CA Manoj Nahata 
1. Whether supply of medicines and allied items through the pharmacy of a hospital (run by the hospital itself) attracts tax liability under GST?
Held: Yes
In case of M/s Ernakulam Medical Centre Private Ltd.-AAAR Kerala, the applicant runs a hospital, which is rendering medical services with professionals like doctors, nursing staff etc. In GST, health care services by a clinical establishment has been exempted vide Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Accordingly the applicant contended that the medicines and surgical items supplied through the pharmacy of the hospital were entitled to exemption being health care services. The pharmacy was meant exclusively for dispensing medicines and consumables to inpatients or outpatients. The Appelate Authority for Advanced Ruling held that as far as inpatient is concerned, hospital is expected to provide lodging, care, medicine and food as a part of treatment under supervision till discharge from hospital. Hence medicines or other allied goods supplied to inpatient are indispensible items and it is a composite supply to facilitate health care services and is not taxable.
Whereas in case of outpatient, the hospital gives only a prescription which is advisory in nature. The outpatient is at liberty to procure the medicines either from the hospital’s pharmacy or any other pharmacy. Therefore the pharmacy run by hospital dispensing medicines to outpatient can be treated as individual supply and not covered under the health care services. Hence, such supply is taxable under GST.
2. Whether the conduct of marathon events by a Trust through which donations are raised for charity is an exempted service under GST?
Held: No
In the case of M/s. Dream Runners Foundation Limited –AAR Tamil Nadu, the applicant is a Trust registered under sec-12AA of the Income Tax Act, 1961. It stated that the principle object of the trust is to organize events like Marathon, Blood Donation Camp, Organ Donation Camp, Eye Donation Camp, Health Awareness Camp etc and utilize the funds raised from such events for Charitable Cause like funding to Non-Governmental Organizations (NGOs), Hospitals, Trusts and other Charitable Organizations. The Applicant has also stated that none of the objects involve carrying of any business, trade or any activity for profit.
The Applicant collects an amount from participants registered for the marathon, treating them as donation and from these collected amounts, the expenses of paying the registration partner, event management expenses, prize money, are met and some portion of the balance is given as donation. The activity in question is the organizing of the Marathon. This is advertised as Dream Runners Marathon where a large number of persons participate. Though the money collected from the participants may be donated or used for further charitable activities, organizing marathon itself is a separate supply of service by the Applicant for the various participants, individuals or runner groups etc.
As per Section 2(31) of CGST Act, ” (31) “consideration” in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;” The money collected by the Applicant, from the participants in the Marathon is used for the expenses of organizing the Marathon in terms of paying the registration partner, event management charges, prize money, publicity, other organizing expenses such as T-shirts, banners and other related materials etc. as seen in their balance sheets. Therefore, the money collected from the participants is a consideration towards the supply of service of organizing and conducting the marathon for the participant’s conduct of marathon event and the same is liable to GST
Therefore the money collected from the participants is a consideration [as per sec-2(31)] towards the supply of service of organizing and conducting the marathon for the participants and the same is liable to GST
3. Whether a land owner is liable to pay GST on premises allotted to him by the developer?
Held: Yes
In case of Sri Patrick Bernardinz D’Sa-AAR Karnataka the applicant is a land owner. He entered into an agreement with M/s Nforce Infrastructure India Pvt. Ltd. Builders and Developer. The developer offered to develop and promote a multistoried residential apartment cum commercial building in the applicant’s land out of which, for his contribution of land, the applicant gets a share of 50% of total flats and also 50% share out of a specified area of commercial construction. The applicant raised a question whether he is liable to pay GST on the premises allotted to him by the concerned developer?
In context of the question raised by the applicant “whether he is liable to pay GST?” the reference to the Notification No.4/2018-Central Tax (Rate) dated 25.01.2018 was made by the authority. The said notification notifies a person or persons who supply development rights to a developer/builder etc. against a consideration which may be in the form of construction service is liable to be registered under GST Act and is liable to pay tax central tax on the said supply.
Thus in the above case it is seen that the applicant is supplying development rights to a developer and in return, he has been allotted premises in the form of consideration.
Therefore the applicant who has supplied development rights to a developer in respect of his land is liable to registration and payment of tax in light of the said notification.
http://gstcouncil.gov.in/sites/default/files/ruling-new/Krntk%2029_2018%20Patrick.pdf
4. Whether two or more supplies of goods or services which are naturally bundled in which the principal supply is exempt and others are taxable can be treated as “composite supply”?
Held: Yes
In case of M/s Columbia Asia Hospitals Private Limited-AAR Karnataka the applicant is a private limited company, engaged in providing health care services categorizing them as ‘In patients’ and ‘Out patients’. It is also engaged in supply of medicines to in-patients and out-patients. Along with these, it also operates Restaurant/ Canteen services in its premises which are used for supplying food and other eatable items to its patients and their attendants. The applicant raised a question before the authority whether two or more supplies of goods or services or both which are naturally bundled in which the principal supply is exempt and other supplies are taxable can be treated as ‘composite supply’? (In the given case, ‘supply of medicines’ constitute principal supply and ‘supply of food items’ are other supplies)
The applicant states that as per the definition of “composite supply” it can be inferred from the word “taxable supply” included in the definition of composite supply that it covers only such supplies which are subject to GST and not the exempt supplies.
The Authority held that as per sub sec (30) of section-2 of the CGST Act “composite supply” means a supply made by a taxable person to recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.” This definition should be read with the definition of taxable supply and exempt supply. As per section-2(108) of the CGST Act “taxable supply” means a supply of goods or services or both which is leviable to tax under this Act.” The term “leviable” used in the definition of taxable supply includes the supplies of goods which are leviable to tax and chosen to be exempted under section-11 and hence the exempt supplies also fall under the category of taxable supply. Accordingly, the healthcare services (supply of medicines and other allied items) which are exempt service along with other taxable supplies (supply of food) will be termed as composite supply with healthcare service as principal supply. It will be exempt composite supply.
http://gstcouncil.gov.in/sites/default/files/ruling-new/Krntk%2026_2018%20CAHPL.pdf
5. Whether the Hotel Accommodation & Restaurant services provided within the premises of the Hotel, to the employees & guests of SEZ units, be treated as supply of goods & services to SEZ units or not ?
Held: No
In case of M/s Gogte Infrastructure Development Corporation Limited- AAR Karnataka the applicant is having a Hotel in Belagavi (Karnataka) by the name ‘Fairfield Marriott’, in which he is providing restaurant and lodging services to all his guests/customers. These customers include the employees, customers, visitors and guests of SEZ Units in Karnataka. They are charging SGST & CGST at the applicable rates. The SEZ units contended that the services are being supplied / rendered to SEZ units only and hence rate of GST is NIL as per provisions of Section 16(1) (b) of IGST Act, 2017. The applicant is desirous to know whether the transaction of providing restaurant services and lodging services provided within the premises of Hotel to employees and guests of SEZ Units can be treated as supply of services to SEZ Units situated in Karnataka.
The Authority held that Supply of goods or services or both to a Special Economic Zone developer or Special Economic Zone units are treated as, “Zero Rated Supply” in terms of Section 16(1) (b) of IGST Act, 2017. Further Rule 46 of CGST Rules 2017 stipulates that the invoice shall carry an endorsement “Supply meant for export / Supply to SEZ unit or SEZ Developer for authorized operations on payment of Integrated Tax” or “Supply meant for Export / Supply to SEZ unit or SEZ Developer for authorized operations under Bond or Letter of Undertaking without payment of Integrated Tax” as the case may be. Therefore on reading Section 16(1) (b) of IGST Act, 2017 & Rule 46 of CGST Rules 2017 together it is clearly evident that the supplies of goods or services or both towards the authorized operations only shall be treated as Supplies to SEZ Developer / SEZ Unit. Further, the place of supply of the services by way of lodging accommodation by a hotel, shall be the location at which the immovable property (hotel) is located or intended to be located, as per Section 12 (3)(b) of the Integrated Goods and Services Tax Act, 2017. In the instant case, admittedly, the applicant is located outside the SEZ. Therefore the services rendered by the applicant are neither the part of authorized operations nor consumed inside the SEZ. Hence, services being provided by the Applicant, within the premises of the Hotel, to the employees & guests of SEZ units, cannot be treated as supply of goods & services to SEZ units and it is intra state supply.
http://gstcouncil.gov.in/sites/default/files/Advance-rulings/02-gogte%20infrasturcture-AAR-order.pdf
6. Whether the supply of solar rooftop power plant along with design, erection, commissioning and installation is a “composite supply”?
Held: Yes
In case of M/s Premier Solar Systems (P) Limited-AAR Uttarakhand it was held that for a supply to be called a “composite supply”, the following conditions must be satisfied-
(a) Supplies of two or more goods/services which are inseparable from each other in the ordinary course of business or complementary to each other,
(b) Supplies which are ancillary to the principal supply of goods or services,
(c) Supplies which are dependent on each other.
Further a supply can be called “mixed supply” if-
(a) Supplies of two or more goods/services which are inseparable from each other in the ordinary course of business or complementary to each other, not dependent on each other.
(b) Goods or services which can be supplied individually.
The applicant was engaged in the manufacture of “solar power generating system” which also includes service elements i.e. designing, erection, commissioning, etc. Also the provision of service in the said supply constitutes less than 10% of the total cost of the same. The supply of goods represents ‘principal supply’. So the supply shall be treated as ‘composite supply’ and not as ‘mixed supply’ as-
(a) Goods and services both are involved in supply,
(b) Service element is ancillary to principal supply of goods,
(c) Both supplies are dependent upon each other since goods supplied can be put to use only after erection, commissioning & installation of the same and in reverse position erection, commissioning and installation can be done only if goods are available.
Hence, the Authority held that the supply shall be treated as “composite supply” in light of above provisions. The applicable rate of tax will be 5%.
7. Whether hostel accommodation provided by Trusts to students is covered within the definition of Charitable Activities and thus exempt under Sl. No. 1 of Notification No. 12/2017-CT(Rate)?
Held: No
In case of Student’s Welfare Association-AAR Maharashtra the applicant is a registered charitable Trust under section-12AA and having 80G certificate of exemption under Income Tax Act, 1961. It provides lodging and boarding facilities besides compulsory personality development training to students from poor families and also physically handicapped for which they charge a consolidated fee of `22,250. The students have no option to choose the activities. The applicant stated that circular no. 354/17/2018-TRU dated 12th Feb 2018 gives a clarification regarding hostel accommodation wherein it is stated that hostel accommodation shall be treated at par with hotel accommodation and accordingly chargeable @18%. However the applicant contented that vide Notification No. 12/2017-Central Tax (Rate) Entry/Clause 14, where services by a hotel, inn, guest house, club or campsite by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent, these services are exempt. The issue involved is that whether hostel accommodation provided by the applicant to the students is covered within the meaning of “charitable activities” and thus exempt? The applicant has a concern that the matter has been clarified by circular no. 354/17/2018-TRU dated 12th Feb 2018 which is incorporating an item not specified in the Notification No. 12/2017-Central Tax (Rate). As a circular cannot override a notification, the concerned matter was referred to Authority for Advance Ruling.
The Authority made reference to the Notification No. 12/2017-Central Tax (Rate) which defines charitable activities as-
“Charitable activities” means activities relating to –
(i) Public health by way of,-
(A) Care or counseling of
(I) terminally ill persons or persons with severe physical or mental disability;
(II) Persons afflicted with HIV or AIDS;
(III) Persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or
(B) Public awareness of preventive health, family planning or prevention of HIV infection;
(ii) Advancement of religion , spirituality or yoga;
(iii) Advancement of educational programmes or skill development relating to,-
(A) Abandoned, orphaned or homeless children;
(B) Physically or mentally abused and traumatized persons;
(C) Prisoners; or
(D) Persons over the age of 65 years residing in a rural area;
(iv) Preservation of environment including watershed, forests and wildlife”
It has been clarified that the hostel accommodation services do not fall within the ambit of charitable activities as per the above notification. This conclusion of the authority is in conformity with Circular No.32/06/2018 GST dated 12th February 2018.
Thus the Authority held that as per the meaning assigned to the expression “charitable activities” the activities of the Trusts in providing hostel accommodation facilities to the students do not fall within the ambit of charitable activities. Hence the services are liable to GST @ 18%.
8. Whether rendering of repair and maintenance services on assets owned by others is a job work as per section-2(68)?
Held: No
In case of Alok Bhanuka-AAR West Bengal, the applicant is engaged in repairing and servicing of transformers owned by WBSEDCL. The Applicant transports the defective and damaged transformers from WBSEDCL, dismantles them, and removes the burnt coil and other damaged parts and accessories that require replacement/repair. The repaired transformers are tested and delivered to WBSEDCL. Being the principal insurer, WBSEDCL reimburses the expense on account of transport, fire and burglary insurance. The applicant is of the view that repair/servicing of transformers is job-work as defined under section 2(68) of the GST Act, and should to be treated as supply of service in terms of Para 3 of Schedule II to the GST Act.
The Applicant refers to Notification No. 5050-F(Y) dated 16/08/2017 of the Government of West Bengal. It has clarified that works involving supply of taxable goods along with labour to any movable property (e.g. servicing of motor vehicles with motor parts, AMC for computers or AC machines or generator, repair of furniture etc.) are composite supplies, as the supply of goods and labour are naturally bundled and made in conjunction with one another. The principal supply, according to the said notification, is determined by the pre-dominant nature of the contract.
Following the above notification, the Applicant argues that repair/servicing of transformers is a composite supply, where the pre-dominant nature of the contract remains that of ‘service’, classifiable as under SAC 9987, and taxable under Sl No. 25(ii) of Notification No. 11/2017 – CT (Rate) dated 28/06/2017
The Authority referred section-2(68) of the GST Acts and observed that Job work has been defined under section 2(68) of the GST Act as any treatment or process undertaken by a person on goods belonging to another registered person. Rule 2(h) of the Cenvat Credit Rules, 2004 defines job work as processing or working upon raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the afore-mentioned process. In course of repairing the defective transformers the Applicant replaces the worn out or burnt materials. The process, therefore, involves transfer of property in goods. The Applicant’s contribution is, therefore, not limited to labour and skill done with the help of his own tools, gadgets or machinery. Repairing and servicing of defective transformers signify working on something which is already in existence. It involves supply of goods, but not as chattels. The goods, namely the spare parts that have replaced the defective ones, are embedded or fixed to the transformer already in existence so that the defects get removed. The contract is not for the supply of the spare parts, but for the treatment or process for maintenance and removal of the defects from the transformers that belong to WBSEDCL. The predominant element of the supply, therefore, is not transfer of title to the goods, but service in terms of para 3 of Schedule II to the GST Act, and supply of spare parts is ancillary to such supply. The process is not, therefore, job work, as defined under section 2(68) of the GST Act.
The Authority ruled that repairing and servicing of transformers owned by another person is not job work as defined under section 2(68) of the GST Act.
9. Whether the execution of “Livelihood for Artists and Local Art Hubs” as an administrative agency fall under the taxable service as per the provisions of GST?
Held: No
In the case of Uralungal Labour Contract Co-op Society Ltd–AAR Kerala the applicant is a labour contract co-operative society registered under Kerala Co-operative Societies Act, 1969. It is primarily engaged in construction of roads, bridges and other public infrastructure for Government and other institutions and accredited agency for Government of Kerala.
The Department of Cultural Affairs, Govt. of Kerala has initiated a programme “Livelihood for Artists and Local Art Hubs” to empower the skills of rural artists and artisans. The applicant has been appointed as an administrative agency for the said programme by the Government of Kerala. The applicant wants to know whether the supply of service by the applicant as an administrative agency to the Government of Kerala falls within the ambit of taxable supplies.
The Authority held that the activities carried out by the society is to establish rural art and handicraft groups, empower the artists by improving the skills of rural artists and artisans, conduct of exhibition of art products, connecting them with markets without involving middleman etc. come under the classification of “pure service” as per Sl. No.3 of Notification No.12/2017 CT (Rate).
Hence the execution of “Livelihood for Artists and Local Art Hubs” as an administrative agency fall under the category of ‘pure service’ and are exempt from GST.
10. Whether services related to providing coaching for entrance exam will come in ambit of GST?
Held: Yes
In the case of Simple Rajendra Shukla-AAR Maharashtra, the applicant runs a tutorial and is engaged in providing the service of teaching to the students of class-XI and class-XII of science. This activity prepares the students for entrance exams related to MBBS, Engineering and other science related examinations. The applicant is of the view that the said activity is covered by Notification No. 12/2017-Central Tax( Rate) dated 28/06/2017 where the services of “ educational institutions” are taxed at NIL rate. The applicant argues that as per the dictionary meaning of Education means “Imparting of knowledge.” The word institution as per dictionary meaning means an organization formed to provide services. Hence in layman’s language an educational institution is an organization formed to impart educational services.
The Authority find that there is a specific definition for educational institution in clause 2 (y) of Notification No. 12/2017-Central Tax( Rate) dated 28/06/2017.
2. Definitions- For the purpose of this notification, unless the context otherwise requires,-
(y) “Educational institution” means an institution providing services by way of-
(i) Pre-school education and education up to higher secondary school or equivalent;
(ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
(iii) Education as a part of an approved vocational education course;
In light of the above definition, it has been observed that the applicant runs a private tutorial. The private institution does not have any specific curriculum and does not conduct any examination or reward any qualification recognized by any law which could be covered in the above notification.
Hence the applicant is in no way covered in the definition of Educational institution as given in the above notification. Therefore the services are liable to GST @ 18%.
11. Whether toll charges reimbursed by the clients to a person acting as ‘pure agent’ of the client are eligible for deduction u/s 33 from the value of supply?
Held: No
In the case of Premier Vigilance & Security Pvt Ltd-AAR West Bengal the applicant provides security service to the Banks. The Applicant also transports cash/coins/bullion in specially built vehicles or Customized Cash vans (CCVs). In course of such transportation, the vehicles move along National and State Highways and the Applicant pays toll charges to both NHAI and State Authority, which is reimbursed by the client Banks. Now, the petitioner raised a question as whether reimbursement of toll charges by the client Bank is liable to GST?
The AAR touched upon rule 33 of the GST Rules which states that:-
Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely,-
(i) The supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient;
(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and
(iii) The supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.
The agreements submitted by the applicant mentioned that toll charges will be paid on the actual amount. But the Banks do not specifically authorize the Applicant as a “pure agent” or acknowledge payment of the toll charges as their own liability.
The Applicant, being the owner of the vehicles, is the recipient of the service provisioned on payment of toll. The Applicant admittedly is the beneficiary and liable to pay the toll, which is compulsorily levied on the vehicles. The expenses so incurred are, therefore, cost of the service provided to the Banks. Reimbursement of such cost is no disbursement, but merely the recovery of a portion of the value of supply made to the Banks. The Applicant is, therefore, not acting in the capacity of a “pure agent” of the Bank while paying toll charges. Such charges are costs incurred, so that his vehicles can access roads/bridges to provide security services to the recipient. The Authority ruled that Toll charges paid are not to be excluded from the value of supply under Rule 33. GST shall, therefore, be payable at the applicable rate on the entire value of the supply, including toll
charges paid.
http://gstcouncil.gov.in/sites/default/files/ruling-new/WBAAR-20-2018-19_02.11.18-PVSPL.pdf
12. Whether supplies of power solutions, including UPS, servo stabilizer, batteries etc. can be treated as Composite Supply within the meaning of Section 2(30) of the GST Act?
Held: No
In the case of Switching Avo Electro Power Ltd-AAR West Bengal the Authority held that as per section-2(30) of the GST Act, a composite supply means “a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof , which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply”.
Principal Supply is defined under Section 2(90) of the GST Act as “the supply of goods/services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary”.
Note 3 to Section XVI of the Tariff Act defines a composite machine as the one consisting of two or more machines fitted together to form a whole. Such machines, as well as other machines designed for the purpose of performing two or more complementary or alternative functions, are to be classified as if consisting only of that component or as being that machine, which performs the principal function.
The UPS serves no purpose if the battery is not supplied or removed. It cannot function as a UPS unless the battery is attached. However, what needs to be considered is whether or not these two items are “naturally bundled”. When a UPS is supplied with built-in batteries so that supply of the battery is inseparable from supply of the UPS, it should be treated as a composite supply and as a composite machine in terms of Note 3. But a standalone UPS and a battery can be separately supplied in retail set up. A person can purchase a standalone UPS and a battery from different vendors. The applicant himself admits that he supplies the battery and UPS as separate machines as well as UPS with battery. It is, therefore, obvious that the UPS and the battery have separate commercial values as goods and should be taxed under the respective tariff heads when supplied separately.
Therefore the supply of UPS and Battery is to be considered as Mixed Supply within the meaning of Section 2(74) of the GST Act, as they are supplied under a single contract at a combined single price.
http://gstcouncil.gov.in/sites/default/files/ruling-new/WB_2017-18_%2003%20dated%2021032018.pdf
13. Whether the money paid by the customer to the driver of the cab for the services of the trip is liable to GST and whether the applicant company is liable to pay GST on this amount?
Held: Yes
In the case of M/s Opta Cabs Private Limited-AAR Karnataka the applicant is engaged in the business of Taxi Aggregation Service and Taxi Service. He states that the billing is done in the name of the Taxi Driver who provides the service for the particular trip and the taxi driver would collect the amount from the customer on the completion of the trip. The applicant shall not collect the amount on behalf of the taxi driver. The applicant is not collecting any charges including trip commission, but only collects service charges for usage of IT services which he would have provided from his end i.e. Mobile App and Billing related services. The applicant is collecting and paying GST on the service charges collected by taxi drivers. Customers pay directly to the drivers, whose turnover may not be more than Rs.12 Lakh per annum and the applicant is of the opinion that he may not be required GST to be levied on the trip amount. The application is of the view that the taxes applicable would be payable by the drivers and users and not to be collected and paid by him as the amount is not routed through him and he is only providing service of invoicing.
The Authority made a reference to section-9(5) of the GST Act. Sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 states as under : “(5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable to pay tax in relation to the supply of such service.” Notification No.17/2017 – Central Tax (Rate) dated 28th June, 2017 notifies the services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motor cycle as the category of services, the tax on intra-State supplies on which shall be paid by the electronic commerce operator as per the provisions of sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017.
Hence from the above it may be concluded that the electronic commerce operator shall be liable to pay tax on the services provided by a motor cab or maxi cab or motor cycle or radio-taxi, by way of transportation of passengers, if such services are supplied through it and it shall be deemed that the electronic commerce operator is deemed to be supplier in such cases.
Hence The applicant is liable to tax on the amounts billed by him on behalf of the taxi operators for the service provided in the nature of transportation of passengers through it, in accordance with the provisions of sub-section (5) of section 9 of the Central Goods and Services Tax Act 2017 read with Notification No. 17/2017 –Central Tax (Rate) dated 28.06.2017.
http://gstcouncil.gov.in/sites/default/files/ruling-new/Krntk%2014_2018%20OCPL.pdf
14. Whether mixing of rubber compound on the materials supplied by the principal and returning the finished product to the principal will come under Sl. No.26 (i)(b) of Notification No.11/2017 CT(Rate) and SRO No.370/2017?
Held: Yes
In the case of Estera Polymers-AAR Kerala the applicant is a manufacturer and supplier of rubber backed mats and mattings for laying on the floor. It also supply rubber backed mats and mattings on job work for which the materials including moulds are supplied by the principal. For executing job works, the applicant procure rubber, reclaimed rubber, tyre / rubber waste powder, China clay powder, process oil, rubber chemicals and other consumables from registered dealers. The other materials like textiles, carpets, coir are supplied by the principal for executing the job work along with moulds in required designs. The applicant’s question is that whether mixing rubber compound with textile provided by the principal will be treated as Services by way of job work in relation to Textile yarns (other than of man-made fibers) and textile fabrics?
It was held that manufacturing services on physical inputs owned by others is treated as service by way of job work. As such these services are covered under SAC 9988, Textiles and textile products products falling under Chapter 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 are taxable @5% GST.
As per the circular no. 38/12/2018 dated 26/03/2018 issued by CBEC it is clarified that, in addition to goods received by principal, the job worker can use his own goods for providing the services of job work. Under job work, the output is not owned by the unit providing this service. Therefore the value of the services is based on the service charge paid, not on the value of goods manufactured. The value of service would include not only the service charges but also the value of any goods or services used by job worker for supplying the job work service, if recovered from the principal.
The materials supplied for execution of job work are falling under Chapter 50 to 63 in the First Schedule of the Customs Tariff Act, 1975. The materials were supplied by the principal. Therefore the job work services applied on such goods will squarely come under Sl. No.26 (i) (b) of Notification No.11/2017 and are taxable @ 5% in GST.
15. Whether consideration for delayed payment of an exempted supply is exempt under GST?
Held: Yes
In the case of Tata Power Ajmer Distribution Ltd.-AAR Rajasthan the Applicant is supplying electricity to industrial and domestic consumers. It has raised an invoice on the customers for the same under which in addition to the energy and distribution charges, it also recovers some non-tariff charges from customers which are charges for meters, cheque dishonour fees, delayed payment charges, etc. The Applicant has sought advance ruling to determine whether various non-tariff charges recovered by it from the customers are exempt as per exemption notification under GST?
The Authority for Advance Ruling, Rajasthan held that non-tariff charges are leviable to GST.
It filed an appeal before the Appellate Authority for Advance Ruling, Rajasthan to determine the taxability of delayed payment charges under GST.
The Appellate Authority for Advance Ruling, Rajasthan observed that the provisions of the value of supply of the CGST Act, 2017 state that the value of supply shall include interest or late fee or penalty for delayed payment for consideration of any supply. The value of supply is the consideration charged by the Appellant from the consumers for the consumption of electricity. The supply of electricity has been exempted under GST and delayed payment charges should form part of value of electricity.
Therefore, no GST is chargeable on delayed payment charges collected from customers.
