RATE OF TAX FOR CERTAIN GOODS AND SERVICES
The Goods and Services Tax Act, 2017 came into
force with effect from 1.7.2017 in India.
The Central Government has clarified rate of
tax for the following items vide Circular No.206. dated 31.10.2023.
i.
Whether
‘same line of business’ in case of passenger transport service and renting of motor vehicles includes leasing of motor
vehicles without operators.
ii.
Whether
GST is applicable on reimbursement of electricity charges received by real estate companies, malls, airport
operators etc. from their lessees/occupants.
iii.
Whether
job work for processing of “Barley” into “Malted Barley” attracts GST @ 5% as applicable to "job work in
relation to food and food products” or 18% as applicable on “job work in
relation to manufacture of alcoholic liquor for human consumption”.
iv.
Whether
District Mineral Foundations Trusts (DMFTs) set up by the State Governments are
Governmental Authorities and thus eligible for the same exemptions from GST as
available to any other Governmental Authority.
v.
Whether
supply of pure services and composite supplies by way of
horticulture/horticulture works (where the value of goods constitutes not more than 25 per
cent of the total value of supply) made to CPWD are eligible
for exemption from GST
under Sr. No. 3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
The Circular issued by the Central Government
is given below for ready reference.
Circular No. 206/18/2023-GST
F. No.
CBIC-190354/195/2023-TO (TRU-II)-CBEC
Government of India Ministry
of Finance Department of Revenue (Tax
Research Unit)
To,
*****
North Block, New Delhi
Dated the 31st October, 2023
The Principal
Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of
Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarifications regarding applicability of GST
on certain services
– reg.
Based on the recommendations of the GST Council in its 52nd meeting held on 7th October, 2023 ,at New Delhi, clarification, with reference to GST levy, related to the following
issues are being issued through this circular.
i.
Whether ‘same line of business’ in case of passenger transport
service and renting
of motor vehicles includes leasing of motor vehicles without operators.
ii.
Whether GST is applicable on
reimbursement of electricity charges received by real estate companies, malls, airport operators etc. from their lessees/occupants.
iii.
Whether job work for processing of
“Barley” into “Malted Barley” attracts GST @ 5% as applicable to "job
work in relation to food and food products” or 18% as applicable on “job work in
relation to manufacture of alcoholic liquor for human consumption”.
iv.
Whether District Mineral
Foundations Trusts (DMFTs) set up by the State Governments are Governmental Authorities and thus
eligible for the same exemptions from GST as
available to any other Governmental Authority.
v.
Whether supply of pure services and composite supplies
by way of horticulture/horticulture works (where
the value of goods constitutes not more than 25 per
cent of the total value
of supply) made to CPWD are eligible
for exemption from GST under
Sr. No. 3 and 3A of
Notification no 12/2017-CTR dated 28.06.2017.
2.
Whether ‘same line of business’ in case of passenger transport
service and renting
of motor vehicles includes leasing of motor vehicles without
operators.
2.1
Services of transport of passengers
by any motor vehicle (SAC 9964) and renting of
motor vehicle designed to carry passengers with operator (SAC 9966),
where the cost of fuel is included in
the consideration charged from the service recipient attract GST at the rate of
5% with input tax credit of
services in the same line of
business.
2.2
Same line of business as stated in
the notification No. 11/2017- Central Tax (Rate) means “service procured from another service provider of transporting passengers in a motor
vehicle or renting of a motor vehicle”.
2.3
It is hereby clarified that input
services in the same line of business include transport of passengers (SAC 9964) or renting of motor
vehicle with operator (SAC 9966) and not leasing of motor vehicles without operator (SAC 9973) which attracts GST
and/or compensation cess at the same
rate as supply of motor vehicles by way of
sale.
3.
Whether GST is applicable on
reimbursement of electricity charges received by real estate companies, malls, airport operators etc. from their
lessees/occupants.
3.1
Doubts were raised on the
applicability of GST on supply of electricity by the real estate companies, malls, airport operators
etc., to their lessees or occupants.
3.2
It
is clarified that whenever electricity is being supplied
bundled with renting
of immovable property and/or
maintenance of premises, as the case may be, it forms a part of composite supply and shall be taxed
accordingly. The principal supply is
renting of immovable property and/or
maintenance of premise, as the case may be, and the supply of electricity is an ancillary
supply as the case may be. Even if electricity is billed separately, the supplies will
constitute a composite supply and therefore, the rate of
the principal supply i.e., GST rate on renting
of immovable property and/or maintenance of premise, as the case may be, would
be applicable.
3.3
However, where the electricity is
supplied by the Real Estate Owners, Resident Welfare Associations (RWAs), Real Estate Developers etc., as a pure
agent, it will not form part of value of
their supply. Further, where they charge for electricity on actual basis that
is, they charge the same amount for
electricity from their lessees or occupants as charged by the State Electricity Boards
or DISCOMs from them, they will
be deemed to be acting as pure
agent for this supply.
4.
Whether job work for processing
of “Barley” into “Malted Barley” attracts GST @ 5% as applicable to "job work in relation to food and food
products” or 18% as applicable on “job work in relation
to manufacture of alcoholic liquor for human consumption”.
4.1
References have been received
to clarify whether
services by way of job work for conversion
of barley into malt attracts GST at 5% prescribed for "job work in
relation to all food and food
products falling under Chapter 1 to 22 of the customs tariff" or at the
rate of 18% prescribed for
"services by way of job work in relation to manufacture of alcoholic
liquor for human consumption”.
4.2
Malt is a food product. It can be
directly consumed as part of food preparations or can be used as an ingredient in food products and also used for
manufacture of beer and alcoholic liquor for human consumption. However,
irrespective of end-use,
conversion of barley into malt amounts to job work in relation to food products.
4.3
It
is hereby clarified that job work services
in relation to manufacture of malt are covered by the entry at Sl. No. 26 (i) (f) which
covers “job work in relation to all food and food products falling under chapters 1 to 22 of the
customs tariff” irrespective of the end use of that malt and attracts
5% GST.
5.
Whether District Mineral Foundations Trusts (DMFTs) set up by the State Governments
are Governmental Authorities and thus eligible for the same exemptions from GST as available
to any other Governmental Authority.
5.1
DMFTs work for the interest and
benefit of persons and areas affected by mining related operations by regulating receipt and expenditure from the respective Mineral Development Funds created in the concerned district.
They provide services related to drinking water supply, environment protection, health care facilities, education,
welfare of women and children, supply of medical equipment etc.
5.2
These activities are similar
to activities that are enlisted
in Eleventh Schedule
and Twelfth Schedule of the
Constitution. The ultimate users of the various schemes under DMF are individuals, families, women and children, farmers/producer groups, SHGs of the mining affected
areas etc. The services/supplies out of DMF fund are provided free of charge
and no consideration is realized
from the beneficiaries by DMF against such services.
5.3
Accordingly, it is clarified that
DMFT set up by the State Governments are Governmental Authorities and thus eligible
for the same exemptions from GST as available
to any other Governmental Authority.
6.
Whether supply of pure services and composite supplies
by way of horticulture/horticulture
works (where the value of goods
constitutes not more than 25 per cent
of the total value of supply) made to CPWD are eligible for exemption from GST
under Sr. No. 3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
6.1
Public parks in government
residential colonies, government offices and other public areas are developed
and maintained by CPWD.
6.2
Maintenance of community assets,
urban forestry, protection of the environment and promotion of ecological aspects are functions entrusted to
Panchayats and Municipalities under Article
243G and 243W read with Sr. No. 29 of 11th Schedule and Sr. No. 8 of 12th
Schedule of the constitution.
6.3
Sr. No. 3 and 3A of notification
No. 12/2017-CTR exempt pure services and composite supply of goods and services in which value of goods does not
constitute more than 25%, that are provided
to the Central Government, State Government or Union territory or local
authority by way of any activity in
relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any
function entrusted to a Municipality under article 243W of the Constitution.
6.4
Accordingly, it is clarified that
supply of pure services and composite supplies by way of horticulture/horticulture works
(where the value of goods constitutes not more than 25 per cent of the total value of supply) made to CPWD are eligible
for exemption from GST under Sr. No. 3 and 3A of Notification no 12/2017-CTR dated 28.06.2017.
7.
Difficulties, if any, in
implementation of this circular may be brought to the notice of the Board.
Yours faithfully,
(Rajeev Ranjan) Under
Secretary, TRU