply' under the GST Act. 9. WBAAR finally took the issue of reversal of input tax credit in respect of which the applicant has made this application. Sub-section (2) of section 17 of the GST Act read with rule 42 of the GST Rules allows a registered person to utilize input tax credit to the extent of input tax paid on inputs and input services that are used for making taxable supplies including zero-rated supply. Credit of input tax attributable to 'exempt supplies' is to be reversed as per the prescribed formula. As WBAAR held that the activities of selling of alcoholic liquor for human consumption by the applicant would be treated as 'non-taxable supply' and therefore falls under the category of 'exempt supply' under the GST Act, the applicant is required to reverse input tax credit attributable to the exempt supply under sub-section (2) of section 17 of the GST Act read with rule 42 of the GST Rules. Ruling of WBAAR: 10. In view of above, the WBAAR vide Order No. 22/WBAAR/2022-23 dated 09.02.2023 ruled that: Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act cannot exceed the scope as put forth in the Preamble of the Act and the Constitution of India and therefore if sale of alcohol do not qualify as supply under GST, any revenue earned out of sale of alcohol cannot be termed to be either an exempt supply under section 2(47) of the GST Act or non-taxable supply under Section 2(78) of the GST Act. 14. The Appellant submits that Section 17 of the GST Act contemplates reversal of credit in certain situations viz "exempt supplies", and "supply for purposes other than business". In other words, when an assessee, for instance, makes an exempt supply, it is not allowed to utilize credit for making payment of its tax liability, rather it will have to reverse the credit which is akin to demand of tax liability. In a situation where supply of alcohol is treated as a non-taxable supply and thereby an 'exempt supply', the applicant will have to consequently reverse ITC. In effect, the applicant will be discharging GST liability on output supply of alcoholic liquor by way of reversal of ITC. 15. In this context, the Applicant relies upon the maxim Quando aliquidprohibetur fieri, prohibetur ex directo et per obliquum- The maxim denotes the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen to the Department to levy tax on it by including it in the value of another excisable commodity i.e. what could not have been done directly could not be done indirectly either. It is therefore, submitted that the GST Act ought not to be interpreted in manner prejudicial to such settled position, where the applicant has to bear tax on such activity in an indirect manner where it is directly and expressly excluded from the scope of the statute. 17. Fundamentally, credit of taxes incurred on inputs must be denied where inputs have not been used for making taxable supply (i.e., on which output tax is not payable). This is on the basis that where no output tax is payable, there can ever be any cascading effect of taxes, with regard to the taxes incurred on the inputs which have been put to use for making the output supply, and accordingly, concept of input tax credit would be wholly not warranted. This would also include cases where the inputs on which credits are sought to be claimed have no nexus whatsoever with the output taxable supplies or these are used for non-business purposes. 18. In the present case, as set out in the facts of this application, none of the credit availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is clearly the intent and philosophy of GST legislation to clearly exclude the same from the aggregate value of exempt supplies and the total turnover, and if this being so. the turnover arising out of sale of alcoholic liquor will also form a part of the same and hence be excluded. (e) Further reference can be made to several legislations in India, which govern the levy of sales tax on alcohol and the term "goods" are defined under such Acts. It is thus clear that the legislative intent was nowhere to bring alcoholic liquor into the ambit of the statute and therefore the definition of 'goods' under section 2(52) of the GST Act, 2017. cannot include alcoholic liquor for human consumption when such items form a part of Entry 54. List II (State List). Thus, the contention of the Ld. Member in the Advance Ruling that alcoholic liquor constitutes "goods" under the GST Act, 2017 and hence, supply under section 7 of GST Act, 2017 is baseless and therefore, turnover arising out of sale of alcoholic liquor cannot be said to be part of total turnover while computing eligible under Rule 42 of the GST Rules, 2017. (f) It is a settled principle of law that credit of taxes incurred on inp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble supply as per Section 2(78) is completed and cannot be restricted and conditioned invoking Article 366(12A) of Constitution. So from the above discussion it is clear that supply of liquor is non-taxable supply. c) Now we need to understand exempt supply. Section 2(47) of GST Act defines exempt supply as supply of any goods or services or both which attracts nil rale of tax or which may be wholly exempt from tax under Section 6 of IGST Act. and includes non-taxable supply. As supply of liquor is non-taxable supply it also comes under exempt supply. So it comes under the purview of reversal of ITC as per Section 17(2) of WBGST Act, 2017 when such supply is effected along with taxable supply. d) The RTP has given some case reference like Superintendent and Remembrance of Legal Affairs, West Bengal Vs Ors..(1975) 4 SCC 754. Popatlal Shah Vs State of Madras, 1953 SCR 677 to clear that the legislative intent was nowhere to bring alcoholic liquor into the ambit of statute and any reading of the provisions that permits it would only render the provision ultra vires the Constitution. Completely agreeing on this point it should be remembered that in order to understand the legislativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the plain reading of the explanation to the Rule 42(1) of the GST Rules, 2017 as well as Entry 5 I and 54 of List II of seventh schedule, it is clear that for the purpose of computation of exempt turnover as well as total turnover, duties and taxes on alcoholic liquor for human consumption shall be excluded and not the whole value of sales of alcoholic liquor for human consumption. 26. The appellant has claimed that under several legislations in India the term "goods" has been defined for charging of taxes on alcoholic liquor, and so the definition of 'goods' under section 2(52) of the GST Act, 2017, cannot include alcoholic liquor for human consumption. This claim of the appellant is not tenable. Defining "goods" in other Acts, does not bar defining the same in any other Acts including GST Act 2017. Clause 12A of Article 366 of the Constitution which was inserted vide Section 14 of the Constitution (101st Amendment) Act, 2016 also establishes alcoholic liquor for human consumption as goods even though that is in exclusion for the purpose of charging GST. 27. Section 14 of the Constitution (101st Amendment) Act, 2016 is reproduced below:- In article 366 of the Constitution, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
