AAR & AAAR Weekly Round-Up***

Clipped from: https://www.taxscan.in/aar-aaar-weekly-round-up-6/241337/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=AAR%20&%20AAAR%20Weekly%20Round-Up

By Taxscan Team – On January 1, 2023 11:37 am

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This weekend summary provides an analytical synopsis of the most major stories about the Goods and Service Tax Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR), that were authored at Taxscan.in during the one week from December 25 to December 31, 2022.

Services of University of Kota to its constituent Colleges is ‘Supply of Service’ liable to GST

In the case of Re: M/s. University of Kota: 2022 TAXSCAN (AAR) 293, the Rajasthan Advance Authority Ruling (AAR), presided over by members Umesh Kumar Garg and M.S. Kaavia, ascertained that the affiliation provided by the Kota University to its constituent colleges for the purpose of imparting education is a supply and pertains to GST. The applicant claimed that affiliation fees were a taxable service under the Pre-GST regime. The bench concurred that the affiliation fees under general university functions to colleges regarding approval for a college, approval for a course, start-up approval, permanent affiliation, continuation of affiliation for each course, permission for increase in intake for each course, and penal fee for late Application appeared to be entirely unconnected to admission to or the conduct of examination by such institution.

No GST on Services provided by Rajasthan Housing Board as ‘Governmental Authority’

According to a ruling by the Rajasthan Advance Authority Ruling (AAR) in Re: M/s. Rajasthan Housing Board: 2022 TAXSCAN (AAR) 294, which was presided over by members Umesh Kumar Garg and M.S. Kavia, the Rajasthan Housing Board (RHB) is a governmental authority and its services are not subject to the Good and Services Tax (GST). According to the applicant’s counsel, CA Manish Maliwal and CA Virendra Parwal, RHB is a “Governmental Authority” and its services are free from GST. The authority determined that the RHB’s services related to any task delegated to a municipality under Article 243W of the constitution are “Nil” graded and hence exempt from GST.

CRP Test Kit and HbAlc Test kit attract 5% GST

The CRP Test kit and HbA1c are classifiable under chapter heading 3002, according to the Maharashtra Appellate Authority for Advance Ruling (AAAR), and would be subject to GST at a rate of 5%. In Re: M/s. Accurex Biomedical Private Limited: 2022 TAXSCAN (AAAR) 148, Coram made up of Shri Ashok Kumar Mehta, member for Central Tax, and Shri Rajeev Kumar Mital, member for State Tax, noted that the HblAc Test Kit is a diagnostic kit, much like the CRP Test Kit, with various components made from human blood. It operates on the same agglutination principle as the CRP Test Kit. Despite overturning the MAAR order, the MAAAR has determined that HbA1c would be classed under chapter heading 3002 and, as a result, will be subject to GST at a rate of 5% because it is constitutionally and functionally very similar to the CRP Test kit.

18% GST payable on Royalty paid under RCM for Mining

The GST at the applicable rate is payable by the applicant on the royalty amount via the reverse charge mechanism, according to the authority of advance ruling (AAR) of Chhattisgarh. The authority Bench in Re: M/s.Shanti Enggicon Private Limited: 2022 TAXSCAN (AAR) 295 indicated that, in accordance with Section 15 of the Central Goods and Services Tax Act of 2017, “Royalty amount is also includible while arriving at the transaction value for payment of applicable GST on the supply of aforesaid services rendered by the applicant to the main contractor.” On payment of a consideration to the Government of Chhattisgarh, the applicant admittedly procured mining rights, including its exploration and evaluation of the soil used in earthwork. With effect from 1.4.2018, GST is payable by the applicant on a reverse charge basis on the consideration so paid to the Government, at the rate of supply of goods being mined.

18% GST payable on Construction Work Contract Services to UP Jal Nigam

The Uttar Pradesh Authority of Advance Ruling (AAR) has ruled that GST at the applicable 18 % rate is payable by the applicant on construction work contract services to Uttar Pradesh Jal Nigam. The Authority Bench stated that “the Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 was amended via Notification No. l 5/2021- Central Tax (Rate) dated November 18, 2021, wherein the words “Union territory, a local authority, a Governmental Authority, or a Government Entity” were substituted with “Union territory or a local authority” in Entry 3(iii). It was thus ruled by Shri Rajendra Kumar, Member (Central Tax) and Shri Vivek Arya, Member (State Tax) in Re: M/s.Concrete Udyog Limited : 2022 TAXSCAN (AAR) 296 that “as the UPJN does not qualify as a ‘local authority’ and it qualifies as a governmental authority, the tax rate of 18% is applicable on the works contract services provided to UPWS by way of Entry 3(xii) of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.”

Hiring of Goods Transportation Vehicle by GTA is exempted from GST, RCM not Applicable

The Goods Transportation Agency (GTA) has been found to be taxed at a “Nil Rate” and to be exempt from obligation under the Reverse Charge Mechanism by the Authority of Advance Ruling (AAR), Chhattisgarh in Re: M/s. Prahallad Ray Rekhraj Agarwal: 2022 TAXSCAN (AAR) 297. The authority highlighted the response of the jurisdiction officer to a letter addressed to the Assistant Commissioner of State Tax stating that services provided by hiring a GTA for the purpose of transporting goods are free from the GST under HSN Code 9966. Additionally, both the RCM and the GST are exempt. As there is no tax, the use of the Input Tax Credit will likewise remain unchanged. The members arrived at the conclusion that the service of providing a means of transportation for rent to the applicant GTA entitled for the GST of Nil rate. Additionally, the issue of taking an input tax credit does not come up when there is no tax due.

GST Notification For concessional tax rate of 12% on Composite Supply of works Contract  applies prospectively

The Advanced Authority Ruling (AAR) of Chhattisgarh ruled that the notification no. 20/2017 amended the tax rate from 18% to 12% on Composite Supply of Works Contract only applied prospectively. The Authority in Re: M/s Dee Vee Projects Limited: 2022 TAXSCAN (AAR) 298 opined that one of the established rules of interpretation was that unless explicitly stated, a piece of legislation is presumed not to be intended to have a retrospective operation. The bench remarked that the applicant misinterpreted the tax liability at 12% and July for the start date of the notification sent in August. Despite the tax being 18%, it is still in effect until August 2017. The notification only applies to future payments, not payments that have already been made.

12 % GST not available to Supply Construction Lines and Open Lines undertaken to Indian Railways

The Uttar Pradesh Authority of Advance Ruling ( AAR ) has ruled that 12 % GST is not available to supply construction lines and open lines undertaken to Indian railways. It was viewed that the specified activities undertaken by the Applicant are about the immovable property (i.e. rail tracks). Thus, the first condition to qualify as a works contract. Shri Rajendra Kumar, Member (Central Tax) and Shri Vivek Arya, Member (State Tax) observed that “the applicant is not entitled to benefit of entry 3(v)(a) of Notification No. 8/2017-integrated Tax (Rate) dated 28.06.2017 because there is no contract for building, construction, fabrication, completion, erection, Installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property.” The Authority held that the applicant is not entitled to an IGST rate of 12 % after 18.07.2022 or even before 18.07.2022 and the appropriate rate of IGST payable by the applicant on services provided on ‘construction line’ as well as ‘open line’ is 18%.

Eco-friendly expandable Paper Wrap (Honeycomb Paper for Wrapping) attracts 18% GST

The Uttar Pradesh Authority of Advance Ruling ( AAR ) has ruled that Eco-friendly expandable paper wrap (honeycomb paper for wrapping) attracts 18% GST. It was submitted that the product ‘eco-friendly expandable paper wrap’ merit classification under HSN 48084090 and the jurisdictional authority has opined that the product merit classification under HSN 48239013. The main intended use is for Packing and wrapping paper which is also eco-friendly and expandable. Shri Rajendra Kumar, Member (Central Tax) and Shri Vivek Arya, Member (State Tax) observed that the assessee have themselves declared their product to be “a packing material used for the packing of goods as a cushioning material, separators or edge protector to make shipping cartons of goods and as pallets and pallet boxes” The Authority held that the eco-friendly expandable paper wrap (honeycomb paper for wrapping) merits to be classified under heading 48239013.

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