Page 25 - GSTL_ 28th May 2020_Vol 36_Part 4

2020 ] VALIDITY OF ADVANCE RULING OBTAINED UNDER GST LAWS J85
(iv) In case the supply is held to be a supply of service in terms of Entry
6(b) of Schedule II to the CGST Act, 2017, would it be mandatory for
the applicant to collect and pay CGST @ 2.5% in spite of the fact that
Entry 7(i) of Notification No. 11/2017-C.T. is a conditional entry?
The Authority for Advance Ruling observed that there is no doubt that the ice
creams sold by the applicant are covered under the definition of ‘goods’ as defined
under Section 2(52) of the Act. There is also ‘supply’ in the case of the applicant as
defined under Section 7 of the Act. As per facts stated by the applicant, the ice
creams are sold by them in the same form as received by them and at agreed rates
not exceeding the MRP and in most of the cases, the said ice creams appeared to be
consumed outside the premises of the applicant. Under the circumstances, the Au-
thority for Advance Ruling held that the supply of ice creams by the applicant
from its retail outlets would be treated as supply of goods. The Authority for Ad-
vance Ruling also held negative to the second question put forth by the applicant.
The third and fourth questions were not answered in view of the answer given for
question No. (i).
The Revenue being aggrieved by the said ruling given by the Authority
for Advance Ruling, filed an appeal before the Appellate Authority for Advance
Ruling as reported in 2020 (32) G.S.T.L. 82 (App. AAR - GST - Mah.). The Appel-
late Authority for Advance Ruling also received one letter dated 29-7-2019 i.e.,
before the hearing date fixed on 14-8-2019, from the Deputy Director, DGGI, Pu-
ne Zonal Unit with a request for grant of an opportunity to present their side in
the capacity of the concerned officer, as they had initiated investigation against
the applicant’s franchisor, Kamaths Ourtimes Ice Creams Private Limited (KOTI)
and its 11 other franchisees located in Mumbai, Delhi, Kolkata, Gurugram on 5-2-
2019, which is prior to the date of filing of the application for Advance Ruling by
the respondent. In that letter it was contended by them that Arihant Enterprises
was not eligible to file the Advance Ruling application as the proceedings against
its franchisees have already been taken. Action against some of its franchisees
had already been initiated on the same issue as that of the questions raised in the
advance ruling application by Arihant Enterprises. The Appellate Authority for
Advance Ruling allowed the DGGI officials to be present in the personal hearing
along with the appellant.
In the personal hearing the DGGI officials filed an affidavit and submit-
ted the following -
• Natural brand ice cream is manufactured by KOTI, Mumbai.
• Some of its directors have formed one more company under the
name Kamaths Natural Retail Private Limited (KNRPL).
• KNRPL owns around 12 Naturals Ice Cream Parlours in Mumbai,
Delhi, Kolkata and Gurgaon.
• An intelligence was received by them on 7-1-2019 that GST to the
tune of ` 40 crores is being evaded by the franchisees of Natural Ice
Cream numbering around 133 across India by way of deliberately
misclassification of their activity of supply of ice cream from Natu-
rals outlets to ultimate consumers under HSN 2105, as supply of
goods and whereby charged and recovered GST @ 18% by availing
input tax credit.
• The activity carried on by KOTI and KNRPL should have been clas-
sified under supply of service under SAC 9963 31 attracting @ 5%
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