In re Shree Arbuda Transport (GST AAAR Gujarat)
Question 1: If we want to provide all above services for a Single consolidated Rate as a package, whether such supply would be treated as Mixed supply as per the provisions of Section 2(74) of the CGST Act, 2017, since the services are not naturally bundled and are capable of being provided independently? Or it shall be treated as Composite supply?
Answer: Such supply would be treated as ‘mixed supply’ as per the provisions of Section 2(74) of the CGST Act, 2017.
Question 2: What shall be the applicable HSN code and corresponding GST Rate for such bundle of services? (Highest Rate of Service in the bundle is 18%).
Answer: The applicable HSN / Service Code (Tariff) would be 996719 and corresponding GST Rate for such ‘mixed supply’ would be the highest rate of the constituent supplies, which is presently 18%.
Question 3: Whether the firm shall be eligible to avail ITC on the following:
– Regarding GST paid on Commercial vehicles and Repair & maintenance cost of such vehicles used for transportation of goods/containers.
– ITC on inward supply from CFS/Port/Labour contractor etc. related to such packaged outward supply.
Answer: Input Tax Credit on inputs, input services and capital goods cannot be denied merely on the ground that one of the constituent service of the mixed supply attracts Nil rate of tax if provided separately.
Question 4: Whether the Exporter client shall be eligible to claim refund of the GST paid on our (appellant’s) outward supply invoices?”
Answer: This question can be answered at the end of exporter. The appellant is not entitled to raise this question.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT
1. At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act, 2017’ and the ‘GGST Act, 2017’) are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017.
2. M/s. Shree Arbuda Transport, a partnership firm, having Principal Place of Business at Plot No.51, Office N0.6, Kesar Arcade, Gandhidham (Kachchh) [hereinafter referred to as ‘the appellant’] intending to provide services like Transportation and Logistics services, Clearing and Forwarding services and Other allied services for import & export of cargo and for coastal movements. The appellant plans to own a fleet of commercial vehicles like trailers and also hires necessary vehicles from market as well. The appellant has submitted that they are in process of entering into an agreement with a specific client engaged in the business of Export of Rice. The appellant has planned to provide following services at a single consolidated rate (per container) for the entire bundle of services:–
(1) Clearing and Forwarding Agency with the help of sister concern, as the CHA License is in the name of a sister concern M/s. SRS Cargo.
(2) Transportation of cargo containing agricultural produces, Rice, Tea etc.
(3) Providing labours for loading of cargo into containers.
(4) Transportation of empty container from CFS / empty container yard to client’s warehouses at various locations
(5) Other allied services like:-
– Lift on/Lift off charges to CFS/empty container yard
– Survey Tally formality for goods loaded in container
– Obtaining Customs permission for self-sealing
(6) Obtaining Customs related certificates/clearing such as Bill of Lading, Health Certificate, Non GMO, Phytosanitary Certificate etc. with complete documentation for export shipment.
3. The appellant has raised following questions before the Gujarat Authority for Advance Ruling [‘GAAR’], Goods and Service Tax:-
(1) If we want to provide all above services for a “Single consolidated Rate” as a package, whether such supply would be treated as “Mixed supply” as per the provisions of Section 2(74) of the CGST Act, 2017, since the services are not naturally bundled and are capable of being provided independently? Or it shall be treated as “Composite supply”?
(2) What shall be the applicable HSN code and corresponding GST Rate for such bundle of services? (Highest Rate of Service in the bundle is 18%).
(3) Whether the firm shall be eligible to avail ITC on the following:-
– Regarding GST paid on Commercial vehicles and Repair & maintenance cost of such vehicles used for transportation of goods/containers.
– ITC on inward supply from CFS/Port/Labour contractor etc. related to such packaged outward supply.
(4) Whether the Exporter client shall be eligible to claim refund of the GST paid by on our (appellant’s) outward supply invoices?
4. In the Ruling passed by the GAAR vide Advance Ruling No. GUJ/GAAR/R/82/2020 dated 17.09.2020, it has been inter alia observed that the issue brought before GAAR has not yet materialised so far i.e. the application for Advance Ruling had been filed on 13.10.2019 but no agreement has been reached so far by the applicant with the exporter of rice after nearly a year of filing of the application (Para 13 of Ruling refers). The GAAR has referred the provisions of Section 97 of the CGST Act, 2017, and observed that the provisions for seeking Advance Ruling made under the Act is limited to the activities conducted by the applicant only; that the applicant has asked hypothetical questions seeking Advance Ruling on an issue which had not materialised till date; that no agreement had been signed in this regard and therefore no copy had been submitted to GAAR in the instant case. Therefore, the GAAR is of the opinion that without any agreement or any other relevant documents having been provided by the applicant, it would not be possible to give a decision in this matter (Para 14 of Ruling refers). Thus, the GAAR has given answer to all the four questions as under:-
“Answer: In view of non-submission of copies of agreement or any other relevant documents with regard to the services to be supplied/provided by the applicant, no decision can be taken in the matter for the reasons discussed hereinabove. “
5. M/s. Shree Arbuda Transport has filed an appeal with us against the aforesaid Ruling under the provisions of Section 100 of the CGST and GGST Acts, 2017. In the Grounds of Appeal, the appellant has inter alia submitted that an Advance Ruling can be sought when a taxpayer wants to know the implication of prevailing tax law in the business proposition; that non-submission of an agreement cannot be a ground for declaring questions as hypothetical. Now, in this appeal proceedings, the appellant has submitted a Draft Agreement (unsigned), and stated that it would be implemented once the provision of law are clear.
6. The appellant has made following submissions:
Question-1: Mixed Supply or Composite Supply
Section 2(30) of the CGST Act, 2017 defines ‘composite supply’ as under:-
” (30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof which are naturally bundled and supplied In conjunction with each other in the ordinary course of business, one of which is a principal supply”
Therefore, ‘Composite supply’ means a supply of two or more taxable supplies of goods or services or both which are:-
