GST-registered consumers can approach AAR bench
Mumbai: The Calcutta high court has held that a service recipient can seek an advance ruling to determine the applicability or the rate of goods and service tax (GST). This recent ruling was giving in the case of Anmol Industries. It opens up possibilities for several service recipients (that is, registered under GST, including registered business persons & professionals) in a plethora of instances to gain clarity via an advance ruling on goods or services purchased or intended to be purchased by them.In the past, several benches of the Authority for Advance Rulings (AAR) across India rejected applications by service recipients on the grounds that the term advance ruling is defined to mean a decision in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. The high court held that service recipients fall under the meaning of the term applicant.In this case, Shyama Prasad Mookerjee Port had agreed to lease an industrial plot of land to Anmol Industries for a period of 30 years for setting up commercial office complexes. The lease called for an upfront lease premium plus an 18% GST. As Anmol Industries (the recipient) was of the view that the lease premium was GST-exempt, it had approached the AAR, but its application was denied. This led to it approaching the Calcutta high court.Considering that the high court has interpreted recipients as eligible to apply for advance rulings, it opens up avenues for GST-registered consumers to approach the authorities for clarifications in case they are facing the brunt of conservative interpretation by the suppliers, said Sunil Gabhawalla, chartered accountant and indirect tax expert.He illustrated: If a person has been given a flat in lieu of his earlier premises by the builder under a redevelopment project, no GST may be leviable in view of favourable tribunal rulings. However, out of abundant caution, builders in some instances impose and collect GST. This individual, if he is registered under GST, can based on the high court decision obtain an advance ruling.Gabhawalla clarified that it is only those service recipients (consumers) who are registered under GST who can approach the AAR for an advance ruling. This means that a consumer who is a salaried individual and does not have to register for GST will not be able to seek an advance ruling.Yet, this judicial order opens up doors for many and clarity can be sought on a range of issues. A classic case is that of the supply of fruits by a hotel to its guests. Hotels charge GST on such exempted products, treating it as a composite supply (nexus with the hotel accommodation). A business person, registered under GST, who travels often can if he/she so wishes obtain a ruling on whether GST is payable on these fruits, adds Gabhawalla.However, it remains to be seen whether the high court order will be the final word or will be contested by the GST authorities.
Monday, May 1, 2023 at 1:30 am