Alerts & Updates

ELP GST Update

Tax | Jun 12, 2018


Notifications and Order No. D.C. (A&R)-2/GST/PWR/Sections/2017-18/ADM-8 dated June 5, 2018   

The Government of Maharashtra vide the abovementioned Notification designates Deputy Commissioners and Joint Commissioners as ‘Appellate Authority’ to hear appeals against the orders of Adjudicating Authority in terms of Section 107 of Maharashtra Goods and Services Tax Act 2017 (MGST Act). Further, vide the aforementioned Order it also delegates powers relating to provisional assessment (u/s 60), assessment of liability for company in liquidation (u/s 88), assessment of liability of partners of firm to pay tax (u/s 90), examination of records of any proceeding & receipt of order passed by Appellate Authority (u/s 107) to Special Commissioner, Additional Commissioners and Joint Commissioner of State Tax under MGST Act.


Circular No. 47/21/2018-GST dated June 8, 2018

The CBIC has issued clarifications inter-alia w.r.t. applicability of GST and requirement of e-way bill in certain business scenarios. The clarifications are summarized below:

  • Moulds and dies owned by Original Equipment Manufacturers (OEM) sent to unrelated / distinct component manufacturer on Free of Cost (FOC) basis, does not constitute a “Supply” absent any consideration and that there is no requirement for reversal of Input Tax Credit (‘ITC’) availed on such moulds and dies by OEM. CBIC has further clarified that value of FOC moulds and dies does not merit inclusion in the value of supply made by component manufacturer in terms of Section 15(2)(b) of Central Goods and Services Tax Act (‘CGST Act’), however if the contract was for supply of components by using moulds / dies belonging to component manufacturer but same have been supplied by OEM on FOC basis, the amortized cost of such moulds and dies shall be added to value of components and in such cases, OEM will be required to reverse ITC.
  • In instances of servicing of cars, which involve both supply of goods (spare parts) and services (labour) if the value of goods and services is shown separately, the supplies would be taxed as goods and services respectively.  Although this, the clarification also states that the applicability of GST would depend upon facts and circumstances of each case thus leaving room for ambiguity.
  • In an auction scenario, the principal, auctioneer as well as the buyer should disclose any such place as ‘additional place of business’, where the underlying goods may be stored. For purpose of supply of tea through a private treaty, the principal and an auctioneer may also comply with said provision. Such principal and auctioneer are required to maintain the books of accounts relating to each and every place of business in that place itself; however in case of any difficulties, the books of accounts relating to additional place of business could be maintained at their principal place of business instead. Maintainability of ITC, in such cases, has been linked to compliances and conditions as prescribed including aspects noted above.
  • In case of transportation of goods by railways, railways shall not deliver the goods unless the e-Way Bill is produced at the time of delivery, in terms of proviso to Rule 138(2A) of CGST Rules.
  • CBIC clarified that, if goods transit through a second State while moving between two places within the same State, an e-Way Bill is required to be generated.
  • Further, no e-Way Bill shall be required in case of movement of goods from DTA unit to SEZ unit or vice versa located in the same state, if same is exempted under Rule 138(14)(d) of CGST Rules.

Advance AUTHORITY Ruling

M/s Inox Air Products Private Limited [TS-223-AAR-2018-NT]

Job work – The principal supplies necessary goods such as Industrial Quality Water and Electricity to the applicant job-worker, which is used for manufacturing industrial gases by the applicant viz. Oxygen, Nitrogen and Argon by undertaking treatment or process and supplied to the principal.  The applicant, thus, raised a question as to whether the arrangement qualifies as job-work under GST regime in as much what was being supplied i.e.  Industrial Quality Water and Electricity constitute ‘goods’?  The question was answered in the affirmative by the AAR.

Valuation – AAR also held that applicant is liable to pay GST on value of supply determined u/s 15(1) of CGST Act / Gujarat GST Act as the applicant and the principal are not related persons and hence, the GST valuation code cannot be invoked as long as the job work charges are the sole consideration for the agreed activity.

M/s Rishi Shipping [TS-224-AAR-2018-NT]

Classification – The applicant is engaged in providing service of space on rent to their customers, where they store imported agricultural commodities. The key issue was whether the services provided by the applicant were classifiable under ‘renting or leasing services’ or ‘storage or warehousing services’.  It was held that once the storage premises were rented by the applicant to its customers, what use the customer makes of such premises doesn’t have any bearing on the nature of service provided by the applicant; accordingly, service provided is classifiable as ‘Rental or leasing services involving own or leased non-residential property’ (SAC- 9972) leviable to GST @ 18%.

Mitora Machinex Pvt Ltd [TS-221-AAR-2017-NT]

Classification“Ice Cream Making Machine” is classifiable under Tariff Heading 84.18 and not under Tariff Heading 84.38 of the CTA, 1975.

Power Build Pvt Ltd [TS-438-AAR-2017-NT]

Classification -‘Geared Motor’ is an assembly product of ‘Electric Motor’ and ‘Gear Box’ and is correctly classifiable under Chapter Heading 8501 of the CTA, 1975.

Dinesh Kumar Agrawal [TS-25-AAR-2018-NT]

Classification – Contract for assembly, erection and commissioning of power plant undertaken under a separate contract does not fall under the ambit of SAC 9954 but falls under Construction Service 9987 Maintenance, repair and installation (except construction) services, which attracts GST @18% as per Entry No.25 of Notification No. 11/2017-CT(R). It was also stated that time of supply of power plant shall be determined u/s 31(4) (continuous supply of goods) r/w Section 12(2) of CGST Act / Andhra Pradesh GST Act.

Fairmacs Ship Stores Pvt. Ltd. [TS-226-AAR-2018-NT]

Taxability – AAR holds that outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships shall be liable to GST. Observes that goods received by applicant are within the Customs area as defined u/s 2(11) of Customs Act and hence, are to be treated as supply in the course of ‘inter-state’ trade. AAR referred to Circular No. 46/2017-Cus which stipulated that supply of warehoused goods squarely falls within “supply” definition u/s 7 of CGST Act.

It may be noted that while the ruling relies upon Circular No. 46/2017-Cus, however the same has been re-examined by Circular No. 3/1/2018-IGST dated 25th May 2018, which was issued post the date of pronouncement i.e. 25th January 2018.

Tata Projects Ltd [TS-227-AAR-2018-NT]

Taxability – Services of rejuvenation of river, including area development on turnkey basis and its Operation & Maintenance (O&M) by Tata Power Limited Consortium to Jaipur Development Authority (Govt. authority) are covered under notification 11/2017-CT(R) as amended and attract GST @12%. Further, holds that works contracts services provided by sub-contractor to main contractor or to Central/State Govt. or Govt. authority/entity also attract GST at rate applicable to main contractor.

Saraswathi Metal Industries [2018-TIOL-46-AAR-GST]

Taxability – Commodities such as marine propellers, rudder set, stern tube set, propeller shaft and M.S. Shaft for couplings are mainly used as a part of fishing/floating vessels, the same would be covered under Entry 252 of Schedule I of Notification No. 01/2017- CT(R) and hence taxable @5%.

Veena Chemicals [2018-TIOL-45-AAR-GST]

Taxability – Implants for joint replacements falling under HSN Code 9021 3100 are covered under Serial No. E(9) of List 3 of Entry 257 of Schedule I of Notification No. 01/2017 – CT(R) attracting GST at the rate of 5%.

JJ Fabrics [2018-TIOL-44-AAR-GST]

Classification – Carry bags made of polypropylene non-woven fabrics is classifiable under HSN code 6305 and since sale value is less than Rs.1000/- per piece, it is chargeable to GST under entry 224 of Schedule I of the Notification No. 01/2017-CT(R) , hence taxable @ 5%.

Dyna Automation Pvt Ltd [2018-TIOL-59-AAR-GST]

Classification – The key issue was classification of the product Steering Unit (Hydraulic Orbital Valve). Held that the product was classifiable under Tariff Heading 84.81 of the Customs Tariff Act, 1975, thereby, Goods and Services Tax rate applicable to Tariff Heading 84.81 is applicable to the said product.

Aqua Machineries Pvt Ltd [2018-TIOL-61-AAR-GST]

Taxability – Held that Pumps for ‘sewage’ / ‘waste’ not meant for handling ‘water’, taxable at 18%. AAR observes that terms ‘sewage’ and ‘water’ have been separately used and therefore, the term ‘water’ cannot be said to include ‘sewage’ or waste; In common parlance, when one refers to ‘water’, it is understood in the sense of clear or raw water and not in the sense of ‘sewage’.

Guru Cold Storage Pvt Ltd [2018-TIOL-58-AAR-GST]

Exemption – Held that pulses (de-husked or split), jaggery, processed dry fruits such as processed cashew nuts, raisin (kismis), apricot (jardalu), fig (anjeer), date, tamarind (ambali foal), shelled groundnuts & groundnut seeds, and copra are not agriculture produce. Besides ‘Cereal’ on which any processing is done as is not usually done by a cultivator or producer will fall outside the definition of agriculture produce. Moreover, processed spices including processed turmeric and processed ginger (soonth), are not agriculture produce.

However, groundnuts with shell, turmeric and ginger on which no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but make it marketable for primary market, would fall within definition of agriculture produce. Lastly, whole pulse grains such as whole gram, rajma and ‘cereal’ on which no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market, fall under the definition of agriculture produce.

M/s R.B. Construction Company [TS-231-AAR-2018-NT]

Taxability – Whether any work executed & invoice to be raised for the pending event of testing and commissioning after the implementation of GST amount to supply, and specifically supply of works contract.

The activity of laying underground pipeline network falls under “works contract” u/s 2(119) under the CGST Act, 2017 and the Gujarat GST Act, 2017.

ITC – Secondly, whether the applicant is entitled to avail proportionate credit worth 10% duty of excise and VAT paid on materials bought vide invoices showing Excise and VAT separately under the transition provisions.

In respect of that part of supply wherein time of supply is on or after the appointed date, GST is required to be paid thereby, the applicant is ineligible for availing input tax credit u/s 140(6) of the CGST Act, 2017 and the GGST Act,2017.

M/s. Docsun Power Pvt. Ltd. [TS-229-AAR-2018-NT]

Classification – Applicant sought to know the classification of ‘Earthing Products’ for electrical & electronic equipments used for earthing purpose. Materials required to produce ‘Earthing Products’ consists of Mild Steel (MS) and Stainless Steel (SS), in solid rods and pipes. Applicant also manufactures Earthing Pipe, Earthing Rods, Lightning Arrester & Back Fill Compound. Held that ‘Lightning Arrester’ is classifiable under Tariff Heading 8535. ‘Earthing Pipe’ is classifiable under Heading 8538. ‘Solid Rod Earthing’ is classifiable under Tariff Heading 7215. ‘Back Fill Compound’ is classifiable under Tariff Heading 3824 and lastly, the service of installation of earthing system is classifiable under Service Accounting Code 9954.

Shree Vishwakarma Engineering Works  [TS-232-AAR-2018-NT]

Classification – Applicant sought to know the classification of electrically operated drum with Bell and Zalar under the Customs Tariff Act & whether the same is eligible for exemption under Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate). Held that the products are classifiable under Heading 9208 of the First Schedule to the Customs Tariff Act, 1975 and are ineligible for exemption under Sl. No. 143 of Notification No. 2/2017-Central Tax (Rate) and corresponding notification in GGST Act.

Judicial update

Silicon Constructions Pvt. Ltd. vs. Union of India and others [CWP-13927-2018]

The petitioner in the instant case prayed for issuance of a writ in the nature of mandamus directing the respondents to reopen the online portal enabling the petitioner to file its Trans-1 which could not be filed due to technical error. The petitioner filed letters to manually allow carry forward of credit in GSTR-3B. Due to inactions of the Department, HC directed Government to take a decision on the petitioner’s letter in accordance with law by passing a speaking order.

M/s Modern Traders vs. State of UP & 2 Ors [2018-TIOL-48-HC-ALL-GST]

The Allahabad HC in the said case quashed the seizure order passed by the respondent and ordered immediate release of goods/vehicle. HC observed that as e-way bill was produced on the same day of the interception of goods along with documents indicating payment of IGST but before seizure order was passed there lies no justification for passing orders of seizure of goods.

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