2021 (6) TMI 521 - AAR - GST

Applicant's Eligibility for Concessional GST Rates in Specific Cases

In Re: M/s. Thermo Fisher Scientific India Pvt. Ltd.

The authority determined that the applicant could charge concessional GST rates only if all conditions specified in the notifications were met. The ... Classification of goods - scientific and technical instruments/ equipment supplied to public funded research institutions, research institutions, universities, Indian Institute of Technology, departments and laboratories of the Central and State Government, basis the certificates appended herewith - part “a” of the Sr. No. “I” of the condition in the Certificate of Registration with DSIR - applicability of N/N. 45/2017-C.T. (Rate) dated 14.11.2020 and corresponding N/N. 45/2017 and 47/2017 issued under the MGST Act, 2017 and the IGST Act, 2017 - HELD THAT:- Considering the fact that conditions prescribed under all Notifications are the same, production of Certificate of registration with DSIR having reference to the erstwhile Notification No. 51/96-Cus should be considered sufficient compliance for eligibility to avail benefit of the Notifications issued under CGST/SGST and IGST - Further, Explanation 2 to Notification No. 47/2017 dated 14.11.2017 as amended explicitly provides exemption would be in line with the notification of the G.O.I. in the M.O.F. (Department of Revenue), No. 51/96-Customs, dated the 23.07.1996 and is applicable with effect from the 15th November, 2017. As per Sr. No 1 of Notification 45/2017, when the said goods are supplied to public funded research institutions other than a hospital or a university or an HT or an IIS or a National Institute of Technology (NIT)/REC, for availing exemption mentioned therein, the said institution must produce a certificate of registration with DSIR, from an officer not below the rank of the Deputy Secretary in the Union territory in concerned department to the supplier, (in this case, the applicant) at the time of supply of the specified goods - In absence of the necessary certificates/documents having being produced before this authority the applicant is not entitled for exemption as a blanket case. Benefit of N/N. 45/2017 - HELD THAT:- As per Sr. No 3 of Notification 45/2017, when the said goods are supplied to Departments and laboratories of the Central Government and State Governments, the said departments/laboratories must produce, at the time of supply, a certificate to the applicant from the Head of such Institution, in each case, certifying that the said goods are required for research purposes only. Applicant has submitted that, such certificates are provided to them by the Head of the Institutions to whom the said goods are supplied. However, corresponding documentary evidence has been submitted only in a couple of cases - The Applicant would be correct in charging 2.5% CGST and SGST respectively or 5% IGST, as applicable, by applying Notification No.45/2017-C.T.-(Rate), Notification No. 45/2017-S.T.-(Rate) And Notification No. 47/2017-I.T.-(Rate) all dated 14.11.2017 on the said goods, only when supplied to institutions, universities, IIT, departments and laboratories, etc mentioned in the said Notification 45/2017, on the basis satisfaction of all conditions mentioned in the said notifications. Applicant would be correct in charging 5% GST only in 4 cases of National Centre for Polar and Ocean Research, University of Delhi, Council of Scientific and Industrial Research CSIR-North East and Institute of Science & Technology where all the conditions mentioned in the impugned Notifications are found to be satisfied and the necessary and proper certificates, complete in all respects as mandated by the relevant Notifications have been produced. ISSUES PRESENTED AND CONSIDERED 1. Whether supplies of specified scientific and technical instruments/equipment to institutions listed in the Notification are eligible for concessional GST rates (2.5% CGST + 2.5% SGST or 5% IGST) under Notification No.45/2017 (CT/ ST Rate) and Notification No.47/2017 (IT Rate) dated 14.11.2017, subject to conditions specified therein. 2. Whether a certificate of registration issued by the Department of Scientific and Industrial Research (DSIR) under the pre-GST/erstwhile regime (containing references to earlier Customs/Central Excise notifications and bearing a validity period) satisfies the condition 'registered with the Government of India in the Department of Scientific and Industrial Research' and the requirement of production of the DSIR certificate 'at the time of supply' under the Notifications of 14.11.2017. 3. Whether DSIR certificates that explicitly refer only to pre-GST notifications (e.g., Central Excise or Customs notifications) can be extended or construed to confer eligibility under the GST Notifications of 14.11.2017. 4. The temporal scope of entitlement - whether concessional rate applies only from the notification date (14.11.2017) and the effect of expiry dates on DSIR certificates for eligibility. 5. Evidentiary/burden issues: whether the supplier may claim concessional rate as a blanket practice without producing the specific, current certificates required by the Notifications, and what constitutes sufficient documentary proof. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to concessional GST rates under Notification No.45/2017 and No.47/2017 Legal framework: The Notifications exempt central/state/ integrated tax 'so much ... as is in excess of the amount calculated at' prescribed rates when goods specified are 'supplied to' the institutions listed, subject to the conditions set out in the corresponding column (including production of specified certificates at the time of supply). Explanation 2 links the GST notification to earlier Customs Notification No.51/96-Cus (applicable from 15.11.2017). Precedent treatment: The authority relied on the settled principle that exemption notifications must be construed strictly and additional conditions cannot be read in. Earlier case law cited supports strict construction but does not permit relaxation of conditions expressly prescribed. Interpretation and reasoning: Entitlement is conditional and derivative upon satisfaction of all notification conditions - (i) institution type listed; (ii) production of DSIR registration certificate issued by the prescribed authority; and (iii) certificate from the Head of Institution certifying research use (and, where applicable, a non-transfer declaration for five years). The Notifications' language requires production of prescribed certificates 'at the time of supply' and links exemption post-GST to the earlier Customs notification via Explanation 2 but does not itself relax or alter the documentary prerequisites. Ratio vs. Obiter: Ratio - concessional rate applies only where all conditions of the Notifications are satisfied and proper documentary proof (as prescribed) is produced at the time of supply. Obiter - general observations on warehouse operations and supply chains do not alter this ratio. Conclusion: The supplier is entitled to charge the concessional GST rates only when all specified conditions of the Notifications are met and corresponding certificates are produced; otherwise normal GST rates apply. Issue 2 - Sufficiency of pre-GST DSIR registration certificates (referencing erstwhile notifications) Legal framework: The Notifications require institutions to be 'registered with the Government of India in the Department of Scientific and Industrial Research' and to produce specified certificates from an officer (not below the rank prescribed) and from the Head of Institution at the time of supply. Precedent treatment: Authority invoked the principle that exemption notifications must be strictly complied with and that documentation required by a notification cannot be replaced by informal or incomplete proof. Interpretation and reasoning: A DSIR registration certificate remains a registration document and it commonly contains references to the specific statutory or notification basis under which it was granted. Where a DSIR certificate (even if issued pre-GST) continues to be valid and expressly indicates registration for availing exemption under the new Notifications (or expressly references the GST Notifications), it may satisfy the Notifications' requirement. However, mere possession of a certificate that refers only to pre-GST notifications is insufficient unless the certificate either (a) remains valid and expressly covers the notification basis required by the GST Notifications, or (b) the certificate otherwise satisfies the textual requirements of the GST Notification (i.e., issued by the prescribed DSIR authority and produced at time of supply). The authority examined each specimen certificate for its wording and validity and declined blanket acceptance. Ratio vs. Obiter: Ratio - a pre-GST DSIR certificate will only be acceptable if it, on its face, satisfies the conditions set out in the GST Notifications (including appropriate issuing authority and unexpired validity) or otherwise is shown to be applicable to the GST Notifications; it cannot be assumed valid merely because it existed under the prior regime. Obiter - administrative practice of DSIR in not reissuing certificates does not modify the statutory requirement. Conclusion: Pre-GST DSIR certificates are acceptable only where they meet the textual conditions of the GST Notifications; certificates that explicitly indicate eligibility only under earlier Customs/Central Excise notifications cannot be treated as conferring eligibility under the GST Notifications. Issue 3 - Can certificates referring only to pre-GST notifications be extended to GST Notifications? Legal framework: Notifications are to be read according to their terms; Explanation 2 aligns the GST notification with earlier Customs Notification No.51/96 but does not state that certificates under the old regime automatically confer entitlement under the new Notifications. Precedent treatment: Cited authorities emphasize strict construction of exemption provisions and that judicial or administrative expansion of eligibility is impermissible. Interpretation and reasoning: The authority concluded that where a DSIR certificate expressly states eligibility only under a Central Excise or Customs notification (e.g., Certificate referencing Notification No.10/97-CE), that explicit limitation prevents extending the certificate to confer entitlement under Notifications of 14.11.2017. Explanation 2 does not effect an automatic carry-over of documentary content; rather, it aligns policy/eligibility but preserves the Notifications' own documentary prerequisites. Ratio vs. Obiter: Ratio - certificates explicitly limited to earlier notifications cannot be read to confer entitlement under GST Notifications; such certificates must be reissued or amended to demonstrate registration relevant to the GST Notifications. Obiter - administrative reluctance to reissue does not override the notification's requirements. Conclusion: Explicitly limited pre-GST certificates cannot be extended to provide GST notification benefits absent amendment or issuance of certificates that, on their face, indicate applicability to the GST Notifications. Issue 4 - Temporal scope and effect of certificate validity/notification effective date Legal framework: Notifications operate from their stated effective date; Explanation 2 makes GST Notification operative with effect from 15.11.2017 in alignment with Notification No.51/96-Cus. Interpretation and reasoning: Eligibility for concessional GST under the Notifications arises only from the Notifications' effective date (14/15.11.2017). Additionally, expired DSIR registration certificates (i.e., those whose validity expired prior to or on the date of supply) cannot support entitlement. The authority reviewed specimen certificates and denied concession where certificates had expired as of hearing. Ratio vs. Obiter: Ratio - concessional rates under the GST Notifications apply only from the Notifications' operative date and only when the DSIR certificate is within its validity period at the time of supply. Obiter - practical suggestions on renewal mechanics are unnecessary to the decision. Conclusion: Concessional rate available only from the Notifications' effective date and only where DSIR certificates are valid at time of supply; expired or post-dated certificates do not confer entitlement. Issue 5 - Evidentiary burden and the supplier's entitlement as a blanket practice Legal framework: Notifications require production of specified certificates 'at the time of supply'; the supplier bears onus to establish compliance with conditions for exemption to justify invoicing at concessional rate. Precedent treatment: Exemption provisions demand strict compliance and documentary proof; supplier cannot claim exemption as a blanket practice without documentary compliance. Interpretation and reasoning: The authority found absence of jurisdictional officer submissions and limited documentary production by the applicant. The applicant's general practice of seeking amendments from customers but producing only limited or expired certificates and a single ambiguous email did not satisfy the notification requirements. Consequently, the authority refused blanket entitlement and analysed only the few cases where complete and valid certificates were produced, granting concessional rate in only those instances. Ratio vs. Obiter: Ratio - the supplier must produce the requisite DSIR and Head of Institution certificates (complete, valid and as prescribed) for each supply to justify concessional GST; failure to produce such records precludes blanket concessional charging. Obiter - supplier's warehouse arrangements or logistics do not affect documentary prerequisites. Conclusion: The burden to establish entitlement lies with the supplier and must be discharged with the specific certificates required; where such certificates are absent, expired, or limited to pre-GST notifications, concessional rates cannot be applied as a blanket claim. Final outcome (application of conclusions to submitted evidence) Where all conditions of the Notification were satisfied and proper, current certificates as mandated by the Notifications were produced, concessional rate (5% GST as applicable) was held to be chargeable in those specific instances. Where certificates were expired, incomplete, or expressly limited to prior regime notifications, concessional treatment was denied.