Page 36 - GSTL_16th July 2020_Vol. 38_Part 3

J78 GST LAW TIMES [ Vol. 38
“The services provided by the applicant to Doyen Systems Pvt. Ltd. is a
supply of services under CGST/TNGST Act and the applicant is liable to pay rel-
evant tax on such supply,” the AAR said.
AMRG & Associates Senior Partner Rajat Mohan said the Authority has
ruled that taxpayers providing information technology software related services
to overseas client of an Indian business would be liable to pay GST at the rate of
18 per cent.
“The Government should contemplate and pass on a tax neutral status to
services sector for all indirect exports, as the procedural law has matured and
technology is stable after three years of implementation. With this tweaking, GST
would move to Phase-II of ‘Ease of Doing Business’ whereby overall cost of capi-
tal in IT services sector could be further rationalised,” Mohan added.
[Source : Millennium Post, New Delhi, dated 6-7-2020]

Some power sector transactions may attract GST : AAR

The Tamil Nadu-based Authority for Advance Rulings (AAR) has held
that only distribution and transmission segments of the electricity sector are ex-
empt from Goods and Services Tax (GST) and any transaction between the two
utilities could come under the indirect tax depending on its nature.
The issue was applicability of GST to the inter-company transactions be-
tween applicant Tamil Nadu Generation and Distribution Corporation
(TANGEDCO) and Tamil Nadu Transmission Corporation (TANTRANSCO),
both subsidiaries of Tamil Nadu Electricity Board.
The AAR held that GST is applicable on these supplies from
TANGEDCO to TANTRANSCO, operation and maintenance materials used in
the regular day-to-day functioning, transfer of assets and movement, and de-
ployment of employees, said Harpreet Singh, partner at KPMG.
Besides, GST will be levied on application for releasing connection of
electricity, rental charges against metering equipment, testing fee for meters,
transformers, capacitors, labour charges for shifting of meters or shifting of ser-
vice lines and charges of duplicate bill.
However, AAR will not be imposed on transaction of funds between the
companies by the way of repayment of existing loan, availing of fresh loans
without any interest component.
GST will also not apply to income from transmission charges, scheduling
and systems operating charges, reactive energy charges received from open ac-
cess consumers by the applicant and adjusted through payable to
TANTRANSCO in TANGEDCO’s bank account.
Singh cautioned the electricity companies to document the exact nature
of transaction between the related entities. “Any incorrect nomenclature, ac-
counting entry could result in GST liability,” he said.
[Source : Business Standard, New Delhi, dated 7-7-2020]

GST LAW TIMES  16th July 2020  36
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