Experts CornerTarun Jain (Tax Practitioner)

Introduction

The very fact that a tax is recognised as a transaction tax on a conceptual basis implies that there must be a transaction to begin with in order to levy such a tax. Admittedly goods and services tax (GST), introduced in India in 2017, is one such tax. It is hinged upon the existence of a supply which has been legislatively defined to essentially refer to a transaction between two persons. A key element for the levy of GST is existence of “consideration”. Albeit there are certain circumstances in which consideration is not necessary and by way of a legal fiction is “deemed” to exist. In all other cases, however, consideration must flow from the recipient of the supply to the supplier in order for the transaction to be exigible to tax. Thus is introduced within the GST realm an important aspect of the law of contract, the “privity of consideration” doctrine. This post examines the nuances of the doctrine to explore its interplay under the GST law and explore its increasing application to address intricate issues which may arise owing to the peculiarities of “consideration”.

Privity of consideration: Not a sine qua non for a valid contract unlike privity of contract

Under the law of contract, privity between parties to the contract (i.e. privity of contract) is a necessity. “It is an elementary principle of English law known as the ‘doctrine of privity’ that contractual rights and duties only affect the parties to a contract, and this principle is the distinguishing feature between the law of contract and the law of property.”1 The same legal position exists under the Contract Act, 1872 (ICA). Pollock & Mulla, describing this doctrine, state “a contract cannot confer rights or impose obligations arising under it on any person except the parties to it. No one but the parties to a contract can be entitled under it or bound by it. This principle is known as that of privity of contract”.2

By contrast, privity of consideration is not a requirement for valid contract. This is on account of the definition of “consideration” set out in Section 2(d) of the ICA which permits the consideration for a contract to flow from a third party. It states that “when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”. In other words, for a contract to come into existence, it is not necessary that the consideration for the contract must necessarily come from the parties to the contract; the consideration can flow even from any other person. This aspect was resounded by the Delhi High Court, inter alia observing that “in India, whereas privity of contract is a must to create a jural relationship, privity of consideration is not essential and pertaining to a contract, consideration may flow to a contracting party from a third party, but at the instance of the other contracting party.”3

Even though there has been a proposal to amend this legal position,4 nonetheless “under the Act, the consideration for an agreement may proceed from a third party, but it does not follow that the third party can sue on the agreement”.5

Privity of consideration under GST laws: Exploring the interplay

The relevance of the aforesaid discussion under the law of contracts qua transaction taxes is brought out from the following consequences flowing from the privity doctrine:6

“The doctrine has two aspects. The first aspect is that no one but the parties to the contract are entitled under it. Contracting parties may confer rights or benefits upon a third party in the form of a promise to pay, or to perform a service, or a promise not to sue (at all or in circumstances covered by an exclusion or a limitation clause). But a third party on whom such right or benefit is conferred by contract can neither sue under it nor can rely on defences based on the contract.

The second aspect of the doctrine is that parties to a contract cannot impose liabilities on a third party. A person cannot be subject to the burden of a contract to which he is not a party. It is the counterpart of the proposition that a third person cannot acquire rights under a contract. This rule, for example also bars a person from being bound by an exemption clause contained in a contract to which it is not a party, so that a contract between A and B cannot impose a liability upon C.”

For our purpose, this summation of the legal position brings forth two aspects which may be relevant for transaction tax perspective. First, a contract between A and B can cause a benefit to flow from A to C. Second, in a contract between X and Y, the consideration to X can flow from Z (upon insistence of Y) even though Z is not a party to the contract. Let us exemplify these aspects in form of illustrations.

Illustration 1-A. A, a philanthropist executes a contract with B, a renowned NGO. Under the contract, B will carry out free evening teaching classes in identified areas to all daily wagers and their children, who are collectively referred as C. In turn, A shall compensate B for carrying out the teaching activity.

Having noted the contract law propositions, let us transpose them in transaction tax domain. For this purpose, it is imperative to take note of the legal provisions of the GST laws. The provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) carry specific stipulations to this end. Section 2 of the CGST Act inter alia defines a “recipient” and “supplier” in the following terms:

(93) “recipient” of supply of goods or services or both, means — (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied;

* * *

(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied.

Let us apply the aforesaid statutory stipulations in the illustration. Theoretically, there can be two versions on its treatment under the GST law. The first version supports the view that there is only one supply in this situation. The second version, however, moots two supplies in this illustration.

  • In the first version, A will be the recipient, as A is liable to pay for the service which B is supplying and accordingly B will be the supplier. In this version, C is a third party to the contract and thus at best a beneficiary.

  • However, second version opines that there are two supplies; the first supply being between A and B and the second supply being occasioned when B undertakes teaching to C. Accordingly to this version, B is the supplier in both supplies. However, the recipient is A (who pays for the supply) in the first supply. In the second supply C is the recipient in terms of Section 2(93)(c) of the CGST Act, which specifically identifies “where no consideration is payable for the supply of a service, the person to whom the service is rendered” is construed as the recipient of the service.

The dichotomy in the two versions under the GST law is best reconciled when the privity of consideration doctrine from contract law perspective is introduced in this scenario. The doctrine of privity of consideration clearly demystifies that there is only one contract in this situation where only A and B are the parties to the contract. The doctrine of privity of consideration is clearly able to delineate that C, even though it gets benefit from the contract between A and B, is at best a third party and thus only a beneficiary which reveals that there is no second supply.

Illustration 1-B. Let us take another illustration on similar lines. Here, P is a pauper litigant. Q is a legal aid society which empanels counsels willing to act pro bono of which R is a member. In view of P approaching Q, R represents P before the court for which R is compensated by Q.

Even in this illustration, theoretically, there can be two versions on its treatment under the GST law. The first version supports the view that there is only one supply in this situation. The second version, however, moots two supplies in this illustration.

  • In the first version, R is the service provider (of legal services) and Q is the service recipient as Q is the person liable to pay for the service which R is supplying. In this version ,P is a third party to the contract, thus, at best a beneficiary.

  • However, second version opines that there are two supplies; the first supply being between R and Q and the second supply being occasioned when R undertakes to represent P. Accordingly to this version, R is the supplier in both supplies. However, the recipient is Q (who pays for the supply) in the first supply. In the second supply P is the recipient in terms of Section 2(93)(c) of the CGST Act, similar to Illustration 1-A.

Similar to Illustration 1-A, the dichotomy amongst the two versions under the GST law in this illustration is best reconciled by the doctrine of privity of consideration. Here R has agreed to represent P on account of the contract between R and Q in terms of which Q has recommended and paid for R to represent P. Thus, the contract is between R and Q and the doctrine of privity of consideration explains why R is representing P in this situation and there is no independent transaction between R and P and there is no separate supply by R to P.

Admittedly both the above illustrations are qua philanthropic activities. However, that fact alone does not take them out of the purview of tax legislations as it is now virtually well established that mere absence of profit motive is not sufficient to ward-off tax liability.7 In any case, there is nothing in these illustrations which cannot accommodate purely commercial transactions, and thus the relevance of doctrine of privity of consideration cannot be overemphasised in the realm of GST law.

Illustration 2. X is a start-up entity which has launched a new product. X is desirous of having a wide user base for its product. X contracts with Y, a marketing company, to make the product popular by getting at least 10,000 users sign up on X‘s website and order one product each. Y would charge marketing fee from X if Y is successful in this assignment. Through intensive marketing, Y is able to successfully get the requisite number of users sign up on X’s website and order the products. These users are collectively referred to as Z. Thus, Y charges the marketing fee from X.

Even though it may be fairly obvious as to who is the supplier and who is the recipient in this illustration from a GST perspective, the doctrine of privity of consideration nonetheless confirms the analysis. By applying the doctrine of privity of consideration, it is clear that the contract is between X and Y where the consideration to X flows from Z (through activities of Y) even though Z is not a party to the contract. Thus, X is the recipient and Y is the supplier. This is so, notwithstanding the conspicuous absence of “consideration” element in the definition of “supplier” under the CGST Act.

The aforesaid illustration has a real life parallel. In the year 2016, owing to demonetisation being announced by the Government, there were difficulties for certain users to carry the cash required to be paid, for crossing a toll bridge. In order to obviate such difficulties, the Ministry permitted users to cross the bridge without making any payment during a particular period. In lieu of the loss suffered by the toll operator on this account, the Ministry compensated the toll operator. The services by way of toll were specifically exempt under the service tax law. However, when the payments were made by the Ministry to the toll operator, certain tax officers sought to levy service tax on the payment made by the Ministry to the toll operator, on the premise that the payments represented an independent service by the toll operator to the Ministry. To address the issue, the Tax Board issued a circular8 clarifying that the activity carried out by the toll operator (i.e. allowing use of the road) remained the same and it was only because the toll operator received the consideration from the Ministry that it permitted the users to use the road without payment of the toll by them. Thus, there was no change in the contract (between the toll operator and user of road) and only the flow of consideration changed. Inter alia the following conclusions were drawn in the circular:

“The service that is provided by toll operators is that of access to a road or bridge, toll charges being merely a consideration for that service. On Ministry of Road Transport and Highways of India (MoRTH)/National Highways Authority of India (NHAI’s) instructions, for the period 8-11-2016 to 1-12-2016 this service of access to a road/bridge was continued to be provided without collection of consideration from the actual user of service. Consideration came from the project authority. The fact that for this period, for the same service, consideration came from a person other than the actual user of service, does not mean that the service has changed.”

Thus, even though the circular did not make specific reference to the doctrine of privity of consideration, it nonetheless gave effect to it in practice by (a) acknowledging that consideration can flow from a third person which is not a party to the contract; and (b) accepting that flow of consideration from a third party does not change the nature of transaction between the parties to a contract. The logic underlying this circular has been extended even to GST laws,9 which clearly reveals the importance of appreciating the finer nuance of doctrine in transaction tax space, including GST.

Conclusion

The aforesaid analysis has multiple implications. First, it reveals how tax law does not operate in isolation. Instead, the contours of tax law are intrinsically interwoven with many other laws, including the law of contract. Second, there can be innate difficulties in applying the tax law on a literal paradigm, which difficulties can be smoothened by taking recourse to relevant doctrines under other laws. Third, in the specific context of the privity of consideration paradigm, the discussion clearly highlights that under GST, determining the existence of a transaction on the basis of the flow of consideration may not reveal the correct legal position given the explicit recognition of third-party consideration under the Indian law. In such view of the matter, the doctrine of privity of consideration may be gainfully employed to decipher the real contracting parties (which often gets clouded when the appraisal is from the perspective of consideration flow), and thus GST can be levied on the correct transaction instead of chasing artificial constructs. The invocation of the substance of this doctrine, as illustrated by the circular, vindicates this analysis.


†Tarun Jain, Advocate, Supreme Court of India; LLM (Taxation), London School of Economics

1. P.S. Atiyah, Atiyah’s Introduction to the Law of Contracts, (3rd Edn., 1981) p. 265, as quoted in P. Ramanatha Aiyar’s, Advanced Law Lexicon, (5th Edn., 2017) p. 4077. The same Lexicon also quotes G.H. Treitel, The Law of Contract, (8th Edn., 1991) p. 538 to state “the doctrine of privity means that a person cannot acquire rights or be subject to liabilities arising under a contract to which he is not a party. It does not mean that a contract between A and B cannot affect the legal rights of C indirectly”.

2. Pollock & Mulla, Indian Contract & Specific Relief Act, (12th Edn., 2010) p. 102. Elaborating further, the authors state that the “doctrine of privity may involve any (or more) of the four questions: (i) can a person enforce a contract to which he is not a party? (ii) can a person set up a defence based on the terms of a contract to which he is not a party in order to answer a claim brought by a person who is a party to the relevant contract? (iii) can a contracting party set up a defence based on the terms of his own contract in order to answer a claim brought by a person who is not a party to the relevant contract? (iv) can a contracting party enforce his own contract against a person who is not a party to the relevant contract?”

3. Paam Antibiotics Ltd. v. Sudesh Madhok, 2011 SCC Online Del 4911: (2012) 186 DLT 652. See also, Krishna Devloor v. N. Madhavi, 2013 SCC Online AP 160: AIR 2013 AP 138: which inter alia explains this legal position in the following terms; “Mere payment of money by one individual to another, does not, by itself, bring about the transaction of a particular description. It is only when there exists unity of opinion, or what is commonly known in the realm of contracts, as consensus ad idem, that it can be treated as a consideration of the contract of a particular description. The money can certainly constitute the consideration, in a given transaction. However, it is only when it is paid by one, to another, with a specific understanding, that it is the consideration for a contract, that the contract can be said to have come into existence. The money paid for one purpose, cannot be treated as consideration for another. Even if a person pays the amount to another, with an idea that it is the consideration for purchase of an item of property, law would recognise such event, if only the person who paid the amount establishes that the one, who received it, was also of the same idea and understanding.”

4. See, 13th Report of the Law Commission of India (1958). In Para 16, the Law Commission had noted the following:

“That a rigid adherence to the doctrine of privity is bound to cause hardship is obvious. The present state of law in India is not quite uncertain and the particular exceptions which have been acknowledged by case law and statutes do not cover all cases of hardship and thus enhance the bewilderment of the layman. As we anticipated in our Report on the Specific Relief Act, the better course would be to adopt a general exception to cover all cases of contracts conferring benefit upon third parties and dispense with the particular instances where the rule of privity should not apply. We consider the recommendations of the Law Revision Committee best suited for the purpose, and recommend that a separate section be incorporated on the lines thereof.”

5. Pollock & Mulla, Indian Contract and Specific Relief Act, (12th Edn., 2010) p. 103. For English law on the subject, see Dunlop Pneumatic Tyre Co. v. Selfridge & Co., 1915 AC 847 inter alia observing that “My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our law knows nothing of a jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in personam. A second principle is that if a person with whom a contract not under seal has been made is to be able to enforce it consideration must have been given by him to the promisor or to some other person at the promisor’s request. These two principles are not recognised in the same fashion by the jurisprudence of certain continental countries or of Scotland, but here they are well established. A third proposition is that a principal not named in the contract may sue upon it if the promisee really contracted as his agent. But again, in order to entitle him so to sue, he must have given consideration either personally or through the promisee, acting as his agent in giving it.” (per Viscount Haldane L.C.) See also, Scruttons Ltd. v. Midland Silicons Ltd. 1962 AC 446: (1962) 2 WLR 186: (1962) 1 All ER 1, etc.

6. Pollock & Mulla, Indian Contract and Specific Relief Act, (12th Edn., 2010) p. 106.

7. See generally, State of T.N. v. Port of Madras, (1999) 4 SCC 630. In any case, in a transaction tax (unlike income tax), there would ordinarily be no difference between commercial activities and non-profit driven activities.

8. Circular No. 212/2/2019-Service Tax dated 21-5-2019.

9. Refer, Circular No. 178/10/2022-GST dated 3-8-2022, relevant at Paras 8-8.1.

Telangana High Court
Case BriefsHigh Courts

   

Telangana High Court: While allowing the instant petition filed under Article 226 of the Constitution of India, for quashing the impugned order dated 03-06-2022 passed by Telangana State Authority for Advance Ruling (‘Authority') and to consider the application for advance ruling under Section 98 of the Central Goods and Services Tax Act, 2017 (‘CGST'), the division bench of Ujjal Bhuyan, C.J., and C.V. Bhaskar Reddy, J., held that the investigation post filing of the application will not debar the applicant from seeking an advance ruling.

Facts:

The petitioner is a private limited company incorporated under the Companies Act, 1956 and is engaged in the business of undertaking works contract mostly with the Central and State Governments. The petitioner is a registered supplier under the CGST Act .

As per the petitioner's counsel, the rate of Goods and Service Tax (‘GST') for work contracts undertaken with the Central Government Employees Welfare Housing Organization (‘Organization') will be 18%. But according to the Organization, GST will be 12%. Hence, the Organization paid GST to the extent of 12% and, after deducting the same, made a payment to the petitioner due to which the petitioner incurred a loss besides being susceptible to the charge of underpaying GST.

On 11-05-2019, the petitioner submitted an application for advance ruling on the question as to what would be the rate of tax on works contract services rendered by it to the Organization. However, there was inordinate delay in providing advance ruling.

On 15-02-2021, the respondent issued a letter to the petitioner alleging short payment of GST i.e., 12 % instead of 18% which was followed by summons to the Managing Director, directing his appearance before the respondent on 05-01-2022.

After 3 years, on 25-04-2022, the Authority issued notice to the petitioner scheduling a personal hearing on 27-04-2022. The petitioner requested the Authority to give a ruling on the application dated 11-05-2019. The Authority noted that the Directorate General of GST Intelligence (‘DGGI') had initiated an enquiry on the question raised by the petitioner. Through the impugned order dated 03-06-2022, the application was rejected and thereby, the present petition is filed.

Issue:

Whether investigation post- filing of an application for advance ruling would debar the applicant from seeking advance ruling?

Observation and Decision:

The Court observed that the word “proceedings” has neither been defined in Chapter XVII (deals in advance ruling) nor in the definition clause of the CGST Act. Therefore, the enquiry or investigation would not come within the ambit of the word “proceedings”.

The Court held that the Authority was not justified in rejecting the application of the petitioner. Further, the Court directed the Authority to take on the application filed on 11-05-2019 and pass an appropriate order after giving due opportunity oh hearing to the petitioner within a period of 2 months.

[Srico Projects (P) Ltd v. Telangana State Authority for Advance Ruling, decided on 17-08-2022]


Advocates who appeared in this case :

Dr. S.R.R. Viswanath, Advocate, for the Petitioner;

Ms. Sapna Reddy, Advocate, for the Respondent.

Legislation UpdatesNotifications

   

On 10-08-2022, the Ministry of Railways has issued guidelines for implementation of Goods and Service Tax (‘GST') implications on recovery of liquidated damages which were given by the Central Board of Indirect Taxes and Customs (‘CBIC') vide circular dated 03-08-2022.

Key Points:

  1. Purpose of the CBIC circular: to implement correct GST practice and ensure uniformity in the manner of payments in cases where liquidated damages are levied on the vendors for non- performance of conditions of a contract. Through the circular, CBIC has clarified that payment of such damages is not the desired outcome of the contract, with regard to the taxability of liquidated damage.

  2. Liquidated damages do not constitute consideration received for supply by way of tolerating the breach or non- performance of contract and are not taxable.

  3. Where there is a delay in rendering of supply and the payment is received by the Railways in the form of liquidated damages against tolerating non- performance, it is not liable to GST.

  4. Where a vendor has to be paid and the liquidated damage has been levied, the amount payable will be paid amount of supply including GST less amount of liquidated damage without GST.

Vide CBIC circular dated 03-08-2022: The Ministry of Finance stated that GST will only be applicable in case of cancellation of AC First Class tickets.

Rule: Cancellation of charges of railway tickets for a class would attract GST at the same rate as applicable to the class.

Explanation: 5% GST for the AC First Class tickets and no GST will be imposed on other categories.

Calcutta High Court
Case BriefsHigh Courts

   

Calcutta High Court: Md. Nizamuddin, J. took cognizance of a writ petition which was filed for the relief by way of direction upon the respondents authority concerned to bear the additional tax liability for execution of subsisting Government contracts either awarded in the pre-GST regime or in the post GST regime without updating the Schedule of Rates (SOR) incorporating the applicable GST while preparing Bill of Quantities (BOQ) for inviting the bids and also to neutralize the impact of unforeseen additional tax burden on Government contracts since the introduction of GST w.e.f. 01-07-2017 for ongoing contract awarded before the said date and to update the State SOR incorporating applicable GST in lieu of inapplicable West Bengal VAT henceforth.

After hearing the parties, the Court gave liberty to the petitioners to file appropriate representation before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks from date. Additional Chief Secretary, Finance Department was directed to take the final decision within four months from the date of receipt of such representation after consulting with all other relevant departments. Any coercive action was barred against the petitioners until the final decision.

It was further expected of the Additional Chief Secretary to pass a reasoned and speaking order on merit and after considering all the judgments of different High Courts upon which petitioners intend to rely.

[Saptarshi v. Deputy Commr. of State Tax, WPA 3994 OF 2022, decided on 17-08-2022]


Advocates who appeared in this case :

Ankit Kanodia, Himangshu Kr. Ray, Megha Agarwal, Advocates, for the petitioner;

Tapan Bhanja, Advocates, for the Union of India in item No. 2;

Anirban Ray, T.M. Siddiqui, D. Ghosh, Advocates, for the State.


*Suchita Shukla, Editorial Assistant has reported this brief.

Legislation UpdatesNotifications

On 02-08-2022, the Goods and Service Tax Network has introduced a Single click Nil filing of GSTR-1 on the GSTN portal in order to improve the user experience and performance of GSTR-1/IFF filing. Taxpayers can now file NIL GSTR-1 return by simply ticking the checkbox File NIL GSTR-1 available on the GSTR-1 dashboard.

Eligibility to file NIL GSTR-1: Taxpayers may file NIL GSTR-1 if they have:

  • No Outward Supplies (including supplies on which tax is to be charged on reverse charge basis, zero rated supplies and deemed exports) during the month or quarter for which the form is being filed for, or
  • No Amendments to be made to any of the supplies declared in an earlier form,
  • No Credit or Debit Notes to be declared/amended,
  • No details of advances received for services is to be declared or adjusted.

Steps to file NIL GSTR-1:
Taxpayers shall login to GST portal and navigate to online form GSTR-1 by selecting relevant GSTR-1 period in Returns dashboard (Services > Returns > Returns Dashboard > Form GSTR-1 > Prepare Online).

  1. Select File NIL GSTR-1 checkbox: In the GSTR-1 dashboard, a File NIL GSTR-1 checkbox shall be available at the top. If the taxpayer is eligible to file NIL GSTR-1, they can select the File NIL GSTR-1 checkbox. On click of the checkbox, system will show a note related to NIL filing and all the tiles/tables shall be hidden.
  2. File Statement: To file Nil GSTR-1, taxpayer need to click File Statement button, which shall be available at the bottom of the GSTR-1 dashboard page. On clicking of ‘File Statement’ button, taxpayers will be navigated to the filing page to file GSTR-1/IFF using DSC/EVC.
AAR GST
Case BriefsTribunals/Commissions/Regulatory Bodies

Tamil Nadu Authority for Advance Ruling: T.G. Venkatesh, Additional Commissioner, and K. Latha, Joint Commissioner held that concerning vessel support services provided to foreign vessels, the service provided falls under export of services as per provisions of the Integrated Goods and Services Tax Act, 2017 (IGST Act) as the place of supply is outside India.

Facts of the case

The applicant is engaged in providing support services related to vessel management to its group company, New Shipping Kaisha Ltd. (Japan).

An application was filed by the applicant, under Section 97 of the Central Goods and Services Tax Act, 2017 before the Tamil Nadu Authority for Advance Ruling to seek an Advance Ruling on the following:

  • Whether the vessel support services provided by the applicant to its group company outside India qualify as “Export of Services” under GST?

Analysis and Decision

The Bench stated that supply of services under Section 2(6) of the IGST Act includes the supply of any service which is provided outside India, the payment received by the supplier is in foreign currency, and the supplier and recipient are not merely the establishment of a distinct person. Therefore, the Bench opined that to determine whether the supply amounts to the export of service, the place of supply is to be determined.

Further, on a joint reading of Sections 13(3) and 13(6) of the IGST Act, the Bench observed that the statutes prescribe the location in the taxable territory where any support services requiring the physical availability of the vessel under management is supplied, then the place of supply is the location in the taxable territory in respect of that voyage of the vessel.

Therefore, the Bench held the following:

  • The vessel support services provided about foreign vessels sailing to other countries outside India, fall under export of services as per Section 2(6) of the IGST Act, as the place of supply in such cases is entirely outside India.
  • Vessels calling out at Port of India, then the place of supply in respect of that vessel is in India as per Section 13(6) of the IGST Act and the services rendered are not export of services.

[NSK Ship Management Pvt Ltd, 2022 SCC OnLine TN AAR-GST 7, decided on 30.06.2022]

Uttarakhand High Court
Case BriefsHigh Courts

Uttaranchal High Court: The division bench of Sanjaya Kumar Mishra, acting C.J., Ramesh Chandra Khulbe, J., held in the writ petition is maintainable, as the cancellation of GST registration affects the rights of livelihood enshrined under Article 21 of the Constitution of India.

The division bench observed that in absence of a GST registration number, a professional cannot raise a bill which affects the chances of getting employment or executing works. Such denial of registration, therefore, affects the right of livelihood that is violative of Article 21 of the Constitution. If the situation so prevailing continues, then it will not only amount to a violation of Article 21 but also the right to life of a citizen of this country.

Facts:

The petitioner is a working mason/ painting professional who applied for GST registration and the registration no. was allotted to him but, hee failed to file his return for a continuous period of six months which was mandatory under the Uttarakhand Goods and Services Tax Act, 2017. Hence, his registration got canceled on 21-09-2019.

The petitioner preferred an appeal before the First Appellate Authority which got dismissed on the grounds of delay. Thereafter, a writ petition was filed which was also dismissed as not maintainable by the Single Judge. It was observed in the writ petition that an alternative remedy of appeal was available to the petitioner under Section 107 of the Uttarakhand Goods and Services Tax Act, 2017. Aggrieved by the order of the Single Judge, the petitioner filed this intra court appeal.

The appellant argued that the High Court can exercise its jurisdiction even in cases where alternative and efficacious remedies are available. It was also argued that the Statute does not provide any prohibition against the exercise of the writ jurisdiction under Article 226 by the High Court.

Issue:

1. Whether a writ petition is maintainable when the limitation period provided for filing an appeal is not extendable?

2. Whether the Assistant Commissioner of GST, whose order is challenged in this case, is an adjudicating authority, or not?

Analysis & Observation:

The Court observed that the law made by the Parliament regarding appeals is very strict. It was pointed out that the law does not grant the First Appellate Authority to extend the limitation beyond one month after the expiry of the prescribed limit due to which the petitioner is put to hardship and left with no remedy.The Court noted that a notice was given on the website regarding the cancellation of GST registration which was not sufficient and a personal notice was supposed to be given. . The Court while allowing the appeal and remanding the matter back said that the petitioner is a semi-skilled labourer and now-a-days bills for any work executed for a private player or, even for the Government agency, are drawn on-line. In most cases, the payments are made direct to the bank on production of the bill with the GST registration number. In the absence of GST registration number, a professional cannot raise a bill. So, if the petitioner is denied a GST registration number, it affects his chances of getting employment or executing works. Such denial of registration of GST number, therefore, affects his right to livelihood. The Court relied on Radha Krishan Industries vs State of Himachal Pradesh, (2021) 6 SCC 771,

wherein it was held that a Commissioner is not an adjudicating authority, hence an appeal will not lie against the orders passed by him under Section 107 of the Uttarakhand Goods and Services Tax Act, 2017. The Court, hence, set aside the order by learned Single Judge and held that the learned Single Judge has committed error by holding that the writ petition is not maintainable.

[Vinod Kumar v. Commissioner Uttarakhand State 2022 SCC OnLine Utt 777, decided on 20-06-2022]

Madras High Court
Case BriefsHigh Courts

   

Madras High Court: Anita Sumanth, J. set aside the impugned order which rejected a registration application filed under Section 22 read with Section 25 of Central Goods and Service Tax (‘CGST Act') and Rule 8 of CGST Rules, without assigning proper reasons and adhering to proper procedure.

The petitioner filed an application seeking registration in accordance with Section 22 read with Section 25 of the CGST Act, 2017 and Rule 8 of the CGST Rules, 2017 in respect of a rice mandi which was duly acknowledged, and physical verification was also duly undertaken. A notice was issued by the respondent officer seeking clarification as the application did not enclose the details of the principal place of business of the petitioner. Pursuant to which, a copy of the rental / lease deed was uploaded however, registration was refused by way of a monosyllabic order simply mentioning ‘rejected’ without assigning any reasons or explanation for rejection. Aggrieved by this, the present petition was filed.

Rule 9(4) of the Central Goods and Services Tax Rules, 2017 states:

‘9. Verification of the application and approval

………….(4) Where no reply is furnished by the applicant in response to the notice issued under sub-rule (2) or where the proper officer is not satisfied with the clarification, information or documents furnished, he [may], for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05.’

The Court noted that the word ‘may’ only refers to the discretion to reject and not to blatantly violate the principles of natural justice. If the assessing authority is inclined to reject the application, which he is entitled to, he must assign reasons for such objection and adhere to proper procedure, including due process.

Thus, the Court allowed the petition and set aside the impugned order.

[B C Mohankumar v. Superintendant of Central Goods and Service Tax, WP No. 13272 of 2022, decided on 16-06-2022]


Advocates who appeared in this case :

Adithya Reddy, Advocate, for the Petitioner;

Prakash for Mr. Rajendran Raghavan Senior Standing Counsel, Advocates, for the Respondent.


*Arunima Bose, Editorial Assistant has reported this brief.

AAR GST
Case BriefsTribunals/Commissions/Regulatory Bodies

   

Appellate Authority for Advance Ruling, Punjab: Arun Narayan Gupta Chief Commissioner, CGST Commissionerate, and Kamal Kishor Yadav, Commissioner of State Tax held that the distribution of match tickets to related persons for the promotion of business attracts GST.

The factual background of the case

The appellant entered into a Franchise Agreement in April 2008 with the Board of Control for Cricket in India (BCCI) to establish and operate a cricket team in the Indian Premier League (IPL) under the title of ‘Punjab Kings’. The Appellant intended to distribute match tickets free of cost as a goodwill gesture for the promotion of business. These tickets were distributed without any consideration by the Appellant. The Appellant approached the Authority for Advance Ruling, Punjab (AAR Punjab) to clarify the treatment of GST liability on the supply of complimentary tickets.

AAR Punjab held the act of Appellant of issuing complimentary tickets displayed an act of forbearance. Aggrieved with the judgment the Appellant filed an appeal under Section 99 of the Punjab GST Act and Central Good and Services Act, 2017 (CGST) before the Appellant Authority of Advance Ruling to seek advance ruling for the following:

  • Whether the activity of providing “Complimentary tickets” by the appellant falls within the definition of supply under the Punjab GST Act, 2017 /CGST Act, 2017?

  • Whether the appellant would be required to pay tax on such complimentary tickets?

Analysis and Decision

The Bench stated that the two key elements that are required to be present for any activity or transaction to fall within the ambit of supply are “consideration” as well as “furtherance of business”. Therefore, the Bench opined that if any activity or transaction mentioned in Schedule II of the CGST the same has to fulfill the two key parameters i.e., presence of “consideration” as well as “furtherance of business” for it to be treated as supply under the Act.

The Bench observed that even for the consideration in the form of payment in kind, it should not be vague or illusory and there should be an element of reciprocity, and the expression “exempt supply” as defined under the CGST means the supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under Section 11, or under Section 6 of the Integrated Goods and Services Tax Act, 2017 and includes the non-taxable supply.

Therefore, the Bench held that the activity of providing complimentary tickets is an exempt supply, and there shall be no availment of Input Tax Credit according to Section 17 (2) of the CGST.

Hence, complimentary tickets provided by the Appellant fall within the ambit of supply on account of Schedule I of the CGST, and the Appellant would be liable to pay tax on the same.

[KPH Dream Cricket Pvt. Ltd., 01/AAAR/CGST/KPH/2022, decided on 01-06-2022]

AAR GST
Case BriefsTribunals/Commissions/Regulatory Bodies

   

Tamil Nadu Authority for Advance Ruling: T.G. Venkatesh, Additional Commissioner of GST & Central Excise, and K. Latha, Joint Commissioner of State Tax has held that the contracts relating to solid waste management and removal of legacy waste dumped at bio-mining sites, except Bio-CNG are exempted from GST.

Factual Background of the case

The applicant is in the bio-waste management sector and does all types of waste management like collection and transportation, manpower supply, bio-mining, micro composting center, and bio- CNG gas.

An application was filed by the applicant, before the Tamil Nadu Authority for Advance Ruling to seek an Advance Ruling on the following:

  • Whether contracts received from various city corporations and a municipality towards solid waste management are exempted from GST?

  • Whether contracts received from various city corporations and a municipality towards the removal of legacy waste dumped at dump sites through Bio-Mining process is exempted from GST?

Analysis and Decisions

The Bench referred to the definition of ‘pure services' as defined under Sl. No.3 of Notification 12/2017- C.T. (Rate) dated 28-06-2017. According to the definition, “Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243-G of the Constitution or in relation to any function entrusted to a Municipality under Article 243-W of the Constitution.

In the light of the above definition, the Bench gave the following decision-

A. Removal of Legacy waste

The Bench observed that removal of legacy waste and reclamation of land is a process whereby the accumulated legacy solid waste is segregated, and the dump site is cleared to reclaim the lands for better usage. Therefore, the Bench held that the contracts received from various city corporations and municipalities towards the removal of legacy waste dumped at the site through the bio-mining process are pure services rendered to local authority and such act is being entrusted to a municipality under Art. 243-W of the Constitution. Hence, such contracts are eligible for exemption from GST.

B. Micro-composting and labour services

The Bench observed that the applicant, to carry out the activity of removal of legacy waste, needs to maintain micro compost centers and employ labourers and operators in order to carry out the service. Therefore, the bench held that contracts entered into for Maintenace of micro-composting and labour contracts for collection of solid waste are ‘pure services' rendered to local authorities and are activities rendered to local authorities and entrusted to the municipality under Art. 243-W of the Constitution.

C. Production of Bio-CNG

Further, the Bench opined that conversion of wet waste into BIO-CNG does not fall under the pure services as the applicant needs to set up a separate plant and machinery and structure as a new product is being produced and no service is being rendered to a local authority or the Government. Therefore, the bench held that the contract on Bio-CNG does not qualify as pure services. Hence, it was not eligible for GST exemption.

[Srinivas Waste Management Services Pvt. Ltd., Or, No. 23/AAR/2022, decided on 30-06-2022]

by Tarun Jain
Experts CornerTarun Jain (Tax Practitioner)

Introduction

Under the incumbent regulations, obligation to pay Goods and Services Tax (GST) presupposes that the activity carried out by one is a supply liable to GST. The determination of this question rests upon satisfaction of the various conditions under the GST laws which inter alia involve determining the “classification” of supply. This in turn requires one to characterise the supply. In other words, characterisation of supply forms the bedrock of GST, or any transaction tax for that matter. A recent decision of the Calcutta High Court raises an interesting issue which forces one to revisit the principles governing characterisation of services and thus, in turn, the classification of supply of services.

Calcutta High Court decision

The decision of the Calcutta High Court in Ramesh Kumar Patodia v. Citi Bank NA2 is on relatively simple facts. In this case the petitioner held a credit card with a bank which offered instant loan above the credit limit. Upon his acceptance the bank issue a loan which was repayable in EMIs. The bank levied GST on the interest component of EMI. The levy of GST on this interest component was challenged before the High Court. It was pleaded by the petitioner that the GST law exempted “services by way of extending deposits, loans or advances insofar as the consideration is represented by way of interest or discount (other than interest involved in credit card services)” and accordingly the levy of GST was unlawful.

For the petitioner, it was contended before the High Court that the transaction was one of “loan” and thus GST was exempt. Per contra, the levy of GST was defended by the respondents contending that the exemption was not available as the loan in this case was intrinsically connected to the credit card services which were carved out from the exemption. In a short fact based conclusion the High Court agreed that the transaction was taxable inter alia observing as under:

26. It is evident from the offer of loan that the same was not an offer to all intending borrowers but was restricted to a particular category of persons holding the Citi Bank credit card. The criteria for processing the loan, the manner in which the EMI of loan is reflected in the credit card statements and the charging of interest in case there is a shortfall in the payment of the amount due as well as the mode of payment all goes to prove that the service rendered by the bank in extending the loan in question is nothing but a service pertaining to the said credit card.

27. Petitioner has accepted the offer made by the bank contained in the aforesaid communications dated 21-2-2019 and 28-2-2019. Thus, the terms and conditions mentioned in the said communications are also accepted by the petitioner. In view thereof this Court is unable to accept the contention of the learned advocate of the petitioner that the services by way of extending loans by the bank in the instant case does not amount to credit card services.

The decision of the High Court may well have concluded the controversy in this case, but as it is evident from the aforesaid reasoning, it is difficult to gauge the legal principle flowing therefrom. The rationale for this state of affairs is the conspicuous absence of objective and principle-driven rules for classification of services under the GST laws. This also prompts a larger question, whether every transaction require similar fact-intensive dissection in order to ascertain the intrinsic characterisation of supply or are there any objective rules to this end in the GST law? Thus one is compelled to review the legal position.

Rules governing classification under erstwhile services tax law

Before adverting the classification principles under the GST law, it is expedient to take note of the statutory provisions governing the levy of service tax law which has been replaced by GST. This is because specific principles for classification of services were engrafted in the Finance Act, 1994 which provided for levy of service tax. There were two different provisions in the law. Section 65-A3 applied for the period up to June 2012 and Section 66-F4 governed the law from July 2012 until June 2017 when service tax was subsumed in GST.

Both these provisions emphasised on the dominant nature of the service insofar as it was provided that the classification shall be inter alia determined basis “most specific description” and the “essential character” test. These tests were akin to a widely accepted principle of statutory interpretation that a special provision prevails over a general one. Accordingly, a large number of classification disputes in the service tax context stood resolved through this principle.5 Nonetheless, the fact remained that there was no objective principles for classification of services in the service tax law.

Scheme governing classification of services under GST laws

With the advent of GST, the provisions governing levy of service tax were replaced by the GST laws. However, the GST laws did not improve upon the position prevailing in the service tax law vis-à-vis the principles governing classification of services. Indeed the GST laws provide for rules governing classification to address instances of simultaneous multiple supplies, referred to as “composite supply”6 and “mixed supply”7 under the GST law.8 In addition, there are also certain tie-breaker provisions in the GST laws whereby a classification conflict between “goods” versus “services” is resolved.9 However, there is no statutory provision in the GST laws which determine classification of services.

The void in the GST law is addressed by way of subordinate legislation. The Government is inter alia empowered under the GST law to notify the rate of GST on supply of services.10 Acting on such empowerment, the Government issues statutory notifications enumerating the rate of tax qua specific services.11 As a part of these notifications, the Government has issued a “scheme of classification of service” which houses all services under “Chapter 99” which is comprised of various “sections”, “headings”, “groups”, etc.12 In order to explain this “scheme”, the GST Council has issued “explanatory notes” which “indicate the scope and coverage of the heading, groups and service codes of the scheme of classification of services”. To ward-off doubts on the relevance and legality of these notes, it is clarified that “[t]hese may be used by the assessee and the tax administration as a guiding tool for classification of services”. The most crucial part in these notes it the clarification that “where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description”.

The aforesaid reveals that the “most specific description” test in the service tax law has been continued in the GST law for the purposes of classification except the technical change that the test which had statutory mandate under the service tax law instead finds place by way of an administrative instruction under the GST legal framework.

Illustration of service classification disputes under GST laws

It is unarguable that the “most specific description” test inherently carries a great deal of subjectivity. The lack of rule-based principles governing classification of services under the GST law has therefore, expectedly, resulted in disputes. A larger number of advance rulings have addressed such disputes, which serve as illustrations to the grim situation and exemplify the need for more pronounced principles governing the classification of services. To this end, it is expedient to note certain examples of the disputes pertaining to service classification under the GST laws.

(A) Yulu Bikes (P) Ltd., In re13

In this case an interesting issue came up regarding the classification of services. The company was engaged in renting of e-bikes/bicycles through a technology driven mobility platform. They would enter into an agreement with customer permitting of the e-bikes/bicycles and charge based on the time of usage. The issue was whether this activity would be classified under SAC14 9966 as rental services of transport vehicles or under SAC 9973 as leasing or rental services without operator. It was argued for the company that e-bikes/bicycles rented out by it to the customers were essentially “goods” which are movable property and are goods included in SAC 9973, therefore, supplying renting services in respect of e-bikes/bicycles without operators is appropriately classifiable under SAC 9973.

The appellate authority for advance ruling disagreed with the principle canvassed by the company and yet accepted the proposed classification. It pointed out that earlier the scope of SAC 9966 covered rental services of transport vehicles with our without operator. However, after its amendment SAC 9966 only covered rental services of transport vehicles with operator. Accordingly, the scope of SAC 9966 had been statutorily limited and thus despite it being the most specific description, it had to be ignored for classification purposes. The authority explained the consequential legal position in the following terms:

“Although Heading 9966 is specific to renting of transport vehicles, we cannot ignore the fact that the heading is specific only to renting of transport vehicles with an operator. Classifying the appellant’s activity under Heading 9966 especially when their vehicles are rented without an operator, would not be correct. The more specific heading would be renting of goods without operator. Therefore, we hold that the service of renting of e-bikes and bicycles by the appellant without an operator is classifiable under Heading 9973.”

Thus, on a technical construct of the competing classification headings, the authority opined that even though “renting of transport vehicles” was the most specific classification, this classification was to be rejected in view of its technical construct which limited its scope and the classification of service was to be under a general classification which covered all classes of leasing activity qua all goods. This case also highlights the limitation of the most specific description test and its ability to holistically address classification of services.

(B) Oswal Industries Ltd., In re15

In this case the company operated naturopathy centers which offered physical, psychological and spiritual health overhaul. It also offered for corporate clients wellness facilities for diverse types of diseases. It claimed, “that such wellness facilities are provided with the help of highly qualified professionals’ doctors in the field of naturopathy, researchers, and support staff”. The company claimed exemption from GST on the ground that “services by way of health care services by a clinical establishment, an authorised medical practitioner or para­medics” were notified as exempt and the expression “clinical establishment”16 was also widely defined which covered them. The authority, however, rejected this submission which was based on the intrinsic elements of the services provided by the company and thus was arguably based upon the “most specific description” principle itself.

Having a close look at the business model of the company, the authority opined that the company was providing a bundle of services wherein “the principal supply would be the accommodation services since the therapy can in no way be administered without accommodation. In fact, there is no option available for the customer to avail the wellness package without opting for the accommodation”. For this reason, the authority refused to extend the exemption to health care services and instead classified the activities as “accommodation services”.

The aforesaid reveals that, notwithstanding the core activity of the company as being health care, owing to the manner in which the services were rendered to the customers, the classification was not made under health care services under the GST law. Thus, the most specific description test and the extensive explanation as to the business model of the company (and the fact that its core activities were indeed health care services as contrasted from hotels and other accommodation services) were overridden by the structure of the transaction between the company and its customers. In other words, this case represents yet another failure of the most specific description test to classify services.

(C) Complete Solutions Service Apartment (P) Ltd., In re17

This case presents a contemporary business model which is colloquially referred as “furnished tenancy”. The applicant took on lease residential dwelling units on lease, aggregated them and thereafter sub-leased these units to various individual/corporates for residential purposes. The applicant also provided various amenities which were essentially in nature of housekeeping services. These comprised of room cleaning, cleaning of utensils, changing of linen, cable/DTH connection, gas pipeline or cylinder, broadband connection with dedicated telephones, electricity supply, water supplies, pest control, AC servicing, security guard, etc.

The applicant charged separately towards the sub-lease and the amenities. The applicant maintained that GST was leviable only on the amenities and not on the rent towards the sub-lease in view of the exemption from GST to “services by way of renting of residential dwelling for use as residence”. The authority agreed with the view of the applicant and opined that the first agreement towards sub-letting was indeed entitled for exemption and GST was rightly charged upon the second agreement qua amenities. Intriguingly however, the authority went beyond to declare that the original lease agreement required recharacterisation as the lease “between the owner and the applicant, at the most can be termed as property management services”. The authority did not extend any reason for such effect but perhaps it was guided by the fact that the original lease agreement by itself did not result into the residential lease. Nonetheless, the authority concluded that the original lease was subject to GST.

The view of the authority on the services provided by the applicant appears reasonable. However, the recharacterisation of the original lease implies rewording of the exemption to “services by way of renting of residential dwelling for use as residence”. The authority appears to have concluded that “for use as residence” in the exemption has a limited nuance and it instead means “services by way of renting of residential dwelling for actual use as residence”. This is because the fact remains that the property was indeed used as residence (in view of the affirmation of the exemption on the sub-lease by the applicant). In other words, the recharacterisation of the transaction between the owner and the applicant was based on the end-use test (i.e. whether the property was actually used for residence) irrespective of the most specific description test (i.e. whether the property was leased for use as residence) as a consequence of the transaction.

Conclusion

Upon an appraisal of the statutory provisions, the lack of objective principles or a rule-base regime for classification of services in the GST laws is evident. The “most specific description” test appears to be neither sufficient nor exhaustive to categorically address the myriad commercial transactions involving supply of services. It is thus not surprising to find that classification of services is largely dictated by subjective appreciation of activities/transactions. The decision of the Calcutta High Court, therefore, is neither the first nor would be the last illustration of judiciary being pressed upon to evolve reasons (and hopefully principles) to settled service classification controversies. One would hope that the legislature takes note and interjects to introduce objective rules which obviate disputes on classification of services under the GST law. Until then, classification of services in GST laws remains a vexed question.


† Tarun Jain, Advocate, Supreme Court of India; LLM (Taxation), London School of Economics.

2. 2022 SCC OnLine Cal 1786.

3. “S. 65-A. Classification of taxable services … (2) When for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of S. 65, classification shall be effected as follows: (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, insofar as this criterion is applicable; and (c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merit consideration.”

4. “S. 66-F. Principles of interpretation of specified descriptions of services or bundled services … (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.”

5. For illustration, see Electronics Technology Parks v. Commr. of Customs, (2022) 56 GSTL 182 (Tribunal); Ess Gee Real Estate Developers (P) Ltd. v. CCE, (2020) 34 GSTL 486 (Tribunal); Airport Retail (P) Ltd. v. Union of India, 2014 SCC OnLine Del 3858 : (2014) 35 STR 659; Atwood Oceanics Pacific Ltd. v. CST, 2012 SCC OnLine CESTAT 2457 : (2013) 32 STR 756; United Enterprises v. CCE and Service Tax, 2012 SCC OnLine CESTAT 2654 : (2013) 29 STR 605; Hardy Exploration & Production (India) Inc., (2012) 28 STR 513, etc.

6. Central Goods and Services Tax Act, 2017, S. 2(30) states, “composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply”.

7. Central Goods and Services Tax Act, 2017, S. 2(73) states “mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply”.

8. Central Goods and Services Tax Act, 2017, S. 8 addresses “tax liability on composite and mixed supplies”.

9. For illustration, see, Central Goods and Services Tax Act, 2017, Sch. II which enlists “activities or transactions to be treated as supply of goods or supply of services”. See also, Central Goods and Services Tax Act, 2017, S. 7(3).

10. For illustration, see, Central Goods and Services Tax Act, 2017, S. 9(1).

11. For illustration, see Notification No. 11 of 2017-Central Tax (Rate), dated 28-6-2017.

12. See, Tarun Jain, “Appraising the Classification of Goods and Services under GST Laws”, <https://www.scconline.com/blog/post/2019/08/13/appraising-the-classification-of-goods-and-services-under-gst-laws/> for detailed explanation of the scheme.

13. (2021) 48 GSTL 187 (AAAR-GST-Kar).

14. SAC represents “Services Accounting Code”.

15. 2020 SCC OnLine Guj AAR-GST 1 : (2020) 41 GSTL 226.

16. Defined in Notification No. 12 of 2017-Central Tax (Rate) dated 28-6-2017 to state, “clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases”.

17. (2021) 47 GSTL 402 (AAR-Har).

AAR GST
Case BriefsTribunals/Commissions/Regulatory Bodies

Ahmedabad Authority for Advance Ruling: Members Atul Mehta and Arun Richard, has held that 18% GST is payable on value for intended supply on the sale of a car by a company after using it for business purposes.

Factual Background of the case

The applicant purchased a new SUV (i.e., sports utility vehicle) for Rs. 80 Lakhs on 16-02-2018 for use in its business. It did not use GST Input Tax Credit at the time of purchase as it is restricted under Section 17(5) of the Central Goods and Services Tax Act, 2017 (CGST Act). The depreciation on the car was claimed under the Income Tax Act, 1961. The Applicant intends to sell the used car for Rs 55,00,000/-. The written down value of the car as per books of accounts is Rs 47,00,000/-.

An application was filed by the applicant, under Section 97(2) of the CGST Act before the Ahmedabad Authority for Advance Ruling to seek an Advance Ruling on the following:

  • At what rate of GST, the new car purchased by the company is sold after using it for business purposes, shall the GST be charged?
  • Whether the value of the old and used car, sold by the company as mentioned above, can be taken as the value that represents the margin of the supplier, on the supply of such car, and whether the GST can be charged on such margin?
  • The value that represents the margin of the supplier, on supply of such old and used goods/Car will be inclusive of GST or exclusive?

Decision and Analysis

The bench opined that concerning the submissions made on behalf of the applicant, the used car falls under the category of Serial No. 3 of the Notification 8/2018- CT dated 25-01-2018.

As per the notification, 9% CGST is payable on old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as SUVs including utility vehicles. According to the notification, an SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm. and above.

The relevant part of the notification which forms the subject matter of the case is as follows-

Explanation- for the purpose of this notification –

In case of a registered person who has claimed depreciation under Section 32 of the Income-Tax Act, 1961 (43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin of such supply is negative, it shall be ignored.

Hence, the bench applied the abovementioned provisions and held that 18% (9% CGST and 9% SGST) GST shall be levied upon the difference between the consideration received for the supply of the car and the depreciated value of the car on the date of supply i.e., the value intended for supply.

[Dishman Carbogen Amcis Ltd., 2021 SCC OnLine Guj AAR-GST 19, decided on 01-06-2022]

Legislation UpdatesRules & Regulations

On June 24, 2022, the Ministry of Finance has notified Goods and Services Tax (Period of Levy and Collection of Cess) Rules, 2022, through which it has extended the time period for levy of compensation cess up to 31st March 2026.

The Goods and Services Tax (Compensation to States) Act, 2017 provides for compensation to states for any loss in revenue due to the implementation of GST. Earlier the Government fixed the last date for levy of GST compensation cess till 1st July 2022, however it has now been extended till 31st March 2026.

AAR GST
Case BriefsTribunals/Commissions/Regulatory Bodies

Maharashtra Authority for Advance Ruling: Rajiv Mangoo, Additional Commissioner of Central Tax & T.R. Ramani, Joint Commissioner of State Tax held that the stipend amount is given to the trainees by the training institutes for the duration of their training is not a part of taxable value.

Factual Background of the case

The applicant is indulged in the business of human resource and skill development and had enrolled as a facilitator under the National Employability Enhancement Mission (NEEM) scheme and provides trainees to various institutes for which service charges were collected in addition to the reimbursement of the stipend payable to trainees.

An application was filed by the applicant, under Section 97 of the Central Goods and Services Tax Act, 2017 (CGST Act) before the Maharashtra Authority for Advance Ruling to seek an Advance Ruling on the following:

  • Whether the applicant, in the capacity of being a NEEM facilitator, acts as a ‘Pure Agent’ while receiving reimbursement of stipend amounts from the various trainer institutes and remitting the same to the trainees?

  • If not, whether such a stipend amount forms a part of the taxable value?

Analysis and Decisions

The bench defined ‘advance ruling’ as a decision given by the authority to an applicant on matters or issues specified in sub-section (2) of Section 97, concerning the supply of goods and services. Therefore, the bench refrained from answering the first issue of the case as the matters specified in clauses (a) to (g) of Section 97 sub-clause (2) of the CGST Act as it was not applicable to the facts of the case.

Further, the bench observed that in regard to payment of stipend to the trainees, the actual service was provided by the trainees for which stipend was payable, the applicant was only acting as an intermediary in collecting the stipend from the training institutes and disbursing the same to the trainees in full without making any deductions.

At this juncture, the bench referred to the case of Yashaswi Academy for Skills 2019 SCC OnLine Mah AAR-GST 78 wherein the bench held that “the reimbursement by industry partner to the applicant, of the stipend paid to the trainees, does not attract tax under the GST Act.”

Hence, the bench applied the same principle as laid down in the aforementioned case and held that the stipend paid by entities/ training institutes to the trainees through the applicant does not attract GST and need not be added to the taxable value.

[Patle Eduskills Foundation, In Re. 2022 SCC OnLine Mah AAR-GST 13, decided on 08-06-2022]

Karnataka High Court
Case BriefsHigh Courts

Karnataka High Court: Suraj Govindaraj, J. dismissed the petition as being devoid of merits.

The facts of the case are such that petitioner 1 is a registered association of the advertising agencies, in the business of advertisement on the advertisement hoardings licensed by respondent 2 Hubballi Dharwad Mahanagara Palike and are also registered as dealers under S. 22 of the Karnataka Value Added Taxes Act. The petitioners 2 to 6 are the members of the petitioner 1. A demand notice was issued upon the petitioners to make payment of advertisement tax as regards advertisement hoardings used by them. The instant petition was filed under A 226 and 227 of the Constitution of India seeking issuance of writ to set aside the demand notice and writ of prohibition to the respondents not to meddle with the advertisement displays and hoardings of the petitioners.

Counsel for petitioners submitted that on the enactment of Goods and Services Tax Act the authority of the respondents to either levy or collect advertisement tax is ousted. The respondents have collected the advertisement tax in terms of Section 134 of the Karnataka Municipal Corporations Act, 1976. The power under Section 134 of the KMC Act flows from Entry 54, List II of Schedule VII of the Constitution of India. The entry 54 having been deleted the said power is divested. Thus, there could be no demand for advertisement tax post the enactment of GST Act and deletion of Entry 54.

Counsel for respondents Mr GI Gachchinmath submitted that the power of respondent 2 to collect the advertisement tax continues under Section 134 of KMC Act. In the decision relied upon by the counsel for the petitioner, said power had been deleted, whereas no such deletion has occurred in the KMC Act.

The Court observed that in the entire transaction of GST, the petitioners are only a collecting agency who collects the GST payable on the service rendered and deposits the same with the authorities, the incidence of tax, i.e., GST being on the services rendered or goods supplied, the obligation of payment being on the person availing the service and or receiving the goods. The incidence of GST is on the service rendered by the petitioner to its clients and has nothing to do with respondent 2-HDMC. The transaction with HDMC is the permission and or license granted by the HDMC to put up hoarding and or use a hoarding either on the land belonging to the HDMC and or on land belonging to a private party.

The Court further observed that there are two distinct transactions. The incidence of tax on both transactions are different. The first transaction is the permission by respondent No.2-HDMC to put up a hoarding or advertisement to use their hoarding for the purpose of advertisement, as regards which respondent No.1-HDMC charges the fee or advertisement tax. The second transaction is on the petitioners making use of the hoarding to display advertisements of its clients towards which the petitioners charge their client which is a supply of services or goods as regards which the GST is liable to be paid. Both the transactions being independent and distinct the incidence of both the GST and advertisement fee being on two distinct transactions inasmuch as the GST not being charged by the respondent 1- HDMC and advertisement free not being charged by the GST authorities.

The Court thus held “there is no conflict between the power to levy GST under GST Act and power of Municipal Corporation to levy advertisement fee or advertisement tax under Section 134 of the Karnataka Municipal Corporations Act.” [Hubballi Dharwad Advertisers Association v. State of Karnataka, Writ Petition No. 104172 of 2021, decided on 21-04-2022]


Arunima Bose, Editorial Assistant has reported this brief.

Advance RulingsCase Briefs

Rajasthan Appellate Authority for Advance Ruling: The Bench of Pramod Kumar Singh, Member (Central Tax) and Ravi Jain, Member (State Tax) while addressing a matter held that hostel seat should be considered as a unit of accommodation.

Factual Background

Appellant had filed an appeal against the ruling issued by Authority for Advance Ruling Rajasthan.

Appellant was registered as a Public Charitable Trust under Section 12AA of the Income Tax Act, 1961. It was stated that the appellant was also the sponsoring body of Mody University of Science and Technology (MUST).

Further, it was added that the appellant was considering a proposal to allow the students of MUST to use the ‘Hostel Accommodation’ in its surplus infrastructure which includes Hostel Seat for the students along with serving meals including breakfast, lunch and dinner.

The ‘Boarding and Lodging Charges’ will directly be charged from the students and shall be based on the type of the ‘HOSTEL SEAT’ opted by the students.

The application was filed before the Rajasthan Authority for Advance Ruling to seek an Advance Ruling on the following:

Whether Hostel facility which includes Lodging and Boarding service provided by appellant to the students of MUST having value service upto Rs 1000 per day would be eligible for exemption under entry 14 of the notification 12/2017 CTR Dt. 28-06-2017?

Rajasthan Authority for Advance Ruling held that the applicant would not be eligible for exemption under entry no 14 of the Notification No. 12/2017 Central Tax (Rate), dated 28-6-2017.

Aggrieved with the above, the present appeal was filed.

Analysis and Decision

Rajasthan Appellate Authority for Advance Ruling expressed that, the Hostel Accommodation Service is at par with the “Service by a hotel, Inn, guest house, club or campsite, by whatever name called, for residential or lodging purpose” which falls under Service Accounting Code – 9963.

The Bench noted that as per Section 2(74) of the CGST Act the term “mixed supply” means two or more individual supplies of goods or services, or any combination made in conjunction with each other day by a taxable person for a single price where such supply does not constitute a composite supply.

In the present matter, the Authority observed that the appellant was supplying services of food along with Hostel Accommodation service.

“The supply of food with Hostel Accommodation service is not naturally bundled in normal course of business.”

Authority added that, a person can live in the hostel without availing other services like food but to make ones stay more comfortable, the said ancillary services are availed him.

Bench found that other services being provided by the appellant were not naturally bundled or ancillary to Hostel service as the inhabitants of Hostel seats can avail the said services from any other source. In fact, the inhabitants have been restricted from sourcing these other services from any other person and have to avail the same from the appellant.

“…supply of hostel accommodation along with food is not a composite supply but it is a mixed supply.”

As per Section 8 (b) of the CGST Act, 2017 in case of the mixed supply of accommodation and food, the highest rate of both will be applicable.

In view of the above, the appeal was disposed of. [Mody Education Foundation, In Re., RAJ/AAAR/01/2021-22, decided on 27-10-2021]

Advance RulingsCase Briefs

Appellate Authority for Advance Rulings, State of Uttarakhand GST: The Coram of P.K. Goel (CGST Member) and Dr Ahmed Iqbal (SGST Member) stated that a resort running the service of Naturopathy as an additional service would not be exempted from GST.

An appeal was filed under Section 100 of the Central Goods & Service Tax Act, 2017 and Uttarakhand Goods & Service Tax Act, 2017 by M/s Corbett Nature Reserves (Applicant) against the Advance Ruling Order passed by AAR of Uttarakhand.

Factual Background

Advance Ruling on the following Question was sought:

Whether “The Centre” of the applicant was eligible to get the benefit of entry 74 of exemption Notification No. 12/2017-Central Tax (Rate) classified under SAC Heading 9993?

The applicant was running a resort namely “Aahana – The Corbett Wilderness” and it was stated that the same runs an independent unit namely “Aahana Naturopathy Centre” wherein services in the form of Nature cure and Yoga therapies were provided, which were not restricted to the in-house customers, but open to all.

The Authority for Advance Ruling, Uttarakhand observed that the supply of services provided by the applicant, was a composite supply, rightly classifiable under sub-heading No. 996311 as ‘Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like’, whereas the exemption at Entry 74 was applicable to services falling under SAC 9993. Therefore, the AAR held that the applicant was not eligible to get the benefit of Entry 74 of Exemption Notification No. 12/2017-Central Tax (Rate) dated 28-6-2017.

On being aggrieved with the above, the present appeal was filed.

Analysis and Decision

In the instant matter, the applicant had advertised and marketed their accommodation service as their main service and Naturopathy as an additional service.

Hence, the accommodation service and other services including Naturopathy rendered during the course of said service would be covered under the composite service and the accommodation service constituted the predominant element and therefore, the principal supply and other services including Naturopathy shall form the part of that composite supply.

Therefore, all the services provided in relation to or in addition to accommodation service were liable to GST applicable to ‘Accommodation Service’.[Corbett Nature Reserve, In Re., 2022 SCC OnLine Utt AAAR-GST 1, decided on 10-3-2022]

Case BriefsHigh Courts

Madras High Court: Dr Anita Sumanth, J., expressed that with the inception of Section 74(5)of GST Act, it is the case of the revenue that the collection of amounts in advance has attained statutory sanction, provided the same are voluntary in Form GST-DR03.

Merely because an assessee has, under stress of investigation, signed a statement admitting tax liability and has also made a few payments as per the statement, cannot lead to self-assessment or self-ascertainment.

In the present matter, mandamus was sought to restrain the first respondent from harassing the petitioner baselessly without addressing its grievance petition and refund claim pending before the respondents.

The petitioner was registered as a Small-Scale Industry under the MSME Act and was an assesseee under the provisions of all the Goods and Service Tax Act, 2017. An investigation was conducted on the premises of the petitioner and various documents and registers were seized. Further, during the investigation, a statement was recorded from one S.A Kumar, who also deposed to the affidavit filed in support of the present petition, to the effect that the petitioner had not discharged its GST liability correctly.

The Managing Director had signed the undertaking and in line with the same, the petitioner remitted a sum of Rs 1 crore.

Petitioner stated that it had no liability to tax, that the MD and Officials were forced to accept liability to tax and the admission was by no means, voluntary.

Further, the petitioner had made serious allegations about the high handedness of the authorities during the conduct of search and the scant regard expressed for the sentiments of the family of the MD and employees of the petitioner.

Whether the collection of any amount during the process of investigation is statutorily permitted?

Whether the products sold are branded or unbranded?

If unbranded then there is no liability to GST.

Whether the petitioner is entitled to the refund of the amounts paid during investigation and the revenue relies upon the provisions of Section 74(5) of the Act?

Section 74 provides for a determination of tax not paid or short paid or erroneously refunded or the wrongful availment or utilization of Input Tax Credit by reason or fraud, willful misstatement or suppression of facts.

The remittance under Section 74(5) is in terms of Rule 142 of the Central Goods and Services Tax Rules, 2017 and has to be made in Form GST DRC-03.

It was noted that the payment was ‘voluntary’ and the same procedure had been followed in regard to the second instalment as well.

“Prior to the inception of the GST Act, instances were rife when officials of DRI and Customs Department were infamous for collecting advance payments of tax from assesses, many a time under coercion, and in the course of investigation itself.”

Thus, according to the revenue, the remittances made by the petitioner during the investigation in terms of Section 74(5) amount to ‘self-ascertainment’. Having remitted two instalments of tax as per is own ascertainment, it cannot pray for a mandamus seeking a refund of the amount.

“No collection can be insisted upon prior to a final determination of liability being made.”

Further, the Bench added that, what Section 74(5) provides is the first opportunity for an assessee to pay tax, interest and penalty liability even prior to the issuance of a show-cause notice and such acceptance will have to be in the form of either self-ascertainment or an ascertainment by the proper officer.

In the present matter, the enquiry and investigation were on-going, personal hearings had been afforded and both the parties were fully geared towards issuing/receiving a show-cause notice and taking matters forward.

Hence, the understanding and application of Section 74(5) was wholly misconceived.

Therefore, the mandamus as sought for by the petitioner was issued and the amount collected of Rs Two Crores shall be refunded to the petitioner within a period of four weeks.[Shri NandhiDhall Mills India (P) Ltd. v. Senior Intelligence Office, WP No. 5192 of 2020, decided on 7-4-2022]


Advocates before the Court:

For Petitioner: Mr.Hari Radhakrishnan

For Respondents: Mr.V.Sundareshwaran (for R1 to R3 & R5)

Senior Panel Counsel R4 – Given up

Case BriefsHigh Courts

Delhi High Court: Prateek Jalan, J., grants bail to a person who was alleged to cause fraudulent transactions and loss to the government.

An applicant sought bail for offences registered under Sections 420, 468 and 471 of the Penal Code, 1860.

The only accused named in the FIR was Sanjay Garg, son of Deep Chand Garg. The FIR alleged cheating and fraud by Saraswati Enterprises, of which Sanjay Garg was the proprietor, causing a loss to the government for the sum of Rs 9.97 crores.

The allegations in the FIR were with regard to the unauthorized and fraudulent claim of input tax credit in respect of Goods and Services Tax [GST] by Saraswati.

The allegation against the applicant was that he and a co-accused had set up a number of fictitious companies, which were being used for the purposes of defrauding the government. It was contended that the accused persons had opened banks accounts in fictitious names and provided their telephone numbers and email addresses in this respect.

Analysis and Decision

In Court’s opinion, the applicant was entitled to bail.

From the status reported, it appeared that the main link of the present applicant with the transactions in question was on the basis of the use of the mobile No. and his email address.

High Court expressed that the applicant in conspiracy with co-accused had registered various bogus firms and opened fictitious bank accounts.

Further, as per the status report, the applicant neither has prior criminal antecedents nor is there any material to suggest that he is a flight risk.

The evidence in the present case was largely documentary and had already been placed before the trial court. Hence, the chances of the applicant tampering with the evidence was therefore unlikely.

Seriousness of the offences alone is not conclusive of the applicant’s entitlement to bail, as held by the Supreme Court inter alia in Sanjay Chandra v. Central Bureau of Investigation (2012) 1 SCC 40.

Concluding the matter, the applicant was granted bail subject to the following conditions:

  1. The applicant will furnish a personal bond in the sum of ₹1,00,000/- with two sureties of the like amount, one of which will be from a blood relative of the applicant, to the satisfaction of the Trial Court.
  2. The applicant will remain resident at the address mentioned in the memo of parties
  3. The applicant will inform the Investigating Officer and the Trial Court in advance of any change in his residential address.
  4. The applicant will appear on each and every date fixed before the Trial Court.
  5. The applicant will give his mobile numbers to the IO and ensure that the mobile numbers are kept operational and reachable at all times.
  6. The applicant will not directly or indirectly tamper with evidence or try to influence any of the prosecution witness in the case. In case the same is established, the bail granted to the applicant shall stand cancelled forthwith.

In view of the above, application stood disposed of. [Pulkit v. State (NCT of Delhi), 2022 SCC OnLine Del 1074, decided on 12-4-2022]


Advocates before the Court:

For the Petitioner:

Sunil Dalal, Senior Advocate with Kapil Madan, Gurmukh Singh Arora, Ramya Verma, Pulkit Pandey, Advocates

For the Respondent:

Amit Chadha, APP for the State with Insp. J.S. Mishra, PS EOW

Op EdsOP. ED.

Introduction

As we all know that the goods and service tax (hereinafter referred to as “GST”) was passed by the Lok Sabha and Rajya Sabha in the year 2017 with a motive of “one nation, one tax”. During the initial stage, the Finance Ministry’s draft proposed to keep crude oil, petrol, diesel, aviation turbine fuel (ATF), and gas outside the scope of the GST. However, simultaneously, they had an aim to bring all of them under the GST regime after its complete and successful implementation in the country. State’s revenue is mostly dependent upon the petrol and diesel to meet their budgetary expectations and expense, seeing which petrol and diesel were not included in the GST. India imports around 80% to 85% petrol and diesel to satisfy the day-to-day oil needs of the country, therefore, the retail prices depend upon the prices in the international market. Prices of oil products are decided out of the demand supply formula. Prices of petrol and diesel have a direct relation to every product we consume/use and majorly, it used in a supply chain. Therefore, if the prices of petrol or diesel rise, it will lead to an increase in the prices of other daily usage commodities impacting the lives of the common people.

Under the current tax structure, the consumers are required to pay three major taxes on petrol and diesel which include excise duty (charged by the Centre), value added tax (charged by respective States), and the dealer’s commission/margin. The pandemic times have led the Central and State Governments to increase excise duty and VAT to fund the government schemes, vaccination drive, etc., to satisfy/manage the country’s economy. Talking in a general sense, the combined price of per litre petrol and diesel include around 45% to 53% of the taxes; whereas, if petrol and diesel get included in the GST, the same would constitute around a maximum of 28% of the taxes. The difference is very much clear as to that why the public is demanding the inclusion of petrol and diesel in GST.

The reason why some States are opposing the inclusion of petrol and diesel under the ambit of GST

Revenue of some States like Rajasthan, Madhya Pradesh, Maharashtra, etc. is mostly dependent upon the revenue generated through VAT on petrol and diesel, so if petrol and diesel are included in the GST, then their revenue might fall heavily. Fearing this, some States are opposing the move of inclusion of petrol and diesel under the ambit of GST. In Kerala Pradesh Gandhi Darshanvedhi v. Union of India[1], the Kerala High Court ordered the GST Council to consider the inclusion of petrol and diesel under GST. In the 45th GST Council meet at Lucknow, Uttar Pradesh on 17-9-2021, all States unanimously opposed the idea with a thought that it would disrupt the State’s revenue. Since 2017, it is the States who are opposing the inclusion of petrol and diesel under the GST regime. Few States are demanding that if petrol and diesel are brought under the GST, then the Central Government must compensate all the States of their deficit revenue. The Central Government showed their incapability to compensate the States of their deficit revenue which has hindered this process overall. It is because of “revenue implication” the Central Government and State Government is fearing the inclusion of petrol and diesel under the GST.

So, this fear of revenue considerations must be jointly addressed and resolved by the Central and State Government to solve this problem. Otherwise, it is the common citizens who will suffer the most due to the rising prices of petroleum products. We should understand that it is the GST Council who in consultation, discussion and approval with the State Governments can only bring this urgent amendment.

Will the inclusion of petrol and diesel under the GST solve the problem?

Now, the important point for consideration is here that whether the inclusion of petrol and diesel in the GST will solve the problem of their rising prices? The answer is yes, it would substantially lower the prices of petrol and diesel, ultimately benefiting the end consumer. But we must also examine its overall effect and impact on the country’s overall future. Petroleum products are derived out of fossil fuels which are getting exhausted and at some point, of time shortly, we will have to limit their usage in daily lives. In the short run, lowering the prices of petrol and diesel will prove helpful but ultimately, all the consumers will have to start shifting towards renewable energy sources for sustainable growth and development. Rather than focusing on the inclusion of petrol and diesel in GST, what if we as a country do some strict and deep research on the topic of finding out serious methods to promote the shifting towards renewable energy immediately. History has been evident that even if the prices of oil barrel has fallen down the Government has not decided to lower the prices but let them remain stagnant. We are just focusing on part only but the inclusion of petrol and diesel under the ambit of GST might bring some sort of other discrepancies that the Governments might use to keep their prices higher to fulfil revenue needs. The aftermath of its inclusion must be drawn beforehand to be ready with the upcoming challenges or problems which might be faced by the general public because everything has its pros and cons, the same would happen with the inclusion of petrol and diesel in the GST. All around the country, we are even witnessing the dire need for further upgradation and amendment in the tax regime under GST, and micro, small and medium enterprise (MSME) sectors are also demanding to resolve the complexities attached with the GST. This point has been mentioned here to take the complexities of GST into cognizance, so that if petrol and diesel are included in the GST, then we are ready with the strategies to cope with them. The aspect of politics in this process cannot be ignored because the spirit of cooperative federalism is losing its spirit in the country which makes policy implementation much harder these days.


BBA LLB (X Semester), New Law College, Bharati Vidyapeeth (Deemed To Be) University, Pune and Legal Trainee, Mehta Chambers Law Office, Jodhpur (Rajasthan). Author can be reached at yashjangid2@gmail.com.

[1] 2021 SCC OnLine Ker 2674.