RULINGS OF ADVANCE RULING AUTHORITIES
Printing of Booklets :
Facts : The Applicant, stated to be engaged primarily in the business of printing of Booklets, seeks a ruling on whether the activities undertaken by procuring orders from a foreign buyer to print texts and thereafter deliver them to various places in India is a taxable transaction.
Observations & Findings : The Applicant supplies the composite printing service to the recipient located in India. Such supplies are not, therefore, export of services within the meaning of section 2(6) of the IGST Act, 2017. It is taxable under SI No. 27(i) of Notification No. 11/2017 – CT (Rate) dated 28/06/2017 or SI No. 27 of Notification No. 8/2017 – IT (Rate) dated 28/06/2017.
In its Circular No. 11/11/2017-GST dated 20/10/2017, the CBIC clarifies the treatment of various composite printing contracts. In all these contracts, the recipient provides the content for printing and the printer supplier the physical inputs. All the printed goods are classifiable under Chapters 48 and 49 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter the Tariff Act). The difference, however, lies in the customer contemplating or not of separate rights and use, arising out of the supply of the goods. In the case of printing of books, pamphlets, annual reports, etc., the goods have no better utility than carrying the printed matter. On the other hand, envelopes, letter cards, napkins, wallpaper and the like have separate use as goods apart from carrying the design or logo printed thereon. The service of printing is, therefore, the predominant element in the contracts for printing of books, pamphlets, annual reports etc., whereas, the supply of goods is the dominant nature of the latter category of printing contracts.
Ruling : The Applicant’s supply of the composite printing service is taxable under SI No. 27(i) of Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 – FT dated 28/06/2017) or SI No. 27 of Notification No. 8/2017 -Integrated Tax (Rate) dated 28/06/2017, as the case may be.
[ 115 taxmann.com 130 (AAR-WEST BENGAL) – Swapna Printing Works (P.) Ltd.]
Bus body building service:
Facts : The applicant is engaged in providing services in the area of Transport Solutions, in the field of fabrication and truck body building area, for transport equipments such as Tippers, Trailers and Tankers. The applicant desires to know whether the [email protected] 28%, which they were charging, is correct or whether they can charge GST @ 18% in terms of circular No. 52/26/2018-GST dated 09.08.2018 Para and 12.3.
Observations & Findings : The impugned services of the applicant are covered under heading 9988 as manufacturing services on physical inputs (goods) owned by others in terms of SI. No. 26(ii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 initially and subsequently under SI. No. 26(iii) / (iv) respectively, consequent to amendment of the said entry No.26(iv) of the aforesaid Notification. However, the services by way of Job work in relation to bus body building have been carved out of the earlier entry i.e. SL. No. 26(iv) of Notification supra and a separate entry under SI. No. 26 (i) (ic) has been incorporated consequent to amendment of the said notification vide Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019. The impugned services had been taxed at GST (9% CGST & 9% SGST) right from the appointed date i.e. 01.07.2017.
Ruling : 1. Charging of GST 28% (CGST @ 14% + [email protected] 14%) as per Sl.No. 169 of Schedule-IV to the Notification No.1/2017-CT (R) dated 28.06.2017 is correct, if the activity of the applicant is treated as supply of goods, falling under Chapter heading 8707.
The activity of fabrication of body building on Tippers, Trailers, etc, merits classification under SAC 998881, under “Motor vehicle and trailer manufacturing services”, in terms of SI.No.535 of Annexure to Notification No, 11/2017-Central Tax (Rate) dated 28.06.2017.
The applicant can start charging GST 18% (CGST @9% + [email protected]% as per of Notification No. 11/2017-CentraI Tax (Rate) dated 28. 06.2017, as amended by Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019 read with explanation provided under Notification No. 26/2019 -CT(R) dated 21.11.2019.
[2020 (1) TMI 791 – AAR, KARNATAKA, – SLN Tech-Fabs (Bengaluru) (P.) Ltd.]
Supply of printed law journals and DVDs of Journal :
Facts : The Applicant is engaged in supply of printed law journals and DVD’s of law journal. They have preferred an Applications seeking Advance Ruling on the following question, Whether the assessee/dealer which publishes law journals in print and sells the same content that is in books in an electronic form in DVD’s/CD’s with a software to search and read it in computers and hand held devices come under the category of E Book, so that it can avail the benefit of Notification No. 13/2018-Central Tax(rate) dated 26.07.2018 which amends the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 in respect of E-book and pay GST @ 5%.
Observations & Findings : Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 provides the applicable rates for various services. As per the Explanation given in the above entry, ₹e-books’ are electronic version of a printed book falling under the tariff item 4901 and supplied online which can be read on a computer or a hand held device, while in the case at hand, the contents supplied in the form of DVD/CD is a software which is used to access content containing the judgments of various fora, case laws Acts, etc which provides for searching using a particular case number/period/act/court or a combination of the above . The DVD/CDs do not contain electronic versions of the journals but an executable software application and therefore do not fall under the explanation of ‘e-book’ given in the said entry. Furthermore, in the case at hand as held in para 6.3 above, the initial supply of DVD/CD  is supply of goods and hence the Notification do not have any application.
Ruling : The supply of DVDs/CDs with The Law Weekly Desktop’ software along with end user license and the supply of access to the on-line database on the applicant’s website are not eligible to avail the benefit of entry at SI. No. 22 of Notification No. 13/2018-C.T.(Rate) dated 26.07.2018 notification dated 26.07.2018.
[2020 (5) TMI 219 – AAR, Tamilnadu – M/s. Law Weekly Journal]
ORDERS OF APPELLATE ADVANCE RULING AUTHORITIES
Maintenance charges collected by Resident Welfare Associations :
Facts : The appellant, an association of apartment owners, collects monthly contributions, from owners of apartment in complex which is used by association for purpose of making payments to third parties for providing security service for residential complex, maintenance or upkeep of common area and common facilities like lift, water sump, health and fitness centre, etc.,
The appellant filed an application for Advance Ruling under section 98 of the CGST Act, 2017 and KGST Act,2017 on the following question:
(i) Whether the applicant is liable to pay CGST and SGST on the amount of contribution received from its members?
(ii) If yes, whether it can avail the benefit of Notification No 12/2017 CT(R) dt 28.06.2017 (SI.No. 77) read with Notification No 02/2018 dt 25.01.2018 which provide for exempting from tax, the value of supply upto an amount of Rs. 7500 per month per member?
(iii) lf the answer to (ii) is ‘yes’, whether it is required to restrict its claim of input tax credit?
(iv) Whether the applicant is liable to pay CGST/SGST on amounts which it collects from its members for setting up a corpus fund?
The AAR has given a ruling on the above questions as follows:
(i) The applicant is liable to pay CGST and SGST on the amount of contribution received from its members as their activities amounts to taxable supply of service.
(ii) The benefit of exemption under entry No. 77 of Notification No 12/2017 CT(R) dt 28.06.2017 (as amended by Notification No. 02/2018 dt 25.01.2018), is available to the applicant only if maintenance charges (contributions) do not exceed Rs.7500 per month per member. In case the charges exceed Rs.7500 per month per member, the entire amount is Taxable.
(iii) The applicant is eligible to claim input tax credit on the inward supplies of goods and services and this is subject to the restrictions as enumerated in Section 17(2) of the CGST Act read with Rule 42 of the CGST Rules and other restrictions applicable if any.
(iv) The applicant is not liable to pay CGST/SGST on amounts which it collects from its members for setting up a corpus fund.
Observations & Findings : Under the GST law, the word ‘supply’ has not been defined but rather the scope of what constitutes ‘supply’ is stated in Section 7 of the CGST Act. For an activity’ to qualify as “supply” in terms of Section 7 of the CGST Act, the following ingredients must be satisfied:
(i) There must be a supply of either ‘goods’ or ‘services’ or both;
(ii) The activity should be undertaken for a consideration
(iii) The activity should be in course or furtherance of business
Section 2(102) of the CGST Act defines “services” to mean anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. The word ‘anything’ used in the said definition does not necessarily imply that everything other than goods, money and securities, is a service.
Section 2(17)(e) of the CGST Act, defines with respect to provision of services by clubs, etc., as follows:
“provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members”.
The Appellant has strongly relied upon the Supreme Court’s decision dated 03-10-2019 in the case of State of West Bengal & Ors vs Calcutta Club Ltd (Civil Appeal No 4184/2009) = 2019 (10) TMI 160 – SUPREME COURT wherein it is stated that supplies made to its members by the member associations, both incorporated as well as unincorporated, are governed by the principal of mutuality and therefore they cannot be charged to tax, be it as tax on sale of goods or as a tax on supply of service. We have gone through the judgment of the Supreme Court in the above cited Civil Appeal wherein the Hon’ble Supreme Court has decided on two issues relating to taxability of sale of goods and provision of services by member’s club to their members. We are concerned only with that portion of the decision which deals with the levy of service tax upon members clubs.
We find that the decision of the Supreme Court was rendered in the context of the provisions of the Finance Act, 1994. In the Finance Act, 1994, the taxable event in terms of Section 66B was on services ‘provided or agreed to be provided by one person to another’. Under GST, the taxable event is the “supply” of goods or services or both.
The exemption as per the entry 77 of the Notification No 12/2017 CT (R) is available only when a member’s contribution per month is upto an amount of ₹ 7500. A member who contributes an amount which is more than ₹ 7500, will not be eligible for the exemption under entry No 77 and the entire contribution amount will be liable to be taxed. Hon’ble Supreme Court of India, Constitution Bench of Five Judges in the case of Commissioner of Customs (Import) Mumbai vs. M/s. Dilip Kumar and Company and Ors (Civil Appeal No. 3327 OF 2007) = 2018 (7) TMI 1826 – SUPREME COURT has held that the benefit of ambiguity in exemption notification cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue/state. Exemption notifications are subject to strict interpretation.
Order : We uphold the passed by the Advance Ruling Authority and appeal filed by the appellant stands dismissed.
[2020 (2) TMI 435 – Appellate AAR, Karnataka – Vaishnavi Splendour Homeowners Welfare Association]
ITC on movable Furniture and Fixtures :
Facts : The Appellant is engaged in providing shared workspace/Office Space to the freelancers, start-ups, small businesses and large enterprises. The Appellant provides a “space-as-a-service” membership model wherein it offers individuals and organizations the flexibility to scale work space up and down as needed. The Appellant procures goods and services from various contractors for fitting-out of the workspaces and provides the said workspace on rent, to various companies and individuals as sharing work-spaces. The Appellant has paid applicable GST on such procurements. Section 16 (1) of the CGST Act entitles a registered person to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business. However, as per Section 17(5) of the CGST Act, a restriction is imposed with respect to input tax credit (hereinafter referred to as “ITC”) on procurement of goods and services or both received by the taxable person for construction of an immovable property.
The Advance Ruling Authority ruled that no input tax credit can be availed by the applicant on the detachable sliding and stacking glass partition which is movable in nature and capitalized as “furniture and fixture”, and is not capitalizes as an immovable property.
Aggrieved by the impugned ruling relating to the denial of input tax credit on detachable sliding and stacking glass partitions, the Appellant filed this appeal.
Observations & Findings : In the instant case, the foremost test to be applied for triggering the restriction under Section 17(5)(d) is whether an activity of fixing the detachable sliding and stackable glass partitions qualifies as ‘construction of an immovable property’ or not. The normal understanding of the term ‘construction’ is to ‘make or build’ something. For the purpose of Section 17(5)(d), the term ‘construction’ has been defined to include ‘re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.’ In the Appellant’s case, as per the above said explanation, the addition of glass partitions qualifies as ‘construction’. This construction is done by the Appellant on his own account. What remains to be determined is whether the fixing of glass partitions amounts to construction of ‘immovable property’? The term ‘immovable property’ has not been defined in the GST law but rather it is defined in Section 3(26) of the General Clause Act, 1897 as including land, benefits arising out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.” “Attached to earth” is defined in section 3 of the Transfer of Property Act. The detachable sliding and stackable glass partitions are movable property and addition /fixing of glass partitions does not amount to construction of immovable property. Therefore, the procurement of detachable sliding and stackable glass partitions will be eligible for input tax credit and will not be hit by the provisions of Section 17(5)(d) of the CGST Act.
Order : We set aside the Advance Ruling which deals with the eligibility of input tax credit on detachable sliding and stackable glass partitions. We answer the question in appeal as follows: “Input tax credit can be availed by the Appellant on the detachable sliding and stackable glass partitions which is movable in nature.”
[2020 (5) TMI 388 – Appellate AAR, Karnataka – Wework India Management P Ltd.]
Supply of temporary residential accommodation by Religious Charitable Trusts :
Facts : The Appellant is a religious charitable trust registered under Section 12 AA of the Income Tax Act, 1961 carrying out religious and charitable activities. The Appellant is principally engaged in the field of spreading knowledge and advancement of Jain Dharma. The Appellant conducted a religious function. The main activities conducted were Pravachanas, Spiritual Speeches, Dhyana, Meditation, prayer, etc. The Appellant provided boarding and lodging facility to the devotees for which purpose, the Appellant erected temporary residential rooms and facilities and charged rent on some categories of accommodation.
The Appellant sought an advance ruling seeking to know whether the applicant is liable to pay tax on renting of temporary residential rooms and supply of food at concessional rate for consideration to the devotees and renting of space for shops and stalls for the purpose of religious programs where the predominant object is not to do business but for advancement of religion?
The Advance Ruling Authority held that the applicant is liable to pay tax in renting of temporary residential rooms for consideration to the devotees and renting of space for shops and stalls.. The applicant is liable to pay tax on renting of temporary residential rooms of all categories if the declared tariff of a unit of accommodation is ₹ 1,000 or more per day or equivalent.
Aggrieved by the impugned ruling, the Appellant filed this appeal.
Observations & Findings : The entry clause (b) of Sl.No 13 merely states ‘renting of precincts of a religious place to the general public’. To understand what gets covered under this clause, one has to look at the exclusions given in the proviso to this clause which states that the exemption shall not apply to the following:
renting of rooms where the charges are ₹1,000 or more per day,
renting of premises, community halls, kalayanamantaps or open area, and the like where charges are ₹ 10,000 or more per day;
renting of shops or other spaces for business or commerce where charges are ₹10,000 or more per month.
On a conjoint reading of the clause (b) of Sl.No 13 and the exclusions, it is evident that the exemption under clause (b) applies to renting of rooms where the charges are less than Rs. 1,000 per day, renting of premises, community halls, kalayana Mantapsor open area, and the like where charges are less than ₹ 10,000 per day and to renting of shops or other spaces for business or commerce where charges are less than ₹ 10,000 per month.
Order : We uphold the Advance Ruling passed by the Authority and dismiss the appeal filed by the appellants.
[2020 (5) TMI 387 – Appellate AAR, Karnataka – Acharya Shree Mahashraman Chaturmas Pravas Vyavastha Samiti Trust]