|ASC GST UPDATES
- Summary of Advance Rulings/Rulings
|Name of the Parties
|M/s. Mary Matha Construction Company. (GST AAR Kerala)
||Facts: The applicant is a contractor of Government projects. Many of the works are undertaken by way of sub contracts. The sub-contractors have raised doubts regarding the applicable tax rate.
Issued Involved: The applicant sought for advance ruling on GST rate applicable for the following works contracts awarded by various Government authorities:
Held: As per the amendment to notification No.8/2017 vide notification No.39/2017 dated October 13, 2017, composite supply of works contract as defined in clause (119) of section 2 of the CGST Act 2017, supplied to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Governmental Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration is taxable @12% GST and others attract 18% GST.
||Name of Project
||Construction of Hospital Block buildings in Government Medical College with civil structural, internal and external finishing, plumbing and sanitary arrangements, electrical, HVAC, lifts and firefighting installations, including testing, commissioning and handover as turnkey work.
||Construction of Non-science building for various departments at Central University of Kerala, Kasargod.
||Construction of Biotech lab and administrative block at Life Science Park, Trivandrum.
- Here, Government Authority means any authority or a board or any other body set up by an Act of Parliament or State Legislature or established by any Government with 90% or more participation by way of equity control. The Central University of Kerala established under the Central University Act. Hence the supply work relating to the construction of non-science building for various departments at Central University of Kerala, is also taxable @12% GST. Even if the work is executed through RITES Ltd, the applicable tax rate is 12% GST.
- Life Sciences Park, Trivandrum is an initiative of Kerala State Industrial Development Corporation Ltd. for providing basic infrastructural facilities to research institutions, science and technology academia and companies working in the field of Bio-Technology, Nano-Technology and Life Sciences, Therefore, it is evident that the Life Sciences Park, Trivandrum is a commercial venture of the KSIDC Ltd., a State Public Sector Undertaking and accordingly the works contract services in respect of construction of Biotech lab and administrative block at Life Science Park, Trivandrum is covered under SI No. 3 (xii) - Heading 9954 of Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 attracting GST at the rate of 18%.
|M/s. Geojith Financial Services Ltd (AAR Kerela)
||Facts: M/s. Geojith Financial Services Ltd is engaged in providing various retail financial services like stock broking, share broking, marketing of initial public offering of companies and mutual funds, corporate advisory services etc. which were not taxable under VAT Law. Based on the transitional provisions, they have claimed input tax credit on closing stock of computers, laptops and other goods lying in the physical possession of the applicant as on June 30, 2017.
1. Whether computers, laptops etc. used by the applicant for providing output service would qualify as inputs for the purpose of availing transitional ITC under Section 140(3) of KSGST Act?
2. If the goods are physically available as closing stock as on June 30, 2017, can the applicant avail ITC for the VAT have paid?
Held: It was observed that, The applicant being a service provider had no tax liability under VAT regime. As per the proviso to Sub-Section (2) of Section 140 of the GST Act, a registered person shall not be allowed to take credit unless such credit was admissible as input tax credit under the existing law and is also admissible as input tax credit under GST Act.
As per Section 2(59) of GST Act, 'input' means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. The computers, laptops etc. were used by the applicant for providing output service are capital assets. These capital goods are ineligible to claim input tax credit under VAT Laws. Section 140(3) of the GST Act covers "credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day", hence, the transitional credit claim of the assessee in respect of capital goods is not acceptable.
In view of the supra observations, the following rulings are issued as under:
i) The computers, laptops etc. used by the applicant for providing output service would not qualify as inputs for the purpose of availing transitional ITC under Section 140(2) /140(3) of the KSGST Act.
ii) The goods, even though physically available as closing stock as on 30th June 2017, ITC is not eligible for the VAT paid.
|M/s A. M. Motors (AAR Thiruvananthapuram)
||Facts: M/s A. M. Motors submitted that it is business requirement that motor car dealer shall compulsorily acquire the demonstration vehicles from principal supplier. These purchases are capitalized in the books of accounts excluding tax components. These demo cars are used for demonstration purpose for the prospective customer and after a specific period of time, they are sold off for book value, paying the applicable taxes at the point of time.
Issues Involved: Whether input tax credit on the motor car purchased for demonstration purpose of the customer can be availed as credit on capital goods and set off against tax payable under GST in the case of a motor car dealer?
Held: It was held as under:
Hence, it is ruled that input tax paid by the vehicle dealer on the purchase of motor car used for demonstration purpose of the customer can be availed as input tax credit on capital goods and set off against output tax payable on GST.
- The demo car is an indispensable tool for promotion of sales by providing test run to customers and to make them understand the features of vehicle. Further, the applicant capitalizes the purchase in its books of account. The capital goods which are used in the course or furtherance of business, is entitled for input tax credit. As the impugned purchase of demo car is in the course or furtherance of business, applicant is eligible for input tax credit.
- In terms of Section 17(5) of the CGST Act, 2017, credit is not available on motor vehicles except when they are used for making taxable supplies and for transportation of goods. The taxable supply includes further supply of such vehicle. In the instant case, after a limited period of use as demo car, the vehicles are sold at the written down book value and applicable GST is satisfied at that point of time. GST Act does not prescribe time within which further supply is to be effected. Hence, the embargo under Section 17(5) will not apply here.
- But, the availability of input tax credit shall be subject to the provisions of Section 18(6) of the GST Act. In the case of supply of capital goods on which Input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by sch percentage points as may be prescribed or the tax on the transaction value of such capital goods determined as value of taxable supply, whichever is higher.