AAR should have decided the issue of Liability to pay GST under RCM: AAAR

In re Portescap India Private Limited (GST AAAR Maharashtra)

The Appellant have raised the issues as to whether they are liable to pay tax on the receipt of -renting of immovable property” services from the SEEPZ SEZ Authority as well as on the other services procured by them wherein they are liable to pay tax under RCM, in terms of the provisions of the Notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 03/2018- Central Tax (Rate) dated 25.01.2018.. In this regard, we observe that the said questions, asked by the Appellant, can aptly be construed to be covered under the clause (e) of Section 97(2) of the CGST Act, 2017, which provides for the determination of the liability to pay tax on any goods or services or The aforesaid observation also finds support from the Kerala High Court Judgment in the case of Sutherland Mortgage Services Inc. vs. Principal Commissioner of Customs, Central GST and Central Excise, Kochi /2020 (3) TMI 186-Kerala High Court], wherein the High Court during the course of the judicial review of the Advance Ruling pronounced by the Kerala Advance Ruling Authority inter-alia observed that the provision as per clause (e) of sub-section (2) of Section 97 of the CGST Act, 2017 is in wide terms and the Advance Ruling Authority is obliged to provide the Advance Ruling in all the matters pertaining to the determination of the liability to pay tax on any goods or services or both so that the applicant could get due clarity and precision about various aspects of taxation in the transactions undertaken by them. The High Court in the aforesaid case went on to hold that even the question related to the “place of supply’ which has not been expressly mentioned under sub­section (2) of Section 97 of the CGST Act. 2017, would come under the jurisdiction of the Advance Ruling for the purpose of deciding the issue pertaining to the determination of the liability to pay tax on any goods or services or both, as enumerated under clause (e) of the Section 97 (2) of the CGST Act, 2017. Thus, it is evident from the aforesaid High Court Judgment that the clause (e) of Section 97(2) of the CGST Act, 2017 has got a very wide connotation and would cover all sorts of transactions, where the Advance Ruling on the questions related to the determination of the liability to pay tax including the liability under RCM (Reverse Charge Mechanism) can be sought by the Applicant in terms of the provisions related to the Advance Ruling as provided under Chapter XVII of the CGST Act, 2017.

Hence. in view of the above discussion. we are of the view that the Appellant is eligible to file the subject Advance Ruling application, wherein they have sought the Advance Ruling as to whether they are liable to pay tax under RCM on the services of “renting of immovable property” received from the SEZ Authority and also on any other services liable for payment of GST under RCM in terms of the Notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017 as amended. Accordingly. the MAAR should not have rejected the subject application on the grounds mentioned in the impugned Advance Ruling, and should have decided the issue on merits. Therefore. we are of the opinion that the subject Advance Ruling application should he decided by the MAAR on merits, and accordingly the same is required to be remitted to the MAAR.

FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, MAHARASHTRA

At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore. unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.

2. The present appeal has been filed under Section I 00 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017[hereinafter referred to as “the CGST Act and MGST Act” by M/s. Portescap India Private Limited (“the Appellant”) against the Advance Ruling No. GST-ARA-93/2019-20/B­31, dated 12.03.2020., pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as MAAR)

BRIEF FACTS OF THE CASE

3.1 M/s. Portescap India Pvt. Ltd., having GSTIN 27AAACK4896K1ZZ. is engaged in the activity of manufacturing of customized motors in India. The Appellant is an SEZ Unit and en^gaged in exports of the manufactured goods outside India.

3.2 The Appellant procures Rental Services from Santacruz Electronic Export Processing Zone (SEEPZ). Special Economic Zone (SEZ) Authority, situated at SEEPZ Service Centre Building. Andheri East, Mumhai-400096 having GSTIN 27AAALS4995G1ZH.

3.3 In accordance with the Notification No. 18/2017 – Integrated Tax (Rate) dated 05.07.201 7. the Central Government exempts services imported by a unit or a developer in the Special Economic Zone for authorized operations, from the whole of the integrated tax leviable thereon, under Section 5 of the IGST Act, 2017.

3.4 The issue in the present case is whether tax is payable under reverse charge mechanism (RCM) on procurement of domestic services like “renting of immovable property services^– from SEEPZ SEZ. in accordance with Notification No. 13/2017 – Central Tax (Rate) dated 28.06.2017. amended by Notification No. 03/2018- Central Tax (Rate) dated 25.01.2018. The extract from the aforementioned Notification No. 03/2018. dated 25.01.2018 is as follows: