2018 (7) TMI 882 - AAR - GST

Tax Dispute: Manpower Supply Services Application Dismissed Due to Jurisdictional Limitations Under CGST Act Provisions

AAR in Chhattisgarh rejected an advance ruling application regarding manpower supply services tax treatment. The Authority determined that the application ... Liability of tax/GST - place of supply - manpower supply services to NTPC BHEL Power Projects Pvt. Ltd. - Input Tax Credit - Levy of IGST or CGST and SGST - intrastate or interstate transaction? Held that:- In terms of section 96,103(1) (a) and 103 (1) (b) of CGGST Act, 2017 Authority for Advance Ruling, Chhattisgarh is not the proper authority to pronounce the ruling regarding the availability or otherwise of ITC to a firm which is registered and situated at a place outside the State of Chhattisgarh - Similarly, section 97(2)(c) of CGST Act, 2017 stipulates that ruling as regards time and value of supply of goods or services or both, can only be raised before AAR for advance ruling. It is precisely for this very reason also, that determination of place of supply has been kept out of the purview of Authority for Advance Ruling (AAR) stipulated under the provisions of section 97(2) of the CGGST Act, 2017. The application merits rejection, being out of the purview of matters or questions specified in sub-section (2) of section 97 of CGGST Act, 2017 read with section 96,103(1) (a) & 103 (1) (b) of CGGST Act, 2017. Issues:1. Determination of whether IGST or CGST and SGST should be charged on manpower supply services.2. Categorization of the transaction as intrastate or interstate.3. Availability of Input Tax Credit (ITC) to the recipient against their output tax liability.Analysis:Issue 1: Determination of Tax to be ChargedThe applicant, engaged in providing manpower supply services to a company in Andhra Pradesh, sought clarification on whether to charge IGST or CGST and SGST. The applicant considered the transaction as interstate due to their registration in Chhattisgarh and the supply being outside the state. They intended to charge IGST on the services provided.Issue 2: Categorization of TransactionThe applicant argued that the supply of manpower services should be treated as an interstate transaction since the supplier was based in Chhattisgarh and the recipient was in Andhra Pradesh. They aimed to issue invoices charging IGST based on this categorization.Issue 3: Availability of Input Tax CreditThe applicant also inquired whether the IGST charged on the invoices would be available as Input Tax Credit to the recipient against their output tax liability. They sought clarity on the admissibility of ITC for the recipient firm registered in Andhra Pradesh.Legal Analysis and DecisionThe Authority for Advance Rulings in Chhattisgarh deliberated on the provisions of the CGST Act, 2017 related to advance rulings. It was noted that the determination of the place of supply and availability of ITC to a firm outside Chhattisgarh fell outside the purview of the Authority for Advance Ruling. As per the relevant sections of the CGST Act, the Authority concluded that the application for advance ruling did not align with the matters specified under Section 97(2) of the Act, along with Sections 96, 103(1)(a), and 103(1)(b).Therefore, the application seeking an advance ruling on the tax treatment and availability of ITC in the context of the provided manpower supply services was rejected by the Authority for Advance Rulings in Chhattisgarh. The decision was based on the statutory provisions that limited the scope of matters falling under the jurisdiction of the Authority, highlighting the specific questions that could be raised for advance rulings as per the CGST Act, 2017.