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Andhra Pradesh Authority for Advance Ruling (AAR) under Goods and Services Tax

Andhra Pradesh AAR under GST

AAR: Denies input tax credit on the civil structure for plant & machinery installation

  • Andhra Pradesh AAR denies GST input tax credit (ITC) to applicant engaged in the manufacturing of steel and production of power;
  • This is in respect of the goods and services used for installation of plant and machinery and for protection of plant and machinery by creating shades;
  • On account of photographic evidence AP AAR rejected applicant’s contention to treat civil structures as structural support to plant and machinery;
  • It held that civil structure under consideration does not fall under the ambit of explanation to the provision to Sec 17(5) of CGST/APGST Act,

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. Mahesh Soni appeared on behalf of the applicant.

AAR: Goods intended to be supplied to ‘Public Funded Research Institution’ not eligible for concessional rate

  • Andhra Pradesh AAR held that goods intended to be supplied by the applicant viz. Outdoor MV Panel, electrical accessories, copper wires, weatherproof enclosures, copper ballast, armored power cable, GRP junction boxes, LED fittings and lamps, 10KVA isolation transformer, HRC fuse, thruster, fans, transformer, DG sets, lightning protection, HT & LT breakers, point wiring, lighting fixtures, fans, flameproof fixtures, panels, and distribution boards, transformers and AVRs, earthing and lightning protection, meters and measuring instruments, installation charges, AC induction motors and starters, 11KV overhead lines and accessories, smoke detection system, maintenance work and trunking system for power distribution, to Satish Dhawan Space Centre (SDSC) are not covered under Notification No. 45/ 2017- Central Tax (Rate);
  • Hence, these are not eligible for concessional rate of GST;
  • The AAR noted that SDSC falls under the ‘Public Funded Research Institution’ and according to the certificate it said that the institute is under the administrative control of the Department of Space, Govt. of India;
  • Also, it concluded that goods intended to be supplied do not appear to be mentioned under column 3 in either of the four categories– (a) scientific and technical instruments, apparatus, equipment such as computers (b) accessories, parts, consumables and live animals (experimental purpose) (c) computer software (d) prototype.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. A.V.S. Krishna Mohan appeared on behalf of the applicant.

AAR: Transaction fee collected as custodian for ITE&C Dept. not subject to GST

  • Andhra Pradesh AAR held that the e-procurement transaction fee collected on behalf of ITE&C department qualifies as ‘supply’ under Section 7 of CGST/ SGST Act, 2017;
  • It referred to para 5 of G.O.Ms.No. 17 dated October 31, 2017, which clarified that the applicant will be paid a service charge @5% on the e-procurement corpus fund and e-procurement transaction fee towards services rendered by the applicant, for which they are paying tax as an independent entity for the services rendered to ITE&C;
  • The AP AAR concluded that the transaction fee collected on account of ITE&C Department, as a custodian will not attract GST;
  • Thus it elucidated that “the liability does not arise due to the amounts so collected is for services rendered by State Govt. i.e. ITE&C Dept. as per the Entry No. 6 of notification no. 12/ 2017 – Central Tax (Rate) dated June 28, 2017″.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. G. Jacob Victor appeared on behalf of the applicant.

AAR: Oil used in poultry feed liable to 5% GST under HSN 1518

  • Andhra Pradesh AAR held that product ‘Energy-G Premium Oil’ which is manufactured out of vegetable fats/ oils (and not from animal fats/ oils), is classifiable under HSN 1518 liable to 5% GST (CGST + SGST) as per Schedule I of Notification No. 1/ 2017- Central Tax (Rate);
  • It referred to Schedule I to find that HSN code 1518 contains “Vegetable fats and oils and their fractions, boiled, oxidized, dehydrated, sulphurised, blown, polymerized by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516”;
  • The AP AAR also noted that the product of the applicant is a substitute of rice bran oil used in the preparation of poultry feed and is inedible and not fit for human consumption.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. M. Rama Chandra Murthy appeared on behalf of the applicant.

AAR: Upholds 18% GST on Job-work on imported goods; Service tax exemption inapplicable

  • Andhra Pradesh (AP) AAR held that the job work service of removing caffeine from tea powder imported from foreign principal and exporting back de-caffeinated goods as per specifications of the service recipient would be taxable under APGST Act, 2017/ CGST Act, 2017 as per Entry No. 26 (HSN 9988) Proviso (iv), hence is liable to be taxed @ 18%;
  • It held that u/s 13(3)(a) of IGST Act, 2017, place of supply of this transaction is the location where services are actually performed i.e. business premises of the applicant which is located in the State of Andhra Pradesh, therefore tax liability under SGST/ CGST Act, 2017 will be applicable;
  • Also, it clarified that as Services Tax Act is subsumed under the GST Act, 2017 the Notification No. 25/2012 dated June 20, 2012, which provided an exemption from service tax, is no more applicable.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. P. Chaitanya appeared on behalf of the applicant.

AAR: Springs and leaves for springs of iron and steel liable to 9% CGST & APGST under HSN 7320

Andhra Pradesh AAR held that springs and leaves for springs of iron and steel qualify as entry number 234 of Schedule III of Notification No. 1/2017 dated June 28, 2018 – Central Tax (Rate) under Chapter Heading 7320, and are liable to be taxed at 9% CGST and 9% APGST.

The order was passed by Shri J.V.M. Sarma (State Tax) and Shri Amaresh Kumar (Central Tax). Mr. T. Vinod Babu appeared on behalf of the applicant.

AAR: Eucalyptus/Subabul wood de-barked pulpwood in cut size liable to 2.5% CGST and SGST

  • Andhra Pradesh AAR stated that the classification of the supply of Eucalyptus/Subabul wood de-barked pulpwood in cut size, supplied to various paper mills for manufacturing of pulp, under entry No. 198 in Heading 4401 of Schedule I of Notification No 01/2017 – Central Tax (Rate) dated 28th June 2017 is liable to CGST @ 2.5% and SGST @ 2.5%;
  • It noted that the said product is purchased in form of logs, then chipped and boiled to manufacture pulp;
  • AP AAR observed that the paper mills have also been purchasing the pulpwood from the Andhra Pradesh Forest Development Corporation Limited who has been supplying Eucalyptus pulpwood at the rate of 5%;
  • Hence it considered the decision of Uttar Pradesh AAR held “applicable tax rate would be 5% on the supply of Eucalyptus/ De-barked subabul wood, useful for preparation of pulp wood”.

The order was passed by Shri J.V.M. Sarma (State Tax) and Shri Amaresh Kumar (Central Tax). Mr. B. Srinivasa Rao appeared on behalf of the applicant.

AAR: Rules on the classification of tobacco leaves, applies 5% rates for most transactions

  • Andhra Pradesh (AP) AAR upheld 5% GST rate for tobacco leaves procured at tobacco platform or directly from farmers (which are cured and dried by farmers);
  • 5% rate (2.5% SGST and 2.5% CGST) is also applicable to tobacco leaves purchased from other dealers, segregation of tobacco leaves into grades based on size, shape, etc.;
  • Further, it upheld 5% rate for tobacco leaves butted and sold to other dealers as well as for tobacco leaves re-dried;
  • It classified all the above, in Schedule I – Sl. No. 109 HSN 2401;
  • Nevertheless, in respect of tobacco threshed and re-dried on job work basis at GLT plants and their subsequent sale, holds that rate applicable is 28% as per Sl. No. 13 of Schedule IV Notification No. 1/2017.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. A. Siva Prasad appeared on behalf of the applicant.

AAR: Amaravathi Metro Rail, a ‘Govt. entity’, exempts consultancy services as falling within ‘Municipality’ functions

  • Andhra Pradesh AAR holds that the applicant, Amaravathi Metro Rail Corporation Limited (AMRCL), is a Government entity and therefore consultancy services provided by it comes within the purview of Municipality functions which is exempt from GST as per Notification No. 12/2017 – Central Tax;
  • It observed that AMRCL is a special purpose vehicle which is set up vide Government of Andhra Pradesh and is 100% owned by the state of Andhra Pradesh, AAR opines that “it is evident that the applicant is a Government authority as per the Notification No. 12/2017 – Central Tax dated 28thJune 2017”;
  • Further, it held that the consultancy services for preparation of transport studies such as comprehensive mobility plan, transit-oriented development plan, NMT plan and consultancy services of transaction advisory/ preparation of DPRs comes within the purview of functions of Municipality under Article 243 read with Twelfth Schedule to the Constitution of India and accordingly, falls within the purview of the aforesaid exemption notification;
  • The AAR expounded that “urban transport and urban planning must go together and that urban transport is an integral part of urban development, which will help in ensuring that urban transport remains an integral part of urban planning at all times…”;
  • Also, it opined that the proposed activity of AMRCL also appears to be getting covered under “Public amenities including street lighting, parking spaces, bus stops, and public conveniences”.

The order was passed by Shri. J.V.M. Sarma (State Tax) and Shri. Amaresh Kumar (Central Tax). Mr. R. Narasimha Murthy appeared on behalf of the applicant.

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