IMPORTANT CASE LAWS
Goods and Services Tax
a. The Applicant is a co-operative housing society which collects charges from its members of societies for providing services. The Applicant appointed M/s Unique Rehab Private Limited(Unique Rehab) for carrying out major repairs, renovations and rehabilitation for society, who in turn charges GST for carrying out works contract services.
The Applicant sought advance ruling whether the Applicant is eligible to claim Input Tax Credit (ITC) on repairs and maintenance work carried out by Unique Rehab?
The Hon'ble Authority of Advance Ruling (AAR)held that the Applicant is collective body of persons who stays in a residential society and such collective body supplies certain services toits members such as collecting statutory dues to be remitted to statutory authorities or maintenance of the building, etc. In terms of Section 2(17)(e) of the Central Goods and Services Tax Act, 2017 (the CGST Act), provision by a club, association, society, or any such body for a subscription or any other consideration of facilities or benefits to its members is deemed to be a 'business'. Accordingly, it has been held that the Applicant is making provision of facilities/benefits to its members and not provided works contract service to its members. Hence, the Applicant is not eligible to avail ITC on services received from Unique Rehab interms of Section 17(5) (c) of the CGST Act.
Takeaway: ITC not available on works contract services provided to Co-operative Housing Society
[M/s Mahavir Nagar Shiv Srushti Co-operative Housing Society Limited, Order No. GST-ARA-19/2021-22/B-94 dated November 10, 2021(Maharashtra)]
b. The Petitioner filed writ petition (WP) challenging Show Cause Notice (SCN) issued in relation to availment of inadmissible transitional credit amounting to INR 3,83,43,693/- including credit of Education Cess (EC), Secondary and Higher Education Cess (SHEC) and personal account amount (PLA) in Form Tran-1.
In terms of amended explanation 3 to Section 140of the CGST Act, Cess is not included in 'eligible duties and taxes' for claiming transitional credit inTran-1. Thus, the Petitioner argued that that without the amendments made in Explanations 1and 2 to Section 140 of the CGST Act being into force, the department merely on the basis of Explanation 3 thereto, as introduced and brought into force, could not have issued the SCN and therefore, the Petitioner is under no obligation to respond thereto.
The Hon'ble High Court held that that mere introduction of Explanation 3 to Section 140 of the CGST Act and making it operational w.e.f. February 1, 2019 would not provide power to the department to issue SCN on the ground that EC, SHEC and PLA is not included in 'eligible duties' as per explanation 1 and 2 to Section 140 of the CGST Act. The department while issuing the SCN overlooked that parts of amendments in Explanations 1 and 2 to Section 140 of the CGST Act are yet to be brought into force and thus, reference thereof is mindless which results into issuance of a SCN without due regard to the provisions of law as well as facts requiring existence or non-existence of a material fact for assumption of jurisdiction.
Takeaway: SCN issued with error in assumption of jurisdiction is ultravires
[M/s Godrej and Boyce Mfg Company Limited, WP No. 3226 of 2019, Order dated October 29, 2021(Bombay High Court)]
c. The Applicant is engaged in purchase and sale of second-hand cars. The Applicant sought advance ruling whether ITC on indirect expenses such as rent, commission, professional fees, telephone etc. incurred for the purpose of business can be claimed by the Applicant?
The Hon'ble AAR observed that the Applicant has availed benefit under Notification No.8/2018-CT(R) dated January 25, 2018(Notification No. 8/2018) and paid GST at a concessional rate. In terms of Notification No.8/2018, concessional rate of GST would not be applicable in case supplier of goods has availed ITC on goods or services for selling old motor vehicles. Accordingly, since the Applicant has paid GST at concessional rate, ITC cannot be availed.
Takeaway: ITC not available on secondhand cars in case opted for concessional rate of Tax
[Deccan Wheels, Order No. GST-ARA-103/2019-20/B-81 dated October 25, 2021 (Maharashtra AAR)]
d. The Applicant is an importer and reseller of chemicals, having place of business in the State of Maharashtra and warehouses in the State of Gujarat and Kerala and therefore, obtained GST registration in all three states. The Applicant also received orders for chemicals from customers located in States where Applicant is not registered under GST and pursuant to such orders, the Applicant placed import orders for required quantity of goods from foreign exporter and accordingly cleared such goods by filing bill of entries in other states on payment of Customs Duty along with Integrated Goods and Services Tax (IGST) under Maharashtra GSTIN. Thereafter, the Applicant directly sold goods from port to customers and issued invoices charging applicable IGST under Maharashtra GSTIN.
The Applicant sought advance ruling whether Applicant is required to obtain registration in the importing States, if goods are imported, sold and delivered directly from Container Freight Station (CFS) / Direct Port Delivery (DPD) being treated as the Customs Boundaries?
The Hon'ble AAR held that supply of goods imported into India are to be treated as supply of goods in the course of inter-State trade or commerce in terms of Section 5(1) of the Integrated Goods and Services Tax Act, 2017 (the IGST Act). Further, place of supply would be the 'location of the importer' in terms of Section 11(a)of the IGST Act. In the present case, Applicant(importer) is registered in Mumbai, Maharashtra and would be selling the goods before clearing the same for home consumption from the port of import to its clients, therefore, place of supply would be the place from where the applicant makes a taxable supply of goods i.e. Maharashtra. Hence, the Applicant can supply the goods on the basis of invoices issued by the Maharashtra Office and thus, there is no need not take separate registration in the State of Import.
Takeaway: Separate GST registration not required at place of import
[Kamdhenu Agrochem Industries LLP, Order No.GST-ARA-112/2019-20/B-87 dated November 2,2021 (Maharashtra)]
e. The Petitioner is a sole-proprietorship concern and engaged in the business of purchase and sale of Iron and Steel Goods. The Petitioner was issued SCN to show cause why its registration should not be cancelled without any providing reasons. The Petitioner submitted its reply, however, the department passed an order cancelling GST registration of the Petitioner on ground that neither place of business nor any books of accounts were found at time of survey and subsequently, landlord of premises has informed survey team that no one came there to start a business and no business activity takes place there. Further, it has been alleged that the Petitioner has purchased goods worth INR29,50,000/- from non-existing dealers and availed bogus ITC with malafide intention. Subsequently, the Petitioner filed appeal against the order passed by the department before the Commissioner (Appeals), which was disallowed. Accordingly, the Petitioner filed WP challenging the orders passed by department and Commissioner (Appeals) in relation to cancellation of GST registration.
The Petitioner argued that SCN reveals no details as to whether any survey had actually taken place or not and no mentioning regarding the date and time fixed for personal hearing. Further, it has been argued that SCN and Orders passed in relation to cancelling registration has been passed without affording an opportunity of hearing to the Petitioner and failed to consider submissions made by the Petitioner and therefore, order of cancellation of registration deserves to be set aside.
The Hon'ble High Court held that bare perusal of format of SCN prescribed under Rule 22(1) of the Central Goods and Services Tax Rules, 2017(the CGST Rules) shows that there is a difference in SCN issued to the Petitioner and format of SCN prescribed under GST laws. Further, it has been held that the specific date and time is necessarily required to be mentioned in SCN for showing cause to the Petitioner. Moreover, the proviso to Section29(2) of the CGST Act mandates opportunity of hearing being provided to the person whose registration is proposed to be cancelled before cancelling registration. Thus, denial of opportunity of hearing to the Petitioner as mandated in proviso to Section 29(2) of the CGST Act vitiates the proceedings as well as the orders cancelling the registration of the Petitioner. Hence, orders regarding cancellation of registration passed by department and the Commissioner (Appeals) are quashed. Thus, WP was allowed.
Takeaway: Opportunity of personal hearing should be given before cancellation of registration
[M/s SS Traders Vs State of UP, Writ Tax No.651 of 2021, Order dated November 2, 2021(Allahabad High Court)]
f. The Applicant is engaged in business of printing high security products and offering total solutions to customers in educational fields. The main product offered by the Applicant are Bank Cheque Books, OMR Answer sheets, Certificates, Bank Memos, etc.
The Applicant sought advance ruling (i) whether printing of pre-examination/post examination material items such as Question Papers, OMR Sheets, Answer Booklets with/without OMR, Practical Answer Booklets, Hall Tickets, Rank Cards, Marks Cards, Grade Sheets and Certificates issued specific to various educational boards/Universities, evaluation of OMR and answer sheets is exempted from payment of GST?(ii) What would be classification of printing of cheque books provided to various banks under GST?
The Hon'ble AAR held that activities carried out by the Applicant to educational institutions is related to admission to or conduct of examination and therefore, exempt from payment of GST in terms of entry no. 66 of Notification No.12/2017-CT(R)dated June 28, 2017. Further, it has been held that in case the Applicant uses paper supplied by its client and prints cheque books, then the same would fall under heading 9988 (ii)(a) to scheme of classification of services and taxable @ 12% and in case the Applicant is using its own paper and print cheques books, then the same would fall under heading 9989(ii) to scheme of classification of services and taxable @ 18%.
Takeaway: Exemption from payment of GST on printing of examination material for educational boards/universities
[M/s Hitech Print Systems Limited, Order No.24/2021 dated November 5, 2021 (Telangana AAR)]
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