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Every instrument or equipment supplied to the Satish Dhawan Space Centre (SDSC) cannot avail concessional GST, the Authority for Advance Ruling (AAR) has clarified.
The AAR helps the taxpayer by giving an advance decision in relation to the supply of goods and/or services proposed to be undertaken or being undertaken by the assessee.
The decision is binding on the applicant and the jurisdictional tax authority.
Though such a decision does not have precedent value like that of a high court or Supreme Court judgment, it can be used as persuasive tool in future cases. Therefore, the decision mentioned here can be used for persuasion in matters related to supply of goods/service to institutions such as IITs and NITs.
Andhra Pradesh-based CR Enterprises intended to supply various instruments and related services to the SDSC/Sriharikota High Altitude Range (SHAR). The company wanted to know whether these supplies be eligible for tax concessions under CGST and IGST notifications.
The concession was sought on the grounds that SDSC falls under the category of ‘public-funded research institution’ and under the administrative control of the Centre’s Space Department.
Supply to such institutions is eligible for tax concession only if it falls under any of these four categories: (a) scientific and technical instruments, apparatus, equipment (including computers), (b) accessories, parts, consumables and live animals (experimental purpose), (c) computer software, CD-ROM, recorded magnetic tapes, microfilms, microfiches, (d) prototypes (the aggregate value of prototypes received by an institution does not exceed ₹50,000 in a financial year).
The AAR for Andhra Pradesh (GST) heard and examined the matter and ruled that the goods/services supplied by CR Enterprises are not covered under Notification 45/2017- Central Tax (Rate), dated 14.11.2017.
Commenting on the ruling, Anita Rastogi, Indirect Tax Partner at PwC, said that the legal jurisprudence has been that exemption notifications are always interpreted strictly.
Hence “it becomes very crucial for businesses to examine the wordings of the notification carefully before proceeding to consider an exemption.”
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