TaxTMI 
TaxTMI 
2021 (8) TMI 387
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....ing refund 1 2 3 4 5 1 APPL/JPR/CGST/JP/ 84/IX/20/ ZY0805200179261, dated 20-5-2020 March, 2018 Refund rejected Rs. 4,98,41,700/- 2 APPL/JPR/CGST/JP/ 85/IX/20/ ZZ0805200179249, dated 20-5-2020 April, 2018 Refund rejected Rs. 1,54,52,949/- 3 APPL/JPR/CGST/JP/ 152/XII/20/ ZV0809200299165, dated 20-9-2020 July, 2018 Refund rejected Rs. 3,62,76,476/- 2. Brief facts of the case : 2.1 The appellant having GSTIN No. 08AAACB2100P1ZX is engaged in providing telecommunication services all across India with its offices in different States has filed refund claims under Section 54 of CGST Act, 2017 in respect of Tax paid inadvertently to the government exchequer. 2.2 On examination of refund claims filed by the appellant the adjudicating authority observed and has issued a show cause notices in Form GST-RFD-08, dated 28-4-2020, 28-4-2020 and 26-8-2020 respectively wherein following reasons have been mentioned. Further, directed to the appellant to furnish a reply to the notice within fifteen days from the date of service of the notice. "GST is not exempted on leasing and renting services with or without opera....
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.... 3. Further, the adjudicating authority vide impugned Orders-in-Original in Form RFD-06, dated 20-5-2020, 20-5-2020 and 20-9-2020 respectively has passed the orders-in-original and rejected the refund claims as inadmissible as Service is not exempted from GST for the period and amount mentioned at above in Para-1 in column No. (4) and (5) filed by the appellant. 4. Being aggrieved with the impugned orders dated 20-5-2020, 20-5-2020 and 20-9-2020, the appellant has filed these appeals on the following grounds which are summarized as under :- that the transaction is not a 'supply'; • that the Appellant submits that such transaction made by the Government is not a supply itself. The Appellant seeks to refer the relevant section wherein the term supply is defined. Section 7 of the CGST Act explains the scope of supply. In this regard, Section 7(1) provides that the expression "supply" includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or further....
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....h within any part of India : Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working • that Section 4 of Indian Telegraph Act is precisely clear while mentioning that the exclusive privilege of establishing, maintaining and working telegraphs is with the Central Government and it is just that the Government is sharing its privilege to private entities such as Appellant. • that by issuing telecom license, DoT, Ministry of Communication, Government of India, is parting with it exclusive privilege and regulates the telecommunication services in discharge of its statutory functions which cannot be said to be rendition of any service. There is no quid pro quo in this transaction and therefore subsequently there is no 'supply'. The license has no connection with any services being provided or to be provided by the DoT in return for consideration in the form of fees paid by the Appellant. • that the regulatory fees by the Government because of allocation of spectrum by DoT to th....
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....lic purposes and as taxes, cesses or duties levied are not consideration for any service, the levy of GST on regulatory fees chargeable by the DoT is arbitrary and contrary to the GST Acts. • that to summarize, the provisions of Section 2(17) clause (i) to the extent they treat all government activities as business and thereby creating charge of GST on activities of the government are manifestly arbitrary, unreasonable and in contravention of Articles 14, 19(1)(g), 246A and 265 of the Constitution of India. • that the Respondent contends that the refund is rejected as the service is not exempted from GST. It is submitted that an activity can be exempted from the levy of GST only if such a transaction falls under the meaning of supply under Section 9(1) of CGST Act. • that the appellant submits that for an activity to fall under Section 9(1) of CGST Act, all the following preconditions have to be satisfied simultaneously - (a) There must be a supply of goods or services (b) There must be a value/consideration for such supply (c) &....
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....sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below, falling under Chapter, Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table TABLE Sl. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 17 Heading 9973 (Leasing or rental services, with or without operator) Temporary or permanent transfer or (i) permitting the use or enjoyment of Intellectual Property (IP) right in respect of goods other than Information Technology software. 6 - Temporary or permanent transfer or (ii) permitting the use or e....
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....ntext otherwise requires, shall mean respectively as "Chapter, "Section" and "Heading" in the annexed scheme of classification of services (Annexure). (iii) ..... • that In addition to that, it is pertinent to note that the Annexure to the said rate notification provides an item code wise detailed list for classification of all services, which must mandatorily be referred and relied upon, in terms of Explanation (ii) to the rate notification, for all issues arising under such notification in relation to the appropriate classification of such services which is necessarily required for determining the applicable tariff on those services. • that the tariff list provided under the rate notification is divided into various categories depending on the nature of services. Also, the broad category are further divided into various sub-categories which deal with carious elements of such broad category. Therefore, for classifying a particular service, it has to be necessarily be determined whether the said service is classifiable under one of the broad category and then only, further sub-classification be resorted to and should not be considered ....
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.... the rate of tax on supply of goods. The Notification No. 11/2017 was amended by Notification No. 27/2018-C.T. (Rate), dated 31-12-2018 w.e.f. 1-1-2019 to introduce a residuary entry to specifically provide for rate of 9% for leasing or rental services with or without operator, not covered by other entries under 9973. • that with effect from 1-1-2019, this newly introduced residuary entry under Heading 9973 - 'leasing or rental services, with or without operator' would also apply in context of immoveable property/goods. The term lease or rent has not been defined anywhere in GST Act. We may refer to the Transfer of Property Act, 1882 to understand these terminology. The term "leasing" is defined in The Transfer of Property Act, 1882 to define that lease is a transfer of right of an immovable property to enjoy such property and whereas the term rent is also associated with leasing service and in turn is associated with immovable property only. • that in common parlance renting service never associated with intangible property and therefore the terms 'leasing' or 'rental' do not cover grant of license under Section 4 of the Telegraph Act. Licensing service i....
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....e Appellant with regards to the GST rate for such supply. The Appellant in its reply submission has categorically submitted that there is no GST rate was prescribed for this transaction. • that as mentioned above, the said notification prescribes the rate of GST on provision of services and is nowhere related to granting of exemption from GST. The finding given by the respondent treating the refund as inadmissible is null and void in law. However, the Learned Respondent have not paid heed to such submission of the Appellant and gave such a finding which does not hold legally correct and the very fundamental and elementary understanding of the law is violated. This makes the impugned order a non-speaking order wherein no explicit or valid reason or finding has been given to reject the refund claim. Further the appellant has cited various case laws in their defence are as under :- United Telecoms Ltd. v. CST, Bangalore-I as reported in 2020-TIOL-811-CESTAT-BANG = 2020 (43) G.S.T.L. 521 (Tri. - Bang.) State of Andhra Pradesh v. V. Prabhakara Reddy, (1987) 2 SCC 136 CCE v. WIMCO Ltd. - 2007 (217) E.L.T. 3 (S.C.) and Grasim Industries v. Union ....
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....tal, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business;" "7. Supply includes - (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;" The term 'licence' is specifically covered under both aforesaid sections of the CGST Act, 2017.' Hence, there is no ambiguity that it is a 'Supply'. As per Entry No. 62 of Notification No. 25/2012-S.T., dated 20-6-2012 (as amended) w.e.f. 1-4-2016 services, provided by Government by way of allowing a business entity to operate as a telecom service provider or use radiofrequency spectrum on payment of licence fee or spectrum user charges, as the case may be, was taxable. Further, with regard to taxability of "assignment of spectrum" CBIC has issued a Circular No. 192/02/2016-Service Tax, dated 13-4-2016 wherein at S. No. 9 of the table it was clarified that 'any periodic payment required to be made by the assignee, such as Spectrum User Charges, license....
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....service' then the appellant was free to approach the Authority for Advance Ruling (AAR) as per clause (e) of sub-section (2) of Section 97 of CGST Act, 2017, because question of law about determination of the liability to pay tax on any service may be sought for advance ruling to AAR as per GST law, but the same was not opted by the appellant. (b) In respect of issue at S. No. (b) I find that : With regard the contention of the appellant regarding License Fee (LF) and Spectrum User Charges (SUC) is a kind of regulatory fee and Government parting such fee by exercising sovereign functions, in this context, it is submitted that the appellant is mis-interpreted that fee of LF and SUC, which is a percentage share of revenue (AGR) is a fluctuating charges in the instant case. Therefore, the permission of granting of License by DoT and allotment of spectrum on the basis of SUC for business activities is directly nexed with their revenue, hence, it cannot be held that these charges are regulatory fee. Further, as per Section 4 of ....
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.... [Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working - (a) of wireless telegraphs on ships within Indian territorial waters [and on aircraft within or above [India], or Indian territorial waters], and (b) of telegraphs other than wireless telegraphs within any part of [India]. [Explanation. - The payments made for the grant of a licence under this sub-section shall include such sum attributable to the Universal Service Obligation as may be determined by the Central Government after considering the recommendation made in this behalf by the Telecom Regulatory Authority of India established under sub-section (1) of section 3 of the Telecom Regulatory Authority of India Act, 1997.] (2) The Central Government may, by notification in the Official Gazette, delegate to the telegraph authority all or ....
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....ver is higher. In case, the Licensee obtains spectrum for any service and service area in different bids, the total presumptive AGR shall be the sum of the presumptive AGRs calculated on the basis of the respective Bid amounts as prescribed in the respective NIA or conditions of spectrum allotment/LoI as the case may be. 18.2.3 The Licensor reserves the right to modify the above mentioned License fee as percentage of AGR any time during the currency of this agreement. 18.3 Spectrum Related Charges : In case the Licensee obtains spectrum, the licensee shall pay spectrum related charges, including payment for allotment and use of spectrum, as per provisions specified in the relevant NIA document of the auction of spectrum or conditions of spectrum allotment/LoI/directions/instructions of the Licensor/WPC Wing in this regard. The spectrum related charges shall be payable in addition to the License fee. 20. Schedule of payment of ANNUAL LICENSE FEE and other dues : 20.1 License Fee shall be payable in four quarterly installments during each financial year (FY) commencing 1st of April. 9. In view of the above, it i....
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.... to licensing services. Further, on examining the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 which has been issued on the recommendations of the GST Council to further amend the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, I find that the same has been issued consequent upon decisions of the 31st GST Council meeting held on 22-12-2018. In this connection, for proper understanding of the issue, I have gone through the Agenda for 31st GST Council Meeting proposals recommended by Fitment Committee and Minutes of the Meeting of the Council available in GST Council website. Sl. No '18' of Annexure-II of Agenda Item 6, which is relevant to the issue is produced below : S. No. Proposal Comments 18 To Clarify GST rate applicable on the right use Intellectual Property and similar products other than IPR Recommendation : It is proposed that to bring clarity, the residuary rate entry for Heading 9973 in Notification No. 11/2017-C.T. (R), dated 28-6-2017 may be split in two parts as follows. Existing Proposed Description of services Rate % Description of services Rate % ....
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....pplicant is appropriately covered under description Licensing services for the right to use other natural resources including telecommunication spectrum which is classifiable under SAC 997338 under Group 99733. On a conjoint reading of the Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018, Minutes/Agenda/Proposal/Discussion of the GST council, I am of the view that amendments have been carried out vide the aforesaid notification to clarify the legislative intent as well as to resolve the unintended interpretations. It is well settled law that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations. I am also inclined to rely on the decision of the Hon'ble Supreme C India in the case of W.P.I.L. Ltd. v. Commissioner of Central Excise, Meerut, U.P. [2005 (181) E.L.T. 359 (S.C.)] which is also applicable to the present case, where in a 31 Judges Bench of the Hon'ble Supreme Court while interpreting applicability of exemption notifications have observed in Para 15 as follows : "15. The Learned Counsel for the appellant is also right in relying upon a decision of this Court in Collect....