TaxTMI 
TaxTMI 
2019 (8) TMI 1562
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.... 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 supplies. (2) They have failed to issue proper invoice under Sec. 31 of GST Act. (3) &nb....
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....ous 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 why this benefit is denied to the appellants. He proceeded to confirm the demand on the gross amount received without excluding the turnover of Rs. 20 Lakhs and without assigning any reasons for such disallowance of exclu....
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....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 filed returns under sec. 39. 3.4 The appellant did not obtain registration as they were under the bona fide impression that they are providing educational services, which are exempted in terms of notification No. 12/2017-CGST (Rate). It is to submit that the concept of input tax credit is not new in GST regime and it was borrowed from the erstwhile central excise and service tax regime. 3.5....
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....aching, 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 tax regime. 4.4 The concept of naturally bundled services was explained in the education guide issued by the Central Board of Excise & customs (Now known as Central Board of Indirect Taxes). The relevant extract of the education guide is reported as under for ease of reference : '9.2.4 Manner of determining if the services are bundled in the ordinary course of business Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services r....
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....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 accommodation provided, including by trusts to students with tariff of less than Rs. 1,000/- per day) the same are exempted under serial No. 12 of the Exemption Notification. Hostel is used as residential dwelling of students and it is rented to the students only for residential purpose. Since, 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. 6. Thus, after assessing the turnover as above, as against the demand of Rs. 9,49,851/- computed at the rate of 9% on gross value of Rs. 1,05,53,900/- for the period from July, 2017 to February, 2018 m....
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....s 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 supply. (f) Composite supply shall be treated as the supply of principal supply and the applicable tax rate on the entire transaction would be the tax rate applicable on principal supply. All the basic condition squarely applicable in the present case. The services provider provides residential coaching to the students exclusively appearing for NEET examinations with the facilities of accommodation and food. The assessee is providing services of coaching coupled with other services like providing accommodation and food. This is a case of bundled service as the services of coaching, accommodation and food in a residential coaching is inseparable. such services in the residential colleges are bundled in the ordinary course of busines....
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.... (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. Further the service recipients i.e. students have option for choosing the service. They were not charged for all the services if they have taken coaching, as alleged by the authority charges/fees were collected from students only to the service availed by them. There is no composite or bundled services provided it can be seen from the records, bills and students account that these following services provided to different to different groups of students during the year. Service provided to students No. of Students Total Fee Tuition Fee Mess Charges Accommo-dation charges Residential 121 58,69,200 2,46,800 36,20,000 20,02,400 Semi-Residential 30 6,73,000 0 6,73,000 0 Short-term 17 5,06,300 8,000 3,04,000 1,94,300 A.C Accommodation 26 20,83,100 3,59,100 8,64,000 ....
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.... students which is taxable service chargeable to GST @ 18% as per the provisions of GST Act. The service provider has furnished the computer generated statements of details of various amounts received from the students from the period from July, 2017 to Feb., 2018 for rendering Commercial Coaching to the students indicating that no GST was paid on the fee amounting to Rs. 1,05,53,900/-. The turnover of the institute exceeded the exemption limit of Rs. 20,00,000/- during the period from 07/2017 to 02/2018, therefore they are liable to pay GST on the services rendered by them as per the provisions of the GST Act. Pursuant to the inspection and on the direction of the Deputy Commissioner (ST) INT, Vijayawada-2 division, the Assistant Commissioner, Patamata Circle has issued suo motu registration under both CGST and SGST Act with TMT No. 371800001142. Subsequently, the service provider has obtained registration under GST with GSTIN : 37AABAD9371M1Z8 with effect from 19-3-2018. M/s. Doctor's Academy deliberately suppressed taxable outward services with an intention to evade the payment of SGST. Therefore, they were assessed as the Institution engaged in the supply of educational....
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....cable GST Returns. (4) Tax is actually paid by the supplier. The assessee is not a registered taxable person under GST prior to the conduction of inspection by the undersigned. The service provider has obtained registration under GST with GSTIN : 37AABAD9371M1Z8 with effect from 19-3-2018. This Section clearly says a registered person is only entitled to take credit of Input Tax charged on any supply of goods or services or both to him which are used are intended to be used in the course or furtherance of his business. The assessee was not a registered person during the period of inspection i.e., from July, 2017 to Feb., 2018. Further the service provider has not furnished any original tax invoices issued by the building owner. Accordingly the undersigned has rejected the ITC claim made by the assesssee. (3) Submission in respect of treating the supplies as composite supply : The dealer contended that the adjudicating authority erroneously applied the provisions ....
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....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 principal supply. (f) Composite supply shall be treated as the supply of principal supply and the applicable tax rate on the entire transaction would be the tax rate applicable on principal supply. All the basic conditions squarely applicable in the present case. The service provider provides residential coaching to the students exclusively appearing for NEET examinations with the facilities of accommodation and food. The assessee is providing services of coaching coupled with other services like providing accommodation and food. This is a case of bundled service as the services of coaching, accommodation and food in a residential coaching is inseparable. Such services in the residential colleges are bundled in the ordinary course of b....
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....tax periods July, 2017 to February, 2018 and treated it as composite supply. Supply can also be composite supply even if separate prices are charged. Thus the combined reading of all three 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 contention of accommodation charges should be treated as residential service is not correct and tenable. (5) Since, the objections raised by the service provider is found untenable regarding Commercial Educational Services, hence, the appeal is liable to be dismissed. It is submitted that all the contentions of the dealers are not tenable and sustainable. This is submitted for favour of kind information and orders." Discussion : 13. Perused the grounds of appeal filed by the appellant alongside the impugned order passed by the audit officer i.e. Deputy Commissioner (ST) LTU, No. II Division, Vijayawada. 14. The appellant primarily submitted that they ha....
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....teria was present in their case. The appellant also put-forth that all 3 services were available separately, and students can choose whatever service they prefer and have option to leave other services. On the basis of above procedure, the appellant advanced that their services and supply turnover are to be assessed at different applicable rates of tax. 21. The appellant also advanced an alternative contention that accommodation charges so charged are on account of student residential facilities and as per Government Instructions vide Sl. No. 12 of G.O. No. 588, dated 12-12-2017, residential dwelling charges are exempted from GST. 22. Arguing against composite supply attribution, the appellant has put-forth that they have collected charges under different heads namely Tuition fee, Accommodation charges, and Mess charges, mentioning distinctively in invoices as well as in books of accounts. The appellant submitted bifurcated details in the following statement of such receipts; Service provided to students No. of Students Total Fee Tuition Fee Mess Charges Accommodation charges Residential 121 58,69,200 2,46,800 36,20,000 20,02,400 Semi-Residential 30 6,73,....
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.... to be dependable and sustainable at the outset. 28. The appellant is definitely at fault for not obtaining registration under CGST/APGST Act, 2017, though he was aware of liability of tax on commercial coaching service. The appellant has been brought to tax net only post inspection after which he has been issued with suo motu registration. The appellant ought to have registered himself at least after crossing threshold limit, but failed to do so, which supports the AO's finding that the appellant has been wilfully attempted for tax evasion. 29. The core & fundamental friction between the appellant & Department revolves around treating the appellant supplies as composite supply. In this connection, it is relevant here to comprehend the following provisions thoroughly. Hence, those are abstracted here for better understanding; Section 8 of CGST/APGST Act, 2017 : "The tax liability on a composite or a 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 (b) &nb....
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.... combined supplies, is nonetheless commercial coaching of NEET education, which is undoubtedly taxable and admitted by the appellant also. The other services of lodging and boarding are only incidental whether chosen by the student or not? That means, though students does not choose auxiliary services but the principal supply must be the criteria while charging the students. 33. No student can choose only lodging or boarding without coaching. Here the appellant contentions fails prima facie, because the narration of the appellant that student can choose any one of the three (3) services is clearly found to be on wrong note. The appellant argument that since some students have opted for only coaching service but not received boarding/lodging as day scholars has no relevance to the present dispute, because such students will only pay for principal supply, resultantly such receipts are to be taxable invariably as applicable to principal supply values only even if treated as composite supply. 34. It is further relevant here to observe the guidelines in another flyer issued by CBEC, which reads as below; "A hotel provides a 4-D/3-N package with the facility of breakfast. T....
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....who has discretely observed that the appellant's transactions clearly liable to be treated as composite supply on analyzing the basic records/documents during the course of inspection. The A.O. also opined that the appellant is resorting to separate the receipts in books of accounts to distract the composite nature of receipts, which could not be countered by the appellant through his explanations. 39. Further, if we decipher scrupulously the following guidelines of CBEC regarding bundle of services and composite supply, it is nonetheless apparent that the appellant supplies certainly fall into composite supply category; Manner of determining if the services are bundled in the ordinary course of business Whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below - * The perception of the consumer or the service receiver. If large number of service receivers of such bundle of services reasonably except such services to be provided ....
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....ince they have failed to get registered themselves on their own after crossing threshold limit, even though the supply is clearly known to be taxable. 42. It is also noteworthy here to observe that the appellant has not submitted the details of initial 20 lakhs turnover, as to how and when they have scored the 20 Lakhs turnover. Since, the appellant's transactions are service to the group customers of commercial coaching, as per time of supply rules, there is every possibility that the appellant might have scored 20 lakhs turnover on the 1st day itself, Therefore, the liable date for registration would become 1st day of supply, hence, the appellant automatically will be liable to pay tax from 1st day itself. Thus, 20 lakhs threshold limit does not arise. As such, non-consideration of exemption of 20 lakhs initial turnover by AO need not be interfered. 43. Regarding the appellant claim of ITC, the AO has recorded certain specific remarks, which on a fundamental reading are found to be logical and legitimate. The AO has asserted that; (a) The appellant must have been a registered taxable person, (b) he must be in possession of tax invoice, and (c) such dealer ought to hav....