Notifications issued giving effect to various rate changes / exemptions with respect of goods as well as services which were approved in the 28th GST Council meeting held on 21.07.2018. Refer our earlier update for various recommendations made by the GST Council in the meeting. The below given table summarizes the Notifications issued:
|Sr. No.||Notification No.||Subject / Summary|
|1.||13/2018-Central Tax (Rate) dated 26.07.2018||Notifies various rate changes for services by amending Notification 11/2017-CT(R) dated 28.06.2017, post the recommendations of the GST Council Meeting;|
|2.||14/2018-Central Tax (Rate) dated 26.07.2018||Exempts various services by amending Notification 12/2017-CT(R) dated 28.06.2017, post the recommendations of the GST Council Meeting;|
|3.||18/2018-Central Tax (Rate) dated 26.07.2018||Notifies various rate changes for goods by amending Notification 01/2017-CT(R) dated 28.06.2017, post the recommendations of the GST Council Meeting;|
|4.||18/2018-Central Tax (Rate) dated 26.07.2018||Exempts various goods by amending Notification 02/2017-CT(R) dated 28.06.2017, post the recommendations of the GST Council Meeting;|
|5.||21/2018-Central Tax (Rate) dated 26.07.2018||Provides for concessional rates for various handicrafts items by exempting to the extent of a certain specified percentage.|
[Corresponding IGST (Rate) Notifications have also been issued]
Valuation – Applicant, a Cement manufacturer, enters into an agreement with dealers/stockists for supply of cement. The agreement also provides for various discounts to the dealers/stockists that may be decided from time to time. The Maharashtra AAR held that amount paid by the Applicant to the dealers on account of rate difference / discounts would not be allowed as a deduction from the transaction value. The AAR referred to Section 15(3)(b)(i) of the CGST Act which states that discount would be allowed to be deducted from the value of supply provided the same is established in terms of agreement before or at the time of supply.
In the present case, the discount is contingent and open ended and the quantum of discount is not known at the time of supply. The discount percentages also vary and there is not pre-fixed criteria for the same. It was accordingly held that such a discount would continue to form part of the value of supply and subject to tax.
Taxability – The question under consideration was whether ‘Exam support services’ provided by the Applicant to British Council U.K. for conducting of IELTS examination would be treated as a Composite supply or Mixed supply and corresponding rate of tax. The services proposed to be provided by the Applicant are of managing the test centres in India, managing the administration and logistics, printing of results, distributing certificates, recruiting, training, etc. The Haryana AAR held that the above services are for conducting IELTS exams and are naturally bundled with each other without having any independent existence and therefore, would constitute as a ‘Composite supply’.
It further held that the principal supply in the given case is of service of conducting exams, the same would be classifiable under code 999299 as ‘Education support services’ and be taxed at 18%.
Taxability – The question under consideration was whether the activity of fabricating/mounting/fitting bus body on the chassis would be considered as supply of goods or services. The Haryana AAR referred to the CBIC Circular 34/8/2018-GST dated 03.03.2018 which has clarified that in case of activity of bus building there is a composite supply of goods as well as service and taxability would depend on the principal supply which would depend on facts of each case.
The Haryana AAR, considering the facts of the case, held that it is only the chassis which are supplied by the customers of Applicant and there is no treatment being undertaken on the chassis, except mounting of bus body on the same and hence does not qualify as Job work activity. Further, the building of bus body also involves use of various raw materials and inputs which are being used by the Applicant on its own account. Hence, based on the present facts, the activity would qualify as a Composite supply with supply of bus bodies as a Principal supply having HSN 8707.
Taxability – The Maharashtra AAR held that in case where transportation charges are received as a part of Engineering, Procurement, Commissioning (EPC) contract it would form part of a Composite supply and therefore subject to tax. The AAR rejected the Applicant’s argument that there exists a standalone contract for transportation of equipment for which separate consideration is received. The AAR held that it is necessary to read the contract as a whole and not in isolation to ascertain its true nature. The Applicant, therefore, is not entitled to the benefit of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 which specifically exempts transportation services by a person other than a GTA, since the same forms part of a Composite supply of EPC contract.
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