AAR Rulings articles

All About Advance Ruling Authority Under GST

All about Advance Ruling under GST i.e. Section 95 to Section 106 of the CGST Act, 2017 Article explains Basic understanding of Advance Ruling, The broad objectives for setting up a mechanism of Advance Ruling, Applicability of Advance Ruling, Authority for Advance Ruling (AAR) & Appellate Authority for Advance Ruing (AAAR), Questions...

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Analysis of Order of Karnataka AAAR in the case of M/s Karnataka Food & Civil Supplies Corporation

Recently, Karnataka AAAR in order number KAR /AAAR-14-I/2019-20 held that the services provided by Central Warehousing Corporation (CWC) are covered under ‘Rental or leasing services involving own or leased non-residential property’ and not under ‘storage and warehousing service’ and hence exemption is not available under entry no...

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AAR in case of M/s Pratham Agro vet Industries – GST Tariff on Rice Bran

AAR in case of M/s Pratham Agro vet Industries – GST Tariff on Rice Bran Question on which advanced ruling had been sought: What is the GST Tariff on Rice Bran obtained by processing Rice husk of Poha and Mamra with different kind sludge/wax oil What is Rice Bran: Rice Bran is a product obtained […]...

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Advance Ruling | Section 18(3) | Credit in case of Sale, Transfer, Merger & Amalgamation

Overview Of Sec 18(3) –  Availability of credit in special circumstances (3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed t...

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Supply of goods from and to overseas party not liable to GST

Recently, there was an Advance Ruling by the Gujarat AAR in case of ‘Sterlite Technologies Pvt Ltd‘wherein it was decided that the goods procured from a supplier located out of India and directly supplied to a recipient located out of India falls under the category of ‘inter-state transaction’ and hence, the same is liable...

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Advance Ruling Under GST Act

ADVANCE RULING – Section 97 to 104 of Central Goods & Services Tax Act, 2017. Applicant: – Person registered or desired to be registered in the act. Section 97 Application for Advance Ruling Applicant sends the application in the form of GST ARA-01 along with the prescribe fees(Rs.5000) in the prescribed manner to Advance ...

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Actionable Claim under GST | Advance Ruling

Advance Ruling Name of the Applicant: Venkatasamy Jagannathan Order No. and Order date : 19 /AAR/2019  Dated: 21.05.2019 Authority : AAR(Tamil Nadu) Questions Sought by the applicant: Will the Profit Sharing Agreement between the applicant as an employee and the shareholders, attract GST in his hands?    Brief Facts: The Applicant has ...

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Advance Rulings- GST on building & mounting of body on chassis

Whether building of body after utilizing and consuming owned materials and providing labour and further amount the same on chassis of the principal would amount to supply of Services? Whether it would amount to a composite supply consisting a small part of supply of goods and major part of supply of services. Supply of Services being prin...

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Whether Value of Goods gives conclusion that activity is Works Contract Service or Not?

Whether Value of Goods gives conclusion that activity is Works Contract Service or Not? In an Application filed before AAR under GST, Maharashtra by Prasa Infocom & Power Solutions Private Limited 1. The value of goods supplied is ₹ 26.03 crores (excluding taxes), the value of Civil and Mechanical Work is ₹ 0.34 crores, the [&hell...

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Advance Ruling | Section 100 to 106 | CGST ACT 2017 | Part II

Simplified GST Series –Section 100-106/CGST ACT 2017 /PART-2 In part II of the Article author explains provisions  of  Section 100- Appeal to Appellate Authority, Section 101 -Orders of Appellate Authority, Section 102- Rectification of advance ruling, Section 103– Applicability of advance ruling, Section 104– Advance Ruling to be...

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Advance Ruling | Section 95 to 99 | CGST ACT 2017 | Part I

Simplified GST Series –Chapter -18-Advance Ruling /Section 95-99/CGST ACT 2017 Part I In part I of the Article author explains provisos of CGST ACT 2017 related to Section 95-Definitions  related to Advance Ruling, Section 96-Authority for advance ruling, Section 97- Application for advance ruling, Section 98- Procedure on receipt of a...

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Furniture supply with installation service cannot be construed as Works Contract

The taxpayer had charged GST at the rate of 18% on the supply and installation of furniture in the government department. However, the government department contention is that GST at the rate of 12% should be charged construing it as Work Contract Service...

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Brink of Process – Manufacture or Job work under GST?

In current business scenarios it is not possible for manufacturing industry to carry out all the processes within its own premises. In such a condition manufacturing unit will have to get work done from others. Job work industries constitute a significant sector in Indian Economy. Most of the manufacturing entities operated in different s...

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Sale of Timbers: Does ‘Karnataka Timber Depot’ Works as Agent of Coffee Garden Owners?

DOES ‘THE KARNATAKA TIMBER DEPOT’ WORKS AS AGENT OF COFFEE GARDEN OWNERS- FOR THE PURPOSE OF SALE OF TIMBERS? -A question arise from the orders of the AAR & AAAR.  One advance ruling was pronounced by Hon’ble Advance Ruling Authority, Karnataka vide order No. KAR ADRG 99/2019 dated 27/09/2019 in the case of Tata Coffee ...

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Agriculture Produce/Agriculturist | Advance Ruling | Section 2(7) | CGST Act 2017

Rara Udhyog (GST AAR Rajasthan); Advance Ruling No. RAJ/AAR/2018-19/06; Dqated- 23/06/2018 Over View- Agriculture Produce Definition ‘agricultural produce‘ in the GST regime The definition of ‘agricultural produce’ has not been provided in CGST Act; rather the term ‘agriculturist’ has been defined under...

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Advance rulings | Definition of Business | Sec 2(17) | CGST Act, 2017

Definition Of  Business Under GST – Overview Supply or acquisition of goods including capital goods and services Admission of person to any premises Provision of facilities to a member of a club, association etc Activities are undertaken by CG, SG or  any Local authority Services supplied as the holder of the office Services by Ra...

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GST on Merchandise Trade Transaction – AAR- Sterlite Technologies Ltd

1. Whether GST is payable in respect of goods procured from outside India and such goods not brought to India? 2. Whether GST is payable in goods are shipped directly from the foreign vendor’s premises to customer’s premise (located outside India)?...

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Advance rulings | Scope of Supply | Section 7 | CGST Act, 2017

Section specific advance ruling under GST Act – Sec 7 of CGST and SGST Act 2017 Article contains section 7 “Supply” related advance rulings under GST pronounced by Advance Ruling Authorities of Various States. Advance ruling’ means a decision provided by the Authority or the Appellate Authority to an applicant on matte...

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Reporting of Input Tax Credit In GSTR 9– Dire Need for Clarification

The process of preparing and filing of annual return in GSTR 9 for FY 2018-19 under GST has already started, however, some basic doubts regarding the correct way to reconcile and report the Input Tax Credit (ITC) under various tables pertaining to the FY 2018-19 are yet be cleared by the creators and owners of […]...

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Different GST rates on Roti and Parota

The Authority for Advance Ruling (AAR, Karnataka) has pronounced a ruling that parantha (frozen / packaged) is different from plain roti and as such shall attract a higher rate of GST, i.e., 18% instead of 5% applicable to roti. [In Re: ID Fresh Food (India) Pvt. Ltd. (2020) 6 TMI 183 (AAR, Karnataka)]. In the […]...

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3 Controversial AAR Rulings and clarifications by CBIC

Another legacy provision that has been included under the GST laws from erstwhile tax regimes is the concept of Advance Rulings. The purpose of advance rulings is to help an applicant who is already a registered taxable person or is liable to be registered to provide clarity and understanding with regards to any supply which […]...

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Gujarat AAR Ruling on Interest – Whether A Risk On Personal Capacity?

The recent ruling could potentially put individuals into jeopardy with no clear distinction between personal and business purpose outlined by the authorities. This ruling can bother many interest earners like retired person (who will required to take GST Registration as per this Ruling) as it has not distinguished between interest earning...

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GST Advance Rulings should be Judicious…

‘Advance ruling’ means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or subsection (1) of section 100 of the CGST Act, 2017, in relation to the supply of goods or services or both being undertaken or proposed to […]...

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GST on Sale of Plot of Land With Basic Amenities- AAR Ruling

In an Application filed before AAR under GST, Gujarat by Shree Dipesh Anilkumar Naik Applicant is the owner of the land, who develops the land with an infrastructure such as Drainage line, Water line, Electricity line, Land levelling etc. as per the requirement of the approved Plan Passing Authority. Scope of Work 1. Forming land [&hellip...

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GTA Services & Consignment Note- AAR Ruling Analysis

Consignment note' has not been defined in the CGST Act or in the Notification either. In this context we take the help of Explanation to Rule 4B of Service Tax Rules, 1994 wherein the ''consignment note' has been defined as a document provided by a goods transport agency against the receipt of goods for the transport of goods by roadways ...

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Land development is Supply of Service- GST AAR Karnataka

Activity of Developing The Land Is A Supply of Service Under GST- An Advance Ruling From Karnataka Authority in the case of Maarq Spaces Private Limited vide Advance Ruling No. KAR ADRG 119/2019 dated 30.09.2019. Advance ruling is upheld by AAAR vide Order No. KAR/AAAR-19/2020-21 dated: 04/05/2020. It has come into knowledge that an appli...

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Infirm Ruling of AAR Gujarat in Sterlite Technologies Limited

In re Sterlite Technologies Ltd (GST AAR Gujarat) Any ruling by the Authority for Advance Ruling is binding only (i) on the applicant who had sought it in respect of a matter, and (ii) on the concerned officer or jurisdictional officer of the applicant as provided in Section 103(1) of the CGST Act. However, it […]...

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GST Implication on Merchant Trade Transactions & AAR Ruling

AAR clarified that GST is not payable on goods procured from vendor located outside India, where the goods purchased are not brought into India. AAR held that IGST will be payable on goods sold to an overseas customer shipped directly from an overseas vendor, while the location of supplier continues to be in India....

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Interest on saving bank account, PPF and personal loans is to be included in threshold limit of 20 Lakhs for GST Registration: AAR, Gujarat

Interest on saving bank account, PPF and personal loans is to be included in threshold limit of 20 Lakhs for GST Registration: AAR, Gujarat ruling on application by Shree Sawai Manoharlal Rathi Aggregate turnover for determining GST registration threshold to include Interest on ‘Saving bank deposit, PPF and Personal loan & advance...

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Ruling on Benefit of India–Mauritius Treaty on Capital Gains (POEM/PPT/GAAR)

AAR – Ruling on Benefit of India–Mauritius Treaty on Capital Gains taken by Tiger Global International Group in respect of Shares of Flipkart (Singapore Co) sold by Mauritius based Co to a Company in Luxembourg (which is controlled by Walmart) and the value of shares is derived from assets located in India Summary of Case […]...

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Advance Ruling | CGST Act, 2017 | Section 95 & Section 97(2)

Article explains  What is advance ruling under GST, To whom the Advance Ruling under GST is applicable,  Matters/questions specified in Section 97(2) of CGST Act, 2017 on which Advance ruling can be sought,  Procedure for obtaining Advance Ruling and the time line under GST and Rectification of Mistakes in Advance Ruling under GST. Wha...

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Role of Authority of Advance Ruling under GST

In the present article, we will discuss detail description and purpose of Authority of Advance Ruling (AAR) established under GST.  I will try to cover or describe all the need and purposes of AAR under GST. INTRODUCTION: “Advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters...

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Decoding Flipkart-Walmart Deal

Recently , a ruling by AAR against Tiger Global’s claim of exemption on capital gain in the Flipkart –Walmart deal has once again brought forth the issues of treaty shopping and GAAR . Background of the ruling is narrated as follows. Investors of Flipkart included Tiger Global Management, Accel, Naspers , Softbank , Vision Fund [&hell...

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Repercussion on Sale & Purchase of Dies under GST

The recent ruling pronounced by the Karnataka Authority for Advance Ruling (‘AAR’) in case of M/s. Dolphine Die Cast (P) Ltd, In the present case, the applicant is in the business of manufacturing and exporting of Aluminium and Zinc die castings. The applicant sought the advance ruling in respect of repercussions under GST on the [&he...

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Applicability of GST on Remuneration to Director

This is the most important topic on which problems are faced by various Companies while calculating GST liability. Question is that whether payment to Director in the form of remuneration will attract GST or not. Answer to above question is that Companies will have to pay GST on the remuneration they dole out to directors, […]...

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Synopsis of 18 recent advance rulings under GST

Article contains synopsis of 18 recent advance rulings under GST pronounced by Advance Ruling Authorities of Various States ‘Advance ruling’ means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 1...

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Procedure on receipt of application by Income Tax AAR

In the last two articles, we have discussed the Concept of Advance Ruling under Income Tax Act 1961 and Application for seeking Advance Ruling under Income Tax Act’1961....

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AAR Briefing on “Storage Charges or Renting of Immovable Property”

The Applicant is engaged in the business of distributing Rice, wheat, palm oil, Toor dal, and salt etc. under the Public Distribution System by the Government of Karnataka. The applicant stated that they are hiring a Godown of central warehousing corporation for consideration as storage charges and using for storage of commodities which c...

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Advance Ruling Authority- Tribunal or Court or What? An Analtyical study

INTRODUCTION Globalisation of Indian economy has been gaining unprecedented momentum in recent years – almost two decades now. In its course, overwhelmingly large number of changes, that too of a significant nature / overreaching in effect , have been taking place; not only in the country’s economic front but also in almost every sphe...

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Supply of repair services along with spare parts/ accessories is taxable at separate rates of GST: AAR

Activity of rendering repairing services for boats/vessels along-with supply of spares and accessories cannot be considered as a composite supply as the supply of spare parts/accessories and repair service are distinct and separately identifiable supplies for which the rates are quoted differently....

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GST not payable on volume discount where no GST adjustment is made: AAR

Volume discount received on purchases and sales through credit note without any adjustment of GST is not liable for GST. Further, since amount received in the form of credit note is actually a discount and not a supply by Applicant to Authorized supplier, the Applicant need not issue tax invoice for this transaction....

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Seats for railway coaches classifiable under Heading 9401, taxable @ 18% GST: AAR

The Hon’ble AAR, Punjab in the matter of M/s. Sutlej Coach Products Pvt Ltd. held that Seats for Railway Coaches supplied to Rail Coach Factory falls under Heading 9401, liable to GST at 18%, and cannot be classified at 5% under HSN 8607 as parts of Railway....

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Whether Recovery amounts to supply of Service under GST Law?

Question: Whether recovery of 50% of Parental Health Insurance Premium from employees, amounts to supply of service under Section 7 of the Central Goods and Service Tax Act, 2017?” FACTS OF THE CASE:  M/s. Jotun India Private Limited (hereinafter referred to as “the Applicant”), is a registered person under GST Act and is a manufac...

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GST Advance Ruling in case of Mohana Ghosh- Interesting facts

In a recent ruling by the Authority of Advance Ruling (AAR), West Bengal, two interesting things occurred and this article tries to highlight the 3rd interesting thing which is missed out in the ruling of the AAR, so this is an interestingly interesting matter. The ruling was in the case of Mohana Ghosh, In Re […]...

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GST leviable on ‘Mobilization Advance’ as on July 1, 2017 received for works contract service: AAR

The West Bengal AAR in the matter of Siemens Ltd. has ruled that the Applicant is deemed to have supplied works contract service to KMRCL on July 1, 2017 to the extent covered by the lump-sum that stood credited to its account on that date as mobilisation advance and GST is leviable thereon accordingly....

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No ITC on inward supplies for in-house hospital providing free medical facilities to employees: AAR

Synopsis: The Tamil Nadu AAR in the matter of Chennai Port Trust has ruled that the Applicant, providing medical services and medicines as part of mandated rules, is not entitled to take credit of input tax on the inward supply of medicines used in providing free medical facilities to the employees, pensioners and their dependents [&helli...

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The rippling effect of tax rulings

The Indian Business Support Services industry may soon face a setback due to the recent ruling of Authority of Advance Ruling in the case of M/s Vserv Global Private Limited ...

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Body Building of Buses Whether Supply of Goods or Services

Whether the activity of building and mounting of the body on the chassis by the applicant will result in supply of goods under HSN 8707 or supply of services under SAC 9988? The above question is related to Section 97 (2) (a) of CGST Act,2017 as it is with regard to Classification & hence permitted under the said act....

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CBIC should clarify on GST Rate on Engines used Solely in Railways

Whether engine manufactured and supplied solely and principally for use in railways/locomotives are classifiable under HSN Heading 8408 or under HSN Heading 8607 of the Customs Tariff (which has been borrowed for classification purposes under GST regime) as a part used solely or principally for Railways or Tramway Locomotives or Rolling S...

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Double IGST on Overseas Freight for Imported Goods

Applicant has pleaded that the authority to levy and collect IGST on import of goods from outside India vests under the Customs Act only hence on deemed value of ocean freight the levy of RCM is without jurisdiction  under GST Law...

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No separate registration is required where imported goods are cleared under invoice from head office  

It was held that as the Applicant need not take any separate registration in Odisha and can facilitate the transaction through Mumbai Head Office GSTIN, it appears to be correct to mention the GSTIN of Mumbai in the E-Way Bill and Dispatch place as Customs warehouse situated at Paradip, Odisha....

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Bengal AAR revisits its own ruling on ITC of GST on Motor Car to Cab Operator

ANALYSIS OF AMENDMENT OF ITS OWN RULING BY AAR-WEST BENGAL ON NON ADMISSIBILITY OF ITC OF GST PAID ON INWARD SUPPLY/PURCHASE OF MOTOR VEHICLE USED FOR SUPPLYING RENT-A-CAB/RENTING/LEASING/HIRING SERVICE Case Name : Mohana Ghosh, In Re Appeal Number : 06/WBAAR/2019-20 & 08/WBAAR/2019-20 Date of Judgement :  Original on 10/06/2019 &...

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“Composite Supply”- Reimbursement of actual expenses “E-Square Leisure AAR”

In re E-Square Leisure Pvt Ltd (GST AAR Maharashtra)

-Whether GST is to be levied on reimbursement of expenses from the lessee by the lessor at actuals- In case GST is to be levied, what would be the applicable rate of GST- Whether reimbursement of expenses by Applicant can qualify as expenses incurred as a 'Pure Agent' and would not be considered in the value of supply for levy of tax...

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GST Invalidates the Tax Planning of Vat ERA

After 21 months of GST Law  being in force,  the assessees and their tax consultants are realising that GST  requires the revisit of every tax  planning / practice which was valid in VAT/ST era, This fact has been very well brought out in the recent judgement of Hon’ble Appellate Authority for the Advance Ruling (GST), […]...

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Authority for Adverse Rulings: Dis-counting discounts

In the case under discussion, the Government is receiving the tax from the supplier on the undiscounted contract value. Hence, the ITC of this tax should be fully available to the recipient making further taxable supplies, in keeping up with the spirit of GST. If any part of this ITC is denied to him, it would unnecessarily increase the c...

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Advance Ruling Provision Is Not In The Interest of Justice & Fair Play

Under section 95 of CGST/SGST Act and section 12 of UTGST Act, ‘Advance Ruling’ means a expert decision provided by the Authority or the Appellate Authority to an petitioner / applicant on the matters or on the questions specified in section 97(2) or 100(1) of CGST/SGST Act as the case may be, with regard to […]...

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Vagaries of Cross Charge & ISD – GST Council Needs to Intervene

Vagaries of Cross Charge and ISD – The GST Council Needs To Intervene- Analysis of Ruling of The AAAR (Karnataka) In M/S Columbia Asia Hospitals Pvt Ltd.) Recently The Appellate AAR in Karnataka has opened a Pandora’s box in the case of M/s COLUMBIA ASIA HOSPITALS PVT LTD. In the ruling it has held that […]...

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Taxability of inter-company supply of services in GST unveiled: An under thought area of taxation

Whether the activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states i.e. distinct persons, shall be treated as supply to attract GST?...

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GST on services by Corporate Office to unit in other states as well

The big question is whether activities performed by the employees at the corporate office in the course of or in relation to employment such as accounting, other administrative and IT system maintenance for the units located in the other states as well i.e. distinct persons as per Section 25(4) of the Central Goods and Services […]...

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FAQs – Advance Ruling under GST

Q1. What is Advance Ruling under GST? Ans. ‘Advance Ruling’ is a decision provided by the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) to an applicant on specified matters or questions, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken [&hell...

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Advance Ruling under Goods & Services Tax (GST)

Advance ruling means a decision provided by the constituted authority at the request of applicant on matters relating GST provisions. Unlike old Indirect Tax laws, it can be obtained by taxpayer on a proposed transaction as well as a transaction already undertaken....

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PIL challenging vires of AAR & AAAR under GST filed before Rajasthan High Court

PIL filed before Rajasthan High court challenging GST Act provision of constitution of Authority for Advance Ruling and Appellate Authority for Advance Ruling admitted...

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Advance Ruling under Goods and Service Tax: FAQs

What is the meaning of Advance Ruling under GST? An ‘advance ruling’ means a decision provided by the authority or the Appellate Authority to an applicant on matters or on questions specified in section 97(2) or 100(1) of CGST/SGST Act as the case may be, in relation to the supply of goods and/or services proposed to be undertaken or...

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Scope of Advance Ruling Under GST Law

Article discusses Advantages of Advance Ruling under GST Law, Questions Specified Questions Specified for Advance Ruling under GST Law, Authority for Advance Ruling (AAR) Under GST Law, Appellate Authority for Advance Ruling (AAAR) Under GST Law, Qualification and appointment of members of the Authority for Advance Ruling, Applicability o...

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‘Intermediary’ under Place of Provision of Services Rules: AAR

As per the rules, an intermediary was defined to mean any broker, agent or similar person who arranges or facilitates the provision of services or supply of goods (inserted w.e.f. 01.10.14) between two or more persons but excluded a person who provided the main service on his own account. ...

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All about Filing of Advance Ruling under Central Excise Act,1944

INTRODUCTION AUTHORITY FOR ADVANCE RULINGS CENTRAL EXCISE Advance rulings enable foreign investors to know in advance into certainty their indirect tax duty liability on production and manufacture of goods in India.2. Relevant provisions for obtaining an advance ruling are contained in Chapter IIIA in the Central Excise Act, 1944; 2.1. Th...

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No Service tax on transfer of non-exclusive right to use goods

Re. M/s SICPA India Pvt. Ltd. [The Authority For Advance Rulings (Central Excise, Customs & Service Tax)]

Whether granting of non-exclusive/ non-transferable right to use the system qualifies as transfer of right to use goods (consequently be outside the definition of service) when complete set of various machines/equipments were required to be installed & commissioned at site of customer and overall operation & maintenance processes shall be...

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No Service tax leviable on ‘car lease scheme’ of providing vehicles by employers to employees

J.P. Morgan Services India Private Ltd, Mumbai Vs Commissioner of Service Tax (Authority for Advance Rulings)

The Hon’ble Authority for Advance Rulings held that in the instant case, the Applicant charge the amount to its employees for use of the vehicles, which is equivalent to the rent amount paid to the car leasing company i.e. no extra amount is charged from employee....

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MFN Clause in Double Taxation Avoidance Conventions – To be partial or not to be

The Authority for Advance Rulings in the case of Steria (India) Limited: AAR No. 1055/2011, while concluding the fact as to whether payment made by Steria (India) Ltd. to Groupe Steria, France for management services constitutes fees for technical services exigible to withholding of tax under section 195 of the Income-tax, Act, 1961...

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Visiting India post- employment abroad could trigger tax implications

In the context of the residential status of a person employed outside India, the Authority for Advance Ruling (AAR) has recently pronounced a decision in the case of Smita Anand (A.A.R. No.1091 of 2011 Dated 19.02.2014) which provides important learnings for employees wanting to settle back in India....

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AAR explains Entire law on what constitutes a Permanent Establishment and Business Connection

AAR held that various factors have to be taken into account to decide a Fixed place PE which inter alia includes a right of disposal over the premises. No strait jacket formula applicable to all cases can be laid down....

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AAR – subsidiary created for Indian business is PE of foreign applicant company as well as its group companies in India

This is a unique Ruling rendered by the AAR wherein the concept of PE of a group of companies has been discussed. It is well known that a subsidiary of a foreign company is not enough to qualify the former as a PE of later or its group companies. The mere existence of a company control is not, in fact, enough, in accordance with Article ...

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Authority for Advance Rulings (Income-tax) – FAQs

The Advance rulings can be sought on any question of law or fact specified in the application in relation to a transaction which has been undertaken, or is proposed to be undertaken, by the non¬resident applicant. Even a resident applicant may seek rulings regarding tax liability of a non¬resident in relation to a transaction with the r...

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Roaming charges paid by telecom service providers not in nature of ‘rent’ which attracts withholding tax

On the issue of whether such payments are, alternatively, in the nature of fees for technical services (FTS), liable to tax withholding under any other provision of the ITL, the Mumbai ITAT restored the matter to the Tax Authority for fresh adjudication in the light of the Supreme Court's (SC) directions in the case of Bharti Cellular Ltd...

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All about Advance Ruling under Chapter XIX-B of the Income-tax Act

With a view to avoiding a dispute in respect of assessment of income-tax liability in the case of a non-resident (and also specified categories of residents), a Scheme of Advance Ruling was incorporated in Chapter XIX-B of the Income-tax Act. The Authority for Advance Rulings ( AAR ) pronounces rulings on the applications of the non-resid...

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AAR ruled out taxability of Income of FII from derivatives trading

Income of foreign institutional investors (FIIs) from derivatives trading will not be liable to tax in India, the Authority for Advance Rulings has said, clearing the air on taxability of the income of foreign investors trading in Indian securities. ...

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Whether income from referral services amount to fees for technical services – whether in absence of a PE, same could be taxed in India

Re. Real Resourcing Limited (Authority for Advance Rulings)

AAR Ruling: Referral fee received from an Indian based recruitment agency by a non-­resident is not liable to tax in India in view of the provisions of India-UK Double Taxation Avoidance Agreement [Real Resourcing Limited (AAR No. 828 of 2009)]....

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Fees received by a foreign company for assigning contractual rights to an Indian entity is not taxable in India

The Authority of Advance Rulings (AAR) has ruled that fees received by a foreign company for assigning contractual rights to an Indian entity is not taxable in India. The ruling of the AAR –– a quasi-judicial forum deciding queries on matters of international taxation — came on a query from an Indian company that had paid a foreign ...

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Taxability of payments received by applicant from its Indian re-seller for supply of software products to end users

M/s Dassault Systems K.K, In re. (Authority for Advance Rulings)

Authority for advance ruling recently held that payments received by the Applicant from its Indian reseller for supply of software products to end users should not be classified as royalty. The AAR further held that the relationship between the Applicant and the reseller does not create a permanent establishment (PE)...

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AAR on Payment for end to end international long distance telecom services not taxable

Cable and Wireless Networks India Private Ltd., In re. (Authority for Advance Rulings)

Cable & Wireless Networks India Private Limited („the applicant?) is engaged in the business of providing international and domestic long distance telecommunication services in India. It proposes to enter into an agreement with its group company, Cable and Wireless UK („C&W UK?) to provide end to end international long distance teleco...

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Advance Ruling on taxability of profits from international operations of ships

Gearbulk AG, In re. (Authority for Advance Rulings)

The applicant is a non-resident shipping Company incorporated under the laws of Switzerland and is in the business of shipping contracts for the transportation of cargo worldwide. During the financial years 2007-08 and 2008-09, the applicant entered into a shipping contract for transportation of cargo from Indian ports to China. The amoun...

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No tax on Foreign telecom firms for carrying calls abroad: AAR

Foreign telecom firms operating without a permanent establishment in India are no more required to pay any tax on income from carrying international calls and data services in pacts with domestic operators. Giving a ruling on an application from Cable & Wireless Networks India which proposed...

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AAR rules on whether a liaison office can constitute a permanent establishment

This alert summarizes a recent ruling of the Authority for Advance Ruling (AAR) [2009-TIOL-12-ARA–IT] in the case of K.T. Corporation (Applicant) on the issue of whether a Liaison Office (LO), acting as a communication channel, will constitute a Permanent Establishment (PE) of the Applicant under the Double Taxation Avoidance Agreement ...

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AAR on importance of the transfer pricing provision over the capital gains provision

In a recent ruling in case of Canoro Resources Limited1 (the taxpayer) the Authority for Advance Ruling (AAR) has held that The transfer pricing provisions shall override the general provisions provided for computing capital gains in the Income-tax Act, 1961 (the Act) in case of transfer of a capital asset by a partner to a firm by way ...

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Where the income is actually received or has accrued in India, the resort to deeming provision is not warranted

MUSTAQ AHMED VS. DIT (AAR) Where the income is actually received or has accrued in India, the resort to deeming provision is not warranted and s. 5(2) is sufficient to create a charge in respect of non-resident’s income. Clause (b) to Explanation 1 makes no difference to this position. ...

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Service Tax – sale of constructed houses – liable to pay Service Tax under ‘construction service’ and not under ‘works contract’ : Advance Ruling

Whether the activity of booking the residential units to be undertaken by the applicant is a taxable service liable to Service Tax under the provisions of section 65 (105) of the Finance Act, 1994? Whether the applicant is liable to service tax under section 65 (105) (zzzh) of the Finance Act, 1994 under the notified taxable service of co...

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Real Estate Developer liable to Service Tax on Residential Construction

Though the rulings of the Authority are binding only on the applicant and the service tax department; but since the issue has been settled in favour of service tax department; all the Builders and Real Estate Developers who are not paying service tax on construction of residential flats and units are going to be slapped the demands of ser...

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Latest Advance Ruling may impact billion-dollar Vodafone takeover case

Latest Advance Ruling may impact billion-dollar Vodafone takeover case; Capital gains - Transfer of shares between two non-resident entities abroad - Since situs of income is located here, it is taxable in India. TAXING capital gains has always been a tricky subject for the Revenue. If it ever involved two non-resident entities, it always...

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IT professional can’t avoid tax on foreign earnings

In a ruling which could affect tax payments of thousands of employees of Indian IT companies earning mega bucks on overseas assignments, the Authority of Advance Rulings (AAR) has said that that there was no escape from paying tax on the amount earned during a stint with the employer's foreign affiliates....

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