Case Law Details
In re Birla Corporation Ltd. (GST AAR Rajasthan)
The Authority for Advance Ruling (AAR) in Rajasthan has issued a ruling regarding an application submitted by Birla Corporation Ltd., seeking clarification on whether the tax payable under Reverse Charge Mechanism (RCM) in terms of Notification issued under Section 9(3) of the GST Act, 2017, constitutes “State Tax Due” under the SGST Act, 2017, particularly in the context of the Rajasthan Investment and Promotion Scheme (RIPS) 2019. The AAR concluded that the application does not qualify for an advance ruling under the GST Act, 2017, as it pertains to the RIPS-2019, which is beyond the purview of GST legislation.
Detailed Analysis: Birla Corporation Ltd. raised a query about the classification of tax paid under RCM as “State Tax Due” in the context of RIPS-2019 incentives. The company, engaged in cement manufacturing, is eligible for incentives under RIPS-2019 based on state taxes due and deposited. However, there was ambiguity regarding whether taxes paid under RCM could be considered as “State Tax Due” for the purposes of calculating incentives under the scheme.
The central issue revolves around the interpretation of “State Tax Due and Deposited” as defined in the RIPS-2019 and whether tax liabilities settled under RCM should be included within this definition. The company argued that since RCM liabilities are effectively a shift of tax payment responsibility from the supplier to the recipient, such payments should qualify as “State Tax Due.”
However, the AAR highlighted that the query involves the interpretation of terms specific to a state government scheme (RIPS-2019) rather than the GST law itself. As per the GST Act, the AAR’s jurisdiction is limited to matters directly related to GST provisions, such as classification of goods/services, determination of tax liabilities, and applicability of notifications under the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
