In re Myntra Designs Pvt Ltd (GST AAAR Karnataka)
Appeal cannot be filed against the question unanswered/rejected by the AAR
The AAAR, Karnataka in the matter of M/s Myntra Designs Pvt. Ltd [Order No. KAR/AAAR /06/2022 dated November 21, 2022] set aside the order of the AAR for failure in giving a ruling on the question of taxability under Goods and Service Tax (“GST”) on services provided by the assessee on the grounds that it involves determination of place of supply which is beyond its jurisdiction. Held that, the AAR was incorrect for failing to make a ruling on the matter. Further, remanded back the case to the AAR for fresh consideration.
Facts:
M/s Myntra Designs Pvt. Ltd (“the Appellant”) owns an e-commerce portal and is engaged in the business of selling fashion and lifestyle products. The Appellant offers advertising space on its website to one Lenzing Singapore Pte Ltd (“Lenzing”), a foreign company, in exchange for consideration.
The Appellant had sought ruling from the AAR, Karnataka on taxability under GST, classification and rate of tax of the service w.r.t. the transaction with the Lenzing, wherein, the AAR, Karnataka vide Advance Ruling order No. KAR ADRG 19/2022 dated 1st July 2022.(“the Impugned Order”) ruled that, the service provided by the Appellant is classified under SAC 998365 as “Sale of internet advertising space (except on commission)” and is chargeable to 18% GST as per Sl. No. 21 of Notification No 11/2017 CT (Rate) dated 28-06-2017.(“the Services Rate Notification”). However, the AAR, Karnataka failed to give a ruling on whether the transaction with Lenzing is taxable under GST or not, on the grounds that the issue involved the determination of place of supply, which is outside its jurisdiction.
Being aggrieved, the Appellant has filed this appeal against the Impugned Order, in not giving any ruling on the issue of the taxability of the transaction.
The Appellant contended that the determination of the place of supply is within the ambit of determination of ‘liability to pay tax on any goods or service or both’ as mentioned in Section 97(2) of the Central Goods and Service Tax Act 2017 (“the CGST Act”). Further, the AAAR has the power to make decisions on issues related to the dispute, including if the AAR made an error in not deciding on the on the issue of taxability of services provided by the Appellant. The Appellant further contended that the AAAR also has the power to remand even if remand provisions are not mentioned expressly in the CGST Act.
Issue:
1. Whether the AAR, Karnataka was correct in not giving a ruling on the question of taxability on the grounds that it involves determination of place of supply which is beyond its Jurisdiction?
2. Whether the AAAR has powers to decide the question of taxability on merits and pass an original ruling on the same, when the AAR has failed to pass any ruling?
Held:
The AAR, Karnataka in Order No. KAR/AAAR /06/2022 of 2022 has held as under:
