2019 (2) TMI 1526 - AAR - GST

Clarification on Customs Notifications and GST Rates for Specified Goods

The ruling clarified that Notification No-51/1996-Customs, as amended by Notification No-43/2017-Customs, applies to the import of specified equipment by ... Applicability of customs exemption to import of goods - Liability to pay IGST on import - Concessional GST rates for specified scientific equipment - Binding nature of GST Council recommendations versus statutory notifications - Advance Ruling jurisdiction under Section 97Applicability of customs exemption to import of goods - Liability to pay IGST on import - Notification No.51/1996-Customs dated 23.07.1996 as amended by Notification No.43/2017-Customs dated 30.06.2017 applies to the Applicant for import of specified equipment but does not extend to OEM suppliers supplying those imported equipments domestically. - HELD THAT: - The Proviso to Section 5(1) of the IGST Act confines levy of IGST on goods imported into India to the time of customs clearance and the levy is limited to importers. Where an eligible institution itself imports specified equipment, the customs notifications providing exemption apply and the importer (the institution) may claim exemption. However, where an OEM supplier located in India imports goods of its own and subsequently supplies them domestically to eligible institutions, the initial import by the OEM remains a taxable import for which IGST is leviable at customs clearance; the subsequent domestic supply is a separate taxable supply (CGST/SGST or IGST depending on locations) and the liability to pay tax lies on the supplier, not on the recipient institution. The customs notification is restricted to specified public funded research/educational institutions as importers and cannot be extended to confer exemption upon OEM suppliers importing for their own account. [Paras 6]Notification No.51/1996-Customs as amended is applicable to the Applicant when it directly imports specified equipment; it is not applicable to OEM suppliers importing for supply to such institutions.Binding nature of GST Council recommendations versus statutory notifications - Advance Ruling jurisdiction under Section 97 - Whether the Authority for Advance Ruling can rule on the legal question of the binding effect of GST Council decisions in the absence of corresponding statutory notifications. - HELD THAT: - While the GST Council is the constitutional body making recommendations on policy, including exemptions, issues of rate or tax concessions require enactment by way of statutory notifications. The Authority observed that questions on whether a Council decision is binding in the absence of a corresponding notification involve matters of issuance of statutory notifications and are not within the competence of the Authority constituted under the OGST Act to pronounce under Section 97/98. Consequently, the Authority cannot entertain a ruling on the binding effect of Council decisions where the question pertains to non-issuance of requisite statutory notifications. [Paras 6]The Authority has no competence to rule on whether GST Council decisions are binding on the Department absent corresponding notifications; that question is beyond the remit of advance rulings under the OGST/CGST Act.Concessional GST rates for specified scientific equipment - Applicability of rate notifications to imported and indigenous goods - Whether Notification No.45-CGST(Rate) dated 14.11.2017 and Notification No.47-IGST(Rate) dated 14.11.2017 granting a concessional rate of 5% apply to both imported and indigenous specified goods supplied to eligible institutions. - HELD THAT: - The rate notifications grant concessional taxation in excess of 5% (2.5% CGST and 2.5% SGST) for specified goods listed in the notification to specified institutions subject to stated conditions. The notifications do not distinguish between imported and indigenous goods in their entries; therefore the concessional rate is applicable to the listed scientific and technical instruments, apparatus, equipment (including computers), accessories, parts, consumables and other specified items whether they are imported or domestically sourced, subject to fulfillment of the conditions in the notifications. [Paras 6]The concessional rate of GST/IGST at 5% under the cited notifications applies to the specified goods whether imported or indigenous, subject to the conditions specified in the notifications.Final Conclusion: The Authority ruled that the customs exemption as amended applies to direct imports by the Applicant but not to OEM suppliers; the Authority cannot rule on the binding effect of GST Council decisions absent statutory notifications; and the concessional 5% GST/IGST rate under Notifications dated 14.11.2017 applies to the listed specified goods whether imported or indigenous. Issues Involved:1. Applicability of Notification No-51/1996-Customs, Dt. 23.07.1996 read with Notification No-43/2017-Customs, Dt: 30.06.2017 and Minutes of the 14th GST Council Decision Dt: 18th/19th May 2017 for specified imported equipment delivered to eligible institutions.2. Binding nature of GST Council's decision granting exemption in the absence of corresponding notification by the Central/State Government.3. Applicability of concessional rate of GST/IGST at 5% vide Notification No-45-CGST(Rate), Dt:14.11.2017 and Notification No-47-IGST(Rate), Dt:14.11.2017 for supply of specified indigenous equipment to eligible institutions.Detailed Analysis:1. Applicability of Notification No-51/1996-Customs and Notification No-43/2017-Customs:The applicant sought clarification on whether the specified imported equipment delivered to eligible institutions is exempt from IGST under the mentioned notifications. The ruling clarified that Notification No-51/1996-Customs, Dt: 23.07.1996, as amended by Notification No-43/2017-Customs, Dt: 30.06.2017, is applicable to the applicant for the import of specified equipment. However, it does not extend to OEM suppliers of such imported equipment. The ruling emphasized that the exemption applies only to direct imports by eligible institutions and not to domestic supplies by OEM suppliers, who must charge IGST as per the prevailing rates.2. Binding Nature of GST Council's Decision:The applicant questioned whether the GST Council's decision to grant exemptions is binding on the department without corresponding notifications from the Central/State Government. The ruling stated that while the GST Council's decisions are binding on the government, the authority for advance ruling does not have the mandate to rule on this matter. The authority's scope is limited to the provisions prescribed in sub-section (2) of Section 97 of the OGST/CGST Act, and it cannot adjudicate on the binding nature of the GST Council's decisions.3. Applicability of Concessional Rate of GST/IGST at 5%:The applicant sought clarification on whether the concessional rate of GST/IGST at 5% applies to specified indigenous equipment supplied to eligible institutions. The ruling confirmed that the concessional rate of GST/IGST at 5% as per Notification No-45-CGST(Rate), Dt:14.11.2017 and Notification No-47-IGST(Rate), Dt:14.11.2017 applies to the specified goods listed in the notifications, regardless of whether they are imported or indigenous. The specified goods include scientific and technical instruments, apparatus, equipment, accessories, parts, consumables, live animals for experimental purposes, computer software, CD-ROMs, recorded magnetic tapes, microfilms, microfiches, and prototypes with a CIF value not exceeding fifty thousand rupees in a financial year.Ruling:1. The notifications are applicable to the applicant for the import of specified equipment but not to OEM suppliers of imported equipment.2. The authority does not have the competence to rule on whether the GST Council's decision is binding without corresponding notifications.3. The concessional rate of GST/IGST at 5% applies to the specified goods, whether imported or indigenous.Appeal:The applicant or the jurisdictional officer may appeal to the Odisha State Appellate Authority for Advance Ruling under Section 100 of the OGST/CGST Act, 2017 within 30 days from the date of receipt of the Advance Ruling.