TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 610
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....te) dated 25th January 2018? 2. Whether Portescap India Pvt. Ltd. is required to pay tax under reverse charge mechanism on any other services in accordance with Notification No. 13/2017 dated 28th June, 2017 read with Notification No. 03/2018 - Central Tax (Rate) dated 25th January 2018? 3. If, answer to the above point is in the affirmative, then the tax under reverse charge mechanism is required to be paid under which tax head i.e., IGST or CGST and SGST? 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 any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions of the applicant are as follows:- 2.1 M/s. Portescap India Pvt. Ltd., the Applicant, a SEZ Unit, situated in Maharashtra, is engaged in the manufacture of customized motors in India and exports the said good....
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...., Union territory or local authority by way of renting of immovable property to a person registered under the Central Goods and Services Tax Act, 2017 (12 of 2017). Central Government, State Government, Union territory or local authority Any person registered under the Central Goods Tax Act, 2017. 2.10 From a perusal of the aforementioned notification and the relevant entry, it is appears that any registered person is liable to pay tax under reverse charge basis on procurement of services of renting of immovable property from Central Government, State Government, Union territory or local authority. 2.11 Applicant has reproduced Section 16 of the 1GST Act as under:- 16. (1) "zero rated supply" means any of the following supplies of goods or services or both, namely:- (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. 2.12 Applicant has also referred to FAQ's issued by the CBIC clarifying the below: "16. When a SEZ unit or SEZ developer procures any goods or services from an unregistered supplier, whether the SEZ unit or SEZ developer needs to pay IGST under reverse ch....
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....tives, appeared and requested for admission of the application. Jurisdictional Officer was also present. However the case was adjourned for submission of documents with respect to the subject Rent Agreement. Preliminary hearing was held again on 03.03.2020. Shri Jai Lokwani, Authorized Representative appeared, made oral and written submissions. Jurisdictional Officer was also present. 2.20 Based on the submissions made and hearings conducted, the application made by the applicant was rejected as being non-maintainable as per Section 95 of the CGST Act, 2017 because the applicant had raised questions as a recipient of services. 2.21 Against the Order No. GST/ARA/93/2019-20/B-31, Mumbai, dated 12.03.2020 passed by this authority, the applicant preferred an appeal with the Appellate Authority for Advance Ruling, Maharashtra State. The Appellate Authority for Advance Ruling, Maharashtra State, vide their Order has directed this authority to decide the application on merits, while setting aside the earlier order passed by this authority. As per the directions of the Appellate Authority for Advance Ruling, Maharashtra State, the applicant was issued a fresh hearing in the matter. 03. ....
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.... Act, 2017, makes it clear that, when recipient and supplier both are situated in SEZ, India, there is no question of import of services Hence, Notification No. 18/2017 is not applicable in this case. 3.7 Applicant submitted that "reverse charge" notification is a general notification and will have to yield to the specific provision made in Sec 16 of IGST Act." In this regard, again it is to be noted that Notification No. 13/2017 dated 28.06.2017 as amended or Notification No. 10/2017- IT. (Rate) dated 28.06.2017, as amended specifically define the conditions, detailing each and every service specifically and further putting on conditions on recipient and suppliers specifically. In fact, it specifically covers "Renting of Immovable property", hence the notification cannot be treated as a general notification. 3.8 Further, in respect of Zero Rated supplies, section 16(2) of the IGST Act, 2017, says that "credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply" which means even in Zero Rated supplies, tax may be paid by using ITC available. And further sub-section 16 (3) is only applicable to "registered person mak....
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....in its ambit." 3.14 In the instant case, SEZ developer is providing services to SEZ unit, which is covered under Reverse Charge Mechanism. Hence, the applicability of above notification cannot be determined in the absence of specific mention for Reverse Charge. Furthermore, the above notification is not included within any notification/circular/orders etc. issued by GST Council, and hence, it cannot over-ride CGST Act, 2017/IGST Act, 2017 or notification/circulars etc. issued the GST Council. Consequently, the liability of the applicant to pay under RCM remains intact as proved earlier. 3.15 Applicant has cited Andhra Pradesh and Telangana HC judgement in the case of GMR Aerospace Engineering Limited and another vs Union of India and others (2019(8) TMI 748) in support of the contention that the SEZ Act -Section 51 has overriding effect. 3.16 The said judgement is in relation to Service Tax (Finance Act, 1994) which cannot be followed as a precedence for CGST Act or IGST Act, especially since the new concepts in GST such as Inter-state supplies and clearly defining conditions for Reverse Charge has made it in full alignment with SEZ Act. We have established the liability of the ....
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....to the supplier alone. The applicant in the instant case is a recipient and thus, is not covered under the said section, thus there is no option for him to avail LUT. Hence the applicant is liable to pay under Reverse Charge Mechanism. 3.21 In view of the above, Applicant is required to discharge liability under RCM for procurement of renting of immovable property services from SEEPZ SEZ. Notification No. 13/2017 dated 28.06.2017, as amended notifies only specific category of services. Hence, applicability of the said notification cannot be decided in a general/blanket manner for all services. Hence, their second question which is quite general in nature and not specific and cannot be commented upon in absence of further information provided by the applicant. Finally, the applicants falls within the purview of "Inter-state Supply" leviable to IGST under provisions of Section 7(5) of the IGST Act. 3.22 Vide further letter dated 22.11.2021, the jurisdictional officer has stated as: "In this connection, it is to state that the department has already submitted reply on 01.02.2021. The submissions dt. 24.08.2021 made by M/s Portescap India Pvt. Ltd don't warrant any changes in previou....
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....or the supplies received from the SEEPZ SEZ and used for the authorized activities of the SEZ. Hence Applicant is not required to make cash payment under reverse charge but receive supplies on the basis of an LUT at its option. 4.4 Reference to the jurisdictional officer's submissions that brings out the relevant extract from Notifications when recipient and supplier both are situated in SEZ, there is no question of import of services in the present case as both are located within India and thereby Notification No. 18/2017- Integrated Tax (Rate) dated 05.07.2017 is not applicable. 4.5 As per Section 2 (a) of SEZ Act 2005; "Import" means- (i)..........................; or (ii) Receiving goods, or services by a Unit or Developer from another Unit or Developer of the same Special Economic Zone or a different Special Economic Zone; Hence, it is evident that receiving goods or services by a SEZ Unit from a SEZ Developer of same SEZ or different SEZ tantamounts to import of goods under the SEZ Act, 2005. In the instant case the SEEPZ SEZ is the Developer which is involved in the provision of service. Therefore, as per Notification No. 18/2017-I.T. (Rate) dated 05.07.2017, SEZ....
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....e the Applicant is not required to make cash payment under reverse charge but effect supplies on the basis of an LUT at his option." APPLICANT'S SUBMISSIONS DATED 24.08.2021 4.10 Applicant has submitted that Ministry of Finance vide F. No 334/335/2017-TRU dated December 18, 201 7 has issued letter in the context of reverse charge mechanism liability on procurement of service by International Financial Services Centre, SEZ which clarifies that - "a Unit in SEZ or SEZ developer can procure such services, where they are required to pay GST under reverse charge, without payment of integrated tax provided the actual recipient i.e., unit in SEZ or SEZ developer, furnishes a Letter of Undertaking in place". 4.11 Additionally, in the said letter, it has been clarified that - "The above provisions shall apply mutatis mutandis in respect of supply of services covered under Notification No. 13/2017-CT (Rate) to a unit". 4.12 The applicant filed an RTI application to find out details pertaining to the aforesaid letter dated 18.12.2017 and received response from the concerned RTI Authority, as under:- "The aforesaid RT1 Request is disposed off as on 22 July, 2021 and mentioned that - "The....
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....aken out the Central Excise registration certificate also. We find from the chart produced by the Ld. Counsel, the ingredients of the products in question are identical to the products which are manufactured by other assessee situated in different Commissionerates. The question of uniformity taxation is of prime importance. We find that the Hon'ble Supreme Court in the case of Damodar J. Malpani Vs. Collector of Central Excise as reported at [2002 (146) E.L.T 483 (S.C.)]", Therefore, we submit that the authorities should take into consideration the clarification issued by Ministry of Finance vide F. No 334/335/2017-TRU dated December 18, 2017. 05. HEARING 5.1 Online e-hearing in the case was held on 21.01.2021. On the final online e-hearing, the Authorized Representatives of the applicant, Shri Aniket Singh, Shri Nitin Khot, Shri Lokwani Jai and Advocate Shri Tirumalai Sanipathkunnaran were present. Jurisdictional officer Shri Bhanu Jain, Deputy Commissioner, Divn X, CGST & Central Tax, Mumbai East was also present. The Authorized Representatives made oral submissions and explained the facts of the case. The Jurisdictional officer stated that the hearing letter was received on 18....
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....re Rental Services from SEEPZ, SEZ Authority, Mumbai-400096 which is a Local authority having GST1N 27AAALS4995G. Applicant is a SEZ Unit while the SEEPZ SEZ Authority is a SEZ Developer. 6.5 As per Section 7(5) (b) of the IGST Act, 2017, Supply of goods or services or both, to or by a special Economic Zone developer or a Special Economic Zone unit shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Thus the subject transaction will be in the course of Inter-State trade or commerce and therefore the provisions of the IGST Act, 2017 will be applicable in the subject case. Therefore we look at some of the provisions of the IGST Act, 2017 in the following paras. 6.6 Since the query of the applicant concerns the reverse charge mechanism under GST Laws, we reproduce Section 5 (3) of the IGST Act, as under:- Reverse charge mechanism - Sec 5(3) of IGST Act "The Government may, on the recommendations of the Council, by notification, specify, categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this A....
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....Section 5 (3) of the IGST Act, has notified specified categories of goods and services where tax shall be paid by the recipient on reverse charge basis, Notification No. 10/2017- I.T. (Rate) dated 28.06.2017, as amended by Notification No. 3/2018-I.T. (Rate)-dated 25.01.2018 clearly states that in case of supply of services by any local authority, by way of renting of immovable property, to a person registered under the CGST Act, 2017 (12 of 2017), the person receiving the said service and registered under the CGST Act, 2017 read with clause (v) of section 20 of IGST Act, 2017, has to discharge GST on the transaction. 6.6.3 In the instant case, as submitted by the applicant, they are receiving renting of immovable property services from a local authority i.e. SEEPZ SEZ and the applicant is registered under the CGST Act, 2017. Hence the applicant must discharge service tax liability under reverse charge mechanism as per the provisions of the amended Notification No. 10/2017- I.T. (Rate) dated 28.06.2017. The RCM provisions provide that all provisions of the IGST Act shall apply as if the recipient person is liable to pay tax. The subject case satisfies all the conditions of Notific....
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....oned above; the term 'India' includes an exclusive economic zone. Therefore in the subject case both, the recipient and supplier of services are situated in India. Hence, Notification No. 18/2017 is not applicable in this case. We agree with the submissions of the jurisdictional officer on this issue. 6.9 Applicant submitted that "reverse charge" notification is a general notification and will have to yield to the specific provision made in Sec 16 of IGST Act." In this regard, it is to be noted that Notification No. 10/2017- I.T. (Rate) dated 28.06.2017, as amended specifically define the conditions, detailing each and every service specifically and further putting on conditions on recipient and suppliers specifically. In fact, the said notification specifically covers "Renting of Immovable property", hence the notification cannot be treated as a general notification. 6.10 Section 16 of IGST Act, 2017 specifies that: 16. (1) "zero rated supply" means any of the following supplies of goods or services or both, namely: (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2)....
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....and therefore will not be applicable in the subject case. 6.13 Alternatively, the Applicant has submitted that even if, for purpose of argument, it is assumed that "reverse charge" notifications are applicable, then the SEZ unit i.e the applicant, in terms of Section 16 of the IGST, could exercise the option to provide LUT as provided under Sec 16 (3) of the IGST Act because in terms of Sec 5(3) of the IGST the recipient of such goods or services is subject to all the provisions of the Act as if such recipient is the person liable for paying the tax in relation to the supply of such goods or services. 6.13.1 As per Section 5(3) of the IGST Act, the Government may specify, categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both." 6.13.2 As submitted by the jurisdictional officer, this section stipulates that all the provisions of this Act shall apply to such recipient as if he is the person liable for paying t....
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....al Financial Services Centre, SEZ for procurement of input services from a unit in Domestic Tariff Area which are chargeable to GST on reverse charge basis, GST is payable by the unit in IFSC SEZ receiving such services". 6.18 It is seen that in the referred case the issue is receipt of input services from a DTA while in the subject case the receipt of input service is from a SEZ Developer and therefore the issues in both cases cannot be considered as same. Further, the concerned RTI Authority has informed the applicant that, the said communication issued vide F. No. 334/335/2017-TRU dated December 18, 2017 is not a Circular perse. This communication not being a Circular and only a clarification on some particular matter of a particular person cannot be made applicable in the present case and the said communication cannot be treated as a binding clarification / judgement issued by board /competent authorities to be made applicable to all cases. 6.19 Further, the decision of the Hon'ble Delhi High Court in case of Interglobe Aviation Ltd Vs. Union of India and ANR wherein Hon'ble bench observed that if the facts are similar and there is a binding judgment in existence, it is bound....