RULINGS OF ADVANCE RULING AUTHORITIES

1. Construction of houses

Facts : The applicant is a non-governmental organization, registered as a charitable society, providing services in the field of construction of residences and affordable housing, architectural advisory services, execution of government contracts etc with special focus on environment friendly construction. M/s. Sri Sathya Sai Trust, Kerala a charitable organisation engaged in various charitable activities across Kerala has awarded a rehabilitation project to the applicant for providing affordable shelter to the 2018 flood victims.

The applicant has sought advance ruling on the following;

1. Whether the services provided by the applicant to Sri Sathya Sai Trust for construction of low cost housing units for flood-affected individuals in Kerala fall within the ambit of Serial number (i), (v) or (va) of Notification No.11/2017-CT(R) dated 28.06.2017 as amended by Notification No. 03/2019 – CT (R) dated 29.03.2019.

2. Whether services by the applicant are otherwise exempt from whole or part of GST leviable thereon by Notification 12/2017- CT (R) dated 28.06.2017 as amended.

Observations & Findings : On a conjoint reading of the provisions of the CGST Act, and relevant Notifications issued there under, it is evident that the activity undertaken by the applicant for Sri Sathya Sai Trust as per the agreement cannot by any stretch of imagination be construed as construction of affordable residential apartments by a promoter in a residential real estate project intended for sale to a buyer and hence the rate of GST prescribed under Sl No. 3 (i) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 is not applicable in respect of the activity. The activity undertaken by the applicant is construction of 45 individual residential houses at different locations on the land belonging to the individual beneficiaries and the activity squarely falls within the scope of works contract as defined in Section 2 (119) of the CGST Act, 2017.

Ruling : The services provided by the applicant to Sri Sathya Sai Trust for construction of low cost housing units falls within the ambit of Sl No.3 (v) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended and is liable to GST at the rate of 12%. The services by the applicant are not exempt from whole or part of GST leviable thereon by Notification 12/2017- CT (R) dated 28.06.2017 as amended.

[2020 (8) TMI 529 – AAR, Kerala – Hebitat Technology Group]

2. Educational services

Facts : The Applicant is an institute imparting education to students to facilitate them in obtaining qualifications like Chartered Accountancy, Cost Accountancy, Company Secretary, Certified Management Accountant, Certified Public Accountant, Association of Chartered Certified Accountant etc. Apart from others, the applicant requested advance ruling on the following important issue. :

Whether the education programme and training being offered by the applicant is exempted from GST as imparting of education since the applicant is giving lecture classes and notes including printed books published by Govt.-recognized institutes, on the basis of the specific syllabus (curriculum) published by the very same institutes formed under Acts of Parliament and also facilitating the students to appear for the examinations conducted by the same institutes.

Observations & Findings : The applicant is not approved / recognised by the Institute of Chartered Accountants of India or Institute of Cost Accountants of India or Institute of Company Secretaries of India or Universities to conduct coaching/ training of students as per the syllabus / curriculum prescribed by them to obtain the qualifications / certificates granted by the institutes / universities. Therefore, the applicant is not covered under the definition of “educational institution” in Para 2 (y) of the exemption Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and hence the services provided by the applicant is not exempted from GST.

Ruling : The applicant is not covered under the definition of “educational institution” in Para 2 (y) of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and hence the services provided by the applicant is not exempted from GST.

[2020 (8) TMI 680 – AAR, Kerala – Logic Management Training Institutes P Ltd.]

ORDERS OF APPELLATE ADVANCE RULING AUTHORITIES

1. Valuation of supply

Facts : The Appellant is engaged in the business of operation and maintenance of International Tech Park, Bangalore which includes operation and maintenance of electrical systems at common areas, building and civil repairs, maintenance of lifts etc. In addition, the appellant also arranges for the transport of its staff and employees of the corporate clients in the Tech Park who are the tenants of the business park.

For the purpose of arranging the transport facility, the Appellant has entered into a contract with Bangalore Metropolitan Transport Corporation (BMTC) whereby BMTC allots 1 bus to the Appellant for every 50 passes purchased. The Appellant receives the following types of bus passes from BMTC for distribution, Non AC regular BMTC bus pass; and Combo bus pass which can be used for Non-AC and AC buses.

BMTC does not charge GST for the non-AC bus passes since the same is exempt from GST vide Entry No. 15 of Notification No. 12/2017-CT(R) dated June 28,2017. However, for Combo bus pass (i.e. which can be used for non-AC and AC buses), BMTC charges GST at 5% as per Entry No. 8(ii) of Notification No. 8/2017- IT (R) dated June 28, 2017.

On an application for Ruling the AAR, Karnataka has given ruling holding that the value of the bus passes distributed by the applicant to the commuters and the facilitation charges is to be included in the value of services provided by the applicant. Regarding the second question of “whether the supply of service in the hands of the applicant could be classified merely a supply of facilitation service between BMTC and the commuters”, the answer is in the “negative”.

Aggrieved by the above ruling the Appellant is before Appellate AAR, Karnataka.

Observations & Findings : The bus passes procured by the Appellant from BMTC are issued by them to the commuters as part of the service provided by them on their own account. If they were merely facilitating the service or acting as an intermediary, as claimed by them, the bus passes would have been issued by BMTC to the commuters. In the light of the above discussions, we agree with the ruling given by the lower Authority and hold that the service provided by the Appellant in arranging the transportation of the employees is not rendered in the capacity of an intermediary and is not a facilitation service between BMTC and the commuters. The service of transporting the employees of the corporate clients of the International Tech Park is rendered by the Appellant on his own account on a principal to principal basis for a consideration.

It is amply clear that those instruments which satisfy the conditions of being accepted as consideration/part consideration against purchase of specified goods and the identities of the potential suppliers are indicated in the instruments are to be considered as ‘Vouchers’ for the purposes of GST. Vouchers are neither money nor actionable claim. It is not a claim to a debt nor does it give a beneficial interest in any movable property to the bearer of the voucher. Similarly, in the instant case, the bus passes are purchased by the commuters on paying a value in money. The commuter produces the bus pass for purchasing the service of transportation. The bus pass only give the commuter the right to travel. If the commuter does not use the bus pass within the duration for which it is valid or loses the bus pass, it becomes invalid and cannot be used to procure the service of transportation. The bus pass is only a contract of carriage. A contract is not property, but only a promise supported by consideration. Thus, the bus pass is not an actionable claim as defined under Transfer of Property Act. It is only an instrument accepted as consideration/part consideration while purchasing the service from the Appellant. Therefore, we do not agree with the claim of the Appellant that the bus pass is an actionable claim not liable to GST. We agree with the ruling given by the lower Authority and hold that by virtue of Section 15 of the CGST Act, the value of the service supplied by the Appellants will include the value of the bus.

Order : We uphold the ruling of the lower Authorities and dismiss the appeal filed on all counts.

[2020 (8) TMI 525 – Appellate AAR, Karnataka – Ascendas Services (India) P Ltd.]

2. Intermediary services

Facts : The Appellant is an individual stated to be an employee of an overseas company engaged in business of manufacturing and selling various categories of distribution transformer components and accessories. The Appellant is required to make a presentation of the various categories of distribution transformer components and accessories offered by the company. The company specifies the presentation and the technical details of the products. The customers approached by the Appellant place their orders for the products with the Company and make payments to the Company’s account. The Appellant does not raise any invoice for the products ordered by the said customers. The Appellant is paid a lump-sum compensation monthly for the aforementioned services. In addition to the aforementioned compensation, the Company provides a credit card (that has been issued in the name of the company) for the purpose of reimbursing reasonable travel expenses, office needs and other business expenses incurred by the applicant in performing the said services.

On the application for Ruling, the AAR, Karnataka has issued ruling that the services provided by the applicant result in the supply of services classifiable under HSN 9983.11 under the description “Other professional, technical and business services”. The applicant is required to be registered under the Central Goods and Services Tax Act, 2017 and is liable to pay GST @ 18%.

Aggrieved by the above ruling the Appellant is before Appellate AAR, Karnataka.

Observations & Findings : The argument of the Appellant that they fall within the exclusion clause of the definition of intermediary is not a correct interpretation of the law. The language of the exclusion clause is such that it is applicable to those persons who supply such goods or service (or both) on their own account. If a person either ‘facilitates’ or alternately ‘arranges’ any supply of goods or service (or both), between two or more persons, and does not supply such goods or service (or both) on his own account, he would be regarded as an ‘intermediary’. At the risk of being repetitive, the Appellant is clearly facilitating the supply of the products of overseas Companies directly to the latter’s customers and is not supplying such goods on his own account. Therefore, the Appellant does not fall within the ambit of the exclusion.

In view of the above, the service of sales belongs to overseas Companies is classifiable as “Other professional, technical and business services” under Service Code 9983.11 and the same is being rendered as an ‘intermediary service’ as defined under section 2(13) of the IGST Act.

Order : We also uphold the other findings of the lower Authority with regard to liability to register, the rate of tax and the time and value of supply and dismiss the appeal on all counts.

[[2020] 119 taxmann.com 51 (AAAR-KARNATAKA) – Rajendran Santhosh]