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Recent advance rulings under the GST Law
August, 27th 2018
Recent advance rulings under the GST
The Authority for Advance Ruling (AAR) constituted under the Goods and Services Tax (GST)
Law has recently pronounced advance rulings clarifying certain positions on the applicability of
GST on supply of goods from retail outlets in international airports, taxability of construction
services under GST, exemptions to education services, taxability of supply of food and
beverages to SEZs and Railways and exemption on non-branded cereals and pulses.

Issues considered and AAR's decision
       1. Rod Retail Pvt. Ltd. ­ AAR Delhi1
                     Issue                                                        Held by AAR

        Whether the supply of goods to                       Such supply cannot be treated as `export' or `zero
        international outbound passengers,                   rated supply' and GST is payable at the
        holding international boarding passes,               applicable rates.
        from retail outlets located in                       - As per GST Law, goods are said to be
        international airports and claimed to                    exported only when they cross the territory of
        be beyond the Customs Frontiers of                       India4.
        India, should be considered as zero                  - Goods cannot be said to be exported merely
        rated supply2, being export of goods3,                   on crossing the Customs Frontier of India5.
        or subjected to GST?                                 - When goods are exported by air, the export
                                                                 will be completed only when goods cross the
                                                                 airspace limits of the territory or the territorial
                                                                 waters of India.
                                                             - Outlets are located at the security hold area of
                                                                 international airports, which is not outside
                                                                 India but is within the territory of India. Hence,
                                                                 the applicant is not taking goods out of India
                                                                 and the supply cannot be treated as `export'
                                                                 or `zero rated supply'.

1 AAR Delhi No.01/DAAR/2018 dated 27 March 2018
2 As defined under section 2(23) of Integrated Goods & Services Act, 2017 (IGST Act)
3 As defined under section 2(5) of IGST Act
4 As defined under sections 2(56) of CGST Act and 2(27) of Customs Act, 1962
5 According to section 2 (28) of the Customs Act, 1962 (52 of 1962) in relation to the Customs Frontier of India under

IGST Act, `Indian customs waters' means the waters extending into the sea up to the limit of contiguous zone of India
under section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act,
1976 (80 of 1976) and includes any bay, gulf, harbour, creek or tidal river.
       2. Shri Sanjeev Sharma ­ AAR Delhi 6
                     Issue                                                      Held by AAR

       Whether GST is applicable on the                    GST is applicable on two-thirds of the total
       sale of:                                            amount. The rate of GST is 18 per cent based on
       - undivided share in land and                       the following:
       - superstructure (under                             - Sale of land is specifically excluded from the
          construction)?                                      scope of supply under GST and hence GST is
                                                              not applicable on it.
        If yes, what is the tax rate and value             - However, as per GST Law7, construction
        on which tax is applicable?                           activity is treated as supply of services.
                                                           - The supply in the given case is a composite
                                                              supply8 consisting of three components,
                                                              namely (i) land, (ii) goods and (iii) services.
                                                              Land and its superstructure become
                                                              inseparable and cannot be sold individually.
                                                           - In such a scenario, since GST is not
                                                              applicable on land, the value of land has to be
                                                              excluded from the taxable value.
                                                           - As per GST Notification9, the deemed value of
                                                              land has been fixed at one-third of the total

       3. Simple Rajendra Shukla ­ AAR Maharashtra 10
                    Issue                                                       Held by AAR

        Whether private coaching services for               Education services are taxed at the rate of 18 per
        entrance examination come under the                 cent under GST.
        ambit of GST ?                                      - However, there is a GST exemption for the
                                                               education services provided by/to an
                                                               educational institution as defined under the
                                                            - Private tutorial coaching is not covered under
                                                               the said definition of `educational institution'.
                                                            - Thus, GST is applicable on these services.

       4. Gogte Infrastructure Development Corporation Limited ­ AAR Karnataka12
                     Issue                                Held by AAR

        Whether hotel accommodation and                     In this case, place of supply shall be the hotel
        restaurant services provided within                 premises which is outside the SEZ. Thus, the said
        the premises of a hotel which is                    services shall be an `intra-state' supply and
        outside an SEZ, to employees and                    taxable under GST.
        guests of SEZ units, can be treated as

6 AAR Delhi No.03/DAAR/2018 dated 28 March 2018
7 Schedule II of CGST Act, 2017
8 As mentioned in Section in 8(a) of the CGST Act, 2017
9 As per Central Tax Notification no. 11/2017 (Rate) dated 28 June 2017 issued by the Central Government as per

powers laid down under Section 15 (5) of the CGST Act, 2017 regarding value of taxable supply
10 AAR Maharashtra No. GST- ARA-06/2017/B- 05 dated 09 March 2018
11 As per Central Tax Notification no. 12/2017 (Rate) dated 28 June 2017 issued under Section 11 of the CGST Act,

2017 regarding powers given to Central Government to grant exemption from tax
12 AAR Karnataka No. KAR ADRG 2/2018 dated 21 March 2018
        supply of goods and services to SEZ                  -    As per the provisions of GST Law13, only
        units and thus as zero rated supply?                      supply of goods and services for authorised
                                                                  operations of an SEZ are treated as supplies
                                                                  to SEZ and can be zero rated.
                                                             -    Place of supply of services by way of lodging
                                                                  and accommodation shall be the location of
                                                                  the immovable property. Also, place of supply
                                                                  of restaurant services shall be the location
                                                                  where the services are performed.

       5. M/s Deepak & Co. (AAR Delhi; No.02/DAAR/2018 dated 28 March 2018)
       Issue                               Held by AAR

        What is the applicable tax rate on    Supplying food/beverages on board train or in food
        activities of supplying:              stalls on the railway platforms is considered as a pure
                                              supply of goods. It does not have a service element
        -    food/beverages on board trains   and would not be treated as a composite supply of
             and on railway platforms as per  services. A train is a mode of transport and it cannot
             the agreements with IRCTC/Indian be called a restaurant.
        -    newspapers in trains?            Taxability would be as under:

                                                           Supply of goods, ie food, bottled water etc., shall
                                                           be charged to GST on individual values of goods
                                                           (excluding the service charges) at their respective
                                                           applicable rates.
                                                           Service charges invoiced separately are classified
                                                           under the head `catering services in train' and
                                                           GST is charged at the applicable rate.
                                                           Supply of newspapers invoiced separately shall
                                                           be taxed at 'nil' rate of GST.

       6. Aditya Birla Retail Limited ­ AAR Maharashtra 14
       Issue                                 Held by AAR

        Does declaring only the name of the                  Supply of goods at exclusive stores would amount
        company under `Manufactured and                      to supply under a brand name.
        packaged by' or `Marketed by' as per                 Supply of such goods would not fit into the
        the statutory requirements, without                  exemption given to non-branded items.
        declaring the registered                             - Certain cereals and pulses supplied by the
        trademarks/logo on packages sold                         applicant are exempt from GST subject to
        from exclusive stores, constitute                        conditions.
        'supply other than those bearing a                   - Exemption is only to such items other than
        brand-name' and qualify for GST                          those packaged in unit containers and bearing
        exemption?                                               a brand name (ie non-branded items).

13   Section 16(1)(b) of IGST Act, 2017 read with Rule 46 of CGST Rules, 2017
14   AAR Maharashtra No. GST- ARA-06/2017/B-05 dated 09 March 2018
Our comments
In complex situations, where there is ambiguity on tax positions, taxpayers may seek advance
rulings to gain clarity and avoid prolonged litigation. Advance rulings are binding only on the
respective applicant and concerned jurisdictional GST officer. If an applicant has a divergent
view on the AAR's decision, it may appeal to the Appellate Authority for Advance Ruling.

However, given the nascent stage of the GST regime, the AAR's decisions can help as a
reference point for other taxpayers and may be used as a guidance for adopting tax positions.

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