GST: Recipient of Services cannot seek Advance Ruling u/s 95(a), rules AAAR

The Maharashtra Appellate Authority for Advance Ruling ( AAAR ) has held that recipient of services cannot seek advance ruling u/s 95(a) of CGST Act,2017

The appellant M/S Romell Real Estate Private Limitedhaving undertaking certain Residential Real Estate Projects (RREP) primarily having residential apartments. The applicant wants to know whether he can apply to the ‘works contract service’ received from its contractor’sEntry No. 3(v) (da) of Notification 11/2017-CT.The works contractors are entitled to levy GST @ 12% in terms of the Notification 11/2017-CT

The applicant contended that the Notification entry is qua the supply and not qua the person and therefore once a project qualifies as an Affordable Housing Project, the benefit of concessional rate of tax would be available in respect of ‘work contract services’ about low-cost houses, irrespective of it being supplied by the Developer or the Contractor.The Applicant has submitted that in this project more than 50% of Floor Space Index (FSI) is utilized towards the construction of units and the project would qualify as an ‘Affordable Housing Project (AHP) which has been given ‘ Infrastructure Status’ under the Notification F.No. 13/6/2009

The respondent contended that the supplier who was expected to ask the questions by way of filing the Advance Ruling application, and the applicant was the recipient and not the supplier of goods or services or both. Further stated that the contractor is the service provider and the applicant is the recipient of service and the benefit of this reduced rate of @6% would be available to the contractors who provide the composite supply of works contract to the developer/applicant.

It was observed thatunder sec 95(a)only a supplier can file an application for advance ruling, and the contentions of the applicant can’t be accepted. Under section 100(1) of CGST Act 2017,the ruling pronounced is binding only on the applicant and on the concerned officer or the jurisdictional officer in respect of the applicant. If an application is filed by the recipient of goods or services or both on the taxability of his inward supply of goods or services, such ruling shall be binding only on him and on the concerned officer or the jurisdictional officer of him.

MAAR comprising Shri. Rajiv Magoo, Member Central Tax and Shri. T. R. Ramnani, Member State Tax has held that the advance ruling filed by the applicant who was a recipient of the transaction was not maintainable.

GST: Intermediary Marketing Services provided can’t be classifiable as Export u/s 2(6), rules AARR

The Maharashtra Authority of Advance Ruling ( AAR ) has held that intermediary marketing services provided cannot be classifiable as export u/s 2(6) of the IGST Act.

The applicant, Gulf Turbo Solutions LIP engaged in the business of service and repairs of various types of Turbochargers and lying spare parts required for Turbochargers and ship spares, Gulf Turbo Repairs and Services FZC (GTRS) a company registered in Sharjah, UAE & is also in the business of service & repairs of various Turbochargers.

The Applicant agreed to provide Marketing Services to GTRS FZC as per the Marketing Services and entered into an agreement for conducting market surveys & providing GTRS FZC with information on India. It was contended that the intermediary or agent would have documentary evidence authorizing him to act on behalf of the provider of Main Service. It was contended that the service Agreement clearly defines the relationship between the parties as independent contractors and not a Principal and Agent.

The agreement has no provision which gives authority to conclude or negotiate any contract or secure any orders on behalf of GTRS. The applicant contended that the services provided by them would constitute export u/s 2(6) of the IGST Act.

The authority observed that the applicant was acting as an intermediary in the subject case as the applicant acted as a conduit between GTRS and customers in India. Further viewed that the applicant satisfies all the conditions of an intermediary provided u/s 2(13) of the IGST Acts an intermediary.

The Coram of Mr Rajiv Magoo (Central tax) and Mr T. R. Ramnani (State tax) has held that the place of supply in the subject case of the applicant as an intermediary would be the location of the supplier of services under Section 13 (8) of the IGST Act, 2017. It was observed that the location of applicant which is located in the State of Maharashtra, India. It was held that as the place of supply of intermediary services to GTRS is in India and consequently, condition (iii) of export of services as per Section 2(6) of IGST Act is not satisfied.

Section 68 has No Application if Share Capital/Premium/Application money was not Received

The Delhi Bench of Income Tax Appellate Tribunal has held that Section 68 has no application if share capital/premium/application money was not received in the relevant Financial Year.

A search and seizure operation under Section 132 of the Act was conducted at the premises of the assessee, M/s. Tirupati Udyog Ltd. Accordingly, notice under Section 153A of the Act was issued and the assessment was completed under Section 153A read with Section 143(3) and an addition of Rs.16,08,10,250/- on account of unexplained cash credit was made by AO under Section 68 of the Act alleging receipt of bogus share capital and share premium from non-existing bogus companies or concerns.

First Appellate Authority reversed the action of the Assessing Officer, against which revenue filed appeal before the ITAT. The counsel for the assessee Mr. H.K. Chaudhary, submitted before the Tribunal that in the absence of any credit in the books of account towards share capital/share premium during the year under consideration, Section 68 does not come into play at all and the Assessing Officer had wrongly invoked provisions of Section 68 and made unlawful addition which has been rightly reversed by the CIT(A).

The Tribunal by giving reliance to the decision of Supreme Court in CIT vs. P.K. Mohankala observed that Section 68 applies only to the credit/ receipts entered in the books during the Financial Year in question and its operation is not extended to other assessment years.

The Coram of Mr. Kul Bharat, Judicial Member and Mr. Pradip Kumar Kedia, Accountant Member has held that “in this factual and legal matrix, the CIT(A), in our view, has rightly concluded on inapplicability of Section 68 of the Act to the facts of the case. We thus see no error in the conclusion drawn by the CIT(A) in favour of the assessee. Hence, we decline to interfere”.