TaxTMI 
TaxTMI 
2024 (10) TMI 770
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....ed by M/s. DECCAN CEMENTS LIMITED, 6-3-666/B, Deccan Chambers, 4th Floor, Somajiguda, Telangana-500082, Hyderabad (hereinafter "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a) given as under: (b) applicability of a notification issued under the provisions of the Act (c)determination of time and value of supply of goods or services or both (d) Admissibility of input tax credit of tax paid or deemed to have been paid (e) determination of the liability to pay tax on any goods or services or both (f) whether applicant is required to be registered under the Act A. SUBMISSION OF THE APPLICANT (in brief):- 1. The applicant is a Limited Company incorporated in India under the Companies Act, 1956 and is in the business of manufacturing and selling cement in south India having Corporate Registered Office at 6-3-666/8, Deccan Chambers, Somajiguda, Hyderabad. The applicant is having its manufacturing plant in the State of Telangana. 2. To expand its business activities in manufacturing and trading in cement throughout India, the applicant intended to start manufacturing unit in the St....
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....e same value issued in accordance with this Clause 10.2, which is for the revised amount or if the Performance Security has been provided through a security deposit, additional amount towards security deposit shall be provided; (d) satisfying the conditions specified in clause (b) of sub-section (2) of section 5 of the Act with respect to a mining plan; and (e) [satisfying such other conditions as may be specified by the State Government with the prior approval of the Central Government.] 10.3 Execution of Mine Development and Production Agreement: The State Government and the Successful Bidder shall enter into the MDPA upon the Successful Bidder having obtained all consents, approvals, permits, no-objections and the like as may be required under applicable law for commencement of mining operations. 10.4 Grant of mining lease: Subsequent to execution of the MDPA, the Successful Bidder shall pay the third installment of the Upfront Payment which is INR 27,67,70,952.00 (Indian Rupees Twenty-Seven Crore Sixty-Seven Lakh Seventy Thousand Nine Hundred Fifty-Two Only). Upon such payment the State Government shall grant a mining lease ....
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....D UNDERSTANDING OF APPLICANT ON QUESTION RAISED (IN BRIEF) At the outset it is made clear that a reference to the provisions of the CGST Act, 2017 (for brevity, Act) and the Notification issued there under would mean reference to similar provisions under the RGST Act, 2017 and the Notification issued there under, wherever applicable, unless specified otherwise. 1. According to Section 9 (1) of the CGST Act, 2017 tax shall be levied on all intra State supplies of goods or services or both on the value determined under Section 15 and at such rates as may be notified by the Government and collected in such manner as prescribed. According Section 9 (3) of the CGST Act, 2017, the Government may, on recommendation of the Council, by notification, specify categories of supply of goods or services or both on which the tax shall be paid on reverse charge basis by the recipient. 2. It is submitted that subheading 997337 of SAC covers, Licensing services for the right to use minerals including its exploration and evaluation, covered under no. 17 in Notification No. 11/2017-Central Tax (rate) dated 28.06.2017 modified from time to time and attracts the same rate as applica....
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.... (b) The date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier. 6. It is submitted that the time of supply provisions relating to supply of services in Section 13 of the CGST Act, 2017 is not applicable to the upfront payment made by the applicant as per the terms and conditions of the Tender Document as these payments are made to entering in to mining lease agreement with the Government. The question of payment of royalty to Government arises only after entering in to the mining lease agreement and hence the upfront amount cannot be considered as advance toward payment of royalty as by the time of payment, there is no supply agreement between the supplier and recipient of services. Any payment made subsequent to entering in to mining lease agreement but before providing the supply of services can be considered as advance payment for supply of services and for these payments only the provisions relating to time of supply under Section 13 of the CGST Act is applicable. Hence applicant is of the view that the upfront amounts paid prior to entering in to mining lease agreements ....
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....s, supporting documents filed by the applicant along with the application, oral and written submissions made at the time of hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 2) The Applicant is a Limited Company incorporated in India under the Companies Act, 1956 and involved in activities of manufacturing and selling of cement in south India having Corporate Registered Office at 6-3-666/B, Deccan Chambers, Somajiguda, Hyderabad. The applicant is having its manufacturing plant in the State of Telangana. 3) To expand its business activities in manufacturing and trading in cement throughout India, the applicant intended to start manufacturing unit in the State of Rajasthan. For this purpose, the applicant participated in Tender process for E Auction of Mining lease for Lime Stone Block at Tata Mandha - 1A (RM-1A), Tehsil Shri Mohangarh District, Jaisalmer in the State of Rajasthan invited by Department of Mines & Petroleum, Government of Rajasthan, Directorate of Mines & Geology, Udaipur. 4) Following the screening process, the applicant is selected as a Preferred Bidder in that process. The Governme....
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....yment or other valuable consideration. Same rate of central tax as on supply of like goods involving transfer of title in goods - (iv) Any transfer of right in goods or of undivided share in goods without the transfer of title thereof. Same rate of central tax as on supply of like goods involving transfer of title in goods - [*** *** *** [(vi) Leasing of motor vehicles purchased and leased prior to 1^st July 2017; 65 per cent. of the rate of state tax as applicable on supply of like goods involving transfer of title in goods. Note:- Nothing contained in this entry shall apply on or after 1st July, 2020, [*** *** *** [[(viia) Leasing or renting of goods Same rate of State tax as applicable on supply of like goods involving transfer of title in goods [{(viii) Leasing or rental services. without operator, other than (ii), (iii), (iv), (vi), and viia) above. 9 -] Section 9 (3) of CGST Act, 2017 provides that 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 ....
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.... as Successful Bidder cannot be considered as Advance payments for supply of services and GST is not liable to be paid at the time of making payment by considering the same as Advance payments for supply of services. In order to reach at the right conclusion, let us examine certain definitions which are relevant in the matter. Section 2 (31) of CGST Act, 2017 stipulates that "consideration" in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be con....
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....forfeited in case of violations of terms and conditions as mentioned in tender document. As per point 13.1 of Tender Document, the upfront payment paid by the Successful Bidder shall be adjusted in full at the earliest against the amount to be paid under sub-rule (3) of rule 8 of Auction Rules on commencement of production of mineral which shows that advance payment made by the Applicant shall be adjusted towards future payments to be made by them. Hence Section 2 (31) of CGST Act, 2017 is not applicable in the instant case. Secondly, it is evident from the tender documents that nowhere there is clause of refund of upfront payment after allotment of mines on lease, therefore upfront payment made to the State Govt. is no more deposit but advance which shall be adjusted towards future payments of revenue share amount. In view of the above, we find that the Applicant is liable to pay GST on the upfront payments made to the State Govt. under Reverse Charge Mechanism (RCM) in term of Serial No.5 of Notification No. 13/20317-CetraI Rate Dated 28.06.2017, 10) The next question is if GST is payable, whether they can pay GST from state of Telangana or to apply for registration in t....
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.... to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; [(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;] (b) he has received the goods or services or both. As discussed above, the tax payable under the provisions of sub-section (3) and (4) of Section 9 is included in input tax and the credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger and so the applicant is eligible to avail ITC of GST paid by them und....