Weekly GST Digest_Apr 19 ~Apr 25



1) National Anti-Profiteering Authority Rulings

a) Benefits of tax rate reduction to be passed on to each customer: Absence of mechanism, under CGST Act and Rules framed thereunder to compute the profiteered amount, cannot be a ground on the basis of which passing on of benefit can be denied by the supplier. Every customer/recipient is entitled to the benefit in the form of reduced prices and the anti-profiteering provisions do not give liberty to the supplier to decide on mechanism whereby the benefit is to be passed on. Any benefit of tax rate reduction passed on to one particular recipient cannot be appropriated towards the benefit that should have been passed on to the other recipient. Increase or decrease in cost to the supplier on account of royalty, advertisement, renovation etc. shall have no relevance as far as anti-profiteering provisions are concerned.

State Tax Officer, Pune & DGAP v. M/s Cilantro Diners Private Limited

2) Advance Authority Rulings

a)  Activity of purchase of land and selling it by converting in residential sub-plots of varying size with basic facilities liable to GST: The said activity shall fall within the ambit of Clause (b) of Para 5 of Schedule II appended to the CGST Act, 2017.

M/s Satyaja Infratech (Gujarat AAR)

b)  Cost of construction, erection of bays, registration charges, operation and maintenance charges etc. do form part of transmission of electricity: Cost of construction/ erection of Bays/ Sub-Stations, Overhead lines and Underground Cables and other charges including Pro-rata charges, supervision charges, proportionate line charges, registration fees and operation and maintenance charges recovered are not in the nature of composite supply and tax liability thereon has to be determined by treating the same different from supply of transmission and distribution of electricity. M/s Gujarat Energy Transmission Corporation Limited (Gujarat AAR)

c)  Taxability of services provided in the canteen for employees of the recipient of services: Said services are taxable under the head ‘Accommodation, food and beverages services’ up to July 25, 2018 in terms of notification 11/2017-CT (Rate) dated June 28, 2017. Post amendment in the said notification vide notification 13/2018-CT (Rate) dated July 26, 2018, tax rate applicable shall be 5% subject to the conditions attached.

M/s Gurukrupa Hospitality Services (Gujarat AAR)

d)  Admissibility of credit of tax in respect of purchase of medicine for employees and purchase of medical equipment and AMC of residential colony and hospital for employees: Provisions pertaining to ITC clearly state that the credit shall be admissible in respect of supplies which are used or intended to be used in the course or furtherance of business of the supplier. As the above-mentioned expenses are not in the course or furtherance of business, credit in respect of the same shall not be admissible.

M/s Kandla Port Trust (Deendayal Port Trust) (Gujarat AAR)

e)  No registration required on project site, where there is no place of business in the state of such site: Location of the supplier shall be the principal place of business is the state of registration and no separate registration shall be required in the state where the project is being executed.

M/s T & D Electricals (Karnataka AAR)

f)  Determination of transaction value in case of financial assistance from the Government: The amount due under the supply contract is payable by the recipient irrespective of the fact that any assistance is received by him from the Government or not. The subsidy/ assistance from the Government has no bearing on the contract price determination and the full amount of contract has been invoiced. Amount of assistance received by the recipient shall not be covered under exclusions given under section 15(2) (e) of CGST Act.

M/s Megha Agrotech Private Limited (Karnataka AAR)

3)  Appellate Authority for Advance Rulings

a)  Making of separate contracts is an artificial division of contract which cannot take away the true or inherent character of the contract: The contractor has been given a contract which clearly provides for two elements of supplies i.e. supply of goods and supply of services. By making two separate contracts, the true and inherent nature of the contract cannot be taken away and it is just an artificial division of the contract. Supply of services (i.e. transportation of goods under the contract) cannot be considered in isolation and has to be read along with the contract for supply of goods since performance of both the contracts is interdependent and naturally bundled resulting into composite supply. Hence, supply of services in relation to transportation (without issuance of consignment note) of goods is not eligible for exemption in terms of notification 12/2017-Central Tax dated June 28, 2017. The contract shall be nothing but composite supply of works contract services as envisaged under section 2(119) of CGST Act and chargeable to tax at 18%.

Siemens Limited (Maharashtra AAAR)

b)  Non-issuance of consignment-note will not make the supplier of services entitled for exemption: In case the lien of goods is transferred and the supplier of service becomes liable for safe delivery of the goods to consignee, the service shall be classifiable as GTA. Issuance or non-issuance of consignment note shall not make any difference, and accordingly, supplier shall not be entitled to exemption from payment of GST. Format of e-way bill is not relevant in deciding the classification of supply. Non-requirement of mentioning of details of supply does not affect liability of payment of tax unless specific exemption has been provided in respect of the same.

M/s K M Trans Logistics Private Limited (Rajasthan AAAR)

4)  Court Rulings

a) Recovery proceedings u/s 79 for recovery of interest cannot be initiated without issuance of SCN u/s 73 or 74 of CGST Act: Interest liability under section 50 is although automatic, but its computation and demand can be raised only after initiation of adjudication proceedings under Section 73 or 74 where such demand is disputed. Unadjudicated demand of interest is not a sum payable under the Act and no proceedings under section 79, being garnishee proceedings, can be initiated for recovery of interest.

Mahadeo Construction Co. v. The Union of India (Jharkhand HC)


Information contained herein are only for reference purposes and are based on the information publicly available as on the date of this publication. The author takes no responsibility for its reliability and accuracy. It is advised to take appropriate legal/professional advice before undertaking any business activity or otherwise based on the above. 

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