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GST – Tamil Nadu AAR - Whether the services of Management Consultant and DPR services supplied to Chennai Metro Water Supply and Sewerage Board (CMWSSB) for the water related projects is falls under the ambit of "Pure Services" and exempt from GST in terms of Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.

HELD - The activity of the Applicant envisaged by the three agreements furnished by the applicant is supply of 'Pure Services' to CMWSSB which is a 'Governmental Authority" relating to water supply for industrial use and sanitation conservancy which are covered under Twelfth Schedule of Article 243 W of the Constitution. Therefore, the services rendered by the Applicant are exempted from GST.

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GST – Maharashtra AAR - Whether Input Tax Credit is admissible in respect of GST paid for hotel stay in case of rent free hotel accommodation provided to General Manager and Managing Director of the company.

HELD – providing of residential accommodation in a Hotel is not in furtherance of applicant’s business. The MD/GM could have been provided with any other residential accommodation and still would have performed their duties for the applicant - the Hotel Accommodation is being used by the applicant as a residential premises of their MD/GM which is for the personal comfort and therefore, in view of the provisions of Section 17(5)(g) of the CGST Act, 2017, they are not eligible to claim the Input Tax Credit for the same; Whether recovery of Parents Health Insurance expenses from employee in respect of the insurance provided by the Applicant amounts to "supply of service" under Section 7 of the Central Goods and Service Tax Act, 2017 (CGST Act, 2017)? If the said recovery amounts to “supply”, what will be the time of supply and value of the said supply? Whether the Applicant can claim input tax credit of GST charged by the insurance company? 

HELD - The recovery of Parents Health Insurance expenses from employee does not amount to "supply of service" under the GST Laws - applicant is creating this fiction of providing health insurance to their employees only to avail 100% ITC of payments made to the insurance companies. Since there is no supply of services there is no question of time and value of the supply. The applicant cannot claim Input Tax Credit of GST paid to the insurance company.

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Central Goods and Services Tax Act, 2017 – Validity of Circular No.34/8/2018-GST -
Taxability of charges recovered for the activities directly connected with the distribution and transmission of electricity such as application fee, meter rent, testing fee, labour charges for shifting meters and shifting of service line, etc. - Section 2(90) - principal supply.

HELD - the meaning of “transmission and distribution of electricity” does not
change either for the negative list regime or the GST regime. If that be so, the services
which stood included within the ambit of transmission and distribution of electricity during
the pre-negative list regime cannot now be sought be excluded by merely issuing a
clarificatory circular, that too, with retrospective effect - from the very manner in which
the Department have treated the services related to transmission and distribution of electricity during the pre-negative list regime, such services would stand covered by the
exemption granted to transmission and distribution of electricity by virtue of inclusion of
such services in the list of negative services under section 66D (k) of the Finance Act as
well as by virtue of exemption notification issued under the CGST Act -

where the services are naturally bundled in the ordinary course of business and the single service which gives  such bundle its essential character is exempt from tax, the entire bundle will have to be treated as provision of such single service - charges such an application fee, meter rent, testing fee, etc collected by the Petitioners are part of composite supply of which principal supply is the actual supply of electricity and therefore the entire composite supply is exempt from tax under Entry 25 of Notification No.12/2017 dated 28.6.2017 - the Paragraph 4(1) of the impugned circular No.34/8/2018-GST dated 1.3.2018 is hereby struck down as being ultra vires the provisions of section 8 of the CGST Act, 2017 as well as Notification No.12/2017- CT (R ) serial No.25 - the respondents shall drop the proceedings under the Finance Act, 1994 as well as under the CGST/SGST Acts sought to be initiated by virtue of the impugned summons to the extent the same is based upon item No.4 (1) of the impugned circular dated 1st March, 2018 – the writ petition is allowed.

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Service Tax – Valuation - Whether the transaction charges received by a stock broker alongwith brokerage charges shall be included in the taxable value.

HELD - In terms of Section 67 of the Act, any amount which is collected not for providing ‘such’ taxable service, the same cannot form part of that valuation. Irrespective Section 67 has undergone amendment w.e.f. 01.05.2006 but, the interpretation of Section 67 is that the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be nothing more or less then the  consideration paid as quid pro quo for rendering such a service - it is only in case the transaction of giving stock broker service is on principal to principal basis that the service is not taxable, in rest of the cases the service is taxable.

It was mandate for the authorities below to verify the records to distinguish the cases where the appellant has provided services as pure agent on principal to principal basis from those where the appellant has provided stock brokerage services on its own behalf. Without this distinction, the correct assessment of the liability of appellant as stock broker cannot be ascertained – the matter is remanded back to the adjudicating authority to decide the issue in terms of the said verification - Appeals stands allowed by way of remand.

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Service Tax – Valuation - Whether the transaction charges received by a stock broker alongwith brokerage charges shall be included in the taxable value.

HELD - In terms of Section 67 of the Act, any amount which is collected not for providing ‘such’ taxable service, the same cannot form part of that valuation. Irrespective Section 67 has undergone amendment w.e.f. 01.05.2006 but, the interpretation of Section 67 is that the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be nothing more or less then the consideration paid as quid pro quo for rendering such a service - it is only in case the transaction of giving stock broker service is on principal to principal basis that the service is not taxable, in rest of the cases the service is taxable It was mandate for the authorities below to verify the records to distinguish the cases where the appellant has provided services as pure agent on principal to principal basis from those where the appellant has provided stock brokerage services on its own behalf.

Without this distinction, the correct assessment of the liability of appellant as stock broker cannot be ascertained – the matter is remanded back to the adjudicating authority to decide the issue in terms of the said verification - Appeals stands allowed by way of remand.

 

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Service Tax – appellant discharged service tax liability as per the remuneration agreed upon in the contract – demand of service tax on remittances received from the client for reimbursement of various other expenses incurred by the appellant on behalf of the client – demand also in respect of deputation of employees of the appellant for carrying out the business activities of the client was also liable to tax under 'manpower recruitment or supply service' on the salaries and other expenses reimbursed by the client

HELD – in terms of the decision of the Hon’ble Supreme Court in Intercontinental Consultants case, the legislative intent to tax was held to be limited to the consideration for the service and the test of leviability for the taxable service would have to be overcome for bearing fruit - The obvious conclusion, therefore, is that the consideration agreed upon as recompense for a particular service is taxable.

Any other receipt has to be evidenced as additional consideration for the said service to be subject to tax - no convincing argument on this score in the notice or the impugned order. In view of the decision of the Hon'ble Supreme Court, it is held that the demand of tax under the head of BAS should be restricted to such amount as was being discharged by the appellant on the contracted amount - the impugned order is set aside and appeal is allowed.

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Construction services : Where applicant supplies works contract services involving supply of goods and services to Chhattisgarh State Power Distribution Company Ltd. (CSPDCL) and nature of services being predominantly for commercial use by CSPDCL, in light of Notification No. 11/2017-State Tax (Rate), dated 28-6-2017 read with Notification No. 24/2017-State Tax (Rate), dated 28-6-2017, said services attract CGST and Chhattisgarh GST each at rate of 9 per cent respectively.

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Service Tax - appellant paid service tax under the head of “Renting of immovable property” whereas the same should have been paid under “Port service” - Service Tax paid, though not under the correct head of service, can be considered as non-payment of service tax.

HELD – the service tax paid under renting of immovable property service may be considered as payment of service tax against port service. The department is free to make their internal adjustment in the account, for that purpose, the appellant cannot be made suffered with charge of non payment of service tax. As regard penalty on the appellant, the appellant have paid entire service tax along with interest.

This is also fact that the appellant is Government of India enterprise, therefore, malafide intention to evade the payment of duty cannot be charged against the appellant - the impugned order is modified and the appeal is allowed.

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Uttar Pradesh Value Added Tax Act, 2008 - Input Tax Credit is to be restricted to tax paid or actually payable - Whether the Input Tax Credit claimed by the assessee could be rejected by treating the same to be excess tax paid in comparison to the tax actually payable.

 HELD - for the purpose of claiming Input Tax Credit, it is not relevant what was the exact rate of tax payable as per the scheduled rates on the goods purchased by the dealer but under the value added scheme of taxation, it would remain relevant what amount of tax had actually been paid by the assessee on purchase of goods - In absence of any statutory injunction to restrict the claim of Input Tax Credit to the tax actually payable, allowing the revenue to restrict that claim, would be wholly contrary to law - To confine the word 'paid' to the amount that would be payable under the schedule would be to allow violation of the Act by ignoring the word 'or' appearing with the word 'paid' and 'payable' under Section 2(p) of the Act.

Then, Section 13 of the Act clearly allows full amount of input tax to be eligible for input tax credit - Merely because the selling dealer may have acted with abundant caution in realizing the higher amount to avoid any litigation with the State authorities and in absence of any allegation of the assessee had passed on the liability of higher tax paid, the question of law is answered in favour of the assessee and against the revenue.

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Madhya Pradesh AAR holds that delayed payment surcharge/ Late payment surcharge/Surcharge on outstanding amount cannot be treated a separate service but is includible in value of initial service i.e. Transmission/ distribution of electricity.

Notes that applicant, engaged in rural electrification work and supply of electricity to commercial and non-commercial consumers, is eligible for exemption from levy of GST under Entry No. 25 of Notification No. 12/2017 – Central Tax (Rate); Remarks that, “component of interest and delayed payment charges are obviously having a direct relation with the value of supply to which such interest/delayed charges relate. These are in fact components of the value of supply and do not have any independent status”; Explains that Delayed payment surcharge is a part of Tariff prescribed by MPERC and Company recovers such charges at rates fixed by Authority, thus “nature of the service is interest/late fee/penalty for delayed in payment of consideration” which falls within scope of Section 15 dealing with ‘Value of Supply”;

Observes further that, in present case, supply is of both exempted (i.e. distribution and transmission, retail supply of electricity) and taxable supply (i.e. other services as per Circular No. 34/8/2018, dated March 1, 2018); Accordingly concludes that “portion of Delayed payment surcharge attributable to exempted supply will be exempted and portion attributable to taxable supply will be taxable at the rate at which the corresponding supply is taxed” 

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