In re Gulab Singh Chauhan (GST AAR Madhya Pradesh)
Applicant proposed to open a new business venture of PAN SHOP. The Business model of PAN SHOP would be selling Pan Masala, Tobacco Products, aerated Drinks etc. There will not be any kind of manufacturing of these products. It merely act as a trader. Whether the composition scheme is available to assesse if the turnover does not exceed Rs. 1,50,00,000 in the preceding financial year?
It appears that the list of goods to be sold from the Pan shop include all kinds of goods that are normally bought from a Pan Shop. Accordingly, one of the goods that shall be sold from the applicant’s Pan Shop is Gutka containing Tobacco or otherwise. The Gutka is a preparation of betel nuts and any one or more of lime, katha (catechu) and tobacco whether or not containing any other ingredient, such as cardamom, copra or menthol, which is same as Pan Masala discussed supra. In a Pan shop the seller also generally makes a product akin to Gutka themselves by mixing of betel nuts, lime, kattha and tobacco containing or not containing other ingredients are sold which amounts to manufacture of Gutka. Preparation of Gutka in the Pan Shop is akin to manufacture on account of the process of preparation being that of mixing of different bought out ingredients and the resultant product having a distinct name and use. Thus the preparation of Gutka at the Pan Shop for sale is covered in the Second Proviso of Notification No. 14/2019 CT In the Table given in Notification No. 14/2019 CT both Pan Masala and goods covered under Chapter 24 are listed as goods for which composition cannot be obtained.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, MADHYA PRADESH
PROCEEDINGS
(Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods & Service Tax Act, 2017)
1. GULAB SINGH CHAUHAN (hereinafter referred to as the Applicant) is proposed to open a new business venture of PAN SHOP. Shop is located at Vijay nagar. Scheme no. 54 in the Indore district of the state of Madhya Pradesh (452001). The Applicant is having a GST registration with GSTIN 23AAYPC2644L1ZG.
2. 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 CGS 1 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. GULAB SINGH is proposed to open a new business venture of PAN SHOP. The Business model of PAN SHOP would be selling Pan Masala, Tobacco Products, aerated Drinks etc.
3.2. There will not be any kind of manufacturing of these products. It merely act as a trader. Whether the composition scheme is available to assesse if the turnover does not exceed Rs. 1,50,00,000 in the preceding financial year.
3.3. what should be the HSN Code, the new business would be required to take at the time of registration under the composition scheme, because at the time of registration under the composition scheme. GSTN Portal is not allowing the assesse to take 1ISN code of Pan Masala and Tobacco products.
4. QUESTION RAISED BEFORE THE AUTHORITY –
4.1 Whether we are eligible to be in the composition scheme as our turnover is much less than 1.5 crores?
4.2. Which HSN codes that needs to be obtained at the time of obtaining registration as any other supplier eligible for composition levy under sub-sections (1) and (2) of section 10 of if the person engaged Pan Masala and Tobacco products Trading under the composition scheme?
4.3. What will be applicable tax rale on the supply of such Pan Masala or Tobacco products as any other supplier eligible for composition levy under sub-sections (1) and (2) of section 10 in the Composition scheme?
4.4. Whether Tax rate prescribed under Notification No. 50/2020 is applicable on any other supplier eligible for composition levy under sub-sections (1) and (2) of section 10 is applicable on the above-mentioned class of assessee who are engaged in Trading of Pan Masala or Tobacco Products?
5. DEPARTMENT’S VIEW POINT- No view from the jurisdictional officer was communicated to this authority.
6. RECORD OF PERSONAL HEARING –
6.1 Mr.Rachit Bhandari, Chartered Accountant and the jurisdictional officer (SGST) appeared for personal hearing through virtual hearing. Mr. Rachit reiterated the submissions already made in the application, and attached additional submissions as follows:
6.2 . As per Section 10 of the CGST Act. 2017 A registered person is eligible is eligible for Composition scheme if aggregate turnover in the preceding Financial year does not exceed Rs. 1.5 crores (75 lakhs for special category states). Since the applicant is registered under the State of Madhya Pradesh which is not a special category state. The Turnover Limit in the Preceding Financial Year is up to Rs. 1.5 crores.
6.3 The eligible persons for the Composition scheme are Manufactures (other than the manufactures of the Tobacco, Ice cream. Pan Masala. Aerated Waters). Restaurant Service Providers, Other suppliers.
6.4 From the above interpretation the Traders or Dealers of Tobacco. Pan Masala can opt for composition scheme
6.5 Under which HSN code they have to get registered while taking registration under the GST composition scheme. Because the GSTN portal docs not allow even the law permits.
6.6 As per Section 10 of the CGST Act. 2017. a registered person is eligible is eligible for composition scheme if aggregate turnover in the preceding financial year does not exceed Rs. 1.5 crores (75 lakhs for special category states). Since the applicant is registered under the State of Madhya Pradesh, which is not a special category state, the turnover limit in the preceding financial year is up to Rs. 1.5 crores.
6.7 The Scheme is eligible to the following class of persons under sub-sections (1) and (2) of section 10 of the CGST Act. 2017:
