1. Banner Printing
Facts : The Applicant is in business of flex banner printing. The applicant gets image done on computer software from customers for different sizes and print the same on flex (HSN 3921) as flex banners and deliver the same to its customers. At times, the applicant is required to provide design and charge the customer for consolidate value of design and print; and bill them for composite supply value. These flex banners are used for both commercial and non- commercial purposes such as birthday, marriage and political purpose.
The applicant purchases flex material, inks etc., for delivery of flex banners. Certain customers provide design to be printed on the flex banner. On customer requirement, the applicant provides design services also and Print the same on flex banner and charge as consolidate supply of flex banner. The applicant charges customer on per sq., feet basis on size of flex banner printed by them. The customer does provide design, size and specification of matter to be printed and does not provide any material. All the material i.e., flex, ink, etc., are procured by applicant only. In pre-GST regime the applicant paid tax under works contract on value of material only.
The applicant had filed an application in form GST ARA-01, Dated 4-6-2019, by paying required amount of fee for seeking Advance Ruling on the following issues’, as mentioned below.
The applicant has raised the following Questions raised before the Authority: Whether supply of print on flex is classifiable as supply of goods or services? If yes, whether falls under HSN 4911 under entry no 132 of Schedule II of Notification No. 1/2017- CTR? If answer to question 2 is yes, whether supply of print on flex noncommercial purpose is also classifiable under HSN 4911 under entry no. 132 of Schedule II of Notification No. 1/2017-CTR?
Observations & Findings : The applicant in the instant case is engaged in supply of printed flex material and the raw materials of the goods in questions are completely procured by the applicant himself. Immaterial of the fact that whether the content is supplied by the customer or it is designed by the applicant himself basing on the requirement of the customer, the applicant transfers the title in the goods i.e., printed material on flex to the customer as defined under Section 7 of CGST Act, 2017 read with Schedule -II Sl.No.1 (a) of CGST Act, 2017.
Further, the supply of print on flex is classifiable vide Notification No. 1/2017 – Central Tax (Rate) dated 28-6-2017 under Sl. No.132 under HSN code 4911 and attracts tax rate of 12%. Further, the same has been clarified in detail vide the clarification issued under F.No.354/263/2017 -TRU, Dated 20th October, 2017 in Circular No. 1l-11-2017-GST.
Ruling : The supply of print on flex is classified under Goods only as per Section 7 of CGST Act, 2017 read with Schedule -II Sl. No.1 (a) of CGST Act, 2017. It is classifiable vide Notification No. 1/2017 – Central Tax (Rate) dated 28-6- 2017 under Sl. No.132 Chapter/Heading/ Sub-Heading/Tariff item 4911 and attracts tax rate of 12%. Supply of print on flex used for non-commercial purpose does not change the classification per se and attracts same rate of tax as mentioned above.
[ 117 taxmann.com 919 (AAR – ANDHRA PRADESH) – Sree & Co.]
2. Government Contracts :
Facts : The applicant entered in to contract with APEPDCL relating to “Supply and erection of 11No.s 33/11KV Indoor Sub stations and their connected lines in Z2 Division of Visakhapatnam circle on turkey basis.” The applicant entered in to contract with APEPDCL relating to Supply and Erection of 33KV Inter linking lines in Srikakulam, Vizag and Vizianagaram District Turnkey Basis. The applicant entered in to contract with APSPDCL, relating to “System improvement project works for erection of 2 nos 33/11kv GIS indoor sub stations at Vijayawada and 1 no. at 33/11kv GIS Indoor Sub-station at Guntur and their connected lines on semi turkey basis under IPDS Scheme”.
The applicant seeks advance ruling, whether APSPDCL & APEPDCL is a Government authority/ Government Entity or not? What is the applicable rate of GST on work agreement entered into with the APSPDCL & APEPDCL?
Observations & Findings : The Government of India vide Notification Number 12/2017 – Central Tax (Rate), dated: 28th June 2017 notified the rate of GST applicable on supply of services. Under this notification for heading 9954 the applicable rate of GST is 9%. The said Notification was amended through Rate Notification Numbers, 20/2017, 24/2017, 31/2017, 46/2017 and 01/2018.
The Applicant Contractees i.e. APSPDCL and AEPDCL are Government Companies i.e. wholly owned by the Government of Andhra Pradesh. When a copy of Audited Annual Accounts of M/s APSPDCL and APEPDCL are examined, it is evident from the schedule of Equity Share Capital of the Annual Statement that 100% share capital is held by the Government of Andhra Pradesh in the name of Honourable Governor of Andhra Pradesh. Thus, based on the above facts, it is concluded that the Government of Andhra Pradesh is having full control over the APSPDCL and APEPDCL and they are covered under the definition of Government Entities.
For all the civil works, where materials such as sand, metal, gravel etc., are involved, the rates are inclusive of seigniorage charges as fixed by the Competent Authority of Government of AP and the same will be recovered from the contract bills for remittance to the Government. Materials such as Power Transformers, 100 Sqmm Conductor & Station Transformer will be supplied by department. In some agreements all the materials are in Contractor’s scope. Now the works under discussion have been undertaken to execute/Implement various schemes for constructing sub stations, providing bore wells, erection of lines and required conductors etc. Moreover, the above works undertaken by APSPDCL and APEPDCL are for business purpose and the benefit of concessional Rate of 12% (6% under Central tax and 6% State tax) as per notification is NOT available to the applicant.
Ruling : The applicable rate of tax is 18% for the services referred by the Applicant as per entry no. (ii) of S.No.3 of the table of Notification No. 11/2017 -Central Tax (Rate), Dated: 28th June 2017.
The value of materials recovered on cost recovery basis by the Contractees from the R.A. bills issued by the applicant is includible in the taxable value of supply in terms of Section 15(2) (b) of the CGST Act, 2017.
[2020 (7) TMI 405 – AAR, Andhra Pradesh – M/S. GVS Projects P Ltd.]
3. Taxable supply
Facts : The applicant is a company engaged in conducting chit auctions. They register the members and conduct auction in respect of each chit each month. The company will be collecting subscriptions from members by dividing the prize money with number of members. The applicant is collecting the foreman commission @5% from the amount to be distributed to the member taking the prize money. The GST is paid on the foreman commission @12%. The applicant is responsible to pay the prize money by due date to the winner of auction. However, many a time, the subscribers fail to deposit subscriptions by the specified date. The applicant charges interest/penalty by whatever name called, from the members paying the subscriptions belatedly. The interest /penalty has no element of services except that it is in an auction in money inasmuch as it is collected as a part of subscription for delay.
The applicant raised the questions, whether the interest/penalty collected for delay in payment of monthly subscription by the members forms a supply under GST? IIf the said interest/penalty is a supply, what is the classification and rate of duty applicable on the said supply?
Observations & Findings : The GST Act 2017 mentioned the value of supply, vide Section 15 (2).
“shall include-(d)- interest or late fee or penalty for delayed payment of any consideration for any supply”;
It is clear from the simple reading of 15(2)(d) that the interest, late fee or penalty charged from customer shall be added to the transaction value and hence shall be taxable at the rate at which such goods/ services are taxable or in other words the classification of interest, late fee or penalty cannot be different from the classification of goods or services.
Ruling : The additional amount being charged in delay of payment by whatever name called should be classified as principal supply and the classification of the same cannot differ from the original supply. Hence the additional amount charged on delayed payment shall be taxed as per original supply i.e. supply of financial and related services. It is classified under SI. No 15 of Heading 9971 Financial and related services, GST @12% as per Notification No. 8/2017-Integrated Tax (Rate) dated, the 28th June, 2017 as amended from time to time.
[2020 (7) TMI 447 – AAR, Andhra Pradesh – Ushabala Chits P Ltd.]
4. Place of Supply :
Facts : The applicant is a registered proprietorship firm deals in supply of goods as well as provides services. The applicant received order for Fixing of Air conditioner & VRV system in Goa for a client (Recipient) registered outside Goa but not registered in Goa. Although the applicant sought ruling on many issues, only one issue could be dealt by this authority for issuing Ruling and that is whether supply made by applicant from Goa on behalf of third person who is not in the taxable territory of Goa to a place in Goa is to be taxed as Interstate Supply or Intra State Supply.
Observations & Findings : To determine the classification of any supply as Interstate Supply or Intra State Supply, two ingredients are relied upon and these are location of the supplier and place of supply. In the instant case, as said by the applicant, location of the supplier is Goa, place of supply will be outside Goa as per section 10(1)(b) of the IGST Act since, goods are supplied on behalf of a registered person outside Goa to a place in Goa.
Section 10(1)(b) of IGST Act is reproduced as “where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.”
Ruling : The nature of supply made by the applicant is to be treated as a supply of goods in the course of interstate trade or commerce and tax is to be charged accordingly.
[2020 (7) TMI 311 – AAR, Goa – High Tech Refrigeration and Air Conditioning Industries]
5. Exempted supply :
Facts : The Applicant, is providing Mapping Services to various Municipal Corporation & Councils. The main aim behind doing the map making activity is to identify unpermitted construction areas. The Applicant has submitted that the services provided by them are Pure Labour Services, provided to Government or Local authority or a Governmental authority by way of an activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.
Observations & Findings : We find that the applicant’s main query is whether in view of the submissions made, the services supplied by them would be covered under clauses (1) & (2) of Twelfth Schedule of Article 243W? and thus exempt under Entry No. 3 of Notification no. 12/2017-Central Tax (Rate) dated 28-6-2018. We find that the Services are provided by the applicant are in relation to Urban planning including town planning and Planning of land- use and construction of buildings in as much as all the said activities help the local authorities to do Town Planning, Urban Planning & Control the Land use by the general public. We find that the Services supplied by them are covered under Article 243W of the Constitution, as functions entrusted to Municipality. Hence the provisions as per SI. No. 3 of the Notification No. 12/2017 – Central Tax (Rate) dated 28-6-2017 as amended applies in their case and therefore, the Subject Services being Pure Services, provided by the applicant to the various Municipal Corporations and Councils are in relation to aforesaid functions entrusted to the said local authority and exempt from GST.
Ruling : Mapping services provided to Municipal Corporation for planning of land use are ‘pure services’, exempt from GST.
[ 117 taxmann.com 749 (AAR – MAHARASHTRA) – Core Project Engineers & Consultants (P.) Ltd.]
6. Long Term Lease :
Facts : That the Rail land Development authority (RLDA), a statutory authority under Ministry of Railway, Government of India -I, issued a request for which was publicized by RLDA for grant of lease for residential & commercial development along with development of financial infrastructure for 99 years.
The Applicant company has entered into a long term Lease Agreement of 99 years with RLDA for undertaking residential & commercial development along with development of financial infrastructure. The Applicant Company paid a sum in parts as Security deposit which, in case of breach is refundable after forfeiting the bid security deposited separately for both the Plots as per the terms of the lease agreement. The issue to be examined in the present case is whether the amount paid prior to 29-3- 2019 in pursuance to the lease agreement of 99 years executed on 8-11-2019 are exempt from levy of GST in view of the Notification No. 04/2019-Central tax(rate) dated 29-3-2019 or Notification No. 12/2017-Central Tax(rate) dated 28-6-2017? or not;
Observations & Findings : While examining the functions of RLDA, we find that it is a statutory authority constituted under the Railways Act, 2005 with obligation, inter alia of development on Railway land for commercial use, entrusted to it by the Central Government for the purpose of generating revenue by non- tariff measures. We observe that in background of its function, especially of generating revenue, RLDA is leasing the parcels of land and thus it is a rental or leasing service of land for commercial function. In a way, it is clear from facts that RLDA is supplying rental or leasing service involving own land. The said service is classifiable under HSN 997212 ‘rental or leasing services involving own or leased non-residential property’.
Serial No. 5A of Notification 13/2017- Central Tax (Rate) dated 28-6-2017 (as amended) provides that ‘supply of renting of immovable property’ made by Central Government to a registered entity is taxable under RCM i.e. the recipient of service is liable to pay GST.
Ruling : Land given on lease for 99 years for residential development by statutory body is leviable to GST under RCM.
[ 117 taxmann.com 797 (AAR- RAJASTHAN) – Hazari Bagh Builders (P.) Ltd.]
7. Composite supply :
Facts : The Applicant has received work orders from Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) through tender process. AVVNL is a company incorporated by Govt. of Rajasthan for distribution of electricity in various parts of Ajmer district. Work undertaken by applicant as per contract along with two work orders involves (a) supply of materials/equipments and (b) erection, testing and commissioning of materials/equipments supplied in building of rural electricity infrastructure.
The applicant sought ruling on whether the contract entered into with AVVNL as per the work orders combine of supply, erection, testing and commissioning of materials/equipments for providing rural electricity infrastructure qualifies as a supply for work contract under section 2(119) of the CGST Act? If Yes, whether such
supply, erection, testing and commissioning of materials/equipments for providing rural electricity infrastructure made to AVVNL would be taxable at the rate of 12% in terms of Sr. No. 3(vi)(a) of the Notification No. 11/2017- Central Tax (Rate) dated 28-6-2017 as amended w.e.f. 25-1-2018?
Observations & Findings : It is observed that all the five conditions prescribed implicitly by Entry No. 3(vi)(a) of the Notification No. 11/2017 – Central Tax (Rate) dated 28-6-2017 are satisfied by the applicant except one, viz. that the activity is meant predominantly to be used other than commerce, industry, or any other business or profession. Thus, work undertaken by the applicant as per Contract RGGW/TN-13 for AVVNL, Ajmer by way of supply of material/equipment and erection, testing & commissioning of supplied material/ equipment is though a Composite Supply of Works Contract but the same is not covered under the Entry No. 3(vi)(a) of the Notification No. 11/2017 – Central Tax (Rate) dated 28-6-2017 (as amended).
Ruling : The work undertaken by the applicant as per Contract RGGVY/TN- 13 (encompassing both work orders) is a Composite supply of Works Contract and is not covered under Entry No. 3(vi)(a) of the Notification No. 11/2017- Central Tax (Rate) dated 28-6-2017 (as amended) as consequentially are not eligible to be taxed at lower rate of 12% and hence are liable to be taxed @18%.
[ 117 taxmann.com 702 (AAR- RAJASTHAN) – ARG Electricals (P.) Ltd.]
8. Supply of food to hospitals :
Facts : The Applicant is engaged in supplying food and beverages at the canteen of their customers. The Applicant himself does not get paid for by the consumers of the food and beverages. The Recipient of the services are hospitals who enter into contract with the applicant. The charges are received from the hospitals on monthly basis on the coupons collected. In short, it is deciphered that the Applicant is vested with management of the canteen facilities.
The applicant sought the ruling, whether Food supplied to Hospitals i.e. Government Hospital, Private Hospitals and Autonomous Bodies on outsourcing basis, GST is chargeable? If GST is chargeable what is the tax rate? If no GST is chargeable on the Supply of food, the GST already paid by the Hospitals and remitted to Government is recoverable from their future bills?
Observations & Findings : The Notification No. 13/2018 – State Tax (Rate), issued in G.O.Ms No. 171, Revenue (CT-II) Department, Dt. 20-08-2018 was amended vide Notification No. 27/2018. In terms of the above amendment, from 01.10.2019, the supply of food by the applicant to hospitals fall under entry no. (ii) of S. No. 7 of Not. No. 11/2017 – State Tax (Rate), issued in G.O.Ms No. 110, Revenue (CT-II) Department, Dt. 29-06-2017 and is subject to 5% GST with the condition of non-availability of input tax credit.
Ruling : For the period from 01.07.2017 to 26- 07-2018 – 18%. For the period from 27.07.2018 onwards – 5%. Provided that credit of input tax charged on goods and services used in supplying the service has not been taken.
[2020 (8) TMI 104 – AAR, Telangana – Navneeth Kumar Talla]