2019 (11) TMI 714 - AAR - GST

GST Liability on PDS Supplies: Applicant Denied Exemption, Must Pay Tax

The Applicant sought a ruling on the liability to pay GST on supplies of consumer goods earmarked 'FOR PDS SUPPLY ONLY.' The Application was admitted for ... Admissibility for advance ruling under section 97(e) of the GST Act - liability to pay Goods and Services Tax on supplies through Public Distribution System - exemption under Notification No. 2/2017 - CT (Rate) - inclusion in Schedule III of the GST ActAdmissibility for advance ruling under section 97(e) of the GST Act - The Application for advance ruling was admitted. - HELD THAT: - The Applicant sought a ruling on taxability of supplies earmarked 'FOR PDS SUPPLY ONLY' to fair price shops/PDS distributors. The Authority was satisfied that the question falls within the scope of advance ruling under the GST Act and that the question was neither decided by nor pending before any other authority. The concerned revenue officer raised no objection to admission. On these foundations the Authority admitted the Application for adjudication. [Paras 1]Application admitted.Liability to pay Goods and Services Tax on supplies through Public Distribution System - exemption under Notification No. 2/2017 - CT (Rate) - inclusion in Schedule III of the GST Act - Supplies of consumer goods made by the Applicant for distribution through the Public Distribution System are taxable and not exempt under the cited notification or included in Schedule III. - HELD THAT: - The Applicant acted as a canalising agency for the State agency, supplying goods earmarked for PDS and performing transportation, packaging and other logistics while receiving only a government-fixed administrative charge. Notwithstanding the contractual relationship and the Applicant's role, the Authority examined the relevant exemption notification and the Schedule III inclusions and found that supply of goods through PDS is not covered by Notification No. 2/2017 - CT (Rate) or its State counterpart, nor are the Applicant's activities included in Schedule III. No revenue objection was raised to the admission or merits. Consequently, the supplies do not qualify for exemption and remain taxable supplies subject to GST at the applicable rate. [Paras 4]Applicant liable to pay GST at the applicable rate on supplies through PDS.Final Conclusion: The Authority admitted the Application and held that the Applicant's supplies of consumer goods through the Public Distribution System are not exempt under the cited notification or included in Schedule III, and therefore are taxable with GST payable at the applicable rate. Issues:1. Admissibility of the Application2. Submissions of the Applicant3. Submissions of the Revenue4. Observations & Findings of the AuthorityAdmissibility of the Application:The Applicant sought a ruling on the liability to pay GST on supplies of consumer goods earmarked 'FOR PDS SUPPLY ONLY.' The question raised was deemed admissible under section 97(e) of the GST Act as it was not decided by any authority. The Application was admitted for further consideration.Submissions of the Applicant:The Applicant, acting as an associate of a government corporation, supplied goods to fair price shops/PDS distributors against a fixed monthly administrative charge. The Applicant bore all costs and risks associated with the supplies, acting as a canalising agency on behalf of the government entity. Despite arguing for GST exemption on PDS supplies, the Applicant provided no legal basis or notification in support of the claim.Submissions of the Revenue:The Revenue officer did not comment on the sustainability of the Applicant's argument regarding GST exemption for supplies through PDS.Observations & Findings of the Authority:The Authority noted that supplies through PDS were not exempt under relevant notifications or Schedule III of the GST Act. As such, the Applicant was held liable to pay GST at the applicable rate on goods supplied through PDS. The ruling declared the Applicant's liability for GST on such supplies, subject to the provisions of the GST Act.This judgment clarifies the tax liability of the Applicant for supplies of goods earmarked for PDS distribution, emphasizing the absence of GST exemption for such transactions under the prevailing notifications and regulations.