Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

GST UPDATE ON CLASSIFICATION OF SERVICES OF MINING WORK 73/2020-21

GST UPDATE ON CLASSIFICATION OF SERVICES OF MINING WORK 73/2020-21
Under the Indirect Tax regime, the classification of various items which are the subject matter of tax, be it goods or services, is an essential and integral part of the whole levy and collection mechanism. It is important both from the taxpayer’s perspective and tax collector’s perspective to have a definite class or group under which subject matters of tax can be divided. The same dispute has been resolved by various Advance Rulings under the GST regime. In this update, we shall be discussing AAR ruling of Rajasthan pronounced in the case of M/s KSC Buildcon Private Limited which shall be important for Mining industry.
M/s KSC Buildcon Private Limited is an unregistered person who has signed a contract agreement for development work of mines including the earthwork of drilling, excavation, removal, transportation of marble and dumping of waste material. Further they are responsible to build roads for movement of vehicles and for safe maintenance of the roads. Moreover the applicant is also required to deploy machinery such as IR, Poclain, JCB, Loader, Trucks along with Operation personnel, skilled and unskilled Manpower, Engineers and Accountants etc. The consideration for the above work is fixed per Metric tonne on target based production.
The applicant seeks advance Ruling with respect to the following questions
  1. Applicability of SAC and classification of said work contract in either of the two codes Viz SAC 9973 – Leasing or rental services concerning machinery & equipment with or without operator or SAC 9954 – Composite supply of work contract services?
  2. What is the difference between operator and Manpower as per GST provisions?
  3. Whether the Special Purpose Vehicles in the work order are classified as “Machinery”?
The Applicant contends that SAC 9973 shall not be applicable as they have not entered into rent or lease agreement as along with machines they have supplied operators and have undertaken the whole project of mining work as mentioned above. So they contend that the work undertaken by them fall under SAC 9954 as they didn’t find any other relevant classification.
 
Going through the agreement between the applicant and M/s AMP Minerals Pvt. Ltd.(company owning mining site) the AAR Rajasthan has found that the applicant was tasked to extract minerals by way of providing the above services mentioned. Further it is pertinent to note that the applicant has not taken the land on lease. The contention of the applicant that it is cither a Leasing or rental service of machinery with or without operator or a Works Contract Service is not tenable on following grounds –
a. The final output or basis of consideration, is quantum of mineral extracted, whereas, supply of machinery is not done with M/s AMP but for the benefit of himself. Nowhere in the agreement, M/s AMP asks the applicant to lease manpower and vehicles.
b. The foremost conditions of Work Contract Services as defined in .Section 2(119) of CGST Act, 2017 are that it leads to creation of an immovable property and then transfer of the said property in goods, whereas in the instant case, no immovable property is created and question of transfer is does not; arises as ownership of the property and minerals is with M/s AMP.
Applicant is providing a support to M/s AMP in extraction of mineral and therefore it is a kind of supplying support Service. Whereas the supply cannot be categorized as that of goods due to the fact that minerals and mining site both are under the ownership of M/s AMP throughout agreement and post-agreement too. Thus the activity undertaken by the applicant is a ‘Service’ under CGST Act, 2017.
Further, the contention raised by the applicant that his issue is similar to matter discussed in advance ruling order passed by Jharkhand Authority for Advance Ruling (JAAR) vide Order No. JHR/AAR/2018-19/01 dated 02.08.2018 is also not tenable on the ground that the order passed by JAAR is related to a partnership firm which is engaged in providing works contract services to a government entity whereas in the instant case, both facts are non-existing.
Looking into the facts, Rajasthan AAR has concluded that the service provided by the applicant is classified under “Supporting service related to mining” SAC 998622 which attracts tax rate of 18%.
The answer to the remaining two questions was not answered as they don’t fall within the scope of AAR as detailed in section 97(2) of CGST Act 2017.  Overall Section 97(2) of the CGST Act is still not wide enough to cover all issues where a taxpayer will be interested in seeking Advance Ruling. Some of these issues are refund, ITC reversals mandated under GST law, interest, penalty, procedural issues etc.
 
The Government needs to have a fresh look at whole Advance Ruling Mechanism under GST regime. The Government must attempt to widen the mechanism as far as possible and eliminate entry barriers. Further, AARs need to be more judicious vis a-vis the present revenue-minded approach. For this purpose, we are regularly demanding a centralised advance ruling authority and inclusion of judicial members in this mechanism.  Then only this will be useful otherwise trade and industry is feeling that there is no utility of the same.
This is solely for educational purpose.
You can reach us at www.capradeepjain.com, at our facebook page on https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/as well as follow us on twitter at https://www.twitter.com/@capradeepjain21.
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com