Court :
AAAR, Karnataka
Brief :
The AAAR, Karnataka in the matter of M/s Myntra Designs Pvt. Ltd [Order No. KAR/AAAR /06/2022 dated November 21, 2022] set aside the order of the AAR for failure in giving a ruling on the question of taxability under Goods and Service Tax ("GST") on services provided by the assessee on the grounds that it involves the determination of place of supply which is beyond its jurisdiction. Held that, the AAR was incorrect for failing to make a ruling on the matter. Further, remanded back the case to the AAR for fresh consideration.
Citation :
Order No. KAR/AAAR /06/2022 dated November 21, 2022
The AAAR, Karnataka in the matter of M/s Myntra Designs Pvt. Ltd [Order No. KAR/AAAR /06/2022 dated November 21, 2022] set aside the order of the AAR for failure in giving a ruling on the question of taxability under Goods and Service Tax ("GST") on services provided by the assessee on the grounds that it involves the determination of place of supply which is beyond its jurisdiction. Held that, the AAR was incorrect for failing to make a ruling on the matter. Further, remanded back the case to the AAR for fresh consideration.
M/s Myntra Designs Pvt. Ltd ("the Appellant") owns an e-commerce portal and is engaged in the business of selling fashion and lifestyle products. The Appellant offers advertising space on its website to oneLenzing Singapore Pte Ltd ("Lenzing"), a foreign company, in exchange for consideration.
The Appellant had sought ruling from the AAR, Karnataka on taxability under GST, classification and rate of tax of the service w.r.t. the transaction with the Lenzing, wherein, the AAR, Karnataka vide Advance Ruling Order No. KAR ADRG 19/2022 dated July 1, 2022("the Impugned Order")ruled that, the service provided by the Appellant is classified under SAC 998365 as "Sale of internet advertising space (except on commission)" and is chargeable to 18% GST as per Sl. No. 21 of Notification No. 11/2017 Central Tax (Rate) dated June 28, 2017 ("the Services Rate Notification"). However, the AAR, Karnataka failed to give a ruling on whether the transaction with Lenzing is taxable under GST or not, on the grounds that the issue involved the determination of place of supply, which is outside its jurisdiction.
Being aggrieved, the Appellant has filed this appeal against the Impugned Order, in not giving any ruling on the issue of the taxability of the transaction.
The Appellant contended that the determination of the place of supply is within the ambit of determination of ‘liability to pay tax on any goods or service or both’ as mentioned in Section 97(2) of the Central Goods and Services Tax Act, 2017 ("the CGST Act"). Further, theAAAR has the power to make decisions on issues related to the dispute, including if the AAR made an error in not deciding on the on the issue of taxability of services provided by the Appellant. The Appellant further contended that the AAAR also has the power to remand even if remand provisions are not mentioned expressly in the CGST Act.
The AAR, Karnataka in Order No. KAR/AAAR /06/2022 of 2022 has held as under:
"97 Application for advance ruling-
(2) The question on which the advance ruling is sought under this Act, shall be in respect of,–
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of thisAct;
(c) determination of time and value of supply of goods or services or both;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determination of the liability to pay tax on any goods or services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term."
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