An Advance Ruling Authority helps the candidate in planning the activities which are accountable for payment of GST. Orders by AAR brings inevitability in determining the tax obligation, as the ruling given by the Authority for Advance Ruling is compulsory on the candidate as well as Government authority. Additionally, it helps in evading long-drawn and exclusive litigation later. Looking for an advance ruling is reasonable, and the process is simple and prompt. It thus delivers inevitability and transparency to a taxpayer with reference to any issue which may possibly cause a dispute with the tax management. A lawfully constituted form known as Authority for Advance Ruling (AAR) can give a compulsory ruling to a candidate who is a registered taxable person or is responsible for being registered under Goods and services tax.
Orders by AAR on Coal handling and Distribution charges
The Authority of Advance Ruling (AAR) Madhya Pradesh ruled that 18% of GST on coal handling and distributor charges whenever the supply of such service is intended to be made expressly to the consumers.
Facts of the Case
The applicant, M/s Agarwal Coal Corporation Private Limited, is engaged in the business of trading of coal in India and for the same Applicant undertakes purchase of coal from domestic markets as well as imports from overseas.
On purchase of coal, the Applicant has submitted that 5% of GST is paid in an intra-state and inter-state supply as the case may be, and on import of coal from the overseas market 5% of IGST is paid. After coal is imported, the coal is stockpiled at the port itself at the designated place for subsequent sale to customers. Various services are availed by Applicant at the port during the process of procurement of coal and for fulfilling obligations towards the supply of coal.
The applicant has sought the advance ruling on the issue whether the Applicant is liable to discharge tax liability at the rate of 18% on coal handling and distribution charges wherever the supply of such services is intended to be made expressly to a customer or will the Applicant be entitled to charge GST at the rate of 5% as applicable on supply of coal and will the applicant be entitled to utilize the input tax credit availed for discharging liability towards the supply of coal and supply of coal handling and distribution charges.
Issued Raised in front of authorities
- Whether the applicant is responsible for paying tax liability at rate of 18% on coal handling as well as distribution charges where the supply of services intended to be made specifically with customers or whether the applicant can charge GST at the rate of 5 % as applicable on supply of coals?
- Whether the applicant is entitled to utilize the Input Tax Credit available on discharging the liability towards supply of coal or handling or distribution charges for supply of coal?
Judgment of the Case
The Authority consisting of its members Manoj Kumar Choubey and Virendra Kumar Jain ruled that the coal handling and distribution charges will be taxed at the rate of 18% and not 5% wherever the supply of such services only is intended to be expressly made to a customer.
“In light of the referred provisions, we are of the opinion that input credit availed as per the conditions specified in section 16 shall be allowed for discharging the liability towards the supply of coal and supply of coal handling and distribution charges respectively,” the Authority said.
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Orders by AAR on Fabrication of Body on Chassis
The Authority of Advance Ruling (AAR) Madhya Pradesh ruled that 18% of GST applicable to the fabrication of the body on chassis provided by the customer.
Facts of the Case
The applicant, M/s VE Commercial Vehicle Limited is engaged in the various businesses including manufacturing of Chassis, Trucks & Buses, Engines, Bus body, and automotive components. The applicant has different manufacturing units/manufacturing verticals h the State of Madhya Pradesh registered separately under the GST Act.
The applicant has sought the advance ruling on the issue whether the supply towards the provision of services in respect of activity of mounting fabrication of bodies on chassis provided by Customer should be treated as supply of bus or provision of services in respect of activity of mounting/fabrication of bus body on the chassis wherein the said activity of mounting/fabrication is outsourced to the Applicant by owner/provider of chassis in two scenarios.
- Firstly, the chassis is originally manufactured by one of the units of the applicant registered separately as a distinct person under the GST Act and sold to the provider of chassis receiving the chassis for the fabrication of the body.
- Secondly, the chassis is originally manufactured by some other OEM and sold to the provider of chassis before receiving the chassis for the fabrication of the body.
Judgment of the case
The Authority consisting of its members Manoj Kumar Choubey and Virendra Kumar Jain ruled that the supply towards the provision of services in respect of activity of mounting or fabrication of bodies on chassis provided by Customer should be treated as supply of bus or provision of services in respect of activity. Wherein the said activity of mounting or fabrication is outsourced to the Applicant by owner or provider of chassis. The ownership of the chassis belongs to the applicant; hence both the scenarios mentioned in the question will be taxable under SAC 998881 Motor vehicle and trailer manufacturing services. Under entry no. 26(iv) as ‘Manufacturing services’ on physical inputs (goods) owned by others it is taxable at the rate of 18%.
Orders by AAR on Renting Non-A/c Buses in the name of APSRTC
The Authority for Advance Ruling of Andhra Pradesh stated that 18% Goods and Services Tax (GST) applicable to renting the Non-Air-conditioned buses under the name & style of Andhra Pradesh State Road Transport Corporation (APSRTC).
Facts of the Case
The Andhra Pradesh State Road Transport Corporation (APSRTC) is a public sector undertaking well-known under the RTC Act, 1950, under the Act of Parliament. The capital invested in the APSRTC is done completely by Central or State Government. It is involved in the transportation of passengers both as step carriers and bond carriers and also in transportation of belongings.
The claimant had filed an application in form GST ARA-01, dated 15.11.2019, paying the prescribed amount of fee for seeking Advance Ruling.
Judgment of the Case
The order was marked by D. Ramesh, Additional Commissioner of State Tax and M. Sreekanth, Joint Commissioner of Central Tax on an application filed by Andhra Pradesh State Road Transport Corporation (APSRTC).
The AAR inspected the data furnished by the claimant and observed that the leasing of the Non-Air conditioned buses under the name M/s Andhra Pradesh State Road Transport Services for the events of weddings or any other functions, etc., for carrying of staffs and students of other organizations or departments for transporting of travelers to Sabarimala, for moving of the public to conferences directed by political gatherings and to places like Polavaram project, etc. under rental services.
The AAR additionally states that the tax charge under GST law is 18% (9% CGST+9% SGST), and the claimant is the earner of rental service has to pay the said tax liability.
To conclude, it can be specified that the law makes a comprehensive provision for advance rulings to ensure that disputes are negligible. Timelines are also given within which the ruling is to be given by the apprehensive authority. Orders by AAR aim is to provide certainty to the taxpayer with respect to his obligations under the GST Act and an expeditious ruling so that the relationship between the taxpayer and administration is smooth and transparent and helps to avoid unnecessary litigation.
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