Khaitan Chemicals and Fertiliser (GST AAR Madhya Pradesh)
Authority is of the view that based on the detailed reading and understanding of Section 97 of the CGST Act, an application for Advance Ruling can only be made to determine the ‘liability to pay tax’ on any goods or services or both. Therefore, no application can be made to determine whether the liability is constitutionally valid or not. Such power rests only with the courts. The applicant have quoted the case of Hon’ble Gujarat High Court wherein the court upheld that the levy of IGST on reverse charge basis amounts to double taxation and is thus not sustainable in law. The applicant has the right to approach the courts for similar principle, but the same is not within the purview of the Advance Ruling Authority to comment upon.
FULL TEXT OF ORDER OF THE AUTHORITY OF ADVANCE RULING, MADHYA PRADESH
M/S KHAITAN CHEMICALS AND FERTILISER (hereinafter referred to as the Applicant) is an autonomous. not for profit, registered society under Department of Micro. Small and Medium Enterprises. Government of Madhya Pradesh. The Applicant is having a GST registration with GSTIN 23AAACK2342QIZI.
The provisions of the CGST Act and MPGST Act are identical. except for certain provisions. Therefore. unless a specific mention of the dissimilar provision is made. a reference to the CGST Act would also mean a reference to the same provision under the MPGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act.
3. BRIEF FACTS OF THE CASE —
3.1. Khaitan Chemical and Fertiliser (hereinafter referred to as “the Applicant”) is engaged in the manufacturing of Single Super Phosphate (Fertilizer), Sulphuric Acid (Chemical). For the manufacture of Single Super Phosphate (SSP), the major raw material required is Rock Phosphate which is imported from various countries like Egypt, Jordan & Morocco and also procured locally within country. The company is registered under the GST laws for payments of GST/IGST besides being paying the customs duty on import of Rock Phosphate.
3.2. The applicant is registered under the MPGST/ CGST Act 2017 vide GsTIN-23AAACK2342Q1Z1.
4. QUESTION RAISED BEFORE THE AUTHORITY —
The below question have been formed in relation to the services being provided by applicant to the recipients:
4.1. Double-taxation on freight portion of imported goods-
4.1.1. Goods imported and IGST levied on CIF Value (which includes freight) + Basic Custom Duty + Social Welfare Cess.
4.1.2. IGST levied again on the freight component (Ocean Freight) on reverse charge basis.
In such circumstances, to levy and collect once again the Integrated Tax under the same Act on the ‘supply'(same aspect) amounts to double taxation.
5. RECORD OF PERSONAL HEARING –
5.1 Shri Kapil Binakiya, CA appeared on behalf of the applicants for personal hearing on electronic mode on 01.10.2020 and he reiterated the submissions already made in the application submit copies of certain documents and requested that the same may be taken on record. Accordingly, the documents submitted have been taken on record for consideration.
5.2. Khaitan Chemicals & Fertilizers Ltd. is mainly engaged in the manufacturing of Single Super Phosphate (Fertilizer), Sulphuric Acid (Chemical). For the manufacture of Single Super Phosphate (SSP), the major raw material required is Rock Phosphate which is imported from various countries like Egypt, Jordan & orocco and also procured locally within country. The company is registered under he GST laws for payments of GST/IGST besides being paying the customs duty on import of Rock Phosphate.
5.3. Rock phosphate and other materials is imported only on CIF (sum of Cost, Insurance & Freight) basis. In CIF basis purchases, the freight invoice is issued by the foreign shipping line to the foreign exporter. The importer (i.e. Khaitan Chemicals & Fertilizers Ltd.) is concerned only with the purchase of goods and the suppliers of rock phosphate are responsible for transportation of goods upto the custom frontier of India. The company neither have any invoice of ocean freight nor has any idea of payments and the amount olocean freight by the foreign exporter.
5.4. Reference to various acts for levying IGST on imported goods and determining the value for calculation of JUST:
