Centralised AAR for taxpayers with 5 or more registration

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Centralised AAR for taxpayers with 5 or more registration

With contradictory verdicts from Authority for Advanced Rulings (AAR) under the GST regime increasing the confusion among tax payers, the government is likely to constitute a centralised AAR for taxpayers who have five or more registrations.

With contradictory verdicts from Authority for Advanced Rulings (AAR) under the GST regime increasing the confusion among tax payers, the government is likely to constitute a centralised AAR for taxpayers who have five or more registrations.

An amendment in the law in this regard could be announced by the GST Council meeting on 2nd of July.

The decision came after a slew of recent pronouncements by the AARs in different states left taxpayers as well as the tax experts in a state of confusion.

While in some cases the rulings have contradicted circulars issued earlier by the Central Board of Indirect Taxes and Customs, in others AARs in two different states have given two contradictory rulings on similar issues.

For example on the question of whether supply of turnkey engineering, procurement and construction (EPC) of solar power plants where both goods and services are supplied can be construed as composite supply, the Maharashtra AAR says it is a works contract and therefore should attract 18 per cent tax. The Karnataka AAR, however, has ruled out the tax installation at the concessional rate of 5 per cent.

On the question if recovery of food expenses from employees is liable to GST, the Gujarat AAR ruled out that provisions of food, beverages and other eatables provided through in-house canteens by companies to their employees come under the category of outdoor catering services and not restaurant and therefore should attract 18 per cent GST.

However, CBIC had earlier clarified that if services are provided free of charge to all employees by the employer then it will not be subjected to GST. The AAR ruling doesn't seem to take a cue from the CBIC clarification.

Similarly, on the issue whether accumulated credit of Krishi Kalyan Cess be carried forward to GST regime, the AAR holds the view that such credits are not admissible as input tax credit (ITC) under the GST regime. The ruling does not seem to consider the Section 140 of the CGST Act, which says that closing balance of CENVAT credits can be transitioned to GST regime.

The purpose of these authorities is to give clarity to taxpayers on their future tax liabilities so that they can avoid litigations in future, but some of them are far from serving their stated purpose.