In re Portescap India Private Limited (GST AAR Maharashtra)
Section 95 of the CGST Act, 2017 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. We find that the applicant has not undertaken the supply in the subject case. We find that, the applicant is a recipient of services pertaining to renting of immovable property in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and therefore, the subject application cannot be admitted as per the provisions of Section 95 of the GST Act. Hence without discussing the merits of the case, we reject the subject application as not being maintainable.
Read AAAR Order: AAR should have decided the issue of Liability to pay GST under RCM: AAAR
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,MAHARASHTRA
PROCEEDINGS
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 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” respectively ] by Portescap India Private Limited, the applicant, seeking an advance ruling in respect of the following question.
1. Whether Portescap India Pvt. Ltd. is required to pay tax under reverse charge mechanism on procurement of renting of immovable property services from Seepz Special Economic Zone Authority (Local Authority) in accordance with Notification No. 13/2017 dated 28th June, 2017read with Notification No. 03/2018 – Central Tax (Rate) dated 25th January 2018?
2. Whether Portescap India Pvt. Ltd. is required to pay tax under reverse charge mechanism on any other services in accordance with Notification No. 13/2017 dated 28th June, 2017 read with Notification No. 03/2018 – Central Tax (Rate) dated 25th January 2018?
3. If answer to the above point is in the affirmative, then the tax under reverse charge mechanism is required to he paid under which tax head i.e., IGST or CGST and SGST’?
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 any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purpose of this Advance Ruling, the expression `GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION-AS PER THE APPLICANT
The submissions of the applicant are as follows:-
2.1 M/s Portescap India Pvt. Ltd., the Applicant, a SEZ Unit, situated in Maharashtra, is engaged in the manufacture of customized motors in India and exports the said goods.
2.2 Applicant procures Rental Services from Seepz, SEZ Authority, Mumbai-400096 which is a Local authority having GSTIN 27AAALS4995G.
2.3 Notification No. 18/2017 – I.T. (Rate) dated 05.07.2017 exempts services imported by a unit or a developer in the Special Economic Zone (SEZ) for authorized operations, from the whole of the Integrated Tax leviable thereon under Section 5 of the IGST Act, 2017.
2.4 The issue in the present case is whether tax is payable under reverse charge mechanism on procurement of domestic services like renting of immovable property services from Seepz SEZ. Authority in accordance with Notification No: 13/2017 – C.T. (Rate) & 03/2018- C.T. (Rate) dated 25.01.2018.
2.5 Section 7 of SEZ Act, 2005 provides for exemption to all goods or services procured from a DTA (Domestic Tariff Area) or foreign suppliers specified in first schedule. According to Section 51 of the SEZ Act 2005, the provisions of SEZ Act would have overriding effect on provisions of any other act including taxation laws.
2.6 Section 26 of SEZ Act, 2005 deals with the exemption from tax on services provided to a developer or unit to carry out the authorized operations in a SEZ. The grant of exemption is subject to the terms and conditions as prescribed by the Central Government in terms of sub-section (2) of Section 26. Rule 22 of these Rules stipulates the terms and conditions for availing exemptions by the developer and entrepreneur in respect of authorized operations.
2.7 As per Notification No. 12/2017 – C.T. (Rate) dated 28.06.2017, Central Government has exempted Services provided by Central Government, State Government, Union territory or a local authority where the consideration for such services does not exceed five thousand rupees subject to the proviso.
2.8 Hence, there is a need to determine whether a SEZ unit is required to comply with the provisions of reverse charge mechanism as a service recipient for local/domestic services produced by the unit.
2.9 Notification No. 13/2017- C.T. (Rate) dated 28-06-2017 as amended by Notification No. 09/2018-C.T. (Rate) dated 25.06.2018, notifies categories of services on which GST will be payble under reverse charge mechanism. Relevant extract is reproduced below:
