GST Caselaw

#GSTCase-104- Lease Agreement for a period of 99 years of immovable property classifiable under HSN 9972, Service provided by State of Rajasthan for which royalty is being paid classifiable under 997337 and taxable at 18%, ‘Breaded cheese’ is classifiable as ‘cheese’ under heading 0406

#GSTCase-104- Lease Agreement for a period of 99 years of immovable property classifiable under HSN 9972, Service provided by State of Rajasthan for which royalty is being paid classifiable under 997337 and taxable at 18%, ‘Breaded cheese’ is classifiable as ‘cheese’ under heading 0406

 

                                                                                                                                                By CA Arpit Haldia

 

Cases Covered

Case-1: Savencia Fromage & Dairy (P.) Ltd., [2019] 104 taxmann.com 434 (AAAR-UTTAR PRADESH)

Case-2- Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. [2019] 107 taxmann.com 278 (AAR- RAJASTHAN)

Case-3- Vedant Synergy (P.) Ltd [2019] 107 taxmann.com 267 (AAR- RAJASTHAN)

Case-4: Greentech Mega Food Park (P.) Ltd., [2019] 107 taxmann.com 263 (AAR- RAJASTHAN)

Case-5- Vinayak Stone Crusher [2019] 107 taxmann.com 273 (AAR- RAJASTHAN)

 

 

Case-1: Savencia Fromage & Dairy (P.) Ltd., [2019] 104 taxmann.com 434 (AAAR-UTTAR PRADESH)

Issue: Whether ‘Breaded cheese’ is classifiable as ‘cheese’ under heading 0406 and accordingly subject to CGST and SGST at rate of 6 per cent each.

Key Observations-1

Customs Tariff is based on the Harmonious System of Nomenclature (HSN) which is a dependable guide for interpreting the customs tariff as held by the Hon’ble Supreme court in the case of L.M.L. Ltd. v. Commissioner of Customs [2010] 1 taxmann.com 333.

Key Observation-2

Apex Court held in the case of Bharat Forge & Press Industries (P.) Ltd. v. CCE 1990 (45) ELT 525 (SC) that under a residuary entry only such goods are covered which cannot be brought under the various specific entries in the tariff. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item.

Held: Heading 0406 includes not only cheese but a mixture or combination of cheese and some other product, including bread and herbs. The term ‘cheese’ under Heading 0406 is of wide import covering within its sweep not only all kinds of cheese but certain articles of cheese too. The process of mixing other ingredients such as meat, fish etc., breading and cooking may result in the creation of an article of cheese but the same remains classifiable under. Heading 0406 if it retains the characteristics of cheese. The HSN and Explanatory Notes which form essential guidance for interpretation of any Heading make it abundantly clear that cheese which contain various additions that are battered or breaded and pre-cooked are included as ‘Cheese’ under Heading 0406. Ingredients and characteristics of the product with which we are concerned do not contain any material or feature, which will take the said product out of goods falling under Heading 0406. Therefore, Goods under reference are classifiable under S. No. 13 of Schedule II of Notification 1/2017 of Central tax (Rate), vide Heading 0406 and taxable @ 12% GST (6% CGST + 6% SGST).

 

Case-2- Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. [2019] 107 taxmann.com 278 (AAR- RAJASTHAN)

Issue: Whether the applicant being a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965, now consolidated to Rajasthan State Co-operative Society Act, 2001 is liable to deduct tax at source (TDS) under GST from payment made to it by vendors for providing/procuring taxable goods and services for making its supplies?

Held: It was held that applicant is neither established under Societies Registration Act, 1860 (21 of 1860) nor it is established/constituted by any Government (viz. Central Government/State Government/Local Authority). The applicant thus does not fall under any category of Section 51 of the GST Act, 2017. Therefore, provisions of TDS are not applicable in accordance with Section 51 of the GST Act, 2017.

 

Case-3- Vedant Synergy (P.) Ltd [2019] 107 taxmann.com 267 (AAR- RAJASTHAN)

Issue: Applicant is a company has applied for bidding in RFP “RFP for selection of an SI to implement and maintain Software VC up to Gram Panchayat Government offices” issued by Centre for e-Governance, Government of Karnataka, Gate-2, 1st Floor, MS Building, Bangalore 560001. What is the classification of goods and services supplied by the applicant and What will be the applicable rate of GST on goods and services supplied by the applicant?

Held: Supply of goods like Central MCU and other equipment in high availability mode, 7000 Nos. of client licenses, Speaker Type 1 (1000 Locations), Camera Type 1 (1000 Locations), Camera Type 1 (1000 Locations), Speaker Type 2 are not of immovable nature and can be dismantled in general view. Thus, character of immovability cannot be attached to the supply of goods. Further, the supply of services like VC engineers supply, helpdesk engineers supply and AMC and O & M service are in conjunction with the supply of goods by the applicant. Therefore, the supply of goods and services by the applicant do not fall under category of works contract service, though it is a composite supply.

From the above facts, we observe that essential element of whole supply is Video Conference software/network. [All other goods and services are involved in carrying out of smooth fixture and operation of video conference, therefore, the principal supply of the whole supply is Video Conference software/solution]. The above said supply falls under HSN 998316 to Notification No. 11/2017(Central Tax-Rate) dated 28.06.2017 (amended from time-to-time) and rate of GST is 18% (SGST 9% + CGST 9%).

 

Case-4: Greentech Mega Food Park (P.) Ltd., [2019] 107 taxmann.com 263 (AAR- RAJASTHAN)

Issue: Whether the Lease Agreement between the Applicant Company i.e. the lessor and the Lessee for a period of 99 years is a Sale of immovable property and outside GST and is exempt from levy of GST and if the present transaction of giving land on lease of 99 years is taxable under GST, then at what rate and what HSN Code is applicable?

Key Observation-1: Builders Association of Navi Mumbai v. Union of India [2018] 92 taxmann.com 134/67 GST 334 (Bom.), where the Hon’ble High Court has sustained GST on long term lease of plots for 60 years. The relevant portion of the said order is reproduced as follows :—

“21. We are, therefore, of the clear view that the demand for payment of GST is in accordance with law. The said demand cannot be said to be vitiated by any error of law apparent on the face of the record. In these circumstances, we do not find any merit in the writ petition. It is accordingly dismissed. Rule is discharged. There would be no order as to costs.”

Held: The Lease Agreement between the Applicant i.e. the lessor and the Lessee for a period of 99 years is a Lease Agreement of immovable property classifiable under HSN 9972. Leasing of a private property (land, building etc.) are classifiable under HSN 997212 heading “Rental or leasing services involving own or leased non-residential property” attracting GST @18% (SGST 9% + CGST 9%) of Annexure to Notification No. 11/2017, dated 28.06.2017. 

 

Case-5- Vinayak Stone Crusher [2019] 107 taxmann.com 273 (AAR- RAJASTHAN)

 Issue: What is the classification of service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it by the State of Rajasthan to M/s Vinayak Stone Crusher for which royalty is being paid?

Held: Service provided by the State of Rajasthan to the applicant for which royalty is being paid is classifiable under 997337. Tax Rate on service provided by the State of Rajasthan to the applicant for which royalty is being paid is 18% (SGST9% +CGST9%). As the applicant is recipient of the services provided by the State of Rajasthan he is liable to pay GST on reverse charge basis under entry number 5 of the Notification No 13/2017-CT (Rate) dated 28.06.2017 and is not covered by exclusion clause number (1) of entry No.5 of the said Notification. Services supplied by State Government of Rajasthan to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government is exempted with certain restrictions by way of Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017 as amended by Notification No. 14/2018-CT (Rate) dated 26.07.2018, However, the applicant is liable to discharge GST on reverse charge basis.

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