The Authority for Advance Ruling ( AAR ), Telangana State has ruled that the CBIC Notification allowing Concessional GST rate on scientific and technical equipments supplied to public funded research institutions applicable to inter-State supplies only. The authority clarified that the benefit of the Notification cannot be extended to intra-State supplies.
The applicant, M/s. Manjira Machine Builders (P) Ltd., intends to supply equipments to all the DRDO labs and Satish Dhawan Space Centre, Sriharikota) and Vikram Sarabhai Space Centre, ISRO, Thiruvananthapuram.
The Central Board of Indirect taxes and Customs, on 14th November 2017, issued a Notification providing concessional GST rate of 5% on scientific and technical equipments supplied to public funded research institutions.
The applicant sought for a clarification that whether the concessional rate is applicable only for Interstate sales i.e., on IGST or also applicable for sales within the state i.e., on SGST & CGST. It also asked that if the concessional tax rate of 5% is applicable for both Interstate and within the state sales, then can they avail the Input tax credit (ITC) for the raw materials used for these supplies.
The Authority for Advance Ruling clarified that the concessional rate of tax @ 5% as given under the above Notification is applicable only for Interstate sales i.e., on IGST and concessional rate of tax @ 2.5% CGST + 2.5% SGST is applicable for Intrastate supplies as per Notification No. 45/2017-Central Tax (Rate) dated 14.11.2017.
Regarding the second question on availability of input tax credit, the authority said that “However, goods and services on which concessional rate of tax is applicable are not figured in the list. Hence, the ITC is allowed on the supplies effected by paying duty at concessional rate of tax. Moreover, the supplies effected at concessional rate of duty are not exempt supplies. Hence, Input tax credit is allowable on the raw materials used for these supplies.”
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