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No GST Registration Needed for Co-Owner in AoP until the Turnover Reached the Threshold Limit: AAR

No GST Registration Needed for Co-Owner in AoP until the Turnover Reached the Threshold Limit: AAR

The Authority of Advance Ruling in West Bengal has ruled that, GST Registration is not needed for Co-Owner in Association of Persons ( AoP ) until the turnover reached the Threshold limit under the GST Act, 2017.

The Applicant is one of the co-owners of immovable property, jointly owned by three individuals. All three co-owners, including the Applicant, hold an equal share in the property. The property is let out to CGST & CX, Chandannagar Division. Total rental received exceeds the threshold provided under section 22(1) of the GST Act, but the share of each of the three co-owners does not cross the said threshold.

The Applicant seeks a ruling on whether he and the other two co-owners are to be treated as an association of persons or a body of individuals and, therefore, a person as defined under section 2(84)(f) of the GST Act, who is required to be registered under section 22(1) of the Act.

The AAR observed that, “the Applicant and the other two co-owners cannot be treated as an association of persons and, therefore, as a person defined under section 2(84X0 of the GST Act, where their income from renting is separately ascertainable and assessed for income tax individually at the hand of each co-owner. Whether the Applicant is required to be registered under section 22(1) of the GST Act will, therefore, depend on his gross turnover, ascertained separately from the other co-owners, exceeding the threshold as provided under the Act”.

Source: TaxScan.

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No GST on Collecting Exam Fee from Students and Remitting same to that Particular University: AAR

No GST on Collecting Exam Fee from Students and Remitting same to that Particular University: AAR

The Authority of Advance Ruling ( AAR ) in Karnataka has ruled that, the activity of collecting exam fee (charged by any university Or institution) from students and remitting the same to that particular university or institution without any value addition to it is a service as a pure agent and hence the value is excluded from the taxable value of the applicant as per Rule 33 of the Central GST Rules / Karnataka GST Rules, hence exempted from Goods and Services Tax ( GST ).

The Applicant provides coaching, learning and training services in relation to under-graduate, graduate and post-graduate degree, diploma and professional courses on a standalone bases to students or for any institution, corporate, company, institutes, universities and colleges in the subject and branches of all types of disciplines such as commerce, hardware, software, computer, science, arts, business management, engineering, medical, industrial, pharmacy, mining, military, dance, acting, sports, journalism and any other ‘field of education and set up of coaching and training classes/ centers in relation to the same.

The AAR observed that, “The applicant is collecting the exact amount payable to institute or college or universities as exam fee from the students (service recipient) and remits the same amount to the respective institute or college or universities (third party) without any profit element or additions, on the authorization of the student. This payment is separately indicated in the invoice issued to the respective students. The applicant providing this kind of services to the student in ‘addition to the services as training and coaching institute. Hence the applicant satisfies all the conditions of the pure agent as narrated in Rule 33 of the COST Rules, 2017. Therefore, amount of the fee collected by the applicant from the student as exam fee which is remitted to the respective institute or college or universities is excluded from the value of supply”.

Source: Taxscan

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18% GST applicable to Works Contract of Residential Quarters, rules AAR

18% GST applicable to Works Contract of Residential Quarters, rules AAR

The Authority of Advance Ruling ( AAR ) in Madhya Pradesh has ruled that, 18% Goods and Services Tax ( GST ) applicable to Works Contract of Residential Quarters.

The AAR has clarified the rate of GST on contract for Construction of building and structure for colony a village Siveria at 2 x 660 MW Shree Singaji Thermal Power Project Stage – II Khandwa.

The AAR observed that the issue before us is squarely covered under Section 97(2)(a) of the Act and therefore we admit the application for consideration.

The authority vide order dtd.18.10.2018 had ruled that “The works contract service of construction of 599 residential quarters allotted to the applicant (Shreeji Infrastructure P.Ltd.) by MPPGCL will merit classification under SAC 9954 and would attract GST @18% (9%CGST + 9%SGST)”.

Construction of residential quarters, though within the precincts of Power Plant’ cannot by any stretch of argument and imagination be termed as the work entrusted to the applicant.

The AAR also observed that, the GST will be applicable @18% under SAC 9954, in as much as it refers to the construction of residential quarters, which was awarded to M/s.Shreeji Infrastructure P.Ltd., as already ruled vide our order no.15/2018 dtd.18.10.2018.

Source: TaxScan.

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Participation Fees for Conference Organized by Educational Institutions leviable to GST: AAR

Participation Fees for Conference Organized by Educational Institutions leviable to GST: AAR

The Madhya Pradesh Authority of Advance Ruling in an application filed by M/s Emrald Heights international School held that GST shall be leviable on consideration received by the school for participation in a conference organized.

The issue before the Authority is whether the consideration received by the school from the participant school(s) for the participation of their students and staff in the conference would be exempted under Entry No. 66/1/80 of the Notification No. 12/2017-Central Tax (Rate). The second issue is concerning the applicable tax rate if the supply is not exempted.

The bench constituting of Hon’ble Members Shri Rajiv Agrawal and Shri Manoj Kumar Choubey held that the activities of holding Educational conference/ gathering of students, faculty and staff of other Schools are not exempt under relevant clauses of Entry 66/1/8 of the above-mentioned notification for the simple reason that the education conference does not fall under any of the categories so listed. Hence, GST shall be chargeable on the consideration received by the school from the participant school(s) for the participation of their students and staff in the impugned conference.

The Hon’ble Bench further stated that various services provided for organizing an educational conference/gathering of students and staff of other Schools, shall be liable to tax at the rate applicable to the respective services. For example, the catering services shall be liable to tax @ 5% without eligibility for Input Tax Credit.

Source: Taxscan

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AAR: An ice-cream scoop is a supply of ‘goods’, with 18% GST, but tax credit reduces the sting

AAR: An ice-cream scoop is a supply of ‘goods’, with 18% GST, but tax credit reduces the sting

In this sweltering heat, who can resist a scoop of ice-cream? Interestingly, the issue of whether serving a scoop of ice-cream would be a supply of services or goods or whether it would be a composite supply was recently examined by the Authority of Advance Ruling (AAR), Maharashtra bench.

Based on the facts of the case, the AAR agreed that even serving scoops of ice-cream did not contain any service element and was a supply of goods. It would attract GST at 18% and the applicant would be able to avail input tax credit (in simple terms it refers to credit that is available for taxes paid on its own purchases or expenditure).

Arihant Enterprises, under a franchise model, sold ice-creams in retail packs (party packs or tubs, typically of 500 grams) and also by way of ice-cream scoops. Sale of retail packs contributed 75% to the company’s turnover.

The company explained that even when it served scoops of ice-cream, the only activity was the transfer of goods (ice-cream) to a cone or a cup. The service element involved was minimal. Only some of its outlets provided a few seats, but this was to benefit senior citizens and mothers accompanied by toddlers. Customers were free to eat the scoops outside the outlets.
On the other hand, a restaurant, canteen or eating joint, refers to an establishment where people meet to eat and drink at the same place. There is a larger element of service involved, it added.

The AAR agreed that the company was a mere re-seller of ice-cream and was engaged in the supply of goods (ice-cream, whether by way of retail packs or scoops).

Sunil Gabhawalla, a chartered accountant and indirect tax expert, states, “For a stand-alone restaurant the GST rate is 5% without any input tax credit. For entities which are part of large franchisee chains or are in a prime area having a huge rent outflow, the loss of input tax credit is a significant blow. For them, a higher rate of tax with input tax credit could be more beneficial. On the other hand, for the mom-and-pop type of outlets with self-owned property and brands, 5% GST without input tax credit could be more beneficial.”

At first glance, it would appear that stepping into an ice-cream parlor would then be more beneficial from the customer point of view. After all, GST is passed on to the customer. However, an industry watcher explained when the input tax credit is not available, the burden is passed on to the customer by jacking the prices.

“Denial of input tax credit distorts the concept of GST and therefore such disputes arise,” admits Gabhawalla. As things stand, it may be tough for an ice-cream connoisseur to glean what the applicable GST rate is as it is dependent on many factors and as explained a lower rate without input tax credit to the seller, may not always work out in favour of the buyer.


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Source: Times of India
Merchant trade transaction no longer vulnerable to GST: Kerala AAR

Merchant trade transaction no longer vulnerable to GST: Kerala AAR

The Authority for Advance Ruling (AAR) under the GST (goods and service tax) in Kerala held that merchant trade transactions, in which traded commodities never GSTenter the country’s tax jurisdiction, are not liable to the GST as goods are never imported to India.

In merchant trade transactions, a supplier is India procures goods from an overseas supplier and supplies directly to its overseas customer. In such transactions, goods do not come to the country.

Goods are liable to IGST (integrated GST) when they are imported to India and the IGST is payable at the time of import of goods into India, the authority said in its ruling.

“The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to the US, nor on sale of goods stored in the warehouse in the Netherlands, after being procured from China, to customers, in and around the Netherlands, as the goods are not imported into India at any point,” the order said.

According to the GST Act, an advance ruling pronounced by AAR is the binding only on the applicant who has sought the advance ruling and on the officer concerned or the jurisdictional officer in respect of the applicant. This means that an advance ruling is not applicable to similarly placed other taxable persons in the state. It is only limited to the person who has applied for an advance ruling.

“While earlier, such transactions were not subject to VAT or service tax, there was an ambiguity under GST laws. Therefore, this AAR provides relief to industry, particularly in commodity trading where such transactions are quite common,” Pratik Jain, leader – indirect tax at PwC, said.
Jain said while it has been held that the GST is not required to be paid on such transactions, another important question which has not been asked in the application filed for this ruling is as to whether there is a requirement for reversal of input credit of taxes paid on expenses attributable to such non-taxable income.

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Source: Financial Express
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