Half-Yearly GST Digest: AAR & AAAR Rulings 2024 [Part II]

This half-yearly round-up analytically summarises the key Goods and Services Tax Advance Rulings of the Authority for Advance Rulings ( AAR ) and Appellate Authority for Advance Ruling ( AAAR ) reported at Taxscan.in during the first half of 2024. GST leviable on Export of Pre-Packaged and Labelled Rice upto 25 Kgs to Foreign Buyer: AAR In Re : M/S Sarala Foods Private Limited CITATION: 2024 TAXSCAN (AAR) 118 The Andhra Pradesh Authority for Advance Ruling ( AAR ) observed that GST is leviable on export of pre-packaged and labelled rice upto 25 kgs to foreign buyer. A Two-Member Bench comprising K. Ravi Sankar and B. Lakshmi Narayana observed that “In the instant case, the ultimate buyer is not present and the commodity is being pre-packed for an unknown ultimate buyer. The buyer from the applicant is re-selling the same to another buyer be it export or indigenous. This advance ruling authority agrees with the observation regarding the applicability of GST on “prepackaged and labelled” irrespective of the fact that whether it is for domestic sale or exported outside the country.” Services that Do not Include Any Supply of Goods can be Categorised as Pure Services: AAR In Re: M/S SWAPNA PRINTING WORKS PVT LTD CITATION: 2024 TAXSCAN (AAR) 119 The West Bengal Authority for Advance Ruling ( AAR ) of Goods and Services Tax matters has ruled that supply of services which does not involve any supply of goods can be regarded as pure services. The two member bench comprising Tanisha Dutta ( Joint Commissioner, CGST & CX ) and Joyjit Banik ( Senior Joint Commissioner, SGST ) held that “term “pure services‟ has not been defined under the GST Act. However, a bare reading of the description of services as specified in serial number 3 above denotes that supply of services which does not involve any supply of goods can be regarded as pure services. The said entry serial, therefore, specifically excludes works contract services or other composite supplies involving supply of any goods. On the other hand, to qualify to be a supply under serial number 3A above, a composite supply, subject to fulfilment of other conditions as specified in the said entry, would be such that the maximum value of involvement of goods is less than 25% of the total value of the said composite supply.” GST: ITC Allowable for Goods Purchased from External Vendors When Payment is Settled through Book Adjustment in Sale and Buyback Transactions, rules AAR In Re: PARAGON POLYMER PRODUCTS PVT LTD CITATION: 2024 TAXSCAN (AAR) 120 A two member bench of West Bengal Authority for Advance Ruling Goods and Services Tax ( AAR ) held that settlement of mutual debts through book adjustment is a valid mode of payment under the Goods and Service Tax ( GST ) Act, 2017. The authority observed that Input Tax Credit ( ITC ) is allowable for goods purchased from external vendors when payment is settled through book adjustment in sale and buyback transactions. The bench comprising Tanisha Dutta ( Joint Commissioner, CGST & CX ) and Joyjit Banik ( Senior Joint Commissioner, SGST ) held that settlement of mutual debts through book adjustment is a valid mode of payment under the GST Act. Recipient can pay the supplier by way of setting book debt since the provision of the Act has not put any restriction in this regard. Therefore, claiming credit of Input Tax Credit ( ITC ) cannot be denied on the sole ground that consideration is paid through book adjustment. Processed Pulses attract GST at 18%: AAR The Andhra Pradesh Authority for Advance Ruling ( AAR ) has mandated an 18% Goods and Services Tax ( GST ) on processed pulses resulting from the dehusking and splitting of grains. This ruling distinguishes these processed pulses from whole pulse grains and categorises them as non-agricultural produce. Additionally, the AAR has determined that an 18% GST applies to brokerage charges on transactions involving agricultural produce. This decision comes in response to a case involving Gayatri Enterprises, a broker in Andhra Pradesh specialising in products such as urad dal, moong dal, toor, jowar, and karamani. The company invoices parties solely for the brokerage amount, with no mention of its name in sale or purchase invoices. The AAR further categorised the company’s role as a broker in pulses as that of a commission agent. Regardless of whether the goods involved are exempt or taxable under the GST regime, the AAR ruled that the company is obligated to pay an 18% GST, the applicable rate for commission agents. Advance Ruling cannot be given on Assumed Scenarios in Absence of Relevant Documents: AAR In Re M/S: VISTAR AEC CONSULTANTS LLP CITATION: 2024 TAXSCAN (AAR) 121 The two member bench of the Authority for Advance Ruling ( AAR ) Karnataka, observed that question of Goods and Service Tax ( GST ) on Revenue Sharing does not arise when Tax Invoice is issued by Supporting Bidder of Contract The tribunal comprising Dr. M.P.Ravi Prasad and Kiran Reddy. T observed that the Applicant cannot consider the GST at the rate as applicable to the client. The exemption of GST was not applicable to the Applicant. The AAR concluded that the Advance ruling cannot be given on assumed scenarios in the absence of relevant documents. Common area Electricity Charges collected by Residential Welfare Associations from members deemed part of Composite Supply, Liable to GST if the service does not qualify for exemption: AAR M/S: PRINSEP ASSOCIATION OF APARTMENT OWNERS CITATION: 2024 TAXSCAN (AAR) 123 The West Bengal Authority for Advance Ruling ( AAR ) has determined that common area electricity charges collected by Residential Welfare Associations ( RWAs ) from their members constitute a component of a composite supply and are subject to Goods and Services Tax ( GST ) if the service rendered does not meet the criteria for exemption. In their conclusion, the two-member authority, comprised of Dr. Tanisha Dutta (CGST Member) and Joyjit Banik (SGST Member), clarified that such charges are deemed part of a composite supply and are subject to GST unless exempted under relevant GST regulations. Maintenance Charges collected by Residential Welfare Associations exceeding Rs.7,500 per month fully Taxable under GST at 18%: AAR M/S: PRINSEP ASSOCIATION OF APARTMENT OWNERS CITATION: 2024 TAXSCAN ( AAR ) 123 The West Bengal Authority for Advance Ruling ( AAR ) has issued a significant clarification regarding the taxation of maintenance charges imposed by Residential Welfare Associations (RWAs) on their members. According to the ruling, maintenance charges exceeding Rs. 7,500 per month per member are fully subject to taxation under the Goods and Services Tax (GST) regime, with a rate of 18%. In their decision, the two-member authority, consisting of Dr. Tanisha Dutta ( CGST Member ) and Joyjit Banik ( SGST Member ), emphasised that if the maintenance charges levied by RWAs surpass Rs. 7,500 per month per member, the entire amount becomes liable to GST at the rate of 18%. Additionally, they clarified that the benefits outlined in Notification No. 12/2017 dated 28.06.2017 (Sl. No. 77), in conjunction with Notification No. 02/2018 dated 25.01.2018, which provide exemptions from tax, are not applicable when maintenance charges exceed Rs. 7,500 per month per member. In such cases, the entirety of the charges becomes taxable under GST regulations. Contributions to Sinking Fund of Residential Welfare Associations by its members deemed Advance Payments for Future Services, liable to 18% GST: AAR M/S: PRINSEP ASSOCIATION OF APARTMENT OWNERS CITATION: 2024 TAXSCAN (AAR) 123 The West Bengal Authority for Advance Ruling ( AAR ) has held that the contributions made by members to the sinking fund of Residential Welfare Associations ( RWAs ) shall be deemed as advance payments for future services and are liable to 18% Goods and Services Tax ( GST ). In result, the two-member authority comprising Dr. Tanisha Dutta ( CGST Member ) and Joyjit Banik ( SGST Member ) has held that contributions to the sinking fund of RWAs by its members are considered advance payments for future services provided by the RWA. This means that members’ contributions towards the sinking fund are subject to GST at the rate of 18%. The ruling highlighted that even though these contributions are made for future contingencies, they are treated as consideration for the future supply of services by the RWA. E-Commerce Operators liable to collect TCS on providing platform for sale of Digital Gold: AAR M/S: CHANGEJAR TECHNOLOGIES PVT CITATION: 2024 TAXSCAN (AAR) 122 The Karnataka Authority For Advance Rulings ( AAR ) has determined that e-commerce operators are obligated to collect Tax Collected at Source ( TCS ) when facilitating the sale of digital gold on their platforms. The authority clarified that the applicant, functioning as an electronic commerce operator, does not serve as an agent of the third-party supplier M/S DGIPL. Therefore, the applicant falls under the purview of Notification No. 52/2018 — Central Tax, in conjunction with Section 52 of the CGST Act, 2017. Dr. M.P. Ravi Prasad, Additional Commissioner of Commercial Taxes Member (State), and Sri. Kiran Reddy, Additional Commissioner of Customs & Indirect Taxes, Member (Central), who constitute the Authority, affirmed that the applicant qualifies as an electronic commerce operator. Additionally, they emphasised that as per Section 52 of the CGST Act 2017, the applicant is obligated to collect tax at source. Consequently, the applicant is required to register compulsorily under Section 24(x) of the CGST Act 2017, in accordance with the provisions of Rule 12 of the CGST Rules 2017. Digital Gold Sales e-Com app ‘Jar’ liable to Collect GST: AAR M/S: CHANGEJAR TECHNOLOGIES PVT CITATION: 2024 TAXSCAN (AAR) 122 The Karnataka Goods and Services Tax (GST) Authority for Advance Ruling (AAR) has clarified that e-commerce operators are mandated to collect Tax Collected at Source (TCS) for facilitating the sale of digital gold on their platforms. The AAR bench, comprising Dr. M.P. Ravi Prasad and Kiran Reddy T., observed that the applicant operates an e-commerce platform through their app, earning consideration in the form of a percentage on the sale value of gold. As a result, they are liable to charge and collect GST. The AAR further emphasised that the electronic commerce operator does not serve as an agent of DGIPL or any third-party supplier. Consequently, they concluded that e-commerce operators are required to collect Tax Collected at Source (TCS) for facilitating the sale of digital gold on their platforms. Activities not Predominantly Agricultural Extension Support, not exempt as “Support Services to Agriculture, Forestry, Fishing, Animal husbandry”: AAR M/S: Archipel India Foundation CITATION: 2024 TAXSCAN (AAR) 124 The Goods and Services Tax (GST) Authority for Advance Ruling (AAR), Karnataka Bench ruled that the applicant’s activities being predominantly outside the purview of agricultural extension support, was not covered under the Notification 11/2017-Central Tax and that the same was not exempt from the levy of Goods and Services Tax Act.It was thus ruled that, “the worker or activities undertaken by the appellant as per agreement viz., project during doesn’t fall under the support services to agriculture under SI.No.24 of Heading 9986 of Notification No.11/2017-Central Tax(Rate), dated 28th June, 2017.” It was also ruled that, “when it comes to taxes, the main argument is whether the appellant should get an exemption vide notification No. 11/2017, CGST , specifically under serial No. 24. In view of findings given above, doesn’t qualify for the exemption. This decision is strengthened by the fact that for the reason their activities doesn’t match the definition of services in the support services 9986 category.” Commissioning Agent/Broker dealing in brokerage of Agricultural Produce liable to be Registered under GST: AAR M/s Gayatri Enterprises CITATION: 2024 TAXSCAN (AAR) 125 The Andhra Pradesh Authority for Advance Ruling has ruled that commissioning agents/brokers dealing in the brokerage of agricultural products are liable to be registered under Goods and Services Tax (GST).It was also noted that, “in the instant case the applicant is involved in the processing of the products and also facilitates the transactions between buyer and seller and collects brokerage charges.” Therefore the applicant is required to obtain registration as well has to pay CGST @9% and SGST @9% as per notification 11/2017-Central Tax (Rate) dated 28.06.2017 given below, irrespective of whether the goods involved in the transaction are exempted or taxable under GST. Thus, the Question “Since we are dealing in brokerage of agricultural produce which is exempt, are we liable for GST Registration?” was answered “Yes” by the authority. Mangala Borosan and Mangala G1 attracts 18% GST: Andhra Pradesh AAR M/s Zuari Farmhub Limited CITATION: 2024 TAXSCAN (AAR) 126 The Andhra Pradesh Authority for Advance Ruling (AAR) has ruled that the Mangala Borosan and Mangala G1 are classifiable under 2833 29 90 attracted 18% Goods and Services Tax (GST).In summary, the product’s placement under Tariff Item 28332990 is substantiated by its composition, notably its sulphate content, as elucidated in relevant literature. By recognizing the absence of micronutrient blends and the prevalence of inorganic chemicals, particularly sulphates, this classification provides a nuanced understanding of the product’s nature and facilitates adherence to regulatory standards. Thus, the AAR bench of B. Laxmi Narayan (Central Tax) and K. Ravi Sankar (State Tax) ruled that the products Mangala Borosan and Mangala G1 are classifiable under 2833 29 90 (under schedule 3) attracting 18% GST and not under Chapter heading 3105 as fertilisers. Crackle with Sugar, Cashews, Butter Not Classified as ‘Sugar Boiled Confectionery’ for 12% GST; Deemed Industrial Input: Andhra Pradesh AAR M/s Venkateswara Cashew Chikky Manufacturers CITATION: 2024 TAXSCAN (AAR) 127 In a recent ruling, the Andhra Pradesh Authority for Advance Ruling (AAR) has ruled that the crackle manufactured by the applicant with Sugar, Cashews, Butter, Liquid glucose and other permitted flavours should not be classified under ‘Sugar Boiled Confectionery’ for 12% Goods and Services Tax (GST) as the products were used as industrial inputs.Hence, the AAR bench ruled that the product by name “Crackle”, manufactured and supplied by the applicant containing the ingredients Sugar, Cashew Nuts, Butter, Liquid glucose and other permitted Flavours, should not be classified under the Tariff Heading 1704 enumerated at Serial number 32AA of Schedule III of Notification No. 01/2017 as a Sugar boiled confectionery. No GST payable on Amount recovered from Permanent Employees for Canteen Facility provided by Employer: AAR M/s Suzuki Motor Gujarat Pvt Ltd. CITATION: 2024 TAXSCAN (AAR) 128 The Gujarat Authority for Advance Ruling ( AAR ) clarified that GST is not applicable on the amount recovered from permanent employees for canteen facilities.The Gujarat Authority Bench of CGST Member Amit Kumar Mishra and State GST Member Riddesh Raval ruled that the company can claim ITC only on expenses related to permanent employees, not on those related to temporary or deputed workers. In conclusion, the applicant was ruled to be exempt from GST on canteen charges for permanent employees and can claim ITC accordingly. However, it was added that they must pay GST for similar services provided to temporary workers and others, without eligibility for ITC on those expenses. Additionally, ITC cannot be claimed on inputs like equipment and kitchen utensils. Software sold without Customization qualifies as ‘Supply of Goods’: AARM/s SOLIZE INDIA TECHNOLOGIES PRIVATE LIMITED CITATION: 2020 TAXSCAN (AAR) 129 The Karnataka Authority of Advance Ruling (AAR) ruled that the supply of software which is not designed and developed specifically to any customer and sold without customization qualifies as “supply of goods” and “supply of computer software as goods”.The authority consisting of members Dr. M.P. Ravi Prasad and Mashood Ur Rehman Farooqui ruled that the supply of software which is not designed and developed specifically to any customer and sold without customization qualifies as “supply of goods” and “supply of computer software as goods”. “The benefits of a notification dated November 14, 2017, are applicable to the supplies made if the same are made to recipients if they are covered under column (2) and if the condition as specified in Column (4) of the notification,” the authority observed. 5% GST on Learning Kitbox Book in Separate Sheets for Imparting Education to Children: AAR M/s RISEOM SOLUTIONS PRIVATE LIMITED CITATION: 2021 TAXSCAN (AAR) 130 The Madhya Pradesh Authority of Advance Ruling (AAR) ruled that 5% GST on Learning kit box books in separate sheets for imparting education to children.The Coram of Manoj Kumar Choubey and Virendra Kumar Jain ruled that the Authority hereby is of opinion that the kit called by the Applicant as “Class Monitor Home Learning Kit” manufactured (printed) marketed and sold is classified under HSN 49011020 and the GST rate is 5% (CGST 2.5% & SGST 2.5%) and as per IGST rate of 5% entry 201 of schedule I of notification number 01/2017 CGST (rate)and corresponding SGST notification as amended from time to time. “On combined reading of extract of tariff and HSN 49001, the kit box/ book, which is in the form of separate sheets which are designed for binding (though not bound to maintain the use) could be covered. Further, such separate sheets (being integral part of kit -box book} have printed pictures but such sheets also bear text and in one shape, so it appears to be covered under HSN 49011020 (attracting CGST& SGST rate of 2.5%, 2.5% and IGST rate of 5%) and not under HSN 4903 attracting NIL CGST/SGST/IGST,” the AAR noted. GST ITC Available for Canteen Services Provided Only to Permanent Employees, Not Contractual Workers: Andhra Pradesh AAR M/s KSH Automotive pvt Ltd CITATION: 2024 TAXSCAN (AAR) 129 The Andhra Pradesh Authority for Advance Ruling ( AAR ) has ruled that the Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) is available for canteen services provided only to the permanent employees and on the contractual workers. The bench also mentioned the condition that the burden of GST has not been passed on to the employees.In light of these submissions and facts, the AAR bench of K. Ravi Sankar and R V Pradhamesh Bhanu concluded that the applicant is eligible for ITC on GST charged by canteen vendors, given the mandatory nature of maintaining a canteen and the provision under the blocked credit subsection. However, the eligibility is based on twin conditions: Subject to the condition that the burden of GST have not been passed on to thc employees. The applicant is eligible for proportionate ITC on permanent employees, on food supplied by canteen service to employees only and not contractual workers. Red Gram Dal Supplied via HACA to Non-Commercial Industrial or Institutional Consumers Not Subject to GST: Telangana AAR M/s.Narayan Trading Corporation CITATION: 2024 TAXSCAN (AAR) 130 In a recent ruling, the Telangana Authority for Advance Ruling ( AAR ) ruled that the Red Gram Dal supplied through Hyderabad Agricultural Cooperative Association Limited ( HACA ) to Non-Commercial Industrial or Institutional Consumers are not subject to Goods and Services Tax ( GST ).The two-member bench of S.V. Kasi Visweswara Rao and and Sahil Inamdar noted that “the supplies made to institutional consumers meeting specific criteria, such as bearing a “not for retail sale” declaration and being used solely for institutional purposes, are exempt from CGST & SGST.” With regards to the 1st issue, the AAR bench declared that the Department for Women, Children, Disabled & Senior Citizens will be covered under the definition of “industrial consumer or institutional consumer”. With regards to 2nd issue, the goods supplied by the applicant through the Nodal Agency – Hyderabad Agricultural Co-operative Association Limited ( HACA ) do not attract GST. However, the both is possible on following conditions: The packaged commodities are bearing a declaration ‘not for retail sale’. The purchase is made directly from the manufacturer or from an importer or from wholesale dealer The purchase is made for use by that institution and not for commercial or trade purpose. Rental / Leasing Charges for Industrial Equipments provided with operator falling under HSN Codes: 84151090 shall attracts 28% GST: AAR M/s. Ventair Engineers CITATION: 2024 TAXSCAN (AAR) 131 The Telangana Authority for Advance Ruling ( TAAR ) has held that rental/leasing charges for industrial equipment provided with operators falling under HSN Codes: 84151090 shall attract 28% Goods and Service Tax.The two member bench of Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao ( Additional Commissioner commercial Taxes ) and Sahil Inamdar, I.R.S ( Additional Commissioner Custom & Indirect Taxes ) observed that rental/leasing charges for industrial equipment provided with operators falling under HSN Codes:84151090 shall attract 28% Goods and Service Tax. Manufacturing of Teicoplanin and Caspofungin under Drugs & Medicines shall attracts 5% GST: AAR M/s. Stanex Drugs & Chemicals Private Limited CITATION: 2024 TAXSCAN (AAR) 132 The Telangana Authority for Advance Ruling(TAAR) has ruled that manufacturing of teicoplanin and caspofungin under drugs & medicines should be attracted 5 % Goods and Service Tax.The two member bench of Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao (Additional Commissioner commercial Taxes) and Sahil Inamdar, I.R.S(Additional Commissioner Custom & Indirect Taxes) observed that manufacturing of teicoplanin and caspofungin under drugs & medicines should be attracted 5 % Goods and Service Tax. Production and supply of fertilisers Urea and Ammonia shall not attract GST TDS, when recipient fall u/s 51(1) (a), (b), (c), (d) of CGST Act: AAR M/s. Ramagundam Fertilisers And Chemicals Limited CITATION: 2024 TAXSCAN (AAR) 133 The Telangana Authority for Advance Ruling ( TAAR ) has held that production and supply of fertilisers urea and ammonia should not attracts Goods and Service Tax ( GST ) Tax Deduction at Source ( TDS ) when the recipient falling under section 51(1) (a), (b), (c), (d) of Central Goods and Service Tax Act, 2017.The two member bench of Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao (Additional Commissioner commercial Taxes) and Sahil Inamdar, I.R.S(Additional Commissioner Custom & Indirect Taxes) observed that The Applicant is established by the Government under the ministry of fertiliser as a PSU. ii. Cumulative shareholdings in the company i.e., 87.3% belong to Central PSUs & the State Government of Telangana. Thus the applicant falls under section 51 (1) (d) of the CGST Act. Hence By virtue of the above status any supplies made to persons falling under clauses (a), (b), (c) & (d) of the sub-section (1) of section 51 will not attract TDS at the hands of the recipients of such supplies by virtue of Notification No.73/2018 dt: 31-12-2018. Export of pre packaged and labelled rice upto 25KGs to foreign buyers shall levy GST :AAR M/s.Sarala Foods Private Limited CITATION: 2024 TAXSCAN (AAR) 134 The Andhra Pradesh Authority for Advance Ruling ( AAR ) has held that export of prepackaged and labelled rice upto 25KGs to foreign buyers should levy Goods and Service Tax ( GST ).The two member bench of Authority of Advance Ruling comprising K Ravi Sankar ( Commissioner of State Taxes ) and B Lakshmi Narayan ( Joint Commissioner of Central Tax ) observed that export of prepackaged and labelled rice upto 25KGs to foreign buyers should levy Goods and Service Tax ( GST ). Supply of pre packaged and labelled Rice up to 25KGs to factory of exporter will apply GST: AAR M/s.Seetharamanjaneya Sortex CITATION: 2024 TAXSCAN (AAR) 135 The Andhra Pradesh Authority for Advance Ruling(TAAR) has held that supply of pre packaged and labelled rice upto 25 KGs to factories of exporter would apply Goods and Service Tax (GST) .The two member bench of Authority of Advance Ruling comprising K Ravi Sankar (Commissioner of State Taxes) and R V Pradamesh Banu (Joint Commissioner of Central Tax ) observed that supply of pre packaged and labelled rice upto 25 KGs to factories of exporter would apply Goods and Service Tax . AIIMS can not claim GST Exemption on pure services received from Vendors: AAR M/s. All India Institute Of Medical Sciences CITATION: 2024 TAXSCAN (AAR) 136 The Telangana Authority for Advance Ruling ( TAAR ) has ruled that All India Institute of Medical Sciences ( AIIMS ) could not claim Goods and Service Tax exemption on pure services received from the vendors. The two member bench of Authority of Advance Ruling comprising S.V. Kasi Visweswara Rao ( Additional Commissioner commercial Taxes ) and Sahil Inamdar, I.R.S ( Additional Commissioner Custom & Indirect Taxes ) held that All India Institute of Medical Sciences could not claim Goods and Service Tax Exemption on pure services received from the vendors. Support services to agriculture, forestry, fishing, animal husbandry not composite supply under GST Law: AAR M/s. Archipel India Foundation CITATION: 2024 TAXSCAN (AAR) 137 The Andhra Pradesh Authority for Advance Ruling ( AAAR ) has ruled that support services to agriculture , forestry, animal husbandry not composite supply under Goods and Service Tax law.The two member bench of Authority of Advance Ruling comprising K Ravi Shankar Commissioner of State Tax (Member) and B Lakshmi Narayana IRS, Joint Commissioner of Central Tax (Member) observed that the activities required to be undertaken for the purposes of achieving the Project Objectives are not purely related agricultural activities but also involves activities such as Project Design, Carbon Accounting, Validation, Monitoring, Reporting and Verification, Project Administration, Project Operations, Biodiversity Impact Assessment, Community Engagement etc. The authority held that the support services to agriculture , forestry, animal husbandry not composite supply under Goods and Service Tax law. Work contracts service for construction of plumbing stations and reservoirs is not covered under exemption Notification No. 12/ 2017 Central Tax: AAR M/s. KBL SPML JV CITATION: 2024 TAXSCAN (AAR) 138 The Karnataka Authority for Advance Ruling ( KAAR ) has ruled that the work contracts service for construction of plumbing stations and reservoirs is not covered under exemption notification no. 12/ 2017 Central Tax. It was observed by the authority that the contracts cover civil works where the supply of goods is also involved and thus such service falls under work contract service and hence it cannot be a pure service. After analysing the submission the two member bench of Authority of Advance Ruling comprising M P Ravi prasad ( Member ) and Kiran Reddy T ( Member ) held that the work contracts service for construction of plumbing stations and reservoirs is not covered under exemption notification no. 12/ 2017 Central Tax. Support our journalism by subscribing to Taxscan premium. 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