TaxTMI 
TaxTMI 
2019 (8) TMI 1562
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.... date Status of hearing 1. 5-10-2018 27-11-2018 Not Attended 2. 5-12-2018 28-12-2018 Attended on 31-12-2018 3. 3-1-2019 11-2-2019 Not Attended 4. 11-2-2019 28-3-2019 Attended 5. 29-3-2019 30-4-2019 Not Attended 6. 3-6-2019 3-6-2019 Attended 7. 8-7-2019 30-7-2019 Attended 8. 30-7-2019 (final) 19-8-2019 Attended 2. Sri K.V. Subba Rao, Secretary & Correspondent and Authorized Representative of the firm (hereinafter referred to as 'A.R.') has appeared on earlier occasions and finally on 3-6-2019 for arguing the case. Finally, the appeal was heard by appellate authority. Statement of facts :- 3. The appellant M/s. Doctors Academy of Educational Society, Kanuru is an assessee on the rolls Assistant Commissioner (ST), Patamata Circle, No. II Division, Vijayawada. 4. The audit officer recorded in his assessment order that in pursuant to the inspection and resultant verification of the appellant records, the following lapses were observed; (1) The service provider had failed to obtain GSTIN on their own and had suppressed the outward ....
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....y submitted that the impugned order passed by the Ld. Adjudicating authority is bad in law, illegal and the same has been passed without proper appreciation of the provisions of the APGST Act, 2017 and various contentions raised by the appellant in reply to the show cause notice and the time of personal hearing. The detailed grounds are as under : 2. Denial of Rs. 20 lakhs Threshold limit: GST is applicable only after crossing Rs. 20,00,000/- turnover. It is humbly submitted that the appellant in reply to the show cause notice as well as during the personal hearing submitted that as per the provisions of sec. 22 of the APGST Act, 2017, Every supplier shall be liable to be registered under the Act if his aggregate turnover in a financial year exceeds Rs. 20 Lakhs. The appellant had no turnover in April, 2017 to June, 2017. Also they are not a registered person under an existing law. Hence, the GST Liability, if any should be computed only after excluding the threshold turnover of Rs. 20 Lakhs. Though Ld. Adjudicating Authority mentioned this contention in his Discussions and finding part of the impugned order, he failed to record any reasons or grounds as to w....
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....fied tax paid document. • It is mandatory to file all the applicable GST returns. • Tax is actually paid by the supplier. 3.3 It is to submit that in the instant case, the following conditions are satisfied : • The supplier of the service (Building owner) has paid the GST. • The appellant is in possession of tax invoice issued by the service provider. • The appellant has received the services and used for outward supplies • The appellant has paid the total invoice value including GST to the supplier. As far as the other two conditions of the appellant being registered with the department and filing the applicable GST returns is concerned, it can be seen that they have obtained a valid GST Registration with GSTIN 37AABAD9371M12Z8 with effect from 19-3-2018. It is to submit that when the department raised a demand for the period before registration, it would be grossly unjustified to disallow the corresponding input credit before registration on pure technical ground that the appellant had not obtained registration and had not file....
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....ncluding by trusts to students with tariff of less than Rs. 1,000/- per day are exempted from GST under Sl. No. 14 of GO No. 588, dated 12-12-2017 issued by the Government of Andhra Pradesh. Further, as per Government of India, Ministry of Finance Clarification Vide F. No. 354/03/2018, dated 8-1-2018, mess charges attract GST rate at 5%. 4.2 However, the Ld. Adjusting authority erroneously applied the provisions of composite supply under sec. 8 of the APGST Act and held that this is a case of bundled service as the services of coaching, accommodation and food in a residential coaching is inseparable. He held that since the dominant nature is determined by the service of commercial coaching, the entire bundle would be treated as educational service and principal supply is providing coaching to the students. 4.3 It is to submit that the above findings of the Ld. Adjusting Authority are totally erroneous. The principles of composite supply are not applicable to the facts of the case. It is to be noted that the concept of composite supply under GST is not new and it is identical to the concept of naturally bundled services prevailing in the erstwhile service....
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....itions are satisfied. removal of hostel service does not affect the coaching service and it would continue. Removal of mess service does not affect the coaching service as the students can have their food at any other place. All three services are available separately as the students have the option of going for only coaching and not availing the other facilities. The three services are not advertised as package. The appellant is not charging a single price for all three services assessed and the tax should be computed by applying GST Rate for each service. Accordingly, the Accommodation charges would be totally exempted, and the GST Rate Applicable would be 5% on the Mess Charges Collected. 5. Exemption of Accommodation charges under Renting of Residential travelling for use as residence : It is a fact the "service by way of renting of residential dwelling for use as residence" is exempted from GST under serial No. 12 of the GO No. 588, dated 12-12-2017. It is submitted that alternatively, even if the Accommodation charges in the case does not fall under exemption at Sl. No. 14 of GO No. 588, dated 12-12-2017 (i.e., hostel accommod....
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.... treated as a supply of such principal supply; and levy collection. The tax liability on a composite supply shall be determined in the following manner. A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principle supply. Principles supply would mean supply which forms the predominant element of the composite supply and other parts of the supply are only ancillary or supportive to that predominant part. Basic features of a composite supply are as follows : (a) it should be a supply made by a taxable to a recipient (b) such supply should comprise of two or more taxable supplies of goods or services or both or any combination thereof. (c) Such combination of two or more supplies of goods or services should be naturally bundled. (d) Such naturally bundled goods or services should be supplied in continuation with each other in the ordinary course of business (e) One of two naturally bundled supply should be a principle suppl....
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....r the taxable July, 2017 to February, 2018 and treated it as composite supply. Supply can also be composite supply even if separate price are charged. Therefore, the commercial residential education services rendered by M/s. Doctors Academy is liable to SGST as discussed in supra. Thus the combined reading of all three services clearly revealed that the services rendered by M/s. Doctors Academy is combination of two or more services which are naturally bundled, hence treated it as composite supply. 2. The appellant submits that the findings of the adjudicating authority are factually incorrect and not in appreciation of true facts. The appellant has undertaken coaching for NEET students and collected fees from them under separate heads. (i) Tuition fee (ii) Accommodation charges (iii) Mess charges All the three services are independent and not inter connected. The bills were also issued for each service separately and accounted in books of account accordingly. They are not split at the convenience of the appellant as alleged in the order. Furth....
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....submit herewith the PARAWISE REMARKS with reference to appeal filed by M/s. Doctors Academy, Kanuru, Vijayawada against the orders passed by the Deputy Commissioner (ST), INT., No. 2 Division, Vijayawada, as called for in the reference cited. M/s. Doctors Academy, Kanuru is engaged in providing Commercial coaching to the students for entrance tests like NEET, EAMCET, etc., and have not been registered with the department. On the basis of specific intelligence collected regarding evasion of GST by M/s. Doctor's Academy, the Joint Commissioner (ST), Vijayawada-2 division has given authorization to conduct inspection under Sec. 67(1) to the Deputy Commissioner (ST) vide Ref. No. A11/66/2017, dated 19-2-2018. Accordingly, the Deputy Commissioner (ST), No. 2 Division, Vijayawada has conducted inspection on dated 23-2-2018. During the inspection, it was found that M/s. Doctor's Academy, Kanuru have not been registered with the department and no GST has been paid for the tax period from 07/2017 to 02/2018. M/s. Doctor's Academy providing coaching services to the NEET entrance test to the students which is taxable service chargeable to GST @ 18% as per the provis....
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.... registered under this Act, if his aggregate turnover in a financial year exceeds twenty lakh rupees". It is submitted that as per Section 22 and 15 of GST Act, the GST liability should be computed including the threshold turnover of Rs. 20,00,000/- and no such provision in the Act as contended by the service provider. (2) Denial of Input Tax Credit : The dealer contended that they should be allowed ITC of the GST paid in respect of renting of immovable property as the said service is used for furtherance of business of the appellant in terms of Sec. 16 of the APGST Act, 2017. The contention of the service provider is not correct. They are entitled to get ITC only if they satisfy the below mentioned conditions as per Section 16 of SGST Act, 2017. (1) The assessee must be register as a taxable person under GST. (2) He is in Possession of Tax Invoice or any other Specified tax paid document. ....
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....site supply under Section 8(1) of APGST Act, 2017 and the same is reproduced hereunder : Tax liability on composite and mixed supplies : "Section 8 : The tax liability on a composite or mixed supply shall be determined in the following manner namely. (a) : A Composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and levy and collection." The tax liability on a composite supply shall be determined in the following manner. A composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. Principal supply would mean supply which forms the predominant element of the composite supply and other parts of the supply are only ancillary or supportive to that predominant part. Basic features of a composite supply are as follows : (a) It should be a supply made by a tax....
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.... services clearly revealed that the services rendered by M/s. Doctors Academy is a combination of two or more services which are naturally bundled, hence treated it as composite supply. Hence their contentions are not tenable. (4) Exemption of Accommodation charges under Renting of renting of residential dwelling for use as residence : The dealer contended that providing of such hostel or accommodation service is nothing but providing residence to the students. It is exempted under Sl. No. 12 of the Exemption Notification : The contention of the service provider that they are collecting accommodation charges and giving receipts separately, hence accommodation charges should be excluded from the taxable turnover and also accommodation service is exempted under Sl. 12 of the exemption Notification. The contention of the assessee is not correct as the service provider is dividing the charges in their books of accounts only for accounting purpose and convenience. T....
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....¢ The appellant is in possession of tax invoice issued by the service provider. • The appellant has received the services and used for outward supplies • The appellant has paid the total invoice value including GST to the supplier. 17. The appellant pleaded that since they have been levied with tax for the unregistered period likewise ITC shall also be allowed on the basis of GST paid by them to the building owner during the unregistered period also. 18. The appellant further argued against treating their supplies as composite supply, submitting that they are collecting Tuition fee, Hostel fee, and Mess charges separately from each student, hence attributing the supplies with composite nature is not bona fide. The appellant also proffered that the 3 different services were not bundled together, but separate from each other, hence cannot be considered as composite supply. 19. The appellant further put-forth the following conditions for becoming a composite supply; (1) There shall be a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. ....
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.... The services are independent and separate (c) The accommodation service is exempt (d) Mess service is taxable @ 5% (e) Rs. 20 Lakhs benefit for basic deduction to be given from coaching fee. (f) Input tax credit for GST paid on rent for building to be given. 25. The appellant has filed copies of receipts of charges from students and copy of account ledger in support of their contention/claim. Issue for Adjudication : (1) Whether the point of the objection of the appellant that their supply of coaching services shall not be termed as composite supply, is based on any logical basis and legitimate provision or not? (2) Whether the appellant contentions with reference to exemption up to threshold limit and allowing ITC on building rental charges are found to be having any sustainable aspects or not? Analysis : 26. Perused the grounds of appeal along with assessment order passed by the audit officer, and after thorough verification of records, the findings of the appell....
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....sport and insurance is a composite supply and supply of goods is a principal supply;" Section 2(90) of CGST/APGST Act, 2017 : " "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;" 30. It is further pertinent here to observe from one of the flyers issued by CBEC, wherein it has been outlined that Educational Institutes, which provide other services like dwelling units for Residence and Food are clearly falls under the category of bundled services, if the charges for Education, Boarding, are collected through a single invoice. The flyer guidelines suggested that such bundle of services will be treated as composite supply and shall be taxed as applicable for principal supply. That means, service that forms the predominant element of bundled service. In education/coaching areas the predominant service has been recognized as education itself, but not lodging/boarding service. 31. This authority also deeply examined the nature of services offered by the appellant, because each individual case needs to be ....
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....table activities as defined in para 2(r) of notification No. 12/2017-C.T. (Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-C.T. (Rate) refers]. Therefore, if the consideration charged by the applicant would only have been for lodging and food facility only, such supply would have been treated as a composite supply." 35. An inference can be drawn from the above, and squarely applicable to the present nature of dispute by which a strong conclusion can be arrived that the appellant combination of supplies shall nevertheless be treated as composite supply. 36. The appellant's effort to distinct their supply as other than composite supplies, is not based on any logical/dependable explanations, but seems only put-forth with an intention to minimize the tax liability. 37. The essential ingredients o....
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....ervices is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. • Other illustrative indicators, not determinative but indicative of bundling of services in ordinary course of business are - • There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. • The elements are normally advertised as a package. • The different elements are not available separately. • The different elements are integral to one overall supply - if one or more is removed, the nature of the supply would be affected. • No straight jacket formula can be laid down to determine whether a service is naturally bu....