Private company's GST appeal rejected for incomplete Rs. 20,000 mandatory fee payment under Section 20 IGST Act

The AAAR Haryana rejected an appeal filed by a private limited company regarding GST classification of licensing services. The appellant was required to deposit Rs. 20,000 as mandatory fee under IGST Act but paid only Rs. 10,000 under tax head instead of the prescribed fee. Since the statutory precondition for filing appeal was not met as per Section 20 of IGST Act read with Section 49 of CGST and HGST Act, the appeal was deemed incomplete and not admitted. The appeal was disposed of without consideration of the substantive issue regarding tax rate classification.

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Issues Involved:
1. Classification of licensing services and applicable GST rate.
2. Compliance with procedural requirements for filing an appeal.

Summary:

1. Classification of Licensing Services and Applicable GST Rate:

The Appellant, M/s. Subway Systems India Private Limited (Now Eversub India Pvt. Ltd.), appealed against the Advance Ruling No. HR/ARL/07/2021-22 dated 10.01.2022, seeking clarification on the GST rate applicable to licensing services received from SIBV under the Master License Agreement (MLA) and Trademark License Agreement (TLA). The Appellant argued that these services should be taxable at 12% under Entry 17 (iii) of the Service Rate Notification, which deals specifically with licensing of Intellectual Property (IP) rights in respect of goods other than Information Technology software. The Appellant contended that the services were previously taxed at 12% under Entry 17 (i) until 30.09.2021, and post-amendment, should continue to be taxed at 12% under Entry 17 (iii).

The Advance Ruling Authority ruled that licensing services received by the Appellant from SIBV under the MLA and TLA will be taxable at 18% under Entry 17 (ii) of the Service Rate Notification and not at 12% under Entry 17 (iii). The Appellant challenged this ruling, arguing that the Authority failed to consider the specific nature of the services and the applicable legal provisions, rendering the order non-speaking and arbitrary.

2. Compliance with Procedural Requirements for Filing an Appeal:

The appeal was not admitted due to non-compliance with the procedural requirement of depositing the requisite fee. As per Section 100 (3) of the CGST Act, 2017, and Rule 106 (1), the Appellant was required to deposit a total fee of Rs. 20,000 for filing the appeal. However, the Appellant deposited only Rs. 10,000. Consequently, the appeal was considered incomplete and was rejected for non-compliance with the statutory precondition.

Order:

The appeal filed by M/s. Subway Systems India Private Limited (Now Eversub India Pvt. Ltd.) was not admitted and was disposed of on the grounds of non-compliance with the mandatory fee deposition requirement under the GST law.

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