2022 (5) TMI 1291 - AAR - GST

Revenue sharing invoices advance ruling application rejected for lack of supplier status under Section 98(2) CGST Act 2017

The Karnataka AAR rejected an application filed by Auriga Research Private Limited seeking advance ruling on whether revenue sharing invoices constitute ... Levy of GST - Revenue Sharing invoices raised by one party on to another party - the outward supply of services is exempt or not - HELD THAT:- Any person registered or desirous of obtaining registration under CGST Act 2017 can seek advance ruling only in relation to the supply of goods or services or both being undertaken or proposed to be undertaken. In the instant case, it is observed that Auriga Research Private Limited, who have filed the application, is not a supplier. Thus the instant application is not admissible and liable for rejection in terms of Section 98(2) of the CGST Act 2017. The application is hereby rejected as “inadmissible”, in terms of Section 98(2) of the CGST Act 2017. Issues Involved:1. Whether GST will be levied on Revenue Sharing invoices raised by one party on another party wherein the outward supply of services is exempt in nature.Detailed Analysis:Admissibility of the Application:- Section 97(2)(e) of the CGST Act 2017: The question pertains to the 'determination of the liability to pay tax on any goods or services or both,' making it admissible under this section.Brief Facts of the Case:- Applicant's Background: The applicant is a Private Limited Company registered under the CGST and KGST Acts, providing Covid-19 testing facilities for air passengers.- Agreements with BIAL: The applicant entered into multiple agreements with Bangalore International Airport Limited (BIAL) for renting spaces and operating Covid Testing Labs. The agreements included a fixed monthly rent and a revenue-sharing arrangement based on the applicant's turnover.- Revenue Sharing Arrangement: BIAL charges GST at 18% on the revenue share, generating tax invoices under SAC 996761 (Airport Operation Services).Applicant's Interpretation of Law:- Exemption Notification: The applicant argues that their Covid Testing services are exempt from GST under Notification No. 12/2017-Central Tax (Rate), Sl.No.74 Heading 9993, which exempts healthcare services.- Actionable Claim: The applicant cites the Tamil Nadu Advance Ruling Authority's decision, arguing that revenue sharing is an actionable claim and, therefore, not subject to GST under Schedule III of the CGST Act.- Precedent Cases: The applicant references the ruling in the case of M/S. PVS Multiplex India Private Limited, where revenue sharing was not subject to service tax.Findings & Discussion:- Provisions of CGST and KGST Acts: The provisions of these acts are in pari-materia, meaning they are identical except for a few specific provisions.- Tax Invoice and Supplier Definitions: Section 31 of the CGST Act mandates issuing a tax invoice for taxable services. Section 2(105) defines 'supplier' as the person supplying goods or services. BIAL, issuing tax invoices, is considered the supplier.- Admissibility of the Application: According to Section 95(a) and 95(c) of the CGST Act, advance rulings can only be sought by a person in relation to the supply of goods or services they undertake. Since the applicant is not the supplier in this context, the application is inadmissible.Ruling:- Application Rejection: The application is rejected as 'inadmissible' under Section 98(2) of the CGST Act 2017.