TaxTMI 
TaxTMI 
2023 (8) TMI 1298
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. In terms of Section 104 of the Act, where the Authority finds that advance ruling pronounced by it under sub-section (4) of Section 98 or under sub-section (1) of Section 101 has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant as if such ruling had never been made. 5. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. 1.1 The applicant M/s State Industries Promotion Corporation of Tamilnadu Limited (hereinafter referred to as Applicant) is registered under the GST Act, 2017....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er evaluating the project proposal of the Allottee(s) and availability of land(s) shall approve the application submitted by the Allottee(s) and allot the earmarked area as laid down in the allotment order. c) The conditions/charges as available in the allotment order are as under: Sr.No Nature Description 1. Initial Plot Deposit The Allottee(s) shall be required to make payment of pre-determined interest free Initial Plot Deposit while making an application for Land Allotment. Further, if the Allottee(s) fails to complete the payment obligations indicated in the Allotment order, the initial plot deposit amount shall be forfeited, and land allotment will be cancelled. 2. Upfront lease payment The allottee(s) shall be required to make an upfront lease payment (inclusive of Plot Cost & Pre-determined interest free caution deposit) to obtain the earmarked area for a pre-determined lease payment (99 years in general). Caution Deposit will be refunded upon the implementation of the project by the allottee within stipulated time. 3. Penalty for delay in executing the lease deed The Allottee(s), if fails to execute the lease deed within stip....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ently, such supply of would be treated as supply of goods. ii. The Applicant refers to the Notification No. 2/2017- Central Tax (Rate) dt. 28.06.2017, which exempts supply of goods specified in the notification from CGST. Entry 99 of the notification grants exemption from CGST to water (except to water which has undergone specified treatment, or the water sold in sealed container). iii. The issue that needs to be examined is whether the exemption under the aforesaid entry is applicable in cases where raw water supplied by the Applicant via pipelines to the Allottee(s) (Tenants) from the infiltration wells/bore wells/open wells/storage reservoir without any process is covered under the said category. iv. A bare reading of the aforesaid entry would reveal that all types of water is exempt under GST other than two categories of water:- 1. aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized water and 2. water sold in sealed container v. The terms 'aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized', imply some amount of processing/treatment on the water. However, in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt shall divide the actual cost incurred based on the mutually agreed ratio and raise a demand to Allottee(s) in instalments. iii. Since only actual cost incurred is collected, there are no separate services which is rendered by SIPCOT on its own to become taxable supply. iv. Considering the above explanation, the Applicant is of the view that the cost collected is only a reimbursement of actual cost towards maintaining the industrial parks in a usable condition and hence shall not be liable to tax under GST laws. IV. Interest for delayed payment for the Lease premium:- i. The Applicant collects Upfront lease payment (inclusive of plot cost & predetermined interest free caution deposits) to obtain the earmarked area for a predetermined lease term (99 years in general). ii. They also collect differential lease premium as per prevailing policy from Allottee(s) upon transfer of remaining Leasehold rights/change in Management of Shareholding Pattern. iii. The Applicant is a person and, in the course, or in furtherance of its business, disposes of lands by leasing them out for a consideration as one-time premium. iv. The tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., any charges collected above shall be subject to tax only when the services supplied is taxable under CGST Act. Considering the same, the Applicant is of the view that the incidental charges (interest charges) above shall be exempted from GST. V. The Applicant has stated that during business, they are collecting interest for delayed payment for maintenance charges for usage of common facilities and Participatory Infrastructure Development Scheme (PIDP) scheme and that taxability of the same will depend on levy of GST on main supply. Referring to Section 15(2) clause (c) of the CGST Act, which states that any incidental expenses charged by the supplier to the recipient and any other amount charged for anything done during the supply until the time of delivery of the goods or supply of the services shall be included in the value of the supply, the Applicant has stated that any charges collected as stated above shall be subjected to tax only when the services supplied is taxable under CGST, Act. Considering this, the Applicant is seeking ruling on the taxability of the main supplies as stated in the above paras to contemplate on the taxability of the incidental interest char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....connection charges. Hence, it appears that such supply of raw water is exempted under GST as per SI.No. 99 of Notification No.02/2017-CT(Rate) dt. 28.06.2017 and incidental charges like interest and reconnection charges which will be included in the value of supply as defined under Section 15(2) of CGST Act, 2017 is also exempted. ii. With regard GST on cost collected by SIPCOT maintenance such as road, street lights, drainage, avenue plants from the allottees for which SIPCOT it has been opined that the said maintenance cost collected is taxable at 18% under Chapter Head 9987 as per SI.No.25 of Notification No. 11/2017-CT(Rate) dt. 28.06.2017 as amended. iii. With regard to taxability of infrastructure works, the Central Authorities have quoted Circular No. 61/2020 dt. 21.08.2020 issued by SIPCOT from which it is noticed that work undertaken by the Applicant i.e upgradation of roads, street lights, drains and others on request, appears to be construction service. Further, the definition of Works Contract has been restricted to any work undertaken for an Immovable Property as Works Contract and defined Works Contract has been defined in Section 2(119) of the CGST ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the fact that subject matter of the application viz., providing assistance to promote the objective of the State by identifying, developing, maintain Industrial areas in the State, thereby fulfills the requirement of Section 95(a) of the Act. 7. Each question raised in the application is discussed as under: I) Whether the Supply of raw water and its incidental charges are liable to be taxed under the prevailing GST Laws:- a) With regard to the above question, it is observed that the applicant, referring to Notification No. 02/2017-CT(Rate) dt. 28.06.2017, Entry at 99, has stated that the Notification grants exemption from CGST to water (except to water which has undergone specified treatment, or the water sold in sealed container) and that the issue that needs to be examined is whether the exemption under the aforesaid entry is applicable in cases where raw water supplied by the Applicant via pipelines to the Allottee (s) (Tenants) from the infiltration wells/bore wells/open wells/storage reservoir or from water supplies received from local body or water board, without any process is covered under the said category. The Applicant has also stated in additional in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....services in case of pure agent.- Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely, - (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient; (ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and (iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account. Explanation. - For the purposes of this rule, the expression "pure agent" means a person who - (a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both; (b) neither intends to hold nor holds any title to the goods or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parate services rendered by SIPCOT on its own to become taxable supply. Further, it is stated that the cost collected is only a reimbursement of actual cost and hence not liable to tax under GST laws. b) In this regard, the Applicant has not submitted any document in support of their stand to fit in the definition of Pure Agent so as to treat the activity as non-taxable in the context of Rule/definition of Pure Agent reproduced at para 9(11) (c), to prove that the cost collected is only a reimbursement of actual cost. Hence, it is very clear that the Applicant is not a Pure Agent who has entered into agreement with the allotee(s) to act as Pure agent to incur expenditure or costs in the course of supply of goods or services or both, it is immaterial whether the cost incurred is actual in nature or not. c) Hence, the provisions of sections 7(1) (a) of CGST Act, 2017 read with clause (b) of section 2(17) of CGST Act, 2017 indicates that the activities of the appellant would fall under the definition of supply hence chargeable to GST. d) It is observed that the activity of rendering infrastructure works as described above, whether on request from the allotte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Revenue. b) With respect of SI.No 2 & 3, as per Section 15 (2) (d) of CGST Act, the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply. In as much as the principal supply i.e maintenance service and PIDP are taxable, interest and penalty collected towards rendering such services will also form part of the value of supply and liable to be tax appropriately in consonance with the principal supply. VI) Whether the Penalty for delay in execution of the project and delay in execution of lease deed are liable to be taxed under the prevailing GST Laws. (a) The Applicant has stated that they are collecting upfront lease payment (Inclusive plot cost & pre-determined interest free caution deposit) to allot earmarked area for a pre-determined lease payment (99 years in general). Caution deposit is refunded upon implementation of the project by the allottee within stipulated time. And that they are levying penalty for the delayed execution of contractual obligation to ensure effective implementation of project. (b) Since the main supply i.e the upfront fee collected is exempted as per entry no. ....