EY Tax Alert. Authority for Advance Ruling passes orders on issues raised under GST. Executive summary

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1 4 May 2018 EY Tax Alert Authority for Advance Ruling passes orders on issues raised under GST Tax Alerts cover significant tax news, developments and changes in legislation that affect Indian businesses. They act as technical summaries to keep you on top of the latest tax issues. For more information, please contact your Ernst & Young advisor. Executive summary This Tax Alert summarizes the orders passed by the Authority for Advance Rulings (AAR) under the GST in different states. The outcome of some of the key rulings are summarized below: Supply of UPS and battery for a single price cannot be considered as naturally bundled and hence is treated as mixed supply Supplier having only exempt supplies and also not liable to pay GST under reverse charge, is not required to register under the GST law Promoting the courses of foreign universities in India is not an export of service but to be treated as intermediary services liable to GST Meals provided to employees in a factory canteen is a supply liable to GST Out and out supply without physical imports into India will not attract GST Goods sold in duty free shop at Delhi Airport to international passengers travelling abroad is a supply within India and not exports, hence liable to GST Transfer of undivided share of land under a separate agreement is part of the supply of superstructure, subject however to the abatement under Notification No. 11/2017 Central Tax (Rate)

2 Page 2 Background GST law has made provisions whereby applicant can approach Authority for Advance Ruling (AAR) to seek decision on issues which may come across in proposed transaction or in transactions already taken place. AAR decides the issues specified in the concerned provisions like classification of goods or services, registration requirement, determination of time and place of supply, admissibility of input tax credit (ITC) etc. Decisions of AAR are binding of the concerned applicant and the Revenue. Thus, seeking decision from AAR may result in minimizing litigation and the cost involved therein. Various applicants located in different states approached jurisdictional AAR on various issues to seek decision. Some of the important rulings of the AAR are summarized below. Supplies cannot be treated as composite supply if not naturally bundled 1 Background and facts of the case The Applicant is the supplier of power solution equipment such as UPS, servo stabilizer, batteries etc. and supplies UPS along with the battery. In view of the definition of composite supply, mixed supply and principal supply, under the Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 (collectively as GST Act), the Applicant wants to know whether supply of UPS and battery as separate goods but for a single price would qualify as composite supply. Application was filed before the West Bengal Authority for Advance Ruling. Applicant s contentions UPS and battery are classified under Notification No. 1/2017-Central Tax (Rate) dated 28 June Explanation (v) of Rate Notification clarifies that the Rules for Interpretation of the First Schedule to the Customs Tariff Act, 1975 ( Tariff Act) including section and Chapter Notes and General Explanatory notes shall apply to interpretation of the above notification. Rules framed under section 2 of the Tariff Act are to be followed for interpretation of the section or chapter notes. machines fitted together to form a whole. Machines which are designed for the purpose of performing two or more complementary or alternative functions, are to be classified as being that machine which performs the principal function. Applicability of Note 3 (supra) is not absolute but subject to the definitions of composite supply and its taxability under section 8(a) of the GST Act. Referring to the definition of composite and principal supply, the Applicant contended the applicability of Note 3 to composite machines. After considering Note 3 of the Tariff Act, AAR observed that composite machines, as one consisting of two or more machines fitted together to form a whole, for performing two or more complementary functions can be classified as such only if they are naturally bundled and supplied in conjunction with each other in the ordinary course of business. Further, based on the classification of goods under tariff heads and understanding the technicalities of the goods supplied, AAR noted that UPS serves no purpose if the battery is not supplied along with it or removed. When UPS is supplied with built-in batteries, it can be said that supply of battery is inseparable from the supply of UPS and it can be considered as a composite machine in terms of Note 3 of the Tariff Act. Therefore, UPS being the principal supply, tax rate of UPS would be applicable on the said supply. AAR considered a situation where UPS and battery can be supplied separately under retail market. It was apparent that the UPS and battery have separate commercial values as goods and needs to be taxed under the respective tariff heads when supplied separately. Further, AAR rejected Applicant s argument that as the battery, being supplied as part of an integral contract, remains naturally bundled with UPS the principal supply by holding it as fallacious. Goods can be said as naturally bundled only in cases where the supply contract is indivisible. Therefore, contract for supply of UPS and battery, if not built as composite machine, cannot be said to be indivisible. In light of the facts and the provisions referred above, the AAR observed that the goods supplied in terms of contracts under reference are no longer naturally bundled and cannot be treated as a composite supply. Further, it observed that if combination of goods are offered at a single price, such supplies would be treated as mixed supplies as defined in section 2(74) of the GST Act. Note 3 to section XVI of the Tariff Act defines a composite machine as the one consisting of two or more 1 Switching Avo Electro Power Ltd. [2018-VIL-01-AAR]

3 Page 3 Supplier not required to register if it makes only exempt supplies and has no liability under reverse charge 2 Background and facts Applicant is a non-profit making organization set up by the Central Government under Clause 17 of the Iron and Steel (Control) Order dated 7 April 1971 (the Order). The functions of the Applicant include management and operation of the sector/industry specific Development Fund and other funds accumulated under the said Order. It also includes, study, analysis and maintenance of a comprehensive database on market situation including fluctuation in a market price, production, availability and movement of material etc. Main source of income is interest accrued on the deposits and on the loans provided from the Steel Development Fund. Secondary income is from sale of journals and periodicals. Also, the Applicant supplies rooms for rent below INR 1,000 per day per unit for accommodation in its guest houses. The Applicant submits that it has not been registered under any of the repealed Acts and hence, wants a ruling on whether it is required to get registered under the provisions of the Central GST or State GST law (GST law). Application was filed before the West Bengal Authority for Advance Ruling. Applicant s Contention Applicant has submitted that all the supplies undertaken by it, of goods and services, are exempt as the same are covered under the exemption notifications issued under the provisions of the GST law. Applicant also took the support from the provision of the Income Tax Act, 1961 (IT Act). Income from supply of services is exempt under section 10 (23C)(IV) of the IT Act. It is also submitted that the nature and type of charitable institutions and/or organizations registered under section 12AA of the IT Act and the charitable institutions and/or organizations registered under section 10(23C)(iv) of the IT Act are same and identical, and therefore, all its supplies of services should get covered under Sr. No. 1 of the notification exempting supply of specified services. The aggregate turnover from the various sources specified above exceeds the threshold limit of INR 20 lakh. A person will be required to register under the provisions of the GST law if it is not involved exclusively in exempt supplies or the supplies not liable to tax. Supplies of journals and periodicals are wholly exempt as per the Notification No. 2/2017-Central Tax (Rate) dated 28 June Also, the supply of services specified earlier are exempt under Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 amended from time to time. Further, the Applicant is not liable to discharge GST under reverse charge mechanism. Since, all the supplies made by the Applicant are exempt supplies and also, in the absence of liability to discharge GST under reverse charge, the Applicant is not liable to be registered under any of the provisions of the GST law. Promoting educational courses of foreign university in India cannot be treated as export of service 3 Background and facts Applicant is engaged in the activity of providing Overseas Education Advisory services whereby the various courses of foreign universities are promoted in India among prospective students. It also has tie ups with various universities located across the globe. It is the responsibility of the Applicant to ensure that the admission formalities are undertaken and completed in all respects. Applicant receives consideration in the form of commission for undertaking above activities. In view of the above facts, the Applicant wants to know whether the service provided to the universities abroad is to be considered as export within the meaning of section 2(6) of the IGST Act, and, therefore, a zerorated supply under the CGST/WBGST Act, 2017 (collectively as GST Act). Application was filed before the West Bengal Authority for Advance Ruling. Applicant s Contention Applicant submits that the principal supply is the service of promoting the courses of the universities located abroad and the services incidental thereto are naturally bundled to the composite supply of business auxiliary services. It is not acting as an intermediary or agent in terms of section 2(13) of the IGST Act, as it supplies the main service i.e. promotion of the university courses, on its own account. Its role is limited only to promote the courses in India and earn consideration out of it. Services provided by Applicant are to be treated as export of service. In support of its contention, the Applicant inter-alia highlighted the receipt of consideration in convertible foreign exchange. In view of these facts, the place of supply should be the 2 Joint Plant Committee [2018-VIL-07-AAR] 3 Global Reach Education Services Pvt. Ltd. [2018-VIL-06-AAR]

4 Page 4 location of the recipient outside India in terms of section 13(2) of the IGST Act. Therefore, the supply of services by the Applicant should be treated as Export of Service within the meaning of section 2(6) of the IGST Act. Revenue s contention Revenue objected to the admission of the application on the ground that determination of the place of supply is beyond the jurisdiction of the Authority. While deciding the objection raised by the Revenue, the Authority stated that the issue before them is not to determine place of supply, but whether the Applicant is providing an intermediary service and liable to pay tax thereon. The Authority referred the provision of section 2(6) of the IGST Act that defines the term export of services and stressed that to qualify any supply of service as export, all the conditions as laid down under the said subsection are to be followed in totality without any violation, and that there is no scope of partial compliance of the condition laid down therein. While scrutinizing the copy of sample agreement provided by the Applicant, the Authority came across self-contradictory provisions i.e. a clause which expressly referred Applicant as Education Agent and the very same clause also specified that the parties to the agreement won t be having principal-agent relationship. Further, another clause of the agreement contained that the consideration will be in the form of commission. Based on the clauses dealing with nature of relationship and consideration, the Authority was of the opinion that payment of consideration for supply of service in the nature of promotion of university courses should have been received irrespective of such supply facilitates recruitment or not. Since, the consideration is in the nature of commission, the Authority denied to accept the contention of the Applicant that it is an independent service provider and concluded in favor of principal-agent relationship between the parties to the agreement. Based on the facts and the documentation provided to it, the Authority concluded that the place of supply of service can be determined under section 13(8)(b) of the IGST Act and not under section 13(2) of the said Act. The place of supply under the above legal framework is the territory of India. Therefore, the Applicant s service to the foreign universities does not qualify as export of services, and is, therefore, taxable under the GST Act. Meals provided in company s factory canteen treated as taxable supply 4 Background and facts Applicant is a private limited company engaged in the manufacture and sale of footwear. As provided by the Factories Act, 1948, it is obligatory on the part of the Applicant to provide canteen services exclusively to its employees. Applicant incurs the canteen operating expenses like salary of cook, procurement of vegetables and other items and undertaking administrative function like record keeping etc. The Applicant recovers the amount proportionate to the food consumed by the employees from them at cost i.e. without adding any profit margin. In view of the above background and facts, the Applicant raised a query whether recovery / recovery of food expenses from employees for the canteen services provided by the Applicant comes under the definition of outward supplies taxable under GST Act. Application was filed before the Kerala Authority for Advance Ruling. Applicant s Contention Applicant submitted that the activity undertaken is obligatory in nature and without any profit. Further, the entire activity described above does not qualify as supply as the same is not undertaken in the course or furtherance of business. Applicant also referred to the Mega Exemption Notification No. 25/2012-Service Tax dated 20 June 2012 issued by the Government of India in the Service tax regime, whereby services in relation to supply of food or beverages by a canteen maintained in a factory covered under the Factories Act was exempt under the Service tax law. Authority admitted that in pre-gst regime there was a notification which provided exemption to services in relation to serving of food or beverages by a canteen maintained in a factory covered under the provisions of the Factories Act. However, it was highlighted by it that there is no such notification under GST regime. Further, the Authority referred the definition of the term business as defined in section 2(17) of the Kerala GST Act, 2017 and the CGST Act (collectively as GST Act or the Act) and concluded that the supply of food by the Applicant to its employees would definitely be covered under clause (b) of section 2(17) as a transaction is found to be incidental or ancillary to the main business. Also, the Authority referred Clause 6 of the Schedule II of the GST Act. As per the said clause supply by way of or as part of any service or in any other manner, of goods, being food or any other article for human consumption or any drink will be treated as supply of service where the same is supplied for valuable consideration. The Authority also commented that even in the 4 Caltech Polymers Pvt. Ltd. [2018-VIL-04-AAR]

5 Page 5 absence of profit element, the activity can qualify as supply within the meaning of section 7(1)(a) of the GST Act and applicant will qualify as supplier within the meaning of section 2(105) of the said Act. Additionally, the Authority referred the definition of consideration as defined by section 2(31) of the GST Act and concluded that since the applicant recovers the cost of food from its employees, there is consideration as defined under sub-section 31. Thus, based on the facts and provisions of the GST Act, the Authority ruled that recovery of food expenses from the employees for the canteen services provided by company would come under the definition of outward supply as defined in section 2(83) of the Act, and therefore, taxable as a supply of service under GST. GST will not be applicable on out and out supply of goods without physical importation into India 5 Background and facts Applicant is engaged in the manufacture and export of spice oil and oleoresins from India and have export trading house status. They mainly purchase spices such as pepper, ginger, cardamom etc. and extract them with solvents / chemicals to produce spice oleoresins. Major revenue of the applicant is from export of such goods. The applicant has filed the application before the AAR to understand opinion of the Revenue as to applicability of GST on two types of transactions. The same have been summarized below. Scenario No. 1 In the first type of transaction, the applicant receives an order for supply of spices from a purchaser located in USA. Applicant, in turn, places an order with its supplier located in China and instructs him to send the material directly to its US based customer and raise an invoice on applicant. Thus, the purchase order placed by the applicant is against the sales order received. Scenario No. 2 In the second scenario, in view of Applicant s global operations, it has taken a portion in the warehouse located in the Netherlands on rental basis so that it can store the goods and make the supplies of the same to its customers in a shortest possible time. To keep the storage updated, the Applicant places orders with its vendors who supplies the goods directly at warehouse. Subsequently, based on the orders, the goods are moved from warehouse. Thus, the procurements undertaken by the Applicant are not against the specific order. In view of the above facts which highlights that the goods procured by the Applicant never enters in India, and in view of the provisions of the GST law and Customs law, the Applicant wants to understand applicability of Integrated Goods and Services Tax (IGTST) on the above stated transactions. Applicant submitted a copy of purchase order issued in favor of Chinese supplier, the invoice issued by such supplier, the Bill of Lading from China to USA and the invoice issued by the Applicant to their customer in USA. Application was filed before the Kerala Authority for Advance Ruling. Ruling of the Authority for Advance Authority considered various provisions of the IGST Act, 2017, Customs Act, 1962 and The Tariff Act. The Authority considered the definition of import of goods as specified under section 2(10) of the IGST Act and the provision of section 5 dealing with levy and collection of IGST under the said Act. Newly introduced section 3(7) of the Customs Tariff Act, 1975 provides for levy and collection of IGST on import of goods. Whereas, section 15 of the Customs Act deals with date of determination of rate of duty and tariff valuation of imported goods. From the combined reading of the provisions of the IGST Act, Customs Act and the Customs Tariff Act, it is evident that the integrated tax on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods under section 12 of the Customs Act. Also, a Circular No. 33/2017-Customs dated 1 August 2017 dealing with leviability of IGST on high sea sales of imported goods and the point of collection thereof was considered by the Authority. As per Para 4 of the said circular, the GST Council has decided that IGST on high sea sales transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time. Further, value addition accruing in each such high sea sale shall form part of the value on which IGST is collected at the time of clearance. Thus, the importer (last buyer in the chain) would be required to furnish the entire chain of documents to establish a link between the first contracted price of the goods and the last transaction. Thus, it was concluded that the goods are liable to IGST when they are imported into India and the IGST is payable at the time of importation of goods into India. Since, in the present issue, the goods are not imported into India at any point, the transaction will not attract IGST. 5 Synthite Industries Ltd. [2018-VIL-02-AAR]

6 Page 6 Sale of goods at duty free shops to outbound international passengers treated as supply within India 6 Background and facts of the case Applicant is in the business of retail sale of sunglasses. The Applicant was registered under the existing law (pre- Goods and Services Tax (GST) laws) and is also registered under the provisions of the GST law. The Applicant has outlets in various parts of Delhi. It has an arrangement with the Delhi International Airport Private Limited whereby the Applicant has been permitted to have its shop/outlet within the Security Hold Area of the Delhi International Airport. Security Hold Area is the area located at airport but beyond the Customs Area. The Applicant purchases branded sunglasses from the Gurgaon based Indian subsidiary of the brand owner who is located outside India. The Applicant pays Integrated Goods and Services Tax (IGST) at prescribed rate on such procurements. Such sunglasses are sold exclusively to the international passengers travelling outside India against a valid international boarding pass. Based on the facts specified above, the Applicant wants to know whether location of the outlet can be claimed to be situated outside the territory of India to constitute the sales as zero rated export sales. Application was filed before the Delhi Authority for Advance Ruling. Applicant s contentions Applicant referred the provision of section 5(1) of the Central Sales Act, 1956 (CST Act) which determines when a sale or purchase of goods shall be deemed to take place in the course of export. In support of its contentions, the Applicant relied on the Supreme Court (SC) ruling in the case of Hotel Ashoka (Indian Tourism Development Corporation Limited) v. Assistant Commissioner of Commercial Taxes and Another7. The SC took note of the fact that Duty Free Shops are located in a Zone which is entered by crossing the customs frontier of India and any sales from the said area is duly covered under the provision of section 5(1) of the CST Act. Thus, the SC held the sales transaction has taken place outside India. The Applicant also relied on the SC ruling in the case of Collector of Customs, Calcutta v. Sun Industries 8 and applied the ratio to the present application. In the said ruling SC held that taking out to a place outside India would also mean a place in high seas and the same is beyond the territorial waters of India. Further, the Applicant considered the definitions of the term export of goods and Zero rated supply as defined under section 2(5) and section 16 of the IGST Act, 2017 (IGST Act). As per section 2(5) of the IGST Act, export of goods means taking goods out of India to a place outside India. Also, it referred definition of the term Customs frontiers of India as defined u/s. 2(4) of the Customs Act, By referring to the definition of export of goods as defined in IGST Act, Applicant submitted that bringing goods to its retail outlet amounts to taking goods out of India. Whereas, the second limb of the definition viz. to a place outside India gets satisfied when the sunglasses are supplied to international passengers. Hence, location of the outlet can be treated to be situated outside the territory of India. The Authority referred following provisions: Article 269(1) of the constitution before its amendment dated 8 September Article 269 deals with taxes levied and collected by the Union but assigned to the States. Article 286(1) of the constitution as it stood before its amendment dated 8 September 2016 was also referred by the Authority. Article 286 deals with restrictions as to imposition of tax on the sale or purchase of goods. Provision of section 2(ab) and section 5, both of the CST Act, deals with crossing the customs frontiers of India and determination of sale or purchase in the course of import or export, respectively. Definition of customs frontiers of India, export of goods, zero rated supply and India, and section 16 dealing with zero rated supply, all under IGST Act. Definition of customs area, export and India under Customs Act, 1962 (Customs Act). Section 3 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Act, The Authority referred and discussed the Supreme Court (SC) ruling in the case of Hotel Ashoka (Indian Tourism Development Corporation Limited) (supra_ wherein the similar issue was involved. After taking into account the Article 286 of the Constitution of India and section 5 of the CST Act, the SC held the transactions had taken place in the 6 Rod Retail Private Ltd. [2018-VIL-09-AAR] VIL-03-SC VIL-18-SC-CU

7 Page 7 course of import where the goods were sold beyond Customs frontiers of India, and the State Government was not permitted to levy VAT on such sale or purchase of goods. However, the AAR declined to rely on the above ruling as the issue decided by the SC was whether duty free shops may be established beyond the customs frontiers of India, whereas, the issue involved before AAR was whether the duty free shops are outside India i.e. beyond airspace on territorial waters of India. The Authority relied on the SC ruling in the case of Collector of Customs, Calcutta v. Sun Industries 9 decided on 11 April In the said case, by referring to the definition of export under section 2(18) of the Customs Act, it was held that the export of goods out of India was completed when the ship had passed beyond the territorial waters of India. Since, definition of export under section 2(18) of the Customs Act and the definition under section 2(5) of the IGST Act are exactly the same, the ratio of the judgment is squarely applicable in the present case. Based on the provisions of the Articles of the Constitution, Customs law, Sales Tax law, GST law and the SC ruling specified above, the Authority held that the supply of goods by the Applicant from their retail outlet situated in the Security Hold Area of the airport to the international passengers going abroad may be taking place beyond customs frontiers of India. However, the said outlet is not outside India as claimed by the Applicant and the same is within the territory of India. Therefore, the Applicant is not taking goods out of India and such supply cannot be called export under section 2(5) of the IGST Act or zero rated supply under section 16(1) of the IGST Act. Accordingly, the Applicant is required to pay GST at the applicable rates. Transfer of undivided share of land under a separate agreement includible in the value of supply of superstructure 10 Background and facts of the case Applicant has plans to engage itself in the development and sale of residential houses i.e. flats. For undertaking the proposed activities, the Applicant has following two options: will be entitled to sell the units developed; or To get the development rights from the land owners against ownership to the agreed number of constructed flats so that Applicant can sell undivided share of land along with the agreed number of flats allotted to him through two different agreements. In view of the above facts, the Applicant wants the ruling on the following: Applicability of GST on the sale of undivided and impartible share of land represented by Agreement to sell the land; Applicability of GST on sale of superstructure; Value and the applicable rate of GST. Application was filed before the Delhi Authority for Advance Ruling. Applicant s contentions Applicant referred Entry 5 of Schedule III of the CGST Act which provides that the transaction of sale of land and subject to clause (b) of paragraph 5 of Schedule II, sale of building, be treated neither as a supply of goods nor a supply of services. Schedule II of the CGST Act provides the list of activities which are to be treated as supply of goods or supply of services. Accordingly, Entry No. 5(b) of Schedule II of the CGST Act provides that activity of construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, be treated as supply of service. Thus, based on the conjoint reading of section 7 of the CGST Act and the above mentioned entries of Schedule II and III, agreement for sale of undivided share of land will not attract GST. Further, the Applicant referred entries related to construction services specified in the Notification No. 11/2017-Central Tax (CT) (Rate) dated 28 July 2017 and paragraph 2 of the said notification that determines value of land or undivided share of land in the construction activities as one third of the total amount charged for such supply. It was also submitted that Indian laws recognize land and superstructure as separate and independent immovable properties. So that transactions as to supply of land and superstructure developed thereon can be undertaken independently. To purchase land and undertake construction activities on its own and also by appointing contractor, so that he VIL-18-SC-CU 10 Sanjeev Sharma [2018-VIL-10-AAR]

8 Page 8 Value of land is to be ascertained on the basis of Rule 30 of the CGST Rule, as the said Rules, do not provide any other specific provision to ascertain the value of land for exclusion. Authority admitted that sale of undivided portion of land is also outright sale of immovable property and hence outside the scope of GST. Further, by referring the provision of section 7(1)(d) of the CGST Act and paragraph 5(b) of Schedule II of the said Act, the Authority mentioned that if construction activity is done on behalf of the buyer i.e. as a supply of goods or services to the buyer, GST is payable. Authority asked the Applicant to submit copy of Registered Sale Agreement to substantiate contention i.e. separate agreements to sell undivided interest in land and sell of superstructure. However, Applicant could not do so. It was held that the nature of supply in such transactions is a composite supply and components of it are: Land on which the complex or building is constructed Goods which are used in construction activities; and Services undertaken by the applicant directly or through other contractors. Authority agreed that in view of inseparable nature of sale of undivided portion of land and superstructure, a deemed value of land needs to be ascertained on which GST would not be payable. Ruling of Delhi High Court (HC) on the writ petition filed in the case of Shri Suresh Kumar Bansal v. Union of India 11 was also considered. In the said ruling, the HC agreed that sale of complex is a composite contract and service tax will be levied on service portion. The HC further agreed that service tax cannot be levied in the absence of machinery provisions to ascertain the value of such service element. Comments Rulings of the AAR may have limited applicability as the same would be binding only to the applicant and the jurisdictional tax authorities, basis the facts of the case submitted before the AAR. One will need to analyze the complete facts of the case before placing reliance on Advance Ruling as it may have a significant bearing on the tax treatment of the transactions, particularly those which are of recurring nature or involving high stakes. The finding of the AAR holding divisibility of contract as a key determinant of the nature of supply i.e. mixed supply or a composite supply, despite the products being interdependent and integral could be debatable. Industry should evaluate supplies of more than one products on case to case basis in light of the said ruling. AAR s observations on taxing the entire consideration notwithstanding the fact that the agreement between the developer and the buyer is entered after part of the construction is already completed, will need to be analyzed in light of the apex court ruling and the tax treatment under the erstwhile indirect tax regime. Non-applicability of IGST on imported goods which do not enter territory of India may remain litigious in view of its implications on reversal of input tax credit as such supply is treated as nontaxable supply. However, such machinery provision has been made in GST law by issuing Notification No. 11/2017-CT (Rate) dated 28 June 2017 pursuant to the powers conferred under section 15(5) of the CGST Act. Accordingly, under the said notification (supra), the deemed value of land or undivided share of land has been fixed at one-third of the total amount charged. Thus, it was held that GST will be levied on two-third of the total amount charged and will attract 9% CGST and 9% SGST. Further, it was held that even if agreement between the Applicant and the buyer is entered after part of the construction is already completed, whole of the consideration would be considered for computation and payment of GST VIL-284-DEL-ST

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