TOPIC: 1.

3 - SAILENT FEATURES OF GST

Case: In Re, Shrimad Rajchandra Adhyatmik Satsang Sadhana Kendra (AAAR-MH)

Facts: The appellant is a public charitable & religious trust engaged in advancement of the
teachings of Paramkrupaludev Shrimad Rajchandra and spreading the knowledge of Jain Religion.
And they spread knowledge of the Jain dharam through publications of books, audio CDs, DVDs,
etc. and other materials for students and public in general and to set up organizations for helping
people. The ancillary objectives also include protecting birds and animals from being killed in
slaughterhouses, and other activities. The appellant was migrated to the GST and though the
appellant had been registered under GST, the appellant had not filed any returns since the appellant
was not engaged in any business as defined under section 2(17) of the CGST Act, 2017. The
appellant filed an Application before the Advance Ruling Authority.

Issues & Holdings

1. Whether the activities carried out by them would fall under the definition of business as defined
under section 2(17)? Yes.
2. Whether they were liable for registration under the provisions of the CGST Act, 2017 and the
MGST Act, 2017? Yes.
3. whether the sale of spiritual products which are incidental and ancillary to main charitable
object of the appellant could be said to be business as defined under section 2(17)? Yes.

The definition of 'business' under the CGST Act is wide enough to include trade, commerce,
manufacture, profession, vocation, adventure, wager or any other similar activities. The term 'trade'
is a comprehensive term which covers the activity of buying, selling or exchanging goods or
services. The terms 'trade and commerce' by themselves mean the buying or selling goods or
services between people. Appellant, a public charitable and religious trust engaged in advancement
of religious and spiritual teachings, also engaged in sale of spiritual goods, can be said to be in
'business' and therefore attract provisions of CGST Act, 2017. The main activity or object of the
trust includes trade and commerce and as the definition of 'business' under the CGST Act includes
the words 'trade and commerce' it can be said that the appellant is engaged in supply of goods and
services and is therefore liable to get itself registered.
Case: In Re, Inox Air Products (P) Ltd (AAR – Gujarat)

Facts: The assessee/applicant was engaged in the manufacture of industrial gases (Oxygen,
Nitrogen and Argon) for Essar on job work basis. Essar provided necessary goods such as
electricity, industrial quality water to the applicant on a free-of cost basis. Essar used these gases
in the manufacture of steel at its steel plant. The assessee made an application before the Authority
for Advance Ruling seeking ruling on the following issues.

Issues & Holding

a) Whether the activity undertaken by the applicant would amount to 'job work' as defined
under section 2(68) of the CGST Act, 2017? Yes.
b) What was the value on which the applicant was liable to pay GST? Liable to pay GST on
the value of supply determined under Section 15 (1) of the CGST Act, 2017 and GGST
Act, 2017

S. 2(68) ‘Job work' means any treatment or process undertaken by a person on goods belonging to
another registered person. S. 2(25) ‘Goods means every kind of movable property other than
money and securities but includes actionable claim, growing crop, grass and things attached to or
forming part of the land which are agreed to be severed before supply or under a contract of supply.
Atmospheric Air, Industrial Water and electricity fall within the definition of goods and the activity
undertaken by applicant amounts to job work since they manufacture the gases by undertaking the
treatment or process on the goods.

Case: In Re, A.M. Motors (AAR – Kerala)

Facts: Applicant company is in motor vehicle industry, it purchases demo cars for promotion of
sales by providing trial runs to customers. These purchases are capitalized in the books of accounts
excluding tax components. These demo cars are used for demonstration purpose for the
prospective customer and after a specific period of time, they are sold off for the book value,
paying the applicable taxes at that point of time.

Issue & Holding

Whether input tax credit on the motor car purchased for demonstration purpose of the customer
can be availed as credit on capital goods and set off against output tax payable under GST in the
case of a motor car dealer? Yes.

Section 16(1) of the GST Act, every registered person shall be entitled to take credit of input tax
charged on any supply of goods or services or both which are used or intended to be used in the
course or furtherance of his business. The demo cars purchased from supplier are being capitalized.
The capital goods which are used in the course or furtherance of business, is entitled for input tax
credit. As per section 2(19), ‘capital goods’ means goods, the value of which is capitalized in the
books of account of the person claiming the input tax credit and which are used or intended to be
used in the course or furtherance of business.

Case: In Re, Adwitya Spaces (AAR – Tamilnadu)

Facts: The applicant is engaged in the business of letting out property and is in receipt of rental
income. It had let out a commercial property on rent to one ‘V’ through a broker ‘C’. The broker
had raised a tax invoice for its services on the applicant in which CGST at 9 per cent and SGST at
9 per cent was charged.

Issues & Holding

Whether it is eligible to take input tax credit of the CGST and SGST charged by ‘C’ in respect of
brokerage services and adjusts the same against output tax payable against renting of immovable
property? Yes but subject to the conditions as per Sections 16, 17 and 18 of CGST & SGST Act.

Section 2(62) ‘input tax’ in relation to a registered person, means the central tax, State tax,
integrated tax or Union territory tax charged on any supply of goods or services or both made to
him and includes:

a) Integrated goods and service tax on import of goods;

b) Tax payable under the provision of sub-sections (3) & (4) of Section 9
c) Tax payable under the provision of sub-sections (3) & (4) of Section 5 of Integrated Goods
and Service Tax Act
d) Tax payable under the provision of sub-sections (3) & (4) of Section 9 of respective State
Goods and Service Tax Act; or
 e) Tax payable under the provision of sub section (3) & (4) of Section 7 of the Union territory
Goods and Service Tax Act

But does not include tax paid under the composition levy.

Case: Ramco Cements Ltd v. Commissioner of Commercial Taxes (HC – Madras)

Facts:
TOPIC: 2.1 – SUPPLY

Case: In Re, Rajashri Foods Pvt. Ltd (AAR – Bangalore)

Facts: The applicant, having three manufacturing units, intends to sell one its independent unit
which is involved in the manufacture of animal feeds. The proposed transaction of sale of unit as
a whole involves transferring of all the assets to the purchaser and also taking over of all the
liabilities by the purchaser for a lump sum consideration.

Issues & Holding

1. Whether the transaction would amount to supply of goods or supply of services or supply of
goods & services? Supply of Services.
2. Whether the transaction would cover under sl. No. 2 of the Notification No. 12/2017-Central
Tax (Rate) dated 28.06.2017? Yes, it covers.

Section 7(1) provides that ‘Supply’ includes activities such as sale, transfer, barter, exchange etc
made for a consideration in the course or furtherance of business. Since the word 'includes' has
been used in Section 7(1) the scope of supply goes beyond the meaning of the expression 'in the
course or furtherance of business'. Therefore in the case of the transfer of a going concern even if
the act of transfer does not constitute an activity carried out in the course of regular business or for
furtherance of business, the activity may still qualify to be termed as a supply. Section 7(1) (d)
stipulates that activities referred to in Schedule II shall be treated as supply of goods or supply of
services. Part 4(c) of Schedule II it is provided that when the business is transferred as a going
concern then it does not amount to supply of goods. It, therefore, becomes clear that such transfer
of business does not constitute a supply of goods. Notification, No. 12/2017-Central Tax (Rate)
dated 28th June 2017. Column number 3 of the Table in the said Notification gives the description
of the services. Serial number 2 of the Notification provides for 'Services by way of transfer of a
going concern, as a whole or an independent part thereof'. This indicates that the activity of transfer
of a going concern constitutes a supply of service. The Notification further provides 'Nil' rate of
tax on such a supply.

Case: In Re, Caltech Polymers Pvt. Ltd (AAAR – Kerala)

Facts: The applicant is a Private Limited Company engaged in the manufacture and sale of foot
wear. It was submitted that they are providing canteen services exclusively for their employees.
They incur the canteen running expenses for a month and recover the same from their employees
without any profit margin on the same. The company is of the opinion that this activity does not
fall within the scope of 'supply', as the same is not in the course or furtherance of its business. The
company is only facilitating the supply of food to the employees, which is a statutory requirement,
and is recovering only the actual expenditure incurred in connection with the food supply, without
making any profit.

Issues & Holding

Whether recovery of food expenses from employees for the canteen service provided by the
company comes under the definition of outward supplies and is taxable under Goods & Services
Tax Act? Yes and taxable.

The recovery of food expenses from employees for the canteen services provided by company
would come under the definition of 'outward supply' as defined in Section 2(83) of the SGST Act,
2017 and would be taxable as a supply of service under GST. The activity of supplying food and
charging price for the same from the employees would surely come within the definition of
"supply" as provided in Section 7(1)(a) of the GST Act, 2017. Consequently, the appellant would
definitely come under the definition of "supplier" as provided in Section 2(105) of the GST Act,
2017. Moreover, since the appellant recovers the cost of food items from their employees, there is
"consideration" as defined in Section 2(31) of the GST Act, 2017.

Case: In Re, T.P. Ajmer Distribution Limited (AAAR – Rajasthan)

Facts: Tata Power Company Limited (TPCL) has entered into a Distribution Franchisee
Agreement (DFA) with Ajmer Vidyut Vitran Nigam Limited (AWNL). In terms of the aforesaid
DFA, TPCL has undertaken to supply Electricity to the customers of AWNL in Ajmer district,
Rajasthan, for a period of 20 years. In order to fulfill its obligation under the DFA entered into
with AWNL, TPLC has set up a Special Purpose Vehicle (SPV) under the name of M/s. TP Ajmer
Distribution Limited (Appellants). The appellants are responsible for operating and maintaining
the distribution network in Ajmer City and supplying Electricity to Industrial and domestic
consumers and for this they raise invoice on the customers for the consideration for supply of
electricity. In addition to the Energy charges and distribution charges, the appellants also recover
some Non-tariff charges from the customers for certain specific activities carried out. Various
Non-tariff charges are Application/Connection fees, Charges for equipment such as Meters,
Transformers, etc., Charges for extension of supply lines, Cheque dishonour fees and Delayed
payment charges.

Issue & Holdings

Whether the various non-tariff charges recovered by the appellants from its customers would be
eligible for exemption under Sr. No. 25 of Notification No. 12/2017-Central Tax (Rate)?
Exemption given only to Delayed payment charges

AAR held that in respect of the cheque dishonour fees, the said fee is a consideration for 'tolerating
an act', which is supply in terms of Clause 5(e) of Schedule II to CGST Act, and hence leviable to
GST. In respect of the Delayed payment charges, they are includible in the value of 'supply' under
Section 15(2)(d) and hence taxable under GST. In respect of other non-tariff charges, the Ld. AAR
has relied on the Department Circular No. 34/8/2018-GST, dated 13-2018 and held that such
charges are leviable to GST.

With regard to Cheque dishonor Fees and Delayed payment charges, an appeal was preferred.

AAAR held that electrical energy has been classified under Tariff Item No. 2716 00 00 under
Customs Tariff Act, 1975 and value of its supply has been exempted vide entry No. 104 of the
Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017. As per Section 15(2), delayed
payment charges should form part of the value of supply of electricity. When value of supply of
electricity itself stands exempted by virtue of the above exemption notification dated 28-6-2017,
incremental value (i.e. consideration for delayed payment of the electricity bills) would also remain
exempted.

The appellants, tolerating the situation of dishonor of cheques, tendered by the consumers of
electricity for payment of electricity bill, by charging certain amount from the consumers, hence,
it is a supply of service in terms of the clause 5(e). Therefore, cheque dishonor charges, being a
supply of service and not exempted anywhere, appropriate GST is chargeable on the value of its
supply.
Case: In Re North American Coal Corporation India Pvt. Ltd. (AAR – MH)

Facts: