INTRODUCTION – ADVANCE RULING
Why?
Advance Ruling (AAR) is a guiding mechanism to resolve the anticipated issues under an anticipation of dispute in relation to any activity proposed to be carried out or already undertaken during the GST regime.
"It is devised to take an informed decision to avoid unforeseen liabilities of tax"
Where?
Every State will have an advance ruling authority.
It shall comprise of one member CGST and one member SGST/UTST. They will be appointed by the Central and State Government, respectively.
Status?
Majority of the ruling by Advance Authority are based on the question of classification, registration and taxation rate.
Unfortunately, the new tax regime of GST has resulted divergent views on the same issues by different Advance Authority Ruling given by different States.
Applicability
As per Section 103 of the CGST Act, 2017, the Advance Ruling is binding only on the applicant and the concerned officer or the jurisdictional officer of the concerning applicant.
"Even if it is not challenged then too it's loses its binding nature when either change in law, facts or circumstances which formed the basis of an advance ruling changes.
The present "Part-I" deals with such rulings where divergent views and/or clarification was issued by CBIC after a ruling.
Name of the
Applicant (State Wise) |
Question(s) on which Advance Ruling Sought | Ruling/View | Circular/ Notification Issued (if any), comparison with the earlier tax regime (if) and contrary ruling (if) |
M/S GOGTE
INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED, Dated: - 21 March 2018 (Karnataka) |
Whether the Hotel Accommodation & Restaurant services provided by them, within the premises of the Hotel, to the employees & guests of SEZ units, be treated as supply of goods & services to SEZ units in Karnataka or not? | The Hotel Accommodation
& Restaurant services being provided within the premises of the
Hotel, to the employees & guests of SEZ units, cannot
be treated as supply of goods & services to SEZ
units Hence the intra state supply and are taxable accordingly. |
In view of the AAR
order, CBIC has issued a circular No. 48/22/2018 - GST, dated
14.6.2018 – 2018[(13) G.S.T.L.153 (C58)] to overcome the
ambiguity which was resulted by AAR Order. CBIC Clarified that a specific provision shall always prevail over a general provision. Hence, supplies of goods or services or both to SEZ units or SEZ Developer has to be treated as "inter-State supply" in terms of Section 7(5) (b) of IGST Act, 2017. AMLEGALS The thumb rule is that place of supply for an immovable property is the place such property is situated. But, if legislation intends to carve out an exception then it can do so by a specific provision to address such an exception. The trite law being specific provision shall always prevail over the general provision shall have always dominance and accordingly. |
M/S DEEPAK & CO. Dated: - 28 March, 2018 (Delhi) | Whether supply of food and beverages made available in trains & in railway stalls be considered as composite supply for levy of GST? | The AAR, Delhi ruled
that supply of food and beverages (cooked/ MRP/ packed) to the
passengers/general public at the rates fixed by the Indian
Railways/ IRCTC at food stalls at Railway platforms and on board
trains does not have any element of service. Hence, the same shall
be rather considered as pure supply of goods and GST shall be
charged on individual items at their respective applicable
rates. |
CBIC On this very same matter, CBIC had earlier issued a notification vide Notification No. 11/2017-CT (Rate), as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 to the effect that "5% GST would be attracted on supply of food and beverages made available in trains & food stalls on platforms or stations." AMMLEGALS |
FERMI SOLAR FARMS PRIVATE LTD, Dated: - 03 March 2018 (Maharashtra) | Whether the taxability
of goods as 'solar power generating system' is 5% or 18%
under the GST tax slab in case of separate contracts for solar
power plants,? Whether the parts supplied would be eligible to concessional rate of 5% as parts of solar power generation system? Will the benefit of concessional rate of 5% be given to the sub-contractors as well? |
First
Ruling The AAR, Maharashtra held that setting up of a Solar Power Plant is in nature of the Work Contract. Works Contract is deemed to be supply of services under clause (119) of section 2 of the CGST Act. It ruled that depending on the nature of supply (interstate or intra state), the rate of tax would be governed by the entry no. 3(ii) of the Notification No.8/2017-Integrated Tax (Rate) under IGST Act,2017 or the Notification no. 11/2017 - Central Tax /State Tax (Rate) under the CGST Act,2017 and MGST Acts, 2017, respectively. It accordingly concluded that the tax shall be levied @ 18% collectively. No Ruling has been given with respect to the last two questions due to the absence/non-availability of documents on record before the Authority. |
Second
Ruling In M/s Giriraj Renewables private Ltd.., The AAR, Karnataka has ruled that as per the contract, the supply was not composite supply. The Authority referred the contract and concluded on the sole basis of the contract and focused on free supply to be construing 60-70% of the supply. The Authority relied upon the clause under the contract for contract "Free Issue Equipment" which is defined as Photovoltaic Modules to be supplied by the owner to the Contractor as free issue equipment at the plant site for the installation and commissioning of the solar power plant. Since, the major equipment i.e. PV modules, are not being supplied by the contractor / Applicant so they refrained to call it is a composite supply. AMLEGALS The concept of free supply has been taken in a manner which is subject of ambiguity. It must be known that valuation demands the value of free supply to be an integral part of valuation of supply. In other words, a receiver of supply incurs something towards a supply has to be part of supply by the supplier. If it is so then one cannot apply a different logic for charging and valuation and further there cannot be half way stop when it comes for rate i.e. it cannot be treated in different manner. |
CONCLUSION
With respect to the Advance Authority Ruling given by different states in India under the GST regime, we have observed that the majority of the rulings are based on the questions of "classification, taxation rate, Registration"
Though, advance rulings are meant to provide certainty on the issues that could lead to heavy litigation in India but divergent views have come due to ambiguity in this subject prevailing amongst almost every corner in India.
The episode of multiple views is bound to come for another 5 years at least or may be more.
AMLEGALS must emphasize again that there is no need to panic even if any contrary ruling(s) come as all the rulings are purely fact-based rulings and are only binding only on the applicant who has opted for such a ruling.
This content is purely an academic analysis under "Legal intelligence series".
© Copyright AMLEGALS.
Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Reade should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.