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2026 (2) TMI 648 - APPELLATE AUTHORITY FOR ADVANCE RULING, ODISHA GST

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Issues: (i) Whether the cross-country underground pipeline used for transmission of natural gas is an immovable property and falls outside the definition of plant and machinery under the GST law. (ii) Whether input tax credit is admissible on goods, pipes, fittings and works contract services used for construction and laying of such pipeline.

Issue (i): Whether the cross-country underground pipeline used for transmission of natural gas is an immovable property and falls outside the definition of plant and machinery under the GST law.

Analysis: The relevant test is whether the pipeline is attached to earth with the intention of permanent annexation and beneficial enjoyment. The statutory meaning of immovable property, together with the doctrine of fixtures, shows that a large underground cross-country pipeline laid for long-term transport of gas is not a mere movable chattel. The expression plant and machinery under the GST law is confined to apparatus, equipment and machinery fixed to earth by foundation or structural support and expressly excludes pipelines laid outside the factory premises. On the facts, the pipeline is laid outside the factory premises used for processing or regasification and cannot be treated as apparatus, equipment or machinery in common parlance.

Conclusion: The pipeline is an immovable property and does not qualify as plant and machinery for GST input tax credit purposes.

Issue (ii): Whether input tax credit is admissible on goods, pipes, fittings and works contract services used for construction and laying of such pipeline.

Analysis: Section 16 permits credit only subject to the restrictions in Section 17. Once the pipeline is treated as immovable property other than plant and machinery, works contract services used for its construction are hit by clause (c) and goods or services received for its construction on own account are hit by clause (d). The use of the goods and services in the course or furtherance of business does not override the express blocked-credit provisions.

Conclusion: Input tax credit is not admissible on the goods and works contract services used for construction and laying of the underground cross-country pipeline.

Final Conclusion: The appeal succeeds only to the extent that the statutory questions are answered; on merits, the claimed credit is held to be blocked because the pipeline is treated as an immovable property outside plant and machinery.

Ratio Decidendi: An underground cross-country pipeline laid for transmission of natural gas, when treated as an immovable property and as pipeline laid outside the factory premises, is excluded from plant and machinery, and the express blocked-credit restrictions under Section 17 override the general entitlement to input tax credit under Section 16.

GST input tax credit blocked for underground gas pipeline treated as immovable property outside plant and machinery
A cross-country underground natural gas pipeline laid outside the factory premises was treated as immovable property and excluded from plant and machinery under GST because it was permanently annexed to earth and not an apparatus, equipment or machinery in common parlance. On that basis, input tax credit on goods, pipes, fittings and works contract services used for its construction and laying was blocked: works contract services fell within the restriction on immovable property other than plant and machinery, and goods or services used on own account were also hit by the blocked-credit provisions. The general business-use condition did not override these express restrictions.

Input Tax Credit - Immovable property - Plant and machinery (explanation to Section 17) - Doctrine of fixtures / attachment to earth - term “movable property” or “immovable property” - Restriction on ITC u/s 17(5)(c) and 17(5)(d) - manufacturing activities and pipelines laid outside their factory premises - services by way of transmission of natural gas in pipeline. - HELD THAT:- As per the Section 3(26) the General Clauses Act, 1897, immovable property includes land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. Further, Section 3 of Transfer of Property Act defines the expression “attached to the earth” to mean things embedded in the earth or attached to what is so embedded for the “permanent beneficial enjoyment” of that to which it is attached. As per the “Doctrine of Fixtures” based on the Latin maxim “Quicquid plantatur solo, solo cedit”, whatever is attached to the ground becomes part of its meaning thereby that chattels (movable goods) permanently annexed to land become immovable. The common test for deciding whether an article is a fixture or chattel turns on the purpose of attachment. Intention of attachment is to be seen as to whether to treat an article as chattel or as a part of freehold. Whether cross-country pipeline for transmission of natural gas is an immovable property? - HELD THAT:- Since the statute specifically bars availment of ITC on works contract services when supplied for construction of immovable property and the cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on works contract services provided for construction of such pipeline for transportation of natural gas. Further, clause (d) of Section 17(5) bars entitlement to ITC in respect of goods or services used for construction of immovable property on assesse's own account. The cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on goods or services received for construction and laying of such pipeline for transportation of natural gas. Whether cross-country pipeline is “Plant & Machinery”? - HELD THAT:- It is evident that the natural gas has to be re-gasified at the terminals i.e., a designated processing plant for converting the liquefied natural gas to gaseous form before being transported in gaseous form through these cross-country pipelines which are laid outside thereto. The plant at the terminals is a place where there are workers who are working and the process that takes place there, is of conversion of LNG to gaseous form and thus can be treated as factory or factory premises. In this case, the pipelines laid by the Appellant for transportation of natural gas cross-country are laid outside the factory preemies. The pipelines laid cross-country by the Appellant on the direction of PNGRB do not form part of “plant and machinery” as these are laid outside the factory premises meant for processing the LNG, RLNG or CNG and therefore fall under the restriction clause as prescribed under Section 17(5)(c) and (d) of Act. Therefore, we are of the considered opinion that underground pipelines laid by the Appellant as per the requirement of the PNGRB, do not form part of plant and machinery as such pipelines laid outside factory premises are excluded from the definition of plant and machinery. To sum up, a pipeline cannot exist in vacuum without a factory. The expression “pipelines outside the factory” signifies that the pipeline is to transport some product from the factory to the end user. In the instant case, the gasified natural gas is transported through the pipeline which is outside the factory. Hence, we are of the view that the said pipeline is a “pipeline outside the factory” for which the appellant cannot avail ITC by treating pipelines as “plant & machinery”. Whether cross-country pipeline is covered under “apparatus, equipment, machinery”? - HELD THAT:- In common parlance, a pipeline cannot be treated as an apparatus, equipment or machinery. When a specific description is available, it is not justified to bring a pipeline within a meaning of “apparatus, equipment or machinery” by quoting convenient meanings just in order to avail ITC. As per the observation of the Hon'ble Apex Court in case of Commr. (CGST) v. Safari Retreats (P) Ltd [2024 (10) TMI 286 - SUPREME COURT], plant and machinery have a restricted meaning in the definition provided in the GST Act. When the legislature uses the expression plant and machinery, only a plant will not be covered by the definition unless there is an element of machinery. Further, plant and machinery have been defined as apparatus, equipment and machinery fixed to the earth by foundation or structural support, unlike the case of pipeline which is not laid on a foundation or structural support but simply laid underneath the earth. So, we are of the considered opinion that cross-country pipelines laid by the appellant are immovable property. The pipelines also cannot be considered as “plant & machinery”. Thus, the appellant is not entitled to ITC on goods or services towards construction and laying of the said pipelines as per the restrictions provided in Section 17(5)(c) & (d) and the explanation appended to Section 17.

2026 (5) TMI 419 - APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH GST

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Issues: (i) Whether the grant-in-aid received from CCRAS constituted consideration and whether the appellant's activities amounted to supply under the GST law; (ii) whether the appellant and CCRAS were distinct taxable persons and the activities were undertaken in the course or furtherance of business; (iii) whether exemption was available under Entry 3 or 3A of Notification No. 12/2017-Central Tax (Rate) or under Notification No. 8/2024-Central Tax (Rate); and (iv) whether the research activity was correctly treated as taxable research and development services.

Issue (i): Whether the grant-in-aid received from CCRAS constituted consideration and whether the appellant's activities amounted to supply under the GST law.

Analysis: The grant was linked to defined research deliverables, reporting obligations, and project performance. The statutory exclusion from consideration extends only to subsidies, not to grants-in-aid. The payments were therefore held to be in respect of identifiable supplies of goods and services.

Conclusion: The grant-in-aid constituted consideration, and the appellant's activities amounted to supply.

Issue (ii): Whether the appellant and CCRAS were distinct taxable persons and the activities were undertaken in the course or furtherance of business.

Analysis: The appellant was a separate legal entity and the description as a sub-nodal agency did not merge its identity with CCRAS. The research work was a systematic, funded activity undertaken for defined deliverables and therefore satisfied the business nexus required for supply.

Conclusion: The appellant and CCRAS were distinct taxable persons, and the activities were undertaken in the course or furtherance of business.

Issue (iii): Whether exemption was available under Entry 3 or 3A of Notification No. 12/2017-Central Tax (Rate) or under Notification No. 8/2024-Central Tax (Rate).

Analysis: The exemption under Entry 3 or 3A required a direct nexus with functions entrusted to a Panchayat or Municipality under Articles 243G or 243W. The services were rendered to a Central Government research body and not in discharge of local body functions. The conditions for the later exemption notification were also not satisfied on the material before the Authority.

Conclusion: The claimed exemptions were not available.

Issue (iv): Whether the research activity was correctly treated as taxable research and development services.

Analysis: The activity consisted of research, analysis, testing, and reporting for consideration and fell within the taxable category of research and development services. The absence of transfer of ownership or intellectual property did not alter the nature of the supply.

Conclusion: The activity was correctly treated as taxable research and development services.

Final Conclusion: The advance ruling was sustained, and the appeal failed in full, leaving the impugned supplies taxable under GST.

Ratio Decidendi: A government grant linked to defined deliverables and reciprocal obligations is consideration under GST unless it is a subsidy expressly excluded by statute, and exemption entries must be strictly construed according to their express recipient and functional nexus requirements.

GST treatment of research grants turns on reciprocal deliverables, distinct taxable persons, and strict exemption conditions.
Grant-in-aid linked to defined research deliverables and reporting obligations was treated as consideration under GST, because the statutory exclusion applies to subsidies and not to such reciprocal project funding. The appellant and CCRAS were separate taxable persons, and the funded research activity was undertaken in the course or furtherance of business. Exemption under Entry 3 or 3A of Notification No. 12/2017-Central Tax (Rate), and under Notification No. 8/2024-Central Tax (Rate), was unavailable because the services were not connected with Panchayat or Municipality functions. The research work was correctly classified as taxable research and development services.

Scope of supply under the GST - Grant-in-aid as consideration - Taxable supply between distinct persons - failed to appreciate that public health promotion is a Directive Principle of State Policy under Article 47 of the Constitution - Nature of Service - Three-Limb Test - Exemption for services relating to Panchayat or Municipality functions - Classification of research and development services Grant-in-aid as consideration - Subsidy exclusion - HELD THAT: - The Appellate Authority held that Section 2(31) expressly excludes only subsidies given by the Central Government or a State Government from the definition of consideration, and that exclusion could not be extended to grants by implication. The payments from CCRAS were found to be linked to approved proposals, defined deliverables, reporting obligations, audits, and performance of specified research activities, thereby disclosing a clear quid pro quo. Service tax decisions relied on by the appellant were held inapplicable because GST contains a broader concept of supply and a specific statutory treatment of consideration and subsidy. [Paras 7, 8] The grant-in-aid received from CCRAS was rightly treated as consideration for identifiable supplies and not as a subsidy outside the charging provision. Distinct taxable persons - Supply of services - HELD THAT: - The Appellate Authority rejected the plea that the arrangement was intra-departmental. It held that CCRAS, though under the Ministry of AYUSH, and the appellant were separate legal entities, and the description of the appellant as a Sub-Nodal Agency did not efface its independent legal personality. The approved scope of work, timelines, deliverables and conditions for release of funds established a functional arrangement under which the appellant carried out research activities for consideration, satisfying the ingredients of supply under Section 7(1)(a). The appellant was also found not to be acting as a pure agent. [Paras 7, 8] The research activity undertaken by the appellant for CCRAS constituted supply between distinct taxable persons in the course or furtherance of business. Exemption under Entry 3 and Entry 3A - Functions entrusted to Panchayat or Municipality - Strict interpretation of exemption - HELD THAT: - The Appellate Authority held that the conditions in Entries 3 and 3A are cumulative and require not only the specified class of recipient but also a direct nexus with functions entrusted to a Panchayat or Municipality. Though the expression "in relation to" is wide, it could not be used to dilute the express statutory requirement. The appellant's work under the Ayurgyan Scheme was found to be research, documentation and evaluation for CCRAS, a central autonomous research body, and not services rendered for or on behalf of local bodies in discharge of constitutional functions under Articles 243G or 243W. The rulings cited by the appellant were distinguished on facts, and the claim under Notification No. 8/2024-Central Tax (Rate) was also rejected because the stated conditions were not shown to be fulfilled. [Paras 7, 8] The appellant failed to establish that its services were covered by Entry 3 or Entry 3A, and no exemption under Notification No. 8/2024-Central Tax (Rate) was available. Classification of research and development services - Specific exemption not attracted - Harmonious construction - HELD THAT: - The Appellate Authority held that the principle that a specific entry prevails over a general entry applies only where both entries govern the same transaction. Since the appellant did not satisfy the conditions of Entries 3 and 3A, there was no conflict between those exemption entries and the taxable entry for research and development services. The intrinsic nature of the activity was research, analysis, validation and documentation, warranting classification under Heading 9981. It was further held that Project 1 and Project 2 did not constitute a composite supply, as they involved distinct supplies of goods and services with separate deliverables. [Paras 7, 8] The supplies were rightly treated as taxable research and development services under Heading 9981, alongside taxable supply of goods in Project 1, and the reliance on exemption entries to displace classification failed. Final Conclusion: The appeal was rejected and the advance ruling was upheld. The Authority held that the grant-in-aid received from CCRAS was consideration for taxable supplies, that the appellant's activities constituted taxable supply between distinct persons, and that no exemption was available under Entry 3, Entry 3A, or Notification No. 8/2024-Central Tax (Rate).

2026 (2) TMI 584 - APPELLATE AUTHORITY FOR ADVANCE RULING, ODISHA GST

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Issues: (i) Whether the appellant is a Governmental Authority or a Government Entity in terms of explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; (ii) Whether the services provided by the appellant constitute "pure services"; (iii) Whether the services supplied by the appellant are entitled to exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Issue (i): Whether the appellant is a Governmental Authority or a Government Entity in terms of explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The appellant was established by the State Government to implement the Free Medical Distribution Scheme and was incorporated with government equity and control to carry out functions entrusted by the State, including procurement, warehousing and distribution of medicines and maintenance of medical equipment. The nature and purpose of the governmental resolution and the extent of government participation were considered in light of the definitions in the explanation to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Conclusion: In favour of Appellant on the question of being a Government Entity; negative on the question of being a Governmental Authority.

Issue (ii): Whether the services provided by the appellant constitute "pure services".

Analysis: The appellant procures goods on funds allocated by the Government, does not treat amounts paid to suppliers as its revenue or expenditure, and retains only a government-authorised service charge reflected in its accounts. The functions performed (procurement, inventory management, distribution, maintenance) are integral parts of the public health scheme and the use of Rule 33 (which concerns valuation for a pure agent) was assessed as misplaced for defining "pure services"; the character of supply was determined from the contractual/functional mandate and accounting treatment.

Conclusion: In favour of Appellant; the services constitute pure services.

Issue (iii): Whether the services supplied by the appellant are entitled to exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: Entry Sl. No. 3 grants nil rate to pure services provided to government in relation to functions entrusted to Panchayats or Municipalities under Articles 243G/243W. The appellant's mandated activities are integrally linked to public health functions expressly enumerated in the Eleventh and Twelfth Schedules and arise from the State's policy to provide essential medicines free of cost; therefore the services fall within the scope of the notified exemption.

Conclusion: In favour of Appellant; the services are entitled to exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding State notification.

Final Conclusion: The appellant qualifies as a Government Entity, its supplies are pure services, and those services are covered by the nil-rate exemption at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017; the earlier AAR conclusions to the contrary are set aside to the extent inconsistent with these rulings.

Ratio Decidendi: Where an entity is established and controlled by the Government to perform functions entrusted under Articles 243G/243W and performs procurement and related services on government funds while retaining only an authorised service charge (not treating supplier payments as its revenue), such activities constitute pure services and fall within the nil-rate exemption at Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

GST exemption for public healthcare supply of medicines and logistics to State affirmed as nil-rated under municipal functions.
The appellant's procurement and logistic services for supplying medicines to State health facilities qualify as pure services and are integrally linked to health and sanitation functions entrusted to panchayats and municipalities. Rule 33 CGST, being a valuation provision for pure agents, cannot be read to define or limit the meaning of "pure services"; that interpretive use is misplaced. Because the services fall within the constitutional municipal functions relating to public health, they attract nil rate exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) and corresponding State notifications, and the appellant is entitled to that exemption.

Entitlement to exemption, as Notified at Sl.No. 3 of the Notification No. 12/2017-CT (Rate) - Qualification as a Government Entity - Non-qualification as a Governmental Authority - procurement of quality medicines, surgical and EIF (Equipment, Instrument and Furniture) - Pure services (excluding composite supplies involving supply of any goods) - nil rate for pure services provided to Government in relation to functions under Articles 243G/243W - valuation of supplies by a pure agent (inapplicability for defining "pure services") - Whether the services entrusted and provided by the Appellant to Govt. falls under article 243G or 243W of the Constitution. - HELD THAT:- The AAR Authority has discussed about Rule 33 of CGST Rules, 2017, for the purpose of interpreting the expression “Pure Services”. However, on plain reading of Rules, it is observed that Rule 33 of the Rules, is prescribed under Chapter-IV of the said Rules which describes “Determination of Value of Supply”. Rule -33 of the Rules prescribes value of supply of services in case of pure agent. Accordingly, any inference drawn as to the meaning or ambit of “pure services” from a provision solely concerned with valuation of services rendered by a pure agent is misplaced and legally untenable. Therefore, the pure services provided to State Government by way of any activity which are under 234G or 243W of the Constitution will attract nil rate of GST. As discussed above, the services provided by the Appellant are “pure services”. The scope of supply, objective of the Scheme, approval accorded by Hon’ble Chief Minister of Odisha and nature of the activities undertaken by the appellant, clearly demonstrates that timely procurement and assured supply of good quality medicine, which involves procurement as well as logistic management, constitutes an indispensable component of an effective public health system. The Government of Odisha has the mandate to ensure access to essential healthcare services, including the provision of quality medicines free of cost to patients attending Government health facilities through “Free Medical Distribution Scheme”. The Appellant functions as an implementing arm of the State in furtherance of this mandate. Accordingly, the activities undertaken by the Appellant are integrally and intrinsically linked to “Health and Sanitation, including hospitals, primary health centres and dispensaries”, which is specifically enumerated at Sl. No. 23 of the Eleventh Schedule (Article 243G) and Public health under Sl. No. 6 of the Twelfth Schedule (Article 243W) of the Constitution of India. Thus, the services rendered by the Appellant squarely fall within the scope of functions entrusted to Panchayats and Municipalities under Articles 243G and 243W of the Constitution. Consequently, the Appellant is entitled to exemption under Sl. No. 3 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as well as the corresponding notification issued by the Government of Odisha, as amended from time to time.

2026 (2) TMI 504 - APPELLATE AUTHORITY FOR ADVANCE RULING, ODISHA GST

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Issues: (i) Whether repair and maintenance services provided by the Head Office in Maharashtra through Field Service Engineers (FSEs) for AMC/CMC with customers in Odisha constitute a 'place of business' in Odisha under Section 2(85) of the CGST Act; (ii) Whether temporary storage of spare parts and tool kits at the Appellant's location in Odisha constitute a 'place of business' under Section 2(85) or a 'fixed establishment' under Section 2(50) of the CGST Act; (iii) Whether the Appellant is required to obtain separate GST registration in Odisha solely on account of activities performed in Odisha.

Issue (i): Whether repair and maintenance services provided by the Head Office in Maharashtra through FSEs for AMC/CMC with customers in Odisha constitute a 'place of business' in Odisha under Section 2(85) of the CGST Act.

Analysis: Section 2(85) is inclusive and identifies (a) a place from where business is ordinarily carried on (including warehouses/godowns), (b) a place where books of account are maintained, or (c) a place where business is carried on through an agent. Section 2(71) defines the location of supplier of services as the place of business or fixed establishment most directly concerned with the supply. The facts show that contracts, invoicing, receipt of consideration and inventory control are effected from the Head Office in Maharashtra; FSEs in Odisha are employees deployed for operational execution and do not enter into contracts, maintain books or act as independent agents. The minimal, incidental post-service holding of spare parts by FSEs is operational and not evidence of a place from which business is ordinarily carried on.

Conclusion: No. The repair and maintenance services provided through FSEs do not constitute a 'place of business' in Odisha. This conclusion is in favour of the assessee.

Issue (ii): Whether temporary storage of spare parts and tool kits at the Appellant's location in Odisha constitute a 'place of business' under Section 2(85) or a 'fixed establishment' under Section 2(50) of the CGST Act.

Analysis: Section 2(50) requires a sufficient degree of permanence and a suitable structure in terms of human and technical resources for supply of services. The retained spare parts are minimal, transient (returned within a short period), incidental to execution of service visits, and there is no separate administrative or inventory control in Odisha. The absence of permanence, independent structure or autonomous inventory management indicates no fixed establishment. Similarly, temporary incidental storage does not satisfy the circumstances envisaged in clause (a) of Section 2(85) as a place from which business is ordinarily carried on.

Conclusion: No. The temporary storage of spare parts and tool kits does not constitute a 'place of business' or a 'fixed establishment'. This conclusion is in favour of the assessee.

Issue (iii): Whether the Appellant is required to obtain separate GST registration in Odisha solely on account of the activities performed in Odisha.

Analysis: Sections 22 and 24 prescribe registration where a person makes taxable supplies from a State or falls within specified categories requiring compulsory registration. Given that supplies, invoicing, consideration and inventory control are effected from the Head Office in Maharashtra and the Odisha presence is limited to operational execution by employees without creating place of business or fixed establishment, supplies are made from Maharashtra. Consequently, the statutory criteria for separate registration in Odisha are not met on the basis of the activities described.

Conclusion: No. The Appellant is not required to obtain separate GST registration in Odisha solely due to the described activities. This conclusion is in favour of the assessee.

Final Conclusion: The Appellate Authority for Advance Ruling has concluded that the Head Office's provision of AMC/CMC services through deployed employees and incidental temporary retention of spare parts in the State do not create a place of business or fixed establishment in that State and do not trigger a requirement for separate GST registration there; the Appellant's supplies are treated as made from the Head Office location.

Ratio Decidendi: Where contracts, invoicing, receipt of consideration and inventory control are effected from the principal place of business and local personnel merely execute those contracts with transient incidental storage of parts, such presence does not constitute a 'place of business' under Section 2(85) or a 'fixed establishment' under Section 2(50) of the Central Goods and Services Tax Act, 2017, and therefore does not mandate separate State registration under Sections 22/24.

Provision of AMC/CMC services through field engineers: operational presence does not create local place of business or require separate GST registration
Repair and maintenance services for AMC/CMC executed in-state by deployed Field Service Engineers do not constitute a "place of business" under Section 2(85) because contracts, invoicing, receipt of consideration and inventory control are exercised from the Head Office; outcome: no place of business. Temporary local storage of spare parts and tool kits is transient, lacks permanence, independent structure or inventory control and therefore is not a "place of business" nor a "fixed establishment" under Section 2(50); outcome: no fixed establishment. Because supplies are made from the Head Office and statutory registration criteria are unmet, the Appellant need not obtain separate GST registration in the State; outcome: no separate registration required.

Place of business (inclusive definition) - fixed establishment (sufficient degree of permanence and suitable structure) - location of supplier of services (establishment most directly concerned with the supply) - agent (person carrying on supply on behalf of another) - liability to register from where taxable supply is madePlace of business (inclusive definition) - location of supplier of services (establishment most directly concerned with the supply) - agent (person carrying on supply on behalf of another) - Repair and maintenance services provided by the Head Office through Field Service Engineers do not constitute a "place of business" in Odisha under Section 2(85) of the CGST Act. - HELD THAT: - The Authority found that all contracts, invoicing and receipt of consideration are effected from the Head Office in Maharashtra and that the Field Service Engineers (FSEs) in Odisha are employees deployed to execute HO's contractual obligations. The FSEs do not enter into contracts, do not maintain separate books, and act under the direction and control of the HO; they are not agents carrying on business on behalf of the HO as contemplated by the Act. The spare parts temporarily retained by FSEs are incidental, limited in quantity and returned to the mother warehouse; they do not amount to a warehouse or place from which the business is ordinarily carried on. Applying the inclusive tests in Section 2(85) to the facts, the activities in Odisha do not satisfy any of the illustrative categories that would convert the Odisha location into a place of business. [Paras 5, 6]No; the activities do not constitute a place of business in Odisha.Fixed establishment (sufficient degree of permanence and suitable structure) - place of business (inclusive definition) - Temporary storage of spare parts and toolkit at the Appellant's location in Odisha does not constitute a "place of business" under Section 2(85) nor a "fixed establishment" under Section 2(50) of the CGST Act. - HELD THAT: - The Authority applied the twofold test for fixed establishment - sufficient degree of permanence and suitable human/technical resources - and found these lacking in Odisha. The presence in the State is limited to deployed employees (FSEs) without administrative set-up, separate books or infrastructure; the retention of leftover spare parts is transient, operationally incidental and not indicative of ordinary carrying on of business or a structured establishment capable of supplying services independently. Accordingly, the temporary holding of spare parts/toolkit does not meet the statutory standard for either a place of business or a fixed establishment. [Paras 5, 6]No; temporary storage and toolkit do not constitute a place of business or fixed establishment in Odisha.Liability to register from where taxable supply is made - location of supplier of services (establishment most directly concerned with the supply) - The Appellant is not required to obtain separate GST registration in Odisha solely on account of the activities performed there. - HELD THAT: - Registration liability attaches to the State from where taxable supplies are made. On the facts, the Authority concluded that the supplies (contracts, invoicing and receipt of consideration) are made from the Head Office in Maharashtra; the Odisha activities are executional and incidental. There is no separate supply emanating from Odisha that would trigger registration under Sections 22 or 24. Consequently, no separate GST registration in Odisha is required based on the present activities. [Paras 5, 6]No; separate GST registration in Odisha is not required on the present facts.Final Conclusion: The Appellate Authority for Advance Ruling, Odisha answered all questions in the negative: the HO's post sale service operations through FSEs and the incidental temporary retention of spare parts in Odisha do not amount to a place of business or fixed establishment in Odisha, and do not impose a requirement for separate GST registration in Odisha.

2026 (7) TMI 628 - APPELLATE AUTHORITY FOR ADVANCE RULING, TELANGANA GST

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GST treatment of mandatory mining contributions differs for District Mineral Foundation and National Mineral Exploration Trust payments.
Contribution towards the District Mineral Foundation was treated as part of the mining royalty burden and, in light of the GST clarification treating District Mineral Foundation trusts as governmental authorities supplying without consideration, it was held not liable to GST. Contribution towards the National Mineral Exploration Trust was treated as a mandatory payment linked to mining operations but not covered by that clarification, and it was held liable to GST. The appeal therefore succeeded only on the District Mineral Foundation issue and failed on the National Mineral Exploration Trust issue, resulting in partial relief.

2026 (2) TMI 322 - APPELLATE AUTHORITY FOR ADVANCE RULING. TELANGANA GST

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Issues: (i) Whether the statutory contribution made to District Mineral Foundation (DMF) is liable to GST and forms part of the mining royalty consideration; (ii) Whether the statutory contribution made to National Mineral Exploration Trust (NMET) is liable to GST and forms part of the mining royalty consideration.

Issue (i): Whether the statutory contribution made to District Mineral Foundation (DMF) is liable to GST and forms part of the mining royalty consideration.

Analysis: The appeal was confined to the question of taxability of the mandatory contribution linked to mining operations. The contribution to DMF was examined in the light of the statutory scheme governing mining royalty and the later GST clarification treating District Mineral Foundation Trusts as Governmental Authorities eligible for the same GST exemption as other such authorities. The amount payable to DMF was held to be a statutory exaction linked to mining activity, but the clarification was treated as sufficient to exclude it from GST liability.

Conclusion: The contribution to DMF is not liable to GST and the appeal succeeds to that extent.

Issue (ii): Whether the statutory contribution made to National Mineral Exploration Trust (NMET) is liable to GST and forms part of the mining royalty consideration.

Analysis: The contribution to NMET arises from the same statutory mining framework, but no comparable GST clarification or exemption was applied to it. The amount remains a mandated payment calculated as a percentage of royalty and is treated as part of the consideration connected with the mining service. On that basis, the earlier ruling taxing the NMET component was upheld.

Conclusion: The contribution to NMET remains liable to GST and the appeal fails to that extent.

Final Conclusion: The mandatory contribution to DMF is taken out of GST charge, while the NMET contribution continues to attract GST as upheld by the lower authority.

Ratio Decidendi: Where a statutory mining-related payment is specifically clarified as exempt through the GST framework, it is not taxable, but a similar mandated contribution without such exemption remains part of the taxable consideration connected with the mining supply.

GST treatment of mining-related statutory contributions: DMF exempt, while NMET remains taxable as part of consideration.
Statutory mining-related contributions were examined for GST treatment in relation to mining royalty consideration. The contribution to the District Mineral Foundation was treated as a mandatory exaction linked to mining activity, but a GST clarification recognising District Mineral Foundation Trusts as Governmental Authorities was applied, so it was held not liable to GST. The contribution to the National Mineral Exploration Trust, however, was also a mandatory percentage-based payment under the mining framework, and no comparable exemption or clarification applied; it was therefore treated as part of the taxable consideration connected with the mining supply and remained liable to GST.

Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - governmental authority exemption from GST - maintainability of issues not raised before lower authorityMaintainability of issues not raised before lower authority - Questions other than the one decided by the lower authority (i.e., questions at Sl. nos. 4(i), (ii), (iv) and (v)) are not admissible in the present appeal as they were not raised before the lower authority. - HELD THAT: - The Appellate Authority noted that only question No. 4(iii) had been raised before the lower authority and that other questions framed in the appeal were not part of the earlier proceedings. In view of that procedural history, those additional questions do not merit consideration in the appeal proceedings and are accordingly excluded from adjudication. [Paras 8]Questions 4(i), 4(ii), 4(iv) and 4(v) are not considered in this appeal as they were not raised before the lower authority.Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - Whether contributions mandated by the MMDR Act to District Mineral Foundation (DMF) constitute consideration for the mining activity and are taxable under GST. - HELD THAT: - The Authority examined the nature of the payments required under sections 9B and 9C of the MMDR Act, noting that the applicant's mining activities fall within the definition of 'business' and that the mandated payments (30% to DMF and 2% to NMET) are fixed percentages of royalty and not voluntary donations. Because these payments are mandated and arise from the mining operations, they qualify as activities 'in the course or furtherance of business' and thus fall within the ambit of supply. However, the CBEC clarification dated 31.10.2023 characterises District Mineral Foundation Trusts (DMFTs) set up by State Governments as 'Governmental Authorities' eligible for the same GST exemptions as other governmental authorities, observing that DMFTs provide services free of charge for public benefit similar to functions in the Eleventh and Twelfth Schedules and do not realise consideration from beneficiaries. Applying that clarification, the Authority ruled that contributions to DMF are not liable to GST. [Paras 12, 14, 15]Contribution to DMF is not liable to GST; the appeal is allowed to this extent.Supply in course or furtherance of business - consideration for supply - taxability of statutory contributions - governmental authority exemption from GST - Whether contributions to National Mineral Exploration Trust (NMET) are taxable under GST. - HELD THAT: - The Authority held that, unlike DMF, the CBEC clarification does not extend governmental authority exemption to NMET. Given that the NMET contribution is a mandated payment tied to mining operations and constitutes a component of the activity carried out in furtherance of business, it falls within the scope of supply for GST purposes. Absent an express exemption or classification as a governmental authority for NMET, the lower authority's ruling applying the tariff entry to NMET contributions was upheld. [Paras 13, 14, 15]Contribution to NMET is liable to GST; the ruling of the lower authority is upheld.Final Conclusion: The appeal is allowed insofar as contributions to District Mineral Foundation (DMF) are ruled not liable to GST in view of CBEC's clarification that DMFTs are governmental authorities; the appeal is dismissed insofar as contributions to National Mineral Exploration Trust (NMET) are concerned and the lower authority's ruling upholding taxability is affirmed. Other questions raised in the appeal were not entertained as they were not raised before the lower authority.

2026 (1) TMI 1054 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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Issues: Whether the GST paid on supply, installation, testing and commissioning of the fire-fighting system and public health engineering for expansion/commissioning of a new factory is eligible as Input Tax Credit or is blocked under Section 17(5)(c) and (d) of the CGST/TNGST Acts; and whether the secondary question on timeline to avail ITC on the advance component requires separate adjudication.

Analysis: The Appellant sought ITC contending the installations constitute "plant and machinery" (apparatus, equipment or machinery) used for making outward supply and/or are movable. The provisions governing entitlement and restrictionsSection 16(1) (entitlement subject to conditions and restrictions) and Section 17(5)(c) & (d) (blocking ITC on works contract services and goods/services for construction of immovable property other than plant and machinery)and the definition of "plant and machinery" (apparatus, equipment and machinery fixed to earth by foundation or structural support and used for making outward supply) are determinative. The contractual scope ('deliver the Permanent Work to the owner') and the cost-abstract show a composite works contract for supply and installation integrated into the factory infrastructure. Applying established tests (nature/object of annexation, intention of parties, functionality, permanency and marketability), the Authority finds the installations become assimilated into the building and serve permanent beneficial enjoyment of the immovable property; several components are tailor-made and not marketable independently. Even where items may be detachable physically, the contract and the manner of integration indicate they form part of immovable property and are not "plant and machinery" for the purposes of Section 17. Given this conclusion, the ITC is blocked under clauses (c) and (d) of Section 17(5). As the primary query is answered against ITC eligibility, the question on timeline for availing ITC on the advance component is rendered academic and need not be answered.

Conclusion: The GST paid on supply, installation, testing and commissioning of the fire-fighting system and public health engineering for the new factory is not eligible as Input Tax Credit and is blocked by Section 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts; appeal dismissed (in favour of Revenue).

Eligibility to claim ITC on firefighting and public health equipment for factory expansion held unavailable due to immovable property assimilation.
GST paid on supply and installation of firefighting systems and public health equipment for a factory expansion is ineligible as input tax credit because such installations, being permanently fastened and assimilated into the building, constitute immovable property and do not qualify as plant and machinery used for making outward supplies; consequently GST on the composite works contract is blocked under the statutory exclusions for goods and services forming part of immovable property and for construction services, and therefore ITC on advance invoices for the specific contract cannot be claimed.

Input Tax Credit - plant and machinery - works contract services - construction of an immovable property - used or intended to be used in the course or furtherance of business - immovable property - movability, object of annexation, intendment and marketability tests - blocked under Section 17(5)(c) and 17(5)(d)Input Tax Credit - plant and machinery - works contract services - construction of an immovable property - movability, object of annexation, intendment and marketability tests - blocked under Section 17(5)(c) and 17(5)(d) - Eligibility of input tax credit on GST paid for supply and installation of firefighting system and public health engineering for expansion of factory - HELD THAT: - The Appellate Authority examined the contract and the nature of the installations and held that the contract is a composite works contract for supply and installation of firefighting and public health systems which, on installation, become assimilated into the building and form part of the immovable property. Applying the definition of "plant and machinery" (apparatus, equipment and machinery fixed to earth by foundation or structural support and used for making outward supply) the Authority found that these installations do not satisfy the requirement of being "used for making outward supply of goods or services" and, in any event, their assimilation into the building, the contractual clause delivering "permanent work to the owner", and the results of the movability/object of annexation/intendment/functionality/permanency/marketability tests demonstrate they form part of the immovable property. Consequently, GST paid on the works contract service and on goods/services used for construction is not eligible as ITC because it is barred by clauses (c) and (d) of Section 17(5). The Authority also observed that mandatory nature of such installations under factory laws does not, by itself, confer entitlement to ITC if the statutory restrictions in Section 17(5) apply. As the main query was answered against the appellant, the alternate question on the timeline for availing ITC on the "advance component" of the contract did not arise and was not decided. [Paras 5]ITC on GST paid for the firefighting system and public health engineering is not available to the appellant as it is blocked by Section 17(5)(c) and 17(5)(d); the AAR ruling is upheld.Final Conclusion: The Appellate Authority upheld Advance Ruling No.31/ARA/2025 dated 18.08.2025 and dismissed the appeal: ITC on the firefighting system and public health engineering for the new factory is ineligible under Section 17(5)(c) and (d); the secondary query on timing of ITC for the advance component did not arise.

2026 (1) TMI 1053 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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Issues: (i) Whether Input Tax Credit (ITC) is eligible on electrical works carried out for expansion of factory for manufacturing activity; (ii) Whether and on what basis the timeline arises to avail ITC on tax invoice raised by supplier to bill the 'advance component' of the contract and subsequent adjustment in service bills.

Issue (i): Whether the electrical installation works (including LT panels, busducts, LT electrical works, lightning protection, light fixtures and associated civil works) qualify as 'plant and machinery' or otherwise fall outside the scope of blocked credits under Section 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts, thereby permitting availment of ITC.

Analysis: The Authority examined the statutory entitlement under Section 16(1) and the blocking provisions in Section 17(5) including the Explanation defining 'plant and machinery'. It analysed the contractual terms (including delivery of 'permanent work'), the nature and purpose of annexation, and applied judicial tests (nature of annexation, object of annexation, intendment of parties, functionality, permanency and marketability). The Authority considered submissions and comparative rulings and distinguished cases where items directly related to transmission or outward supply were held to be plant and machinery. It concluded that the electrical installation as a whole and its components do not constitute equipment, machinery or an 'apparatus' as contemplated in the Explanation, that the object and intendment indicate permanent beneficial enjoyment by the immovable property, and that the items lack independent marketability or independent functional existence in the instant facts.

Conclusion: ITC on the electrical installation works for the new factory is not eligible and is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts; the AAR ruling disallowing ITC is upheld in favour of the Revenue.

Issue (ii): Whether the timeline to avail ITC on the 'advance component' billed by the supplier requires determination given the contract and invoices in question.

Analysis: The Authority treated the timeline issue as subordinate to the primary question of ITC eligibility. Having held that ITC on the contract is not available on merits, the factual and temporal question regarding the treatment of advance invoices and subsequent adjustments becomes moot in the context of this contract.

Conclusion: The question on the timeline to avail ITC on the 'advance component' does not arise and is not answered because the main query on ITC availability has been answered in the negative.

Final Conclusion: The Advance Ruling No.32/ARA/2025 dated 18.08.2025 is upheld and the appeal is dismissed; the electrical installation works in the facts of this case form part of immovable property and ITC thereon is blocked under Section 17(5)(c) and 17(5)(d).

Ratio Decidendi: Where electrical installations cease to have independent existence, are intended for permanent beneficial enjoyment of the immovable property, and do not satisfy the Explanation to Section 17 as 'plant and machinery' (apparatus, equipment or machinery fixed to earth and used for making outward supply), the ITC on such supplies is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST Act, 2017.

Eligibility to avail ITC on electrical works for factory expansion denied where installations are not plant and machinery and form immovable property
Input tax credit for electrical installations in factory expansion was held inapplicable because such installations do not qualify as plant and machinery under the explanation to Section 17(5) of the CGST Act; therefore GST paid on those installations is blocked under the input tax credit exclusion. The installations (LT panels, bus-ducts, wiring, lighting, lightning protection and associated civil works) were characterised as forming part of immovable property by annexation and permanent enjoyment, not as discrete apparatus, equipment or machinery, and accordingly ITC on related supplies is unavailable.

Input Tax Credit eligibility - Blocked credit under Section 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts - Definition of "plant and machinery" under the Explanation to Section 17 - Movability and immovable property tests (nature of annexation, object of annexation, intendment of parties, functionality, permanency, marketability) - Distinction between articles used for making outward supply and supportive infrastructure - Binding effect of advance ruling on the applicantInput Tax Credit eligibility - Blocked credit under Section 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts - Definition of "plant and machinery" under the Explanation to Section 17 - Movability and immovable property tests (nature of annexation, object of annexation, intendment of parties, functionality, permanency, marketability) - Whether ITC is eligible on electrical installation works carried out for expansion of factory for manufacturing activity - HELD THAT: - The Authority examined whether the electrical works (LT panels, busducts, LT electrical works, lightning protection, light fixtures and associated civil works) fall within the Explanation to Section 17 as "plant and machinery" or otherwise escape the bar in clauses (c) and (d) of Section 17(5). The explanation requires apparatus, equipment or machinery to be fixed to earth by foundation or structural support and used for making outward supply. The Authority held that the expression "plant and machinery" must be read in toto and the electrical installation cannot be characterised as equipment or machinery; at best the appellant sought to treat it as an "apparatus" by relying on dictionary meanings, but the installations are generic in function (power distribution, lighting, protection, enabling cranes and other machinery) rather than a specific apparatus or self-contained equipment. Applying established tests of movability/immovability (nature and object of annexation, intendment of parties, functionality, permanency and marketability), and having regard to contractual terms providing for delivery of "permanent work to the owner", the Authority concluded that these installations cease to have an independent existence once installed and form part of immovable property for permanent beneficial enjoyment of the land. Distinguishing the factual matrix and purposive features of precedents and CBIC circulars relied upon by the appellant (which concern OFC networks, direct transmission equipment or different factual constructs), the Authority found those not to be applicable. Consequently the supplies are caught by clauses (c) and (d) of Section 17(5) and ITC is blocked. [Paras 5]ITC on the electrical installation works for the new factory is not eligible and is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts; the AAR ruling is upheld on this point.Input Tax Credit eligibility - Binding effect of advance ruling on the applicant - Whether timeline to avail ITC on invoices billing an "advance component" requires a separate ruling in the present appeal - HELD THAT: - The second query on the timeline to avail ITC in respect of the advance component was dependent on the primary question of whether ITC is available on the contract at all. Having answered the main question in the negative (ITC blocked), the Authority held that the subsidiary question on timeline does not arise for determination in this appeal. [Paras 5]The question on the timeline to avail ITC on the advance component does not arise and is not decided.Final Conclusion: The Appellate Authority upholds Advance Ruling No. 32/ARA/2025 dated 18.08.2025 and dismisses the appeal; ITC on the electrical installation for the new factory is held to be ineligible under Sections 17(5)(c) and 17(5)(d), and the ancillary question on timeline is not examined.

2026 (1) TMI 1052 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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Principal function governs classification of interactive flat panel displays, keeping them under the monitor heading for GST purposes.
Interactive flat panel displays were classified according to their principal function as display and viewing devices, not as automatic data processing machines, because the embedded processor, memory, operating system and connectivity were ancillary to the goods' essential character. The authority held that a product incorporating data-processing features remains classifiable by its dominant non-data-processing function where that function defines its commercial use. On that basis, the goods fell under the monitor heading, classification under 84714190 was rejected, and 85285900 was upheld with the applicable GST rate remaining 28%.

2026 (5) TMI 487 - APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH GST

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Issues: (i) Whether assignment of leasehold rights in industrial land constitutes a taxable supply of service under the goods and services tax law. (ii) Whether recovery of land development costs is a taxable supply of service under the goods and services tax law.

Issue (i): Whether assignment of leasehold rights in industrial land constitutes a taxable supply of service under the goods and services tax law.

Analysis: The transfer involved only the right to use the demised premises for the balance lease term and did not amount to transfer of title in land. Section 7 read with Paragraph 2(a) of Schedule II treats the grant of a right to use immovable property for consideration as a supply of service. The cited High Court view was not treated as final because the matter was pending before the Supreme Court, and the circular and other advance rulings supported the same interpretation.

Conclusion: The assignment of leasehold rights is a taxable supply of service and GST is payable on the consideration received.

Issue (ii): Whether recovery of land development costs is a taxable supply of service under the goods and services tax law.

Analysis: The land development activities included internal roads, drainage, levelling, compound wall and allied infrastructure. These works constituted identifiable development and construction services that enhanced the utility of the premises. The reimbursement was separately ascertainable from the lease consideration and therefore represented consideration for services rendered.

Conclusion: Recovery of land development costs is taxable as a supply of service and attracts GST.

Final Conclusion: The appellate challenge failed and the advance ruling was sustained in full, leaving the taxability findings against the appellant undisturbed.

Ratio Decidendi: Assignment of leasehold rights without transfer of title is a taxable supply of service, and separately identifiable reimbursement for land development works is also taxable where it represents consideration for services rendered.

Leasehold rights and land development reimbursements were held taxable as supplies of service under GST
Assignment of leasehold rights in industrial land was treated as a taxable supply of service because the transfer covered only the right to use the premises for the balance lease term and did not transfer title in land; GST was held payable on the consideration received. Recovery of land development costs was also held taxable because the development works, including roads, drainage, levelling and compound wall, were identifiable services that enhanced the premises, and the reimbursement was separately ascertainable as consideration for those services. The appellate challenge failed, and the advance ruling was sustained in full.

Levy of GST on Assignment of leasehold rights - taxable supply of service - Land development cost reimbursement - Construction and development services - Recovery of land development cost and related amounts from the transferee. Assignment of leasehold right - HELD THAT: - The Appellate Authority held that Section 7 read with paragraph 2(a) of Schedule II treats the grant of a right to use immovable property for consideration as a supply of service. In the transaction under consideration, what stood transferred was only the right to use the demised premises for the balance lease period and not title in the land itself. On that reasoning, the transaction could not be equated with sale of land under Schedule III. The Authority further held that the Gujarat High Court decisions in Gujarat chamber of Commerce and Industry Vs Union of India [2025 (1) TMI 516 - GUJARAT HIGH COURT] and also in Dhiraj Can Co. (P) Ltd., Vs Union of India [2025 (7) TMI 622 - GUJARAT HIGH COURT] relied upon by the appellant had not attained finality since the Departmental appeal had been admitted by the Supreme Court, and that the ruling in Safari Retreats [2024 (10) TMI 286 - SUPREME COURT] was inapplicable as it concerned input tax credit on construction for leasing and not taxability of assignment of leasehold land rights. Reference by the AAR to other advance rulings and the CBIC circular was treated as permissible use of persuasive interpretative material supporting a uniform application of the statute. [Paras 7, 8] GST was held applicable on the consideration received for transfer of the leasehold rights, and the AAR's view on this issue was upheld. Land development cost reimbursement - Construction and development services - Consideration for services - HELD THAT: - The Appellate Authority accepted the AAR's characterisation of the underlying activities such as roads, drainage, levelling, compound wall and allied civil infrastructure as construction and development services. These works were found to enhance the usability and value of the demised premises and to possess an independent service character under the GST framework. Since the amount recovered towards land development cost was separately identifiable and distinct from the consideration for transfer of leasehold rights, it represented consideration for services rendered by the appellant and therefore attracted GST. [Paras 7, 8] The recovery of land development cost was held taxable as supply of service, and the AAR's ruling on this aspect was affirmed. Final Conclusion: The appeal was dismissed and the advance ruling was upheld. The Appellate Authority affirmed that transfer of the unexpired leasehold rights attracted GST as a supply of service, and that the separately recovered land development cost was likewise taxable as consideration for services.

2025 (10) TMI 785 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether import IGST paid through a TR-6 challan, either alone or read with the Special Valuation Branch (SVB) order and Customs authorities' letters, constitutes an eligible "tax paying document" under Section 16(2) of the CGST Act read with Rule 36(1)(d) of the CGST Rules for availing input tax credit (ITC).

2. Whether eligibility to avail ITC of import IGST paid via TR-6 challan is subject to the time limit prescribed under Section 16(4) of the CGST Act.

3. Whether ITC of import IGST paid on the basis of a re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act, and if so, whether the time runs from original bill of entry or from the date of re-assessment (the last sub-question was not appealed and therefore not considered afresh).

ISSUE-WISE DETAILED ANALYSIS - Issue 1: TR-6 challan (alone or with SVB order/letters) as an eligible document for ITC

Legal framework: Section 16(2)(a) CGST Act requires possession of a tax invoice or such other tax-paying documents as may be prescribed. Rule 36(1)(d) CGST Rules expressly includes "a bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports." Customs Act defines "assessment" and prescribes certain documents (e.g., bill of entry) under specific sections.

Precedent treatment: Appellant relied on pre-GST decisions and prior regime analogies where documents not expressly listed were accepted for credit; administrative and judicial pronouncements addressing practical difficulties (including a CBIC Circular addressing TR-6 usage where BE re-assessment post Out-of-Charge is system-restricted) were also invoked. The AAR and Appellate Authority preferred post-GST statutory scheme and the circulars' guidance on process over pre-GST analogies.

Interpretation and reasoning: The phrase "bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports" was read conjunctively: (i) the document must be similar in content/purpose to a bill of entry (containing particulars of assessment/payment), and (ii) it must be a document prescribed under the Customs Act or rules made thereunder. A TR-6 challan is a treasury/payment instrument prescribed under Treasury Rules, not a document prescribed under the Customs Act for assessment; it lacks the assessment particulars embedded in a bill of entry. Even when read together with SVB orders and Customs letters, those documents do not convert TR-6 into a Customs Act-prescribed assessment document akin to a bill of entry. The CBIC circular acknowledging operational constraints (ICES/ OOC issues) was held to be relevant for procedure (suggesting re-assessment and notional OOC to enable transmission), but it does not alter the statutory classification of TR-6.

Ratio vs. Obiter: Ratio - TR-6 challan, whether alone or read with SVB order and Customs letters, is not a "bill of entry or any similar document prescribed under the Customs Act" and therefore is not an eligible Rule 36(1)(d) document for availing ITC. Observations on the applicability of the CBIC circular and distinctions from pre-GST jurisprudence are explanatory (supporting ratio) rather than departing from core statutory interpretation.

Conclusion: A TR-6 challan, either alone or coupled with SVB orders and Customs communications, is not an eligible tax-paying document under Section 16(2) read with Rule 36(1)(d) for claiming ITC of import IGST; the AAR's conclusion to that effect is upheld.

ISSUE-WISE DETAILED ANALYSIS - Issue 2: Applicability of Section 16(4) time limit to ITC claimed via TR-6 challan

Legal framework: Section 16(4) CGST Act prescribes the outer time limit for taking ITC "in respect of any invoice or debit note" (the thirtieth day of November following the end of the financial year to which the invoice/debit note pertains or furnishing of the relevant annual return, whichever is earlier). Rule 36 distinguishes invoices/debit notes from other prescribed documents (e.g., bill of entry).

Precedent treatment: Appellant relied on pre-GST precedents and administrative circulars to argue against application of the statutory time bar to non-invoice documents; AAR and Appellate Authority relied on the structure of CGST/IGST Acts and mutatis mutandis application to conclude otherwise.

Interpretation and reasoning: Since the Appellate Authority has held that TR-6 challans (alone or with SVB/letters) are not eligible documents under Rule 36(1)(d), the question whether Section 16(4) applies to ITC based on TR-6 does not arise. Procedurally and substantively, Section 16(4) on its face limits credit in respect of invoices and debit notes; the issue of time limitation for TR-6 would be moot given non-eligibility status. The CBIC circular's procedural fixes do not convert TR-6 into an eligible document nor negate the question's non-relevance once non-eligibility is established.

Ratio vs. Obiter: Ratio - Because TR-6 is not an eligible document for ITC, the applicability of Section 16(4) to TR-6 payments is not relevant; this is dispositive for the second issue. Observations distinguishing invoices/debit notes from other documents under Section 16(4) are part of the ratio.

Conclusion: The question whether Section 16(4) applies to ITC claimed via TR-6 challan is academic given TR-6's non-eligibility; AAR's decision that the question does not arise is affirmed.

ISSUE-WISE DETAILED ANALYSIS - Issue 3: Applicability of Section 16(4) to ITC on re-assessed bill of entry

Legal framework: Section 16(4) prescribes the outer time limit for credit "in respect of any invoice or debit note"; Rule 36(1)(d) expressly includes a "bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports." Section 20 IGST Act and Rule 2 IGST Rules apply CGST provisions mutatis mutandis to integrated tax matters.

Precedent treatment: Appellant invoked pre-GST case law and administrative circulars to argue non-application of the Section 16(4) time bar to bills of entry. The AAR and Appellate Authority applied the mutatis mutandis principle to conclude that the time bar applies to ITC claimed on import IGST evidenced by bills of entry.

Interpretation and reasoning: The Appellate Authority reasoned that when CGST provisions relating to input tax credit are made applicable to IGST "mutatis mutandis" under Section 20 IGST Act, necessary adaptations include treating bills of entry (the import assessment document) as the equivalent category to invoices/debit notes for import IGST. The legislative architecture shows that: (i) CGST's Section 16 limitation is directed at invoices/debit notes for intra-state supplies; (ii) for imports/inter-state items, IGST provisions borrow CGST input credit rules with necessary changes so that the limitation attaches to the appropriate import document (i.e., bill of entry or similar document). The statutory scheme, structure of Section 16(4), and the need for an outer limit for ITC together support applying the limitation period to re-assessed bills of entry. Reliance on the doctrine that legally enforceable causes of action attract limitation (as applied in analogous prior decisions) bolsters the position that re-assessed bills of entry are subject to the Section 16(4) timeline.

Ratio vs. Obiter: Ratio - Section 16(4) limitation applies, mutatis mutandis via Section 20 IGST Act and Rule 2 IGST Rules, to availment of ITC based on a bill of entry (original or re-assessed); this is a binding part of the decision. Comparative and policy comments regarding pre-GST differences and the CBIC circular are explanatory.

Conclusion: ITC claimed on the basis of a re-assessed bill of entry is governed by the time limit prescribed under Section 16(4) CGST Act (as applied mutatis mutandis to IGST matters); the AAR's view on this point is affirmed.

DISPOSITIONAL CONCLUSION

The Appellate Authority upholds the AAR ruling: (i) TR-6 challan, alone or read with SVB order and Customs letters, is not an eligible Rule 36(1)(d) document for ITC; (ii) the question of Section 16(4)'s applicability to TR-6 does not arise; and (iii) ITC based on a re-assessed bill of entry is subject to the time limit under Section 16(4) (applied mutatis mutandis to IGST). The advance ruling is therefore affirmed and the appeal dismissed.

TR-6 treasury challan not valid for ITC; IGST via reassessed bill of entry eligible subject to Sec 16(4)/20 time limit
AAAR held that import IGST paid via a TR-6 challan is not an eligible document for ITC because a TR-6 is a treasury instrument not equivalent to a bill of entry under the Customs Act; ITC claim based solely on TR-6 (even with SVB orders) is rejected. IGST paid under a re-assessed bill of entry is eligible for ITC, but subject to the time limit of Section 16(4) of the CGST Act (applied mutatis mutandis via Section 20 IGST Act), counting from the original bill of entry or from the date of reassessment. Appeal dismissed.

Eligibility to avail ITC - import IGST paid through TR-6 Challan in terms of Section 16(2) of the CGST Act read with rule 36 of CGST Rules - import IGST paid vide TR-6 Challan is subject to the time limit prescribed under Section 16(4) of the CGST Act - import IGST paid vide re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act - time limit for availing ITC would begin from the initial date of bill of entry originally filed or from the date of re-assessment of bill of entry. Whether the Applicant can avail the ITC of the import IGST paid through TR-6 Challan in terms of Section 16(2) of the CGST Act read with rule 36 of CGST Rules? - HELD THAT:- Apart from the other documents prescribed under rule 36(1) for the purpose of availment of ITC, ‘a bill of entry or any similar document’ also figures as one of the documents under sub-clause (d) to Rule 36(1). In this regard, we observe that though the phrase “any similar document” occupies center-stage along with the term “Bill of Entry” under the said sub-clause, the presence of other phrases, viz., ‘prescribed under the Customs Act, 1962 or rules made thereunder’, and ‘for the assessment of integrated tax on imports’ clearly brings in a restriction, purpose and the legislative intent behind the framing of said sub-clause. The payment of differential duties of customs including IGST for import by the applicant in the instant case, is a fall-out of the suo-motu declaration of price revision (of the foreign supplier) by the appellant. The said fact has duly been considered and acknowledged by the Department by way of SVB Order dated 27.02.2015 issued the Deputy Commissioner of Customs, SVB, New Delhi, which further stands renewed vide order dated 11.06.2018. Further, we observe that in the instant case, the transaction involving import of goods that has already been assessed to duties of Customs including IGST, is being subjected to re-assessment whenever upward price revision takes place between the applicant and the foreign supplier who happen to be a related party - irrespective of the fact whether the differential duties of customs and Integrated taxes on import gets paid under a re-assessed bill of entry, or, by way of TR-6 challans, it amounts to ‘assessment’ as defined under Section 2(2) of the Customs Act, 1962. TR-6 challan is not a document prescribed under the Customs Act or the rules made thereunder, and we find that a TR-6 challan is a document prescribed under the Treasury Rules of the Central Government’, under which any person can pay money into the treasury or Bank on Government Account. It is further observed that as far as the taxation law including the Customs Act, 1962 is concerned, it is nothing but a tool to transfer money to Government Account, and apart from the nature of duties/taxes paid, and the relevant code/heads of account, it does not contain all the details relating to assessment encapsulated in a ‘bill of entry’ - the contention of the appellant about a TR-6 challan to be treated as a document similar to a ‘Bill of Entry’ or a ‘TR-6 challan along with the SVB order and letter issued by the tax authorities to pay duty under Section 28(1)(b) of Customs Act’, to be treated as a document similar to a ‘Bill of Entry’, lacks legal backing and is not sustainable. There is a noticeable difference in the pre-GST legal provisions as compared to GST provisions, which is due to the fact that the dynamics involving the transmission of the duties of customs including IGST, Cess, etc., to the GSTN portal, so as to enable the same to be available for the claim of ITC, was not a pre-requisite in the pre-GST era - the case laws relied upon by the appellant, especially relating to the pre-GST period, do not have any relevance to the instant case. As it is clear that a TR-6 challan as such, or a TR-6 challan read with the SVB order and letters issued by the tax authorities, cannot be considered as a document similar to a ‘Bill of Entry’ and since they are not the prescribed document under the Customs Act, 1962 or the rules made thereunder, we are of the considered opinion that neither a TR-6 challan as such, nor a TR-6 challan read with the SVB order and letters issued by the tax authorities as claimed by the applicant, can be considered to be an eligible document for the purpose of availment of ITC. Whether the eligibility to avail ITC of the import IGST paid vide TR-6 Challan is subject to the time limit prescribed under Section 16(4) of the CGST Act? - HELD THAT:- The question of answering this query does not arise, having already held that TR-6 challan as such, or a TR-6 challan read with the SVB order and letters issued by the tax authorities, cannot be considered as an eligible document for the purpose of availment of ITC. Whether the eligibility to avail ITC of the import IGST paid under the re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act? - HELD THAT:- The Bill of Entry’ figures as one of the prescribed document for the purposes of availment of ITC, under rule 36(1)(d) of the CGST Rules, 2017, as a result of which, availment of ITC based on a ‘Bill of entry’ becomes eligible. The provisions of 16(4) of the CGST Act, 2017 that prescribes the time frame for availment of ITC refers just to an invoice or a debit note, in view of the fact that the levy enabled under Section 9 of the Act, ibid, is only in respect of ‘intra-state’ supplies of goods or services or both. As one may be aware, only a Bill of Entry’ is relatable to import of goods involving payment of taxes under IGST. Accordingly, by virtue of Section 20 of the IGST Act, 2017, whereby the provisions of CGST Act, 2017, becomes applicable ‘mutatis mutandis’ in relation to Integrated tax, it is inferred that the time limit prescribed under the provisions of Section 16(4) of CGST Act, 2017, applies in equal measure to the availment of ITC based on a ‘Bill of Entry’ in relation to Integrated taxes, as much as it applies to availment of ITC based on an invoice or debit note in relation to Central tax. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise, it also becomes necessary to consider the requisite changes/interpretation, when the IGST Act, 2017, through Section 20 of the Act, ibid, seeks to borrow the provisions in relation to ‘Input Tax Credit’ of the CGST Act, 2017. Appeal dismissed.

2026 (2) TMI 1067 - APPELLATE AUTHORITY FOR ADVANCE RULING, ODISHA GST

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Limitation: appeal beyond the expressly limited further period cannot be condoned, resulting in dismissal for want of temporal jurisdiction.
The appeal raises whether an appeal from an AAR order is barred by limitation and whether the appellate authority may extend the statutory further period beyond that expressly permitted. The authority applied the statutory scheme under section 100(2), held that the proviso allows only a single further period not exceeding thirty days for sufficient cause, and found the appellant's portal confusion immaterial in view of procedural rules allowing manual filing; precedents confirm tribunals cannot exceed an expressly limited extension. Outcome: the appeal was held time-barred and cannot be entertained on merits for want of temporal jurisdiction to condone further delay.

Condonation of delay under the proviso to section 100(2) of the CGST Act, 2017 - time bar/limitation for filing appeal against an AAR order - appeal dismissed without adjudication on merits - manual filing permitted under Rule 107A of the CGST Rules, 2017 - transaction in immovable property characterised as 'neither a supply of goods nor a supply of service' under Schedule III - treatment as supply of service under Clause 5(e) of Schedule II - HELD THAT:- As per the provisions of CGST Act, 2017, the Appellate Authority can only condone the delay up to a period of 30 days beyond the normal period of 30 days of communication of AAR order to the appellant, provided that sufficient cause is presented by the appellant for such delay. In the instant case, there is a delay of 220 days from the last date of filing of appeal in normal course, which is beyond the power vested on Appellate Authority for condonation of the delay, not examining as to whether sufficient cause for the delay was submitted or not. It is seen that statute allows manual filing of an application, intimation, reply, declaration, statement, in respect of any process or procedure where reference to electronic filing has been prescribed. Accordingly, the appellant’s claim that as the impugned order in this Appeal has not been uploaded in the Portal, they were in doubt, whether the order passed as such would have been filed Appeal Electronically or manually, is not tenable in view of the provisions of Rule as discussed above. It is a fact that this Appellate Authority is created by a statute and is empowered under the provisions of CGST/SGST Act, 2017. The condonation of delay up to a period of 30 days in filing the appeal, is empowered to this Authority are prescribed in Section 100 of the CGST Act, 2017. The proviso of sub-Section (2) of Section 100 of CGST Act, 2017 makes it clear that the Authority has no power to allow the appeal beyond 30 days after a normal period of 30 days of communication of the AAR Order. Accordingly, since the filing of the appeal in the instant case, falls beyond the scope of powers conferred under proviso to Section 100(2) of the CGST Act, 2017, we hold that the appeal cannot be allowed to proceed on account of time limitation, and as a result, the question of discussing the merits of the issue in this case in appeal does not arise. Thus, we are of the considered view that we are not empowered to condone the delay beyond the statutory period in filing this appeal.

2025 (10) TMI 242 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether input tax credit (ITC) on common inputs and input services used in relation to subscription to and redemption of mutual fund units must be reversed under section 17(2) of the CGST Act, 2017 read with rule 42(2) of the CGST Rules, 2017.

2. Whether mutual fund units being "securities" (excluded from definitions of "goods" and "services") fall outside the ambit of "exempt supply" and "non-taxable supply" under the CGST Act, thereby negating any obligation to include transactions in securities in the value of exempt supply under section 17(3).

3. Whether "redemption" of mutual fund units is legally distinct from "sale" of securities for purposes of valuation under section 17(3) and the Chapter V Explanation to the CGST Rules, 2017, and if so, whether absence of a sale value defeats the machinery for computing the value of exempt supply and reversal of ITC.

4. Whether the activity of subscription and redemption of mutual funds by a taxable person can be considered to be "in the course or furtherance of business" so as to affect entitlement to ITC under section 16(1), and whether such characterization negates the operation of section 17(2)/(3).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Obligation to reverse ITC used for subscription and redemption of mutual fund units

Legal framework: Section 16(1) allows ITC for inward supplies used in the course or furtherance of business, subject to restrictions in Section 17. Section 17(2) mandates reversal of ITC attributable to exempt supplies. Section 17(3) provides that the "value of exempt supply" shall include specified items, including "transactions in securities", and the Chapter V Explanation to the Rules prescribes valuation for securities.

Precedent treatment: Authorities and case law were cited by parties; however, the Court relied primarily on the statutory text and the delegated rule prescribing valuation of securities as one per cent of sale value.

Interpretation and reasoning: A conjoint reading of Sections 16, 17(2) and 17(3) and the Chapter V Explanation establishes that transactions in securities are expressly required to be included in the value of exempt supply. That deeming/inclusion in Section 17(3) is a statutory fiction which brings transactions in securities within the computation machinery for reversal of ITC even though "securities" are excluded from definitions of "goods" and "services". Accepting the contrary position would render the statute and the delegated Rules otiose.

Ratio vs. Obiter: Ratio - ITC attributable to activities involving transactions in securities (including mutual funds) is subject to reversal under Section 17(2) read with Section 17(3) and the Chapter V Explanation.

Conclusion: The appellant is obliged to reverse proportionate ITC in respect of inputs and input services used for subscription and redemption of mutual fund units in accordance with Section 17(2)/(3) and the Rules.

Issue 2 - Status of mutual fund units as "securities" and effect on exempt/non-taxable supply classification

Legal framework: Securities are defined under the Securities Contracts (Regulation) Act and are excluded from the statutory definitions of "goods" and "services". The CGST Act separately defines "exempt supply" and "non-taxable supply". Section 17(3) nonetheless includes "transactions in securities" in the value of exempt supply.

Precedent treatment: The appellant relied on authorities construing classification where absence of machinery was an issue; revenue cited judgments supporting inclusion of securities within the section 17(3) deeming provision. The Court prioritized the statutory inclusion in Section 17(3).

Interpretation and reasoning: Exclusion of securities from the definitions of goods and services does not exclude "transactions in securities" from consideration for ITC reversal where the statute expressly includes such transactions in Section 17(3). The deeming provision operates to bring securities within the computation of exempt supply value for the limited purpose of ITC reversal despite their exclusion from goods/services definitions.

Ratio vs. Obiter: Ratio - Mutual fund units as securities, though not goods or services, are within the scope of Section 17(3) for computing value of exempt supply and thus affect ITC reversal obligations.

Conclusion: The characterization of mutual fund units as securities does not exempt them from being included in the value of exempt supply under Section 17(3); accordingly they impact ITC reversal under Section 17(2).

Issue 3 - Whether "redemption" equates to "sale" for valuation and machinery purposes; effect of absence of sale value on reversal mechanism

Legal framework: Section 17(3) requires inclusion of transactions in securities in the value of exempt supply; the Chapter V Explanation prescribes that "the value of security shall be taken as one per cent. of the sale value of such security." There is no statutory definition of "redemption".

Precedent treatment: The Court relied on the common parlance/marketability interpretive approach affirmed by higher courts in taxation contexts. Some tribunal decisions had taken a contrary view in different statutory contexts, but those decisions were distinguished on facts and statutory scheme.

Interpretation and reasoning: Applying the common parlance test and industry material (AMFI, fund houses), "redemption" is the process where an investor sells units back to the AMC at applicable NAV and receives money - effectively a repurchase/sale back to the fund. Given Section 17(3)'s inclusion of "transactions in securities" and the Rules' valuation provision referencing "sale value", "redemption" must be treated as a sale for valuation purposes so that the delegated rule can operate and the legislative intent in Section 17(3) is not rendered otiose. The legislature's clear inclusion prevents defeating the reversal machinery by asserting absence of sale value. The Court also invoked the principle that clear statutory language must be given effect without rendering provisions redundant.

Ratio vs. Obiter: Ratio - Redemption of mutual fund units is, for the purposes of Section 17(3) and the Chapter V Explanation, to be treated as sale/repurchase for valuation and reversal calculations; absence of an independently negotiated sale price does not defeat the application of the valuation rule.

Conclusion: Redemption is to be construed as sale/repurchase to the AMC for valuation under the Rules; hence the mechanism for computing value of exempt supply and reversal of ITC applies.

Issue 4 - Whether subscription and redemption activities amount to "course or furtherance of business" such that Section 16(1) entitlement negates Section 17 restrictions

Legal framework: Section 16(1) permits ITC where inward supplies are used in the course or furtherance of business, but that entitlement is subject to conditions and restrictions prescribed in Section 17.

Precedent treatment: Parties asserted factual characterizations; Court required evidentiary support showing these activities form part of business operations rather than treasury/investment activities. Relevant authorities cited by parties did not displace the statutory operation of Section 17(3).

Interpretation and reasoning: Even if subscription/redemption are in the course or furtherance of business, Section 17 imposes statutory restrictions and Section 17(3) expressly mandates inclusion of transactions in securities in exempt supply valuation. The appellant failed to furnish evidence to substantiate that subscription/redemption are business operations in a manner that avoids Section 17. Consequently, Section 16(1) entitlement is subject to reversal under Section 17 irrespective of the appellant's asserted business nexus.

Ratio vs. Obiter: Ratio - Entitlement under Section 16(1) does not override the reversal obligations under Section 17(2)/(3); factual claim of business nexus must be substantiated and does not, by itself, negate statutory reversal.

Conclusion: The appellant's unsubstantiated assertion that subscription and redemption are in the course or furtherance of business does not avoid the statutory reversal obligations under Section 17; ITC used for such activities remains subject to reversal as per Sections 17(2)/(3) and the Rules.

Overall Conclusion

The Advance Ruling that ITC on common inputs and input services used in relation to subscription and redemption of mutual funds is available only subject to the conditions in Section 17(2) and that the value of exempt supply includes transactions in securities under Section 17(3) is upheld. Redemption of mutual fund units is to be treated as sale/repurchase for valuation and reversal purposes, and the appellant's contentions to the contrary are rejected. The appeal is dismissed.

Ruling upholds requirement to reverse input tax credit under section 17(2)/(3) for mutual fund subscription and redemption
AAAR dismissed the appeal and upheld that input tax credit reversal under section 17(2)/(3) is required for common inputs and input services used for mutual fund subscription and redemption. The authority held that "transactions in securities" under section 17(3) include mutual fund transactions via the statutory deeming fiction, and the rule treating value as one percent of the sale value applies to redemption. The appellant failed to demonstrate that subscription/redemption were in the course or furtherance of its business. The appeal was rejected.

Eligibility to avail ITC of tax paid on common inputs & input services used in relation to the subscription and redemption of mutual funds - value of exempt supply in terms of section 17(3) shall include the value of transactions in securities or not - HELD THAT:- The averment raised is that by virtue of the term ‘securities’ being excluded from the definition of goods & services, they stand excluded even from the ambit of exempt supply [u/s 2(47)] and non-taxable supply [u/s 2(78)] and, therefore, there is no requirement to reverse ITC of tax paid on common inputs & input services in terms of section 17(2), ibid since the activity of investment and redemption in mutual funds is not an exempt supply - it is found that there is no requirement to reverse ITC of tax paid on common inputs & input services in relation to transactions in subscription/investment and redemption of mutual funds is not legally tenable owing to the deeming fiction which forms a part of section 17(3), ibid, via an inclusion clause. The next averment of the appellant is that redemption of mutual funds is distinct from sale of security - It is worthwhile to mention that the phraseology used in Section 17(3) of the CGST Act, 2017 is” transactions in securities” and, hence, the term ‘sale’ used in the expression “the value of security shall be taken as one per cent. of the sale value of such security” of the CGST Rules, 2017 has to be interpreted accordingly, to ensure that the provisions of Section 17(3) of the CGST Act, 2017 are not rendered otiose - the appellant has not produced anything which would otherwise force us to interfere with the said ruling as far as this averment is concerned. The last averment raised is that the GAAR has not given any finding in the impugned ruling that the activity of subscription and redemption of mutual funds is not in the course or furtherance of business. In this regard, it is found that, other than raising this averment, the Appellant has not justified as to how the activity of subscription and redemption of mutual funds is in the course of furtherance of business when it is his own say that they are engaged in manufacture, supply and distribution of pharmaceutical products. The appeal filed by appellant M/s. Zydus Lifesciences Ltd. is rejected.

2025 (10) TMI 241 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT GST

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Issues: (i) Whether expenditure incurred for buyback of shares is eligible for input tax credit under the GST regime. (ii) Whether input tax credit attributable to common inputs and input services used in relation to share buyback is liable to be reversed.

Issue (i): Whether expenditure incurred for buyback of shares is eligible for input tax credit under the GST regime.

Analysis: Shares are securities and therefore neither goods nor services. A buyback transaction in shares is thus not a supply under GST. Though section 16(1) of the Central Goods and Services Tax Act, 2017 allows credit on goods or services used in the course or furtherance of business, that entitlement remains subject to the restrictions under section 17. The inclusion of transactions in securities within the value of exempt supply and the statutory scheme of section 17 show that costs connected with securities transactions are outside the intended ambit of input tax credit. The fact that the expenditure may support business objectives does not override the specific exclusion arising from the nature of the transaction.

Conclusion: The expenditure incurred for buyback of shares is not eligible for input tax credit, against the appellant and in favour of Revenue.

Issue (ii): Whether input tax credit attributable to common inputs and input services used in relation to share buyback is liable to be reversed.

Analysis: Section 17(3) of the Central Goods and Services Tax Act, 2017 expressly includes transactions in securities within the value of exempt supply. The Rules also prescribe valuation of securities for this purpose. In consequence, credit attributable to common inputs and input services used for buyback-related expenditure cannot be retained and must be apportioned and reversed in accordance with the statutory mechanism. The appellant's contention that no reversal is required is inconsistent with the deeming inclusion under section 17(3).

Conclusion: Input tax credit attributable to common inputs and input services used in relation to share buyback is liable to be reversed, against the appellant and in favour of Revenue.

Final Conclusion: The appellate authority upheld the denial of input tax credit on share buyback-related expenditure and affirmed the reversal requirement for common credits connected with that transaction.

Ratio Decidendi: Where a transaction in securities is statutorily treated as part of exempt supply, input tax credit on expenses directly connected with that transaction is not available and common credit attributable to such expenses must be reversed, regardless of any broader business purpose.

GST input tax credit on share buyback expenses denied, and common credits linked to securities transactions must be reversed.
Expenditure incurred for share buyback was held not eligible for input tax credit under GST because shares are securities, securities transactions are neither goods nor services, and section 17 treats transactions in securities as part of exempt supply. The authority therefore rejected the argument that a general business nexus under section 16 overrides the statutory restriction. It also held that input tax credit attributable to common inputs and input services used for buyback-related expenditure must be apportioned and reversed under the GST mechanism, since the deeming inclusion of securities transactions in exempt supply applies to those common credits. The denial of credit and reversal requirement were both upheld.

Eligibility for ITC under GST regime - expenditure incurred by the applicant, a listed entity, for the buyback of its shares in the course of furtherance of business - requirement to reverse the ITC on common inputs and input service used in relation to the expenditure incurred for buyback of share. Expenditure incurred by the applicant, a listed entity, for the buyback of its shares in the course of furtherance of business - HELD THAT:- On reading Section 17(5)(d), ibid, it is fortified that all costs incurred for the furtherance of the business is not eligible for credit, as the said Section restricts input tax credit on goods or services or both received by a taxable person for construction of an immovable property, even if they are used in the course of furtherance of business. Therefore, there are no merit in the argument that the ITC on the expenses like professional fees, legal expenses, consultancy charges, etc., relating to buy back of shares, if used in the course of furtherance of business, should be allowed - the argument that the activities are in the course of furtherance of business is wholly irrelevant to decide the availability of ITC if the activities are in relation to transaction in securities. Hence, it is not worthwhile to go into the issue of whether or not the activities, relevant in this case, are in the course of furtherance of business - the appellant is not eligible to avail ITC involved in the expenditure incurred for buy back of its shares. Reversal of ITC on common inputs - HELD THAT:- In the cases Punjab State Industrial Development Corporation Ltd. [1996 (12) TMI 6 - SUPREME COURT] and Brooke Bond India Ltd [1997 (2) TMI 11 - SUPREME COURT] pertaining to the Income Tax Act, the dispute was whether an expenditure was a capital expenditure or a revenue expenditure. While holding that the expense made led to expansion of the capital base and would help the business and may also help in profit making, the Hon’ble Court ruled that it was a capital expenditure. In the case of M/s. Kernex Microsystems (India) Ltd. [2015 (12) TMI 1106 - CESTAT BANGALORE], it was held that the IPO was used to collect the capital expansion and creation of manufacturing activities. We have already held that even if the said expenses are related to furtherance of business, the ITC would not be available as the securities are neither goods nor services. Therefore, these case laws, which primarily deal with credit of tax paid on activities related to furtherance of business, will not help the appellant’s cause. In none of the above cases were the courts/Tribunal dealing with a situation where there was specific statutory exclusion of such activities from the ambit of input tax credit. The appeal filed by appellant is rejected.

2025 (10) TMI 240 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether input tax credit (ITC) is available on capital goods in the form of high-tension cables, electrical equipment and allied works (66 KV S/Cable and feeder bay installation) laid outside factory premises for transmission of electricity to the registered person's factory.

2. Whether such capital goods/works fall within the exclusions of section 17(5)(c) and/or 17(5)(d) of the CGST Act - i.e., whether they constitute construction of immovable property (other than plant and machinery) or fall within the exclusion "pipelines laid outside the factory premises".

3. Whether subsequent handing over/transfer of the capitalized goods to the distribution company (GETCO) affects the initial availment of ITC and if so, whether section 18(6) imposes an obligation to reverse or repay ITC.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Availability of ITC on the high-tension cable/feeder bay installed outside factory premises

Legal framework: Section 16 (conditions for availing ITC) and section 17 (blocked credits) of the CGST Act govern eligibility; section 18(6) prescribes liability in case capital goods are transferred to an unregistered person or otherwise. The Explanation to section 17 defines "plant and machinery" and lists exclusions.

Precedent treatment: The Advance Ruling Authority concluded ITC was available. The Appellate Authority examined that conclusion and the supporting findings; no binding adverse precedent was produced by Revenue to rebut the ruling. A Board circular (CBIC) clarifying treatment of ducts and manholes for OFC networks was relied on as persuasive guidance.

Interpretation and reasoning: The Court reviewed undisputed factual findings that conditions under section 16 were satisfied (tax invoices, receipt of goods/services, payment of tax and returns, payment to supplier within 180 days). The impugned ruling found the cables and associated equipment were not fixed to earth in the manner contemplated by the Explanation and were housed in ducts allowing removal/maintenance. Applying the statutory text and the Explanation's scope, the Authority held these items are not blocked by sections 17(5)(c)/(d). The Appellate Authority gave weight to the Board's clarification that ducts and manholes used for optical fibre cable networks are not barred under section 17(5), reasoning by analogy that items forming part of a transmission network (and not ordinary civil structures) fall within "plant and machinery" and are not covered by exclusions. No legal provision was identified which outrightly prohibits initial availment of ITC on capital goods later handed over to a distribution company; instead the statute contemplates post-availment consequences (see Issue 3).

Ratio vs. Obiter: Ratio - ITC is available where conditions of section 16 are satisfied and the goods/equipment used for transmission are not excluded by the Explanation to section 17; factual characteristics (not fixed to earth, removable, housed in duct) are material to classification. Obiter - analogy to ducts/manholes for OFC networks via CBIC circular, used as persuasive, non-binding clarification supporting the statutory interpretation.

Conclusion: ITC on the specified 66 KV cable and associated equipment used for transmission of electricity to the factory is allowable; the Advance Ruling's grant of ITC is upheld.

Issue 2: Applicability of exclusions under section 17(5)(c) and 17(5)(d) (construction/immovable property and pipelines outside factory premises)

Legal framework: Section 17(5)(c) bars ITC for works contract services supplied for construction of immovable property (other than plant and machinery); section 17(5)(d) bars ITC for goods/services received for construction of immovable property (other than plant or machinery) on own account. The Explanation defines "plant and machinery" and explicitly excludes certain items (land, buildings, telecommunication towers, pipelines laid outside factory premises).

Precedent treatment: The Advance Ruling analyzed clauses (c) and (d) and the Explanation and concluded the items in question do not fall within the barred categories. The Appellate Authority found no contestation of those factual and legal findings by Revenue and no persuasive authority to overturn them. The CBIC circular addressing ducts/manholes in OFC networks was adopted as interpretive guidance.

Interpretation and reasoning: The Authority distinguished between civil/immovable structures and apparatus/equipment that form part of a transmission network. The Explanation's exclusions are specific and do not automatically capture all external works; the equipment here (cables in ducts, removable for maintenance) function as part of the outward supply/transmission network and are not in the nature of excluded pipelines or civil structures. The factual finding that cables are not fixed to earth in the requisite manner and are maintainable and removable is pivotal to exclude the operation of 17(5)(c)/(d).

Ratio vs. Obiter: Ratio - the statutory exclusions under the Explanation must be applied to the substance and factual mode of attachment/use; items that are removable and not structural foundations do not fall within the exclusions and therefore are not blocked under section 17(5)(c)/(d). Obiter - reliance on CBIC circular for analogy to OFC ducts/manholes, used to reinforce the interpretation.

Conclusions: Sections 17(5)(c) and (d) do not bar ITC on the subject cables/equipment given their functional characteristics and factual status; the Advance Ruling's conclusion that these provisions do not block ITC is sustained.

Issue 3: Effect of subsequent handover of capitalized goods to the distribution company and applicability of section 18(6)

Legal framework: Section 18(6) addresses adjustments/liability where capital goods on which ITC has been availed are subsequently transferred to another person or otherwise disposed of (statutory obligations to compensate/adjust as prescribed).

Precedent treatment: The Advance Ruling expressly noted there is no provision preventing initial availment of ITC even if capital goods are later handed over; it cautioned the applicant about potential liability under section 18(6) but did not adjudicate that liability as it was not the question framed. The Appellate Authority observed that GAAR had recorded this position and that Revenue did not contest or produce contrary legal grounds.

Interpretation and reasoning: The Authorities distinguished between (a) the entitlement to initially claim ITC upon satisfaction of section 16 conditions and (b) separate statutory consequences if the capital goods are later transferred (section 18(6)). The ruling treats section 18(6) as a mechanism to address post-availment transfer consequences, not as a bar to initial availment. Since the question before the ruling did not require determination of any obligation under section 18(6) on facts of transfer to the distribution company, the Authority restricted its decision to availability of ITC and recorded that section 18(6) may operate subsequently.

Ratio vs. Obiter: Ratio - initial availment of ITC is governed by section 16 and the exclusions in section 17; section 18(6) may impose subsequent liabilities but does not ipso facto negate an otherwise valid initial claim. Obiter - the ruling's caution about section 18(6) without adjudication of reversal/repayment on concrete transfer facts is a non-decisive observation.

Conclusion: The initial availment of ITC is not barred by the prospect of subsequent transfer to the distribution company; any obligation to reverse or repay ITC under section 18(6) is a separate issue to be determined when such a factual transfer and statutory mechanism are actually invoked.

Cross-references and Administrative Clarification

CBIC clarification regarding ducts and manholes used in optical fiber cable networks was treated as persuasive administrative guidance supporting the interpretation that network components not of the nature of excluded civil structures/pipelines are within the ambit of plant and machinery for ITC purposes; this clarification reinforced the conclusion under Issues 1 and 2.

Overall Conclusion

The Appellate Authority upheld the Advance Ruling allowing ITC on the specified capital goods (66 KV cable and related equipment); sections 17(5)(c)/(d) do not bar ITC on the facts found, and section 18(6) may create subsequent liabilities but does not prevent valid initial availment of ITC. The departmental appeal was rejected as devoid of merits.

Appeal dismissed; Revenue's challenge denying ITC on capital goods (wires, cables, equipment) under s.17(5), s.18(6) rejected
AAAR upheld the lower authority's findings and dismissed the departmental appeal. Revenue's challenge-that capital goods (wires, cables, electrical equipment for a 66 kV feeder bay) were outside the factory and effectively owned by the transmission utility, warranting ITC reversal under s.17(5) and s.18(6)-was rejected for lack of legal grounds. The AAAR relied on Board clarification that ITC is not barred for ducts/manholes and similar items used for OFCs, concluding the goods qualified as capital goods/plant and machinery and entitlement to ITC stands.

2025 (10) TMI 165 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether the product Rapigro is classifiable as a plant growth regulator under Chapter 38 (tariff item for plant growth regulators) or as a fertilizer/animal or vegetable fertilizer under Chapter 31 or as an enzyme/organic product under Heading 3507.

2. Whether registration/notification under the Fertilizer (Control) regime, designation as a bio-stimulant or prior classification of an input (CPH liquid) under Chapter 31 precludes classification of the final product as a plant growth regulator under Chapter 38.

3. The relevance and admissibility of decade-old analytical/test reports and certificates (sourced from predecessor entities) for deciding present classification.

4. The legal effect of supplier/consignor classification (including earlier classification by predecessor entities) on the consignee/applicant's current classification; and the proper use of precedent and prior orders in classifying the product.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Proper Tariff Classification (Chapter 38 plant growth regulator vs Chapter 31 fertilizer vs Heading 3507)

Legal framework: Classification must follow the Tariff entries and chapter notes derived from the Harmonized System; under governing circular guidance, plant growth regulators (PGRs) are defined as organic compounds other than nutrients that affect physiological processes at low concentrations and are covered under the chapter heading for plant growth regulators. Chapter note 6 to Chapter 31 requires that "other fertilizers" contain as essential constituent at least one of nitrogen, phosphorus or potassium. Chapter 38 excludes "separate chemically defined elements or compounds" except certain enumerated products, and chapter note (1)(a)(2) addresses PGRs being covered under heading for preparations put up for retail.

Precedent treatment: The authority applied and relied on the Board's clarificatory circular on micronutrients/PGRs, and followed tribunal and court decisions recognizing the distinction between fertilizers, micronutrients and PGRs. Past decisions treating similar formulations as PGRs were followed where factual matrix matched; contrary authorities based on pre-circular regimes were distinguished.

Interpretation and reasoning: The Court examined the product technical literature and characteristics: (i) Rapigro is described as a biologically active concentrate containing protein hydrolysates, amino acids, short chain peptides and other organic constituents; (ii) marketed application rate is very low (2 ml/lt or 200 ml/acre) indicating activity at low concentration; (iii) product literature and characteristics state effects consistent with modulation of physiological processes (stimulates photosynthesis, alters vegetative period, induces flowering/fruit set, affects quality) rather than merely supplying macronutrients. Analytical composition submitted did not demonstrate that nitrogen, phosphorus or potassium are the essential constituents giving the product its character. The applicant failed to disclose the nature of "organic nutrients obtained through fermentation" used in manufacture (step 5), making it impracticable to exclude PGR classification. The product is therefore functionally and legally a PGR under the tariff headings and circular definition.

Ratio vs. Obiter: Ratio - Rapigro's classification as a plant growth regulator under the relevant tariff heading is supported by the statutory chapter notes and the Board's clarificatory circular, taking into account product mode of action, rate of application, and lack of essential N/P/K character. Obiter - observations distinguishing certain past decisions on unrelated facts and remarks on commercial labeling/marketing outside tariff textual analysis.

Conclusion: Rapigro is correctly classifiable as a plant growth regulator under the tariff item for PGRs (Chapter 38). Classification under Heading 3507 (enzymes) or Chapter 31 (other fertilizers) is not supported on the present record.

Issue 2 - Effect of Fertilizer/BCI Registration and Prior Input Classification on Tariff Classification

Legal framework: Circular guidance clarifies that notifications under the Fertilizer (Control) Order and registration as a bio-stimulant are not determinative for tariff classification; classification must be governed by the Tariff entries, chapter notes and HSN explanatory notes. Chapter notes require essential constituent analysis (N/P/K) for classification as fertilizer.

Precedent treatment: Authorities holding that FCO inclusion is not decisive for tariff classification were followed; tribunal decisions relying on pre-circular reasoning were distinguished. The court emphasized recent larger-bench and circular guidance distinguishing PGRs from fertilizers and plant growth promoters.

Interpretation and reasoning: The Court held that registration under FCO or description as bio-stimulant does not override tariff text. Where analytical composition does not show N/P/K as the essential constituent and product properties reflect hormonal/physiological action at low doses, the PGR classification prevails notwithstanding fertilizer registration. Earlier orders classifying inputs or predecessors' treatments are not binding where the present product's character differs and current circulars/HSN definitions apply.

Ratio vs. Obiter: Ratio - FCO notifications and bio-stimulant registration are not conclusive for tariff classification; chapter notes and circulars control. Obiter - critique of reliance on FCO evidence where analytical proof of constituent character is absent.

Conclusion: Fertilizer Control Order registration and supplier/input classification do not prevent classification of the final product as a plant growth regulator when the product's essential character and mode of action conform to the PGR definition.

Issue 3 - Admissibility and Weight of Old Analytical/Test Reports and Reliance on Predecessor-Era Documents

Legal framework: Evidence submitted to support classification must be relevant, current and pertain to the product under consideration; burden lies on applicant in advance ruling matters to disclose material facts and constituents.

Precedent treatment: The authority declined to accept old test reports that predated the applicant's existence and related to predecessor entities, consistent with principles requiring probative, contemporaneous evidence for classification.

Interpretation and reasoning: The Court found the majority of submitted reports nearly a decade old, often illegible, and not in respect of the appellant's manufactured product. The applicant also failed to explain or disclose critical manufacturing additions (step 5). On this basis the reports were held insufficient to rebut the GAAR's findings. The onus is on the applicant to approach advance ruling authorities with full and current evidence; lack of disclosure undermines credibility and evidentiary value.

Ratio vs. Obiter: Ratio - Outdated or non-specific test reports pertaining to a predecessor are not adequate to overturn a classification founded on product literature, mode of action and current circulars. Obiter - general admonition on parties' duty of full disclosure in advance ruling proceedings.

Conclusion: The decade-old successor/predecessor reports were not accorded cognizance and did not materially affect the classification; the applicant failed to discharge the evidentiary burden.

Issue 4 - Effect of Supplier/Consignor Classification and Precedent Reliance

Legal framework: Classification is a question of fact and law determined by tariff text, chapter notes, and HSN explanatory notes; prior classification by consignor or supplier may be persuasive but is not determinative where facts differ. Binding effect of advance rulings is circumscribed by statute to the applicant and jurisdictional officer.

Precedent treatment: The authority examined and distinguished cited judgments where factual matrix differed or earlier legal positions were altered by subsequent circulars. It reiterated the principle that precedents must be applied to similar facts; judicial observations are not statutes and require contextual fit.

Interpretation and reasoning: The Court held that consignor classification cannot be blindly followed where factual differences exist; reliance on supplier's input classification or past contentions by predecessor entities cannot prevent reassessment if the final product's essential character differs. Precedents were applied selectively-followed where factually comparable and circular guidance was considered; distinguished where they predated the Board's clarificatory circular or involved different product composition/evidence.

Ratio vs. Obiter: Ratio - Consignor/supplier classification is not sacrosanct; classification may be reassessed on correct application of tariff text and chapter notes to the actual product characteristics. Obiter - extended commentary on the proper use of precedents and caution against mechanical reliance on earlier decisions.

Conclusion: Past classifications at consignor or predecessor level and selective case law do not bar reclassification; authority properly applied precedent and circular guidance to the facts and upheld the PGR classification.

Final Disposition (legal conclusion)

The impugned advance ruling classifying Rapigro as a plant growth regulator under the relevant Chapter 38 tariff item is legally sustainable: the product's mode of action, low application rate, technical characteristics and absence of N/P/K as essential constituents support PGR classification; fertilizer registration, aged predecessor reports and supplier classifications do not override tariff text and the Board's clarificatory guidance. The applicant failed to discharge the onus of disclosure and to produce adequate, contemporaneous evidence to rebut the GAAR's findings.

Product classified as plant growth regulator under tariff 38089340; 18% GST (9% CGST + 9% SGST) upheld, appeal dismissed
AAAR held the product is classifiable as a plant growth regulator under tariff 38089340 and taxable at 18% (9% CGST + 9% SGST) under the specified notification. The authority refused to compel the supplier to disclose proprietary data and found the onus on the appellant to present a consistent record; inconsistencies and prior documents undermined the appellant's position. Arguments that the product fell under fertilizer or heading 3507 were rejected. The appeal by the appellant is dismissed and the impugned advance ruling is upheld.

Classification of the appellant’s product Rapigro - rate of tax - classifiable as a plant growth regulator under Chapter 38 or as a fertilizer/animal or vegetable fertilizer under Chapter 31 or as an enzyme/organic product under Heading 3507 - GAAR ruled that: (i) the classification of Rapigro under the Customs Tariff Act, 1975 and under the Central Goods & Services Tax Act, 2017 will be under 38089340, as a ‘plant growth regulator’. (ii) The rate of tax applicable on Rapigro is 18% [9% CGST and 9% SGST] as per SI. No. 87, Schedule III, notification No. 1/2017-CT(Rate) dated 28.6.2017. HELD THAT:- As far as the averment that the appellant cannot force M/s. Sowbhagya, their supplier, to disclose proprietary information in respect of CPH liquid, is concerned, it is found that in matters pertaining to advance ruling on classification, the onus is on the appellant to approach the Authority with clean hands. The averment that the appellant is not party to any dispute of classification of Rapigro in the past, has no standing. In-fact, on going through the compilation submitted during the course of personal hearing, it is found that at Annexure 2, the applicant, in the index has stated that they have enclosed “Certificate of analysis dated 17.9.2011 & 26.9.2011 of Rapigro issued by Doctors Analytical Laboratories P Ltd “. While on one hand the claim put forth is that they are not a party to any dispute of the past, on the other, they submit certificates pertaining to sample of Rapigro GR drawn from their predecessor M/s. Isagro. The next averment raised by the appellant is that once the product is notified as fertilizer under FCO [Fertilizer (Inorganic, Organic or mixed) Control Order, 1985] & bio-stimulant and protein hydrolysates, the same cannot be treated as PGR under chapter 3808 - The appellant, in his grounds, has specifically relied upon para 31 of the judgement of the Hon’ble High Court of Gujarat in VASU PHARMACEUTICAL PVT. LTD. VERSUS UNION OF INDIA [2010 (8) TMI 1090 - GUJARAT HIGH COURT], wherein it was held that the product ‘Trichup Oil” was certified to be an Ayurvedic patent and proprietary medicine by the Joint Commissioner, Food and Drugs Control Administration, Gandhinagar & that the said product was manufactured by using active ingredients which are exclusively Ayurvedic Drugs described in Authoritative Books on Ayurvedic (including Siddha & Unani) system of medicines; that even the certificate issued by the Food and Drug Control Administration certifies the product in question to be an Ayurvedic Medicament; that if the department was of the view that the product was not an Ayurvedic Medicament it could have referred the matter to the Adviser, Ayurveda/Sub-Commissioner in terms of CBEC’s circular. The next averment raised is that that CPH liquid is obtained from vegetable protein which is maize protein technically called Gluten by hydrolysis process and is of vegetable origin and contains nitrogen & other growth elements & hence is classifiable under heading 3101; that classification cannot be changed at the recipient’s end. The next averment of the applicant is that for a product to be covered under PGR, it needs to have at least promotors or other hypothetical growth substances & inhibitors. The applicant further contends that in terms of note 1(a)(2) of chapter 38, the product should be separately defined chemical element or compound & should be put up in forms or packaging for retail sale or as preparations or articles; that in case of Rapigro it is not a separately defined chemical element or compound & hence the same cannot be covered under chapter 38 & is, therefore, correctly classifiable under 3101 0099. The appellant has not produced anything to warrant any interference with the findings of the impugned ruling. The appeal filed by appellant M/s. Jivagro Limited is rejected.

2025 (10) TMI 54 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether the Appellate Authority for Advance Ruling may admit an appeal filed beyond the 30-day statutory period by invoking the proviso to Section 100(2) permitting condonation for a further period "not exceeding thirty days".

2. Whether the reasons advanced for delay (late receipt of a third-party approval) constitute "sufficient cause" within the meaning of the proviso to Section 100(2) to admit an appeal filed 105 days late.

3. Whether, having found the appeal time-barred and declined condonation, the Appellate Authority must proceed to examine the merits of the appeal.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Power of Appellate Authority to condone delay beyond 30 days

Legal framework: Section 100(2) prescribes a 30-day period for filing an appeal from communication of an advance ruling and contains a proviso permitting the Appellate Authority to allow presentation of the appeal within a further period not exceeding thirty days if satisfied that the appellant was prevented by sufficient cause.

Precedent Treatment: No precedents were cited or applied in the reasoning; the Authority's conclusion rests on statutory text and principles of interpretation.

Interpretation and reasoning: The proviso's language ("may" and "not exceeding thirty days") was read as conferring a discrete, non-extensible discretionary power limited to a maximum additional 30 days. The Authority reasoned that allowing a longer extension would render the statutory phrase "not exceeding thirty days" redundant and would usurp a limitation expressly prescribed by the legislature. It further distinguished the Appellate Authority from a "Court", observing that being a creature of statute its condonation power is confined to that expressly provided in the statute.

Ratio vs. Obiter: Ratio - the Appellate Authority's power to condone delay is limited to a further period not exceeding thirty days as per the proviso to Section 100(2); any condonation beyond that is beyond its statutory competence. Obiter - observations contrasting the Authority with a Court and rejecting application of judicial precedents permitting greater condonation in different fora are explanatory but flow from the ratio.

Conclusions: The Appellate Authority lacks statutory power to condone delay beyond the additional 30-day limit provided in the proviso to Section 100(2).

Issue 2 - Sufficiency of cause for a 105-day delay

Legal framework: The proviso to Section 100(2) requires the Appellate Authority to be "satisfied that the Appellant was prevented by a sufficient cause" for delay and permits condonation only up to a further 30 days.

Precedent Treatment: None relied upon; assessment made on facts and statutory threshold.

Interpretation and reasoning: The Authority evaluated the factual chronology: original advance ruling communicated in February 2025, appeal filed in June 2025, delay of 105 days beyond the statutory last date and well beyond the maximum condonable 30 days. The reason proffered-late receipt of an approval from a third party (a state green energy company)-was found not to be a valid or sufficient cause given the long interval (application to AAR was filed over a year earlier) and the appellant's prior opportunity and assurances to produce agreements. The Authority concluded that the inordinate delay and the nature of the reason did not satisfy the statutory requirement of "sufficient cause".

Ratio vs. Obiter: Ratio - the facts did not constitute sufficient cause to invoke the proviso; the Authority will decline condonation where delay exceeds the statutorily permitted extension and the reasons for delay are not compelling. Obiter - comments about the appellant's internal timeline and assurances to the AAR are fact-specific observations.

Conclusions: The reasons advanced did not constitute sufficient cause; even if sufficient cause had been shown, the delay exceeded the maximum period the Authority could condone.

Issue 3 - Effect of dismissal for time-bar and the scope for merits consideration

Legal framework: Procedural limitation bars admission of appeals not filed within the statutory period or its maximum condonable extension; the Authority's jurisdiction to decide the merits arises only after compliance with filing conditions.

Precedent Treatment: Not invoked; conclusion follows statutory scheme.

Interpretation and reasoning: Because the appeal was filed beyond both the statutory 30-day period and the additional 30-day maximum, and because the Authority was not satisfied of sufficient cause, the appeal could not be admitted. The Authority held that once the appeal is time-barred and beyond its condonation power, it must dismiss the appeal without touching merits; examination of substantive issues becomes impermissible until statutory filing requirements are met.

Ratio vs. Obiter: Ratio - an appeal that is not admitted for want of compliance with the statutory limitation (and which cannot be condoned within the statutory maximum) must be dismissed without adjudicating merits. Obiter - procedural remarks about the Appellate Authority not being a Court are illustrative of limits on its power and do not expand the holding.

Conclusions: The appeal was dismissed on grounds of time limitation; merits were not considered and therefore remain undecided and not binding.

Cross-references and operative conclusions

The three issues are interlinked: the statutory construction in Issue 1 establishes the outer limit of the Authority's condonation power which, when applied to the facts in Issue 2, produced the operative outcome in Issue 3. The Authority's decision to dismiss the appeal is founded on (a) a textual construction of the proviso to Section 100(2) limiting condonation to 30 days and (b) an evaluative finding that the appellant's reasons did not amount to sufficient cause. Consequently, the substantive questions raised in the underlying advance ruling were not adjudicated on appeal.

Appeal dismissed as time-barred after 105-day delay beyond statutory 30-day period and maximum 30-day condonation limit.
AAAR held the appeal barred by time, noting the AAR order communicated 07.02.2025 (received 08.02.2025), making the 30-day appeal period expire on 10.03.2025 and the maximum 30-day condonation limit expire on 09.04.2025. The appeal filed on 23.06.2025 incurred 105 days' delay beyond the statutory/condonable period. The AAAR found the delay unexplained and beyond its power to condone, dismissed the appeal as time-barred and declined to consider the merits.

Time limitation for filing appeal - sufficient cause for delay or not - Eligibility to take input tax credits on inputs/capital goods or input services of the items used in Design, engineering, Installation of 10.2 MW of the Solar Power plant as per MNRE & IEC standards - eligibility to take input Tax credit for inputs and services for running the solar plant - HELD THAT:- In terms of Section 100(2) of the Act, an appeal should be filed within 30 days from the date of communication of the advance ruling order that is sought to be challenged. However, the proviso to Section 100(2) of the CGST Act, 2017, empowers the Appellate Authority to allow the appeal to be presented within a further period not exceeding 30 days, if it is satisfied that the Appellant was prevented by sufficient cause from presenting the appeal within the initial period of 30 days. It is found that the date of the Advance Ruling No. 01/ARA/2025 pronounced originally by the AAR is dated 06.02.2025 and the date of communication of the order is 07-02-2025, which was received by the applicant on 08.02.2025, so the last date for filing the appeal under Section 100(2) of the CGST Act, 2017, would be 10.03.2025, and the last date for filing the appeal with a maximum condonable delay of 30 days as per the first proviso to Section 100(2) of the CGST Act, 2017, would be 09.04.2025. The appeal filed by the appellant is on 23-06-2025. Therefore, it is evident that there has been a delay of 105 days (10.03.2025 to 23.06.2025) from the last date for filing the appeal under Section 100(2) of the CGST Act, 2017. Since the filing of the appeal in the instant case, falls beyond the scope of powers conferred under proviso to Section 100(2) of the CGST Act, 2017, it is held that the appeal cannot be allowed to proceed on account of time limitation, and as a result, the question of discussing the merits of the issue in this case in appeal does not arise, as well. It is not satisfied with the reasons of delay advanced by the appellant as also we are not empowered to condone the delay beyond the statutory period in filing this appeal - appeal dismissed.

2025 (9) TMI 1323 - APPELLATE AUTHORITY FOR ADVANCE RULING, TELANGANA GST

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ISSUES PRESENTED AND CONSIDERED

1. Whether rent received for letting out immovable property to a State Government department, used to run hostels for scheduled castes/weaker sections, qualifies as "pure services ... by way of any activity in relation to any function entrusted to a Municipality/Panchayat" under serial no. 3 of Notification No.12/2017 and is therefore exempt from GST.

2. Whether the supply by the lessor is directly "in relation to" the statutory functions listed in Article 243W read with the Twelfth Schedule of the Constitution of India, such that the exemption at serial no. 3 of Notification No.12/2017 applies.

3. Whether prior AAR/AAAR decisions from other States submitted by the appellant bind the Appellate Authority where those orders did not apply the Supreme Court's interpretation of the phrase "in relation to."

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Applicability of exemption under serial no. 3 of Notification No.12/2017 to rent received from State Government department used for social-welfare hostels

Legal framework: Serial no. 3 of Notification No.12/2017 exempts "Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G ... or in relation to any function entrusted to a Municipality under article 243W ...".

Precedent treatment: The Court refers to the Supreme Court's guidance in Doypack Systems Pvt. Ltd. on the correct legal import of "in relation to". AAR/AAAR orders from other States relied on by the appellant were examined and not followed because they did not consider Doypack.

Interpretation and reasoning: The Tribunal interprets "in relation to" in its legal sense-meaning "concerning with", "pertaining to" or having a direct association/connection with the statutory functions enumerated in the Twelfth Schedule pursuant to Article 243W. The Twelfth Schedule entries (including "Safeguarding the interests of weaker sections" and "Promotion of cultural, educational and aesthetic aspects") are listed; the authority requires a direct nexus between the service supplied and the statutory municipal/panchayat function.

Ratio vs. Obiter: Ratio - exemption requires that the service be directly "in relation to" a function entrusted to Municipality/Panchayat as legally construed; services merely used by a government entity for welfare purposes but not directly connected to a municipal/panchayat statutory function do not qualify. Obiter - reference to the list of Twelfth Schedule functions and examples are explanatory but secondary to the nexus requirement.

Conclusions: The letting of buildings by a private lessor to a State Government department that, in turn, uses the premises to run social welfare college hostels does not constitute a service directly "in relation to" the statutory functions entrusted to Municipalities/Panchayats. Therefore the exemption under serial no. 3 of Notification No.12/2017 is not attracted and the rent is taxable.

Issue 2 - Directness of nexus between the lessor's supply and municipal/panchayat functions under Article 243W/243G

Legal framework: Article 243W and the Twelfth Schedule identify municipal functions; the exemption hinges on services being "by way of any activity in relation to any function entrusted" to those bodies.

Precedent treatment: The Supreme Court's elucidation of "in relation to" in Doypack is treated as binding guidance for determining the requisite connection/nexus.

Interpretation and reasoning: The Appellate Authority examines the factual sequence: lessor ? lease to State department ? department uses premises to run hostels. The Court finds the lessor's activity (renting the building) lacks the requisite directness or immediacy to be considered an activity "in relation to" a function entrusted to a Municipality/Panchayat. The channeling of supply through a government department that applies the premises for welfare does not transform the lessor's supply into one connected with municipal/panchayat statutory functions.

Ratio vs. Obiter: Ratio - a direct and proximate connection between the service provided and the municipal/panchayat function is necessary; indirect or downstream use by a government entity does not suffice. Obiter - discussion of factual permutations where such nexus might exist (not decided here).

Conclusions: There is no direct nexus between the appellant's renting service and the functions in the Twelfth Schedule; hence the exemption claim fails on the ground of insufficient legal connection.

Issue 3 - Weight of other AAR/AAAR decisions and compliance with Supreme Court interpretation of "in relation to"

Legal framework: Administrative rulings (AAR/AAAR) are persuasive but must conform to higher court precedent and correct legal interpretation.

Precedent treatment: The Appellate Authority explicitly declines to follow the other State AAR/AAAR rulings tendered by the appellant because those orders proceeded without applying the Supreme Court's Doypack interpretation of "in relation to".

Interpretation and reasoning: The authority reasons that AAR/AAAR orders that do not apply binding Supreme Court authority on statutory interpretation cannot stand as persuasive precedent for the present matter. The correct legal import of "in relation to" must be applied uniformly; departures are not followed.

Ratio vs. Obiter: Ratio - administrative rulings inconsistent with Supreme Court interpretation are not followed. Obiter - citation of specific out-of-State orders is explanatory of why they were not persuasive.

Conclusions: The prior AAR/AAAR decisions submitted by the appellant are not followed because they failed to apply binding Supreme Court guidance; they do not alter the outcome.

OVERALL CONCLUSION

The Appellate Authority affirms that rent received for letting buildings to a State Government department, which subsequently uses the premises to run social welfare college hostels, is taxable. The exemption under serial no. 3 of Notification No.12/2017 is not attracted because the lessor's service is not directly "in relation to" any function entrusted to a Municipality/Panchayat as legally construed; out-of-State AAR/AAAR orders inconsistent with Supreme Court authority are not followed. The appeal is dismissed and the impugned AAR ruling is upheld.

Letting college hostels to government department not 'in relation to' statutory functions; no exemption under Entry 3 of N/N.12/2017
AAAR held the appellant's letting of buildings to a government department for use as social welfare college hostels did not qualify as supply "in relation to" statutory functions of panchayats and similar bodies, and therefore was not entitled to exemption under entry 3 of N/N.12/2017. Applying the legal meaning of "in relation to," the authority found the supply was not sufficiently connected to the statutory functions and dismissed the appeal.

2026 (5) TMI 1792 - APPELLATE AUTHORITY FOR ADVANCE RULING, KERALA GST

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Issues: (i) Whether the fee paid for conversion of wetland to dry land under the Kerala Conservation of Paddy Land and Wetland Act, 2008 constitutes consideration for a taxable supply by the State Government liable to GST under reverse charge mechanism. (ii) Whether the activity falls within the exemption for services in relation to functions entrusted to a Panchayat under Article 243G of the Constitution. (iii) Whether the advance ruling application was maintainable in respect of a completed transaction.

Issue (i): Whether the fee paid for conversion of wetland to dry land under the Kerala Conservation of Paddy Land and Wetland Act, 2008 constitutes consideration for a taxable supply by the State Government liable to GST under reverse charge mechanism.

Analysis: The permission granted under section 27A is a statutory regulatory approval that confers a specific and measurable private benefit on the applicant by enabling a change in land use. The fee is directly linked to the grant of that approval and is not merely a compulsory levy unconnected with any supply. The activity is treated as a service supplied by the State Government to a business entity and falls within the reverse charge entry for government services.

Conclusion: The fee constitutes consideration for a taxable supply and is liable to GST under reverse charge mechanism.

Issue (ii): Whether the activity falls within the exemption for services in relation to functions entrusted to a Panchayat under Article 243G of the Constitution.

Analysis: The exemption applies only where the service is in relation to functions actually entrusted to a Panchayat under Article 243G and the Eleventh Schedule. Land conversion from wetland to dry land is distinct from land improvement or soil conservation and is a permission-granting regulatory function of the State authority, not a devolved Panchayat function. The exemption notification therefore does not cover the activity.

Conclusion: The exemption is not applicable.

Issue (iii): Whether the advance ruling application was maintainable in respect of a completed transaction.

Analysis: Advance ruling is intended to determine the tax position of proposed or ongoing transactions. Where the conversion fee had already been paid and the transaction was completed before the application, the matter does not fit the advisory purpose of the advance ruling mechanism.

Conclusion: The application was not maintainable.

Final Conclusion: The ruling of the Authority for Advance Ruling was sustained, the conversion fee was held taxable under reverse charge, and the appeal failed.

Ratio Decidendi: A statutory permission fee is taxable as consideration when the authority performs a specific regulatory service conferring private benefit, unless the service is shown to fall within a specific constitutional or notified exemption.

Statutory land-conversion permission fees attract reverse-charge GST, while Panchayat-function exemption and completed-transaction advance rulings remain unavailable.
Fees paid for statutory permission to convert wetland into dry land are treated as consideration for a taxable regulatory service where the approval confers a specific private benefit by enabling change of land use. Services supplied by the State Government to a business entity in this context attract GST under reverse charge. The exemption for services relating to Panchayat functions does not extend to land-conversion permissions, which are distinct from land improvement or soil-conservation functions entrusted under Article 243G. Advance ruling jurisdiction is confined to proposed or ongoing transactions and does not cover a conversion fee already paid for a completed transaction.

Maintainability of advance ruling application in respect of completed transaction - Taxability of Fees paid for conversion of wetland to dry land under the Kerala Conservation of Paddy Land and Wetland Act, 2008 - supply by the State Government liable to GST under reverse charge mechanism - Scope of Panchayat functions exemption under Article 243G. Advance ruling maintainability - Completed transaction - HELD THAT: - The Appellate Authority held that the advance ruling mechanism is intended to provide certainty in relation to a proposed supply or an ongoing supply, and not to regularise a transaction already completed without discharge of the tax liability, if any. Since the appellant had already paid the prescribed fee to the State Government before approaching the Authority for Advance Ruling, the application related to a completed transaction and fell outside the proper scope of the advance ruling provisions. [Paras 6] The application before the Authority for Advance Ruling was held to be non-admissible as it concerned a completed transaction. Government permission-granting service - Statutory fee as consideration - Article 243G exemption - Wetland to dry land conversion - HELD THAT: - The Appellate Authority treated the permission granted under Section 27A as a specific regulatory act performed on application, conferring a measurable and exclusive private benefit by enabling non-agricultural use of the land. On that reasoning, the prescribed fee had a direct nexus with the permission granted and therefore constituted consideration for a supply of service. It further held that land conversion is distinct from land improvement and cannot be brought within the functions entrusted to Panchayats under Article 243G and the Eleventh Schedule. Since the activity was not covered by the constitutional-function exemption, and services supplied by Government to a business entity were otherwise taxable under reverse charge, the fee attracted GST under reverse charge. [Paras 6] The fee for wetland-to-dry-land conversion was held taxable under reverse charge, and the claimed exemption under Notification No. 14/2017-Central Tax (Rate) was rejected. Final Conclusion: The Appellate Authority upheld the advance ruling and dismissed the appeal. It held that the application itself related to a completed transaction and, in any event, that the fee paid for conversion of land from wetland to dry land was taxable under reverse charge and not covered by the exemption relating to functions entrusted to Panchayats.

2025 (8) TMI 1818 - APPELLATE AUTHORITY FOR ADVANCE RULING, GOA GST

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Issues: (i) Whether the advance ruling was invalid for having been pronounced beyond the ninety-day period under Section 98(6) of the CGST Act, 2017. (ii) Whether permission charges, reinstatement charges, road cutting charges and ground rent charges levied by Goa PWD authorities were liable to GST under reverse charge in terms of Serial No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017.

Issue (i): Whether the advance ruling was invalid for having been pronounced beyond the ninety-day period under Section 98(6) of the CGST Act, 2017.

Analysis: The ninety-day period was treated as prescribing a procedural time frame only. The provision was held to be directory because it does not expressly provide that breach of the time limit renders the ruling void or invalid. No prejudice or violation of natural justice was shown on account of the delay.

Conclusion: The delay did not invalidate the advance ruling, and the objection was rejected.

Issue (ii): Whether permission charges, reinstatement charges, road cutting charges and ground rent charges levied by Goa PWD authorities were liable to GST under reverse charge in terms of Serial No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: Serial No. 5 of Notification No. 13/2017-Central Tax (Rate) places GST liability on the business entity recipient where services are supplied by the Central Government, State Government, Union territory or local authority. Goa PWD was treated as falling within the relevant government category, and the appellant was a business entity receiving the supply. The appellate authority also declined to enter into a fresh determination on wider taxability issues not sought in the advance ruling application.

Conclusion: The charges were held liable to GST under reverse charge in the hands of the appellant.

Final Conclusion: The appeal failed and the advance ruling was sustained, with liability to pay GST under reverse charge affirmed against the appellant.

Ratio Decidendi: A procedural time limit in an advance ruling provision is directory unless the statute attaches invalidating consequences, and where a government or local authority supplies services to a business entity, reverse charge liability follows the specific notification governing such supplies.

Advance ruling delay is directory; government service charges to a business entity attract reverse charge GST.
The ninety-day period for pronouncing an advance ruling under Section 98(6) of the CGST Act was treated as directory, not mandatory, because the statute does not state that delay makes the ruling void and no prejudice or denial of natural justice was shown. The objection to delay was therefore rejected. Permission charges, reinstatement charges, road cutting charges and ground rent charges levied by Goa PWD were held taxable under reverse charge, as the notification applies where services are supplied by the Central Government, State Government, Union territory or local authority to a business entity. The appellate authority also declined to expand the ruling into broader taxability questions not raised in the application.

Scope of advance ruling pronounced beyond the prescribed period under Section 98(6) - Nature of time-limit for pronouncement of advance ruling - Directory Or Mandatory - Reverse charge on services supplied by State Government to business entity - liability to pay GST under reverse charge in terms of Serial No. 5 of Notification No. 13/2017-Central Tax (Rate). Time-limit for advance ruling - Validity of delayed advance ruling -HELD THAT:- The appellate authority held that the provision requiring pronouncement of advance ruling within ninety days prescribes a time frame but does not attach any consequence of nullity or invalidation for delay. On that basis, the provision was treated as directory and not mandatory. It further held that delay in pronouncement had not caused prejudice or violated natural justice, and therefore the challenge to the validity of the ruling on that ground could not be sustained. [Paras 10] The plea that the advance ruling was void for having been pronounced beyond ninety days was rejected. Reverse charge on permission, reinstatement, road cutting and ground rent charges - Services supplied by State Government to business entity - HELD THAT: - The appellate authority confined itself to the question actually posed before the advance ruling authority, namely liability under reverse charge. It held that Serial No. 5 of Notification No. 13/2017-CT dated 28.06.2017 clearly fastens tax liability on the recipient where services are supplied by the Central Government, State Government, Union territory or local authority to a business entity. Since PWD Goa fell within the category of State Government or local authority and the appellant was a business entity, the liability to pay GST under reverse charge followed on the terms of the notification. [Paras 11, 12] The ruling that GST on all four charges is payable by the appellant under reverse charge was affirmed. Scope of appeal against advance ruling - New plea on taxability not entertainable in appeal - HELD THAT: - The appellate authority recorded that the application before the advance ruling authority was limited to whether GST was payable under reverse charge and did not seek any ruling on taxability of the services themselves. Proceeding on that basis, it held that a new issue could not be introduced at the appellate stage and therefore declined to examine the contentions that the activities were outside the scope of supply or otherwise non-taxable. [Paras 11] The taxability challenge was not entertained and the appeal was decided only on the reverse charge question originally raised. Final Conclusion: The appeal was dismissed. The appellate authority upheld the advance ruling that GST on permission charges, reinstatement charges, road cutting charges and ground rent charges levied by Goa PWD authorities is payable by the appellant under reverse charge, and rejected both the challenge based on delay in pronouncement and the attempt to raise fresh issues on taxability at the appellate stage.

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