Recent major judgements of Indirect Tax Volume 3

Recent major judgements of Indirect Tax Volume 3

GST

A. GST: AAR shall be required to determine the place of supply wherever it is necessary for determining the liability of the registered person to pay tax

The petitioner has entered into a contract with its Principal Company located in the USA for providing services to the customers located outside India. The principal company shall raise the invoice on the customers and shall reimburse the petitioner for costs incurred by it. The question that arose before the AAR was whether the said services provided by the petitioner would qualify to be export or not. AAR held that for determining the same it would have to delve into the issue of the place of supply which is outside its ambit. In this respect, the Hon’ble High Court of Kerala held that entities which come with foreign investment in India would require certainty and precision about the tax liability so that they can plan their functioning as business entities in India and in light of the same, the Parliament has taken a wide vision to mandate such a provision in Section 97(2), whereby the applicant is empowered to seek advance ruling on the issue of determination of liability to pay tax which shall include issue related to the place of supply within its ambit.

[M/s Sutherland Mortgage Services Inc, 2020-VIL102- KER]

B. GST: Investigation once initiated by DGGI shall be completed by him only unless specifically transferred

The search was carried out at the office premises of writ applicant by DGGI, Ahmedabad Zonal Unit under Section 67 of the CGST Act, 2017. The DGGI had seized original books of account and document of the applicant for carrying out the investigation. Thereafter, the summons was issued by Deputy Commissioner, State Tax and DGGI, Surat Zonal for conducting inquiry at office premises of the applicant. In the instant case, there was nothing on record to indicate that the Central Tax Authority has transferred the case to any other authority of state. Hon’ble Gujarat High Court held that DGGI, Ahmedabad to reach a logical conclusion and ensure no undue harassment is caused by different authorities on the same matter.

[M/s Bhawani Textiles, 2020-VIL-125-GUJ]

C. GST: The first occupation shall be said to be taken place after all the requirements of the law in respect of the said occupation have been complied with.

The applicant had claimed that since the first occupation has nowhere been defined in the Act, the same shall be construed to be occupying the first unit of the building by the allottee. The applicant had applied for a grant of completion certificate which was rejected by the Municipal Corporation. The AAR held that the first occupation as claimed by the applicant without having mandatory completion certificate by jurisdictional authorities is devoid of any merit as under the Chhattisgarh Municipalities Act, 1961, occupation is not valid until permission has been received in respect of the same.

[Shri Aman Agrawal (M/s Bilaspur Infrastructure Pvt. Ltd.), 2020-VIL- 58-AAR]

D. GST: Supply of SCADA System to Metro shall attract GST @ 12%

The applicant was engaged in designing, supply, installation, testing and commissioning of a computer-based SCADA system for smooth operation and monitoring of auxiliary power supply system on the metro corridor. The AAR held that the erection and commissioning of the SCADA system is done with no intention of removing it in foreseeable future and since it cannot be removed without causing substantial damage, it shall qualify to be immovable property and be treated as works contract under GST. AAR further held that said supply should attract tax @ 12% under Entry 3(v)(a) of Notification 11/2017 – CT(R), as it is a power supply and distribution network installed for the smooth operation of the metro.

[ABB India Ltd, 2020-VIL-73- AAR]

E. GST: The operation and maintenance part of the contract for water supply to Government authority is exempt to the extent of the invoice raised after 25 January 2018.

Entry no 3A of Notification. No 12/2017- CT(R), as inserted vide notification No 02/2018-CT(R) dated 25th Jan 2018 exempts the composite supply of goods and services to Government Authority where the value of goods does not exceed 25% of the value of said composite supply. Where the contract is entered in the Pre-GST period, the AAR held that the operations and maintenance part of the composite supply to governmental authorities are exempt to the extent of invoices raised after 25th Jan 2018. Whereas for contracts entered in the GST period, the exemption applies from the date of the contract.

[M/s The Indian Hume Pipe Company Ltd., 2020- VIL- 50-AAR]

F. GST: Unutilized credit of duty/tax paid in earlier tax regime cannot be denied on the non-filing of Trans-1.

The revenue challenged the judgment of Punjab and Haryana High Court in case of Adfert Technologies Pvt Ltd where the court had permitted the carry forward of unutilized CENVAT credit which could not be carry forwarded on account of Non-filing or erroneous filing of Trans-1. Apex court held that unutilized credit of duty/tax paid in erstwhile tax regime is a vested right which cannot be taken way on procedural/technical grounds of non-filing of Trans-1

[Union of India & ORS Vs Adfert Technologies Pvt Ltd, 2020-VIL-10-SC]

G. GST: No requirement of obtaining separate registration at the place of the port where customs clearance obtained

The AAR held that since the applicant is already registered in Karnataka and uses this GSTIN for paying taxes on import, no separate registration is required to be taken by him at the port even if the goods are sent directly to the customer premises from the said port. AAR further held that, if the goods are sent to a state other than Karnataka, then the applicant shall be required to discharge IGST, otherwise it shall be required to levy CGST and SGST.

Related Topic:
Summary of major Indirect Tax Case Laws

[M/s Kardex India Storage Solutions Pvt Ltd, 2020- VIL-76- AAR]

H. GST: Supply of purified water in unsealed containers not entitled to GST exemption.

The question before AAR was whether the supply of purified water to the public in unsealed cans is exempt under GST law. The AAR held that all types of purified water are specifically excluded from the Entry No 99 of Notification No 2/2017 – Central Tax (Rate) and therefore the supply of purified water whether it is supplied in sealed or unsealed container is not entitled to GST exemption.

[M/s Water Health India Pvt Ltd., 2020-VIL-77- AAR]

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