In re Karnani FNB Specialities LLP (GST AAR West Bengal)
Question: Whether or not the applicant is obliged to reverse input tax credit (ITC) under Section 17(2) of the CGST Act read with Rule 42 of the Central Goods and Services Tax Rules, 2017 (CGST Rules), in view of the sale of alcoholic liquor for human consumption effected by it at its premises under the facts & circumstances of the present case?
Answer: Under the facts & circumstances of the present case, the applicant is required to reverse input tax credit (ITC) in terms of sub-section (2) of section 17 of the GST Act read with Rule 42 of the GST Rules for sale of alcoholic liquor for human consumption.
AAAR Order: Sale of alcoholic liquor for human consumption is a non-taxable supply under GST
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression „GST Act‟ would mean the CGST Act and the WBGST Act both.
1.2 The applicant is engaged in the business of providing restaurant services from its lounge bar called “The GRID” and is also providing catering services as well as banquet renting services. Along with such supplies or on a standalone basis, at times, the applicant is also engaged in selling/serving of alcoholic liquor for human consumption to its customers.
1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
(i) Whether the Constitution of India has conferred any power onto the Parliament to legislate on sale of alcoholic liquor for human consumption with reference to the Goods and Service tax regime, considering the provision of Article 246A read with Article 366(12A)?
(ii) If the answer to question (1) is in the negative, then whether the Central Goods and Services Tax Act, 2017(CGST Act) can directly or indirectly deal with aspects touching upon sale of alcoholic liquor for human consumption by the applicant either with reference to levy of tax on such sale or with reference to reversal of credit solely because the applicant is effecting sale of such alcoholic liquor?
(iii) Under these circumstances, whether the definition of exempt supply as provided under section 2(47) of the CGST Act, read with definition of the term „non-taxable supply‟ under section 2(78) can therefore include sale of alcoholic liquor for human consumption by the applicant?
(iv) Whether in order to qualify as non-taxable supply under section 2(78), a transaction must first qualify as supply as defined in section 7 of the CGST Act read with Article 246A and Article 366(12A) of the Constitution and as such therefore, sale of alcoholic liquor for human consumption cannot be said to qualify as a „supply‟ for the above purposes under the ambit of the CGST Act.
(v) Consequently, whether the applicant is obliged to reverse input tax credit (ITC) under section 17(2) of the CGST Act read with rule 42 of the Central Goods and Services Tax Rules, 2017 (CGST Rules) in view of the sale of alcoholic liquor for human consumption effected by it at its premises under the facts & circumstances of the present case?
1.4 The concerned officer from the revenue has submitted that the principal question raised by the applicant is whether the applicant is required to undertake reversal of ITC in terms of Rule 42 to the extent of turnover that relates to sale of alcoholic liquor for human consumption. This very question is not in compliance with the provisions of section 97 of the GST Act and hence the application for advance ruling should not be admitted.
1.5 This authority, however, is of the view that the questions except that under serial number (v) above are not covered under any of the clauses of sub-section (2) of section 97 of the GST Act. On being pointed out the aforesaid observation in course of hearing, the applicant has withdrawn the questions under serial number (i) to (iv) and has also rephrased the question under serial number (v) as under:
Comments are closed.