TaxTMI 
TaxTMI 
2019 (3) TMI 592
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat place of supply, where the leased circuit is installed in more than one State and the value for service cannot be determined in absence of a contract, shall be on such other basis as prescribed i.e. the same would be the location of recipient of service. b) In a case where the location of the service provider on pan India basis is Delhi and that of the recipient is Mumbai whether in the facts and circumstances, it would be Integrated tax that would be chargeable since no rules have been prescribed pursuant to Sec as aforesaid and therefore whether it would be in order for the recipient to take credit of such Intergraded tax since the said services are used in the course or furtherance of business namely provision of last mile connectivity services to the recipient of services. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also means a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vided by the Applicant is as follows: 3.1 Registration requirement: 3.1.1 The Applicant would like to submit that in terms of Section 22 of the CGST Act, a supplier is liable to be registered in the State from where he makes a taxable supply. In other words, the supplier is required to register in all the States which qualify as the location of the supplier. 3.1.2 It is thus, essential to make a reference to the definition of location of supplier' in terms of the CGST Act. 3.2 Location of supplier of services: 3.2.1 Section 2(71) of CGST Act, Location of supplier of services means: (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and (d) in absence of such places, the loca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the location where the telecommunication line, leased circuit or cable connection or dish antenna is installed for receipt of services; (b) in case of mobile connection for telecommunication and internet services provided on post-paid basis, be the location of billing address of the recipient of services on the record of the supplier of services; (c) in cases where mobile connection for telecommunication, internet service and direct to home television services are provided on pre-payment basis through a voucher or any other means,-- (i) through a selling agent or a re-seller or a distributor of subscriber identity module card or re-charge voucher, be the address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or (ii) by any person to the final subscriber, be the location where such prepayment is received or such vouchers are sold; (d) in other cases, be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services: Provided that where the address of the recipient as per the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....per the records of the supplier. In case address of recipient is of a State other than location of supplier, it would be considered as inter-state supply, if it is in the same State then it will be considered as intra-state supply. Scenario 1: Applicant's location is Mumbai (Maharashtra), address on records of recipient is say Pune (Maharashtra), Central Tax and State Tax of Maharashtra shall be charged on such supply. Scenario 2: Applicant's location is Mumbai (Maharashtra), address on records of recipient is say Delhi (Delhi), Integrated Tax on such supply shall be charged. 3.3.5 Having made the submissions relating to the place of supply for the outward supplies, it shall also be relevant at this stage to discuss the place of supply provisions for inward supplies. This is in light of the fact that ITC can be availed only in respect of the Central Tax and State Tax charged to the Applicant, where the place of supply is in the State where the Applicant is registered. With regard to the input services and the corresponding input tax credits which are the subject matter of the application, the Applicant states as follows: 3.3.5.1 Leased circuits are one of the ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....view, the residual clause can be referred to determine the place of supply in cases where vendor have leased circuit installed in multiple states and there is no provision in the Agreement or Contract to determine the value of service attributable to each state, the place of supply as per residual clause (Section 12 (2)) shall be the location of registered person. (Scenario 3) 3.4. Input tax credit 3.4.1 The Applicant has leased multiple Pops across different states in India. Applicant has obtained registration of the premises in accordance with the provisions of Section 22 of CGST Act. It raises invoices to the customer from the State where it has been incorporated i.e. Mumbai (Maharashtra) which would be considered as location of supplier as discussed in above Para. Further on the basis of the address on records of the recipient (customer) which is the place of supply as determined above, the Applicant charges Central Tax and State Tax or Integrated Tax. 3.4.2 The leased circuits to provide the last mile connectivity service are not owned by the Applicant. Applicant provides connectivity service through the bandwidth it has taken on the leased line operated by other inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... especially Routers, Switches & Security appliances. Additional submission of applicant on 24.12.2018 Submission on maintainability of Advance ruling application: - 1. As per Section 97(2) of Central Goods and Services Tax Act, 2017, following are the question on which advance ruling can be sought: a) classification of any goods or services or both; b) applicability of a notification issued under the provisions of this Act; c) determination of time and value of supply of goods or services or both; d) admissibility of input tax credit of tax paid or deemed to have been paid; e) determination of the liability to pay tax on any goods or services or both; f) whether applicant is required to be registered; g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 2. In the present case, Applicant wishes to seek an advance ruling for determination of liability to pay tax on receipt of services. Subsequently, Applicant also wish to seek an advance ruling in relation to admissibility of input tax credit of tax paid or de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut cannot set at naught legislative judgment because such course would be subversive of constitutional harmony" 5. Further, in case of B. Premanand v. Mohan Koikal (2011) 4 SCC 266 = 2011 (3) TMI 1590 - SUPREME COURT the Supreme Court observed that while interpreting a statute the basic principle of literal rule of interpretation has to be followed. The relevant extract of the decision is as follows: "9. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB vs. Securities and Exchange Board, India, AIR 2004 SC 4219 = 2004 (8) TMI 389 - SUPREME COURT OF INDIA." 6. In Commissioner of Income Tax Kerala v. Tara Agencies 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion for advance ruling can only made by certain specified applicants as defined under Section 96A(b) of the Finance Act, 1994. Further, the application for advance ruling can be made in relation to following questions: (a) classification of any service as a taxable service under Chapter V; (b) the valuation of taxable services for charging service tax; (c) the principles to be adopted for the purposes of determination of value of the taxable service under the provisions of Chapter V; (d) applicability of notifications issued under Chapter V; (e) admissibility of credit of duty or tax in terms of the rules made in this regard; (f) determination of the liability to pay service tax on a taxable service under the provisions of Chapter V. 11. The questions on which advance ruling can be sought under earlier regime is similar to the provisions under GST law except the purpose for which advance ruling can be sought and the definition of applicant, as defined under Finance Act, 1994. In service tax regime, the advance ruling can be sought by specified applicants who proposes to undertake any business activity in India; however, under GST regime advance ruling can be s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o' model the supplier can charge IGST from the recipient (bill to party) against which the recipient is eligible to claim Input tax credit. 14. In view of the above rulings pronounced by advance ruling authorities, Applicant wish to submit that an applicant being the recipient of goods or services can seek an advance ruling under question (e) of Section 97(2) of CGST Act, 2017 i.e. determination of liability to pay tax on goods or services or both. 15. Therefore, Applicant humbly request the honorable authority of advance ruling to accept our application in light of the above submissions. Questions for which Advance ruling is sought in the present application: 1. Applicant wishes to seek advance ruling in terms of Section 97(2)(e) of Central Goods and Services Tax Act 2017, "Whether the supplier is to charge Integrated Tax on supply of leased circuit facility to the Applicant, where the leased circuit is installed in more than one State or Union territory and the contract or agreement doesn't specifically provide the proportion of service provided in each state?" 2. Applicant also wishes to seek advance ruling in terms of Section 97(2)(d) of CGST Act 2017, "I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce being devoid of legal provision. Hence proposition (b) not maintainable before AAR Alternative Submission is as follows In respect of question A the levy and collection is governed by section 5 of IGST Act. The section 12 provides for place of supply of services were location of supplier and recipient is in India Section 12 of IGST Act, 12. Place of supply of services where location of supplier and recipient is in India. (1) The provisions of this section shall apply to determine the place of supplier of services where the location of supplier of services and the location of the recipient of services is in India. (2) The place of supply of services, except the services specified in sub-sections (3) to (14),- 1. made to a registered person shall be the location of such person; 2. made to any person other than a registered person shall be, - (i) the location of the recipient where the address on record exists; and (ii) the location of the supplier of services in other cases. (3) The place of supply of services, 1. directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l, artistic, sporting, scientific, educational or entertainment event including supply of services in relation to a conference, fair, exhibition, celebration or similar events; or 2. services ancillary to organisation of any of the events or services referred to in clause (a), or assigning of sponsorship to such events, (i) to a registered person, shall be the location of such person; (ii) to a person other than a registered person, shall be the place where the event is actually held and if the event is held outside India, the place of supply shall be the location of the recipient: Explanation. Where the event is held in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services Shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. (8) The place of supply of services by way of transportation of goods, including by m....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., be the address of the recipient as per the records of the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services: Provided that where the address of the recipient as per the records of the supplier of services is not available, the place of supply shall be location of the supplier of services: Provided further that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on the record of the supplier of services shall be the place of supply of such services. Explanation.- Where the leased circuit is installed in more than one State or Union territory and a consolidated amount is charged for supply of services relating to such circuit, the place of supply of such services shall be taken as being in each of the respective States or Union territories in proportion to the value for services separately collected or determined in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basis as may be prescribed. (12) The place ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services: Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs; 2. Services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services. (4) The place of supply of services supplied directly in relation to an immovable property, including services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including that of architects or interior decorators, shall be the place where the immovable property is located or in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... such other non-banking institution or class of such institutions, as the Reserve Bank of Inola hay with the previous approval of the Central Government and by notification in the Official Gazettte, specify (9) The place of supply of services of transportation of goods, other than by way of mail or to be the place of destination of such goods, (10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey (11) The place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey. (12) The place of supply of online information and database access or retrieval services shall location of the recipient of services. Explanation.- For the purposes of this sub-section, person receiving such services shall be deemed be located in the taxable territory, if any two of the following non contradictory conditions are satisfied, namely: 1. the location of address present....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g of enactment. 2. In case of leased circuit is installed in more than one State and the value for service cannot be determined in absence of a contract the reliance can be made on following judgment. The interpretation of taxing statue is to be made harmoniously so as to make statue workable. The reliance can be made on following judgment. Machinery provisions:- Provisions for charge of interest on delayed payment have been added for tightening up the machinery for collection of tax and that as a deterrent measure so that the dealers may not evade or delay the payment of due tax. These are necessarily machinery provisions. Therefore, if more than one construction of such a provision is possible then that construction which preserves its workability and efficacy is to be preferred to one which would render it otiose or sterile 65.(State of T .N, V, M.K. Kandaswami, (1975) 36 STC 191 (SC) = 1975 (7) TMI 123 - SUPREME COURT OF INDIA followed in Kingsway & co. v. C.T.O., (1990) 76 STC 119 (WBTT) = 1989 (7) TMI 326 - WEST BENGAL TAXATION TRIBUNAL. 3: Section 5 of IGST Act which is charging section needs to be construed strictly - taxing statute indisputably is t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd made oral submissions for admission of their ARA application. They were informed that their question would have to be reframed to enable their application to be admitted which they agreed to. They have requested for 15 days time to reframe their questions. Jurisdictional Officer Sh. Rajesh Jadhav, Dy. Commissioner of S.T.(E-638), L. T.U., Unit-4, Mumbai appeared and made written submissions and also raised no objection for giving the applicant time to reframe their questions. The applicant has submitted reframed questions on 27.122018. Preliminary hearing for admission or rejection as requested by the applicant earlier as above is again held on 22.01.2019 wherein Sh. Harish Bindumadhavan, Advocate along with Sh. Sagar Shah, Manager, and Sh. Aakash Sarda , C.A. appeared and made oral & written submissions. Jurisdictional Officer Sh. Rajesh Jadhav, Dy. Commissioner Of. S.T. (E-638), L.T.U., Unit-4, Mumbai appeared and submitted written submissions and made objection that applicant being recipient is not competent to apply for ruling & hence ARA is not maintainable. We were heard from both the parties on the said issue. 05. OBSERVATIONS We have gone through the facts of the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "If the answer to the above question is affirmative, can the Applicant avail Input Tax Credit of the tax charged by the supplier of leased circuit facility?" We find from the statement of facts pertaining to first question "Whether the supplier is to charge Integrated Tax on supply of leased circuit facility to the Applicant, where the leased circuit is installed in more than one State or Union territory and the contract or agreement dosen't specifically provide the proportion of service provided in each state?" From the perusal of transaction as discussed above in details in their contention, it is clear that applicant is not supplier of services . He is recipient of services from their supplier who leased circuit facility to the applicant and as such by virtue of section 95 is not an applicant who an obtain advance ruling unless the recipient is paying the taxes under reverse charge mechanism on the transaction of receipt of supply. In the present case applicant is recipient of services and he has not a paying the taxes under reverse charge mechanism on the impugned transaction in GST ACT. Hence, we find that the applicant has not satisfied the conditions of section 95....