GST in respect of certain services as per GST Council meeting held on 9th, 10th & 13th

January, 2018 — Clarification

Circular No. 34/8/2018-GST, dated 1-3-2018
F. No. 354/17/2018-TRU
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Clarifications regarding GST in respect of certain services
I am directed to issue clarification with regard to the following issues as approved by the Fitment Committee to
the GST Council in its meeting held on 9th, 10th and 13th January, 2018 :-
S. Issue Clarification
No.
1. Whether activity of bus body In the case of bus body building there is supply of
building, is a supply of goods goods and services. Thus, classification of this
or services? composite supply, as goods or service would
depend on which supply is the principal supply which
may be determined on the basis of facts and
circumstances of each case.
2. Whether retreading of tyres is In retreading of tyres, which is a composite supply,
a supply of goods or the pre-dominant element is the process of
services? retreading which is a supply of service. Rubber used
for retreading is an ancillary supply. Which part of a
composite supply is the principal supply, must be
determined keeping in view the nature of the supply
involved. Value may be one of the guiding factors in
this determination, but not the sole factor. The
primary question that should be asked is what is the
essential nature of the composite supply and which
element of the supply imparts that essential nature
to the composite supply.
Supply of retreaded tyres, where the old tyres belong
to the supplier of retreaded tyres, is a supply of
goods (retreaded tyres under heading 4012 of the
Customs Tariff attracting GST @ 28%)
3. Whether Priority Sector In Reserve Bank of India FAQ on PSLC, it has been
Lending Certificates (PSLCs) mentioned that PSLC may be construed to be in the
are outside the purview of nature of goods, dealing in which has been notified
GST and therefore not as a permissible activity under section 6(1) of the
taxable? Banking Regulation Act, 1949 vide Government of
India notification dated 4th February, 2016. PSLC
are not securities. PSLC are akin to freely tradeable
duty scrips, Renewable Energy Certificates, REP
license or replenishment license, which attracted
VAT.
In GST there is no exemption to trading in PSLCs.
Thus, PSLCs are taxable as goods at standard rate
of 18% under the residuary S. No. 453 of Schedule
III of notification No. 1/2017-Central Tax (Rate). GST
payable on the certificates would be available as ITC
to the bank buying the certificates.
4. (1) Whether the activities (1) Service by way of transmission or distribution of
carried by DISCOMS against electricity by an electricity transmission or
recovery of charges from distribution utility is exempt from GST under
consumers under State notification No. 12/2017-C.T. (R), Sl. No. 25. The
Electricity Act are exempt other services such as, -
 from GST? i. Application fee for releasing connection of
(2) Whether the guarantee electricity;
provided by State ii. Rental Charges against metering equipment;
Government to state owned iii. Testing fee for meters/transformers,
companies against capacitors etc.;
guarantee commission, is
taxable under GST? iv. Labour charges from customers for shifting of
meters or shifting of service lines;
v. charges for duplicate bill;
provided by DISCOMS to consumer are taxable.
(2) The service provided by Central
Government/State Government to any business
entity including PSUs by way of guaranteeing the
loans taken by them from financial institutions
against consideration in any form including
Guarantee Commission is taxable.
2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board.
Services — GST in respect of services as decided in 25th GST Council Meeting —
Clarification
Circular No. 32/06/2018-GST, dated 12-2-2018
F. No. 354/17/2018-TRU
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject : Clarifications regarding GST in respect of certain services.
I am directed to issue clarification with regard to the following issues approved by the GST Council in its 25th
meeting held on 18th January, 2018 :-
S. Issue Clarification
No.
1. Is hostel accommodation provided by Hostel accommodation services do not fall
Trusts to students covered within the within the ambit of charitable activities as
definition of Charitable Activities and defined in para 2(r) of notification No.
thus, exempt under Sl. No. 1 of 12/2017-C.T. (Rate). However, services by
notification No. 12/2017-C.T. (Rate)? a hotel, inn, guest house, club or campsite,
by whatever name called, for residential or
lodging purposes, having declared tariff of
a unit of accommodation below one
thousand rupees per day or equivalent are
exempt. Thus, accommodation service in
hostels including by Trusts having
declared tariff below one thousand rupees
per day is exempt. [Sl. No. 14 of
notification No. 12/2017-C.T. (Rate) refers]
2. Is GST leviable on the fee/amount Services by any court or Tribunal
charged in the following established under any law for the time
situations/cases? being in force is neither a supply of goods
(1) A customer pays fees while nor services. Consumer Disputes
registering complaints to Consumer Redressal Commissions
Disputes Redressal Commission (National/State/District) may not be
office and its subordinate offices. tribunals literally as they may not have
These fees are credited into State been set up directly under Article 323B of
Customer Welfare Fund’s bank the Constitution. However, they are
account. clothed with the characteristics of a
tribunal on account of the following :-
(2) Consumer Disputes Redressal
Commission office and its (1) Statement of objects and reasons as
subordinate offices charge penalty mentioned in the Consumer Protection
in cash when it is required. Bill state that one of its objects is to
provide speedy and simple redressal to
(3) When a person files an appeal to consumer disputes, for which a quasi-
Consumers Disputes Redressal judicial machinery is sought to be set
Commission against order of up at District, State and Central levels.
District Forum, amount equal to
50% of total amount imposed by the (2) The President of the District/
District Forum or Rs. 25000/- State/National Disputes Redressal
whichever is less, is required to be Commissions is a person who has
paid. been or is qualified to be a District
Judge, High Court Judge and Supreme
Court Judge respectively.
(3) These Commissions have been vested
with the powers of a civil court under
CPC for issuing summons, enforcing
attendance of defendants/witnesses,
reception of evidence,
discovery/production of documents,
 examination of witnesses, etc.
(4) Every proceeding in these
Commissions is deemed to be judicial
proceedings as per sections 193/228
of IPC.
(5) The Commissions have been deemed
to be a civil court under CrPC.
(6) Appeals against District Commissions
lie to State Commission while appeals
against the State Commissions lie to
the National Commission. Appeals
against National Commission lie to the
Supreme Court.
In view of the aforesaid, it is hereby
clarified that fee paid by litigants in the
Consumer Disputes Redressal
Commissions are not leviable to GST. Any
penalty imposed by or amount paid to
these Commissions will also not attract
GST.
3. Whether the services of elephant or Elephant/camel joy rides cannot be
camel ride, rickshaw ride and boat ride classified as transportation services.
should be classified under heading These services will attract GST @ 18%
9964 (as passenger transport service) with threshold exemption being available
in which case, the rate of tax on such to small service providers. [Sl. No 34(iii) of
services will be 18% or under the notification No. 11/2017-C.T. (Rate), dated
heading 9996 (recreational, cultural 28-6-2017 as amended by notification No.
and sporting services) treating them as 1/2018-C.T. (Rate), dated 25-1-2018
joy rides, leviable to GST @ 28%? refers]
4. What is the GST rate applicable on Leasing or rental services, with or without
rental services of self-propelled access operator, for any purpose are taxed at the
equipment (Boom Scissors/ same rate of GST as applicable on supply
Telehandlers)? The equipment is of like goods involving transfer of title in
imported at GST rate of 28% and goods. Thus, the GST rate for the rental
leased further in India where operator services in the given case shall be 28%,
is supplied by the leasing company, provided the said goods attract GST of
diesel for working of machine is 28%. IGST paid at the time of import of
supplied by customer and these goods would be available for
transportation cost including loading discharging IGST on rental services. Thus,
and unloading is also paid by the only the value added gets taxed. [Sl. No
customer. 17(vii) of notification No. 11/2017-C.T.
(Rate), dated 28-6-2017 as amended
refers].
5. Is GST leviable in following cases : Health care services provided by a clinical
(1) Hospitals hire senior establishment, an authorised medical
doctors/consultants/technicians practitioner or paramedics are exempt. [Sl.
independently, without any contract No. 74 of notification No. 12/2017-C.T.
of such persons with the patient; (Rate), dated 28-6-2017 as amended
and pay them consultancy charges, refers].
without there being any employer- (1) Services provided by senior
employee relationship. Will such doctors/consultants/technicians hired
consultancy charges be exempt by the hospitals, whether employees or
from GST? Will revenue take a not, are healthcare services which are
stand that they are providing exempt.
services to hospitals and not to (2) Healthcare services have been defined
patients and hence must pay GST? to mean any service by way of
(2) Retention money : Hospitals charge diagnosis or treatment or care for
the patients, say, Rs. 10000/- and illness, injury, deformity, abnormality or
pay to the consultants/technicians pregnancy in any recognised system of
 only Rs. 7500/- and keep the medicines in India [para 2(zg) of
balance for providing ancillary notification No. 12/2017-C.T. (Rate)].
services which include nursing Therefore, hospitals also provide
care, infrastructure facilities, healthcare services. The entire amount
paramedic care, emergency charged by them from the patients
services, checking of temperature, including the retention money and the
weight, blood pressure, etc. Will fee/payments made to the doctors etc.,
GST be applicable on such money is towards the healthcare services
retained by the hospitals? provided by the hospitals to the
(3) Food supplied to the patients : patients and is exempt.
Health care services provided by (3) Food supplied to the in-patients as
the clinical establishments will advised by the doctor/nutritionists is a
include food supplied to the part of composite supply of healthcare
patients; but such food may be and not separately taxable. Other
prepared by the canteens run by supplies of food by a hospital to
the hospitals or may be outsourced patients (not admitted) or their
by the Hospitals from outdoor attendants or visitors are taxable.
caterers. When outsourced, there
should be no ambiguity that the
suppliers shall charge tax as
applicable and hospital will get no
ITC. If hospitals have their own
canteens and prepare their own
food; then no ITC will be available
on inputs including capital goods
and in turn if they supply food to the
doctors and their staff; such
supplies, even when not charged,
may be subjected to GST.
6. Appropriate clarification may be issued As per the Production Sharing Contract
regarding taxability of Cost Petroleum. (PSC) between the Government and the
oil exploration & production contractors, in
case of a commercial discovery of
petroleum, the contractors are entitled to
recover from the sale proceeds all
expenses incurred in exploration,
development, production and payment of
royalty. Portion of the value of petroleum
which the contractor is entitled to take in a
year for recovery of these contract costs is
called “Cost Petroleum”.
The relationship of the oil exploration
and production contractors with the
Government is not that of partners but that
of licensor/lessor and licensee/lessee in
terms of the Petroleum and Natural Gas
Rules, 1959. Having acquired the right to
explore, exploit and sell petroleum in lieu
of royalty and a share in profit petroleum,
contractors carry out the exploration and
production of petroleum for themselves
and not as a service to the Government.
Para 8.1 of the Model Production Sharing
Contract (MPSC) states that subject to the
provisions of the PSC, the Contractor shall
have exclusive right to carry out Petroleum
Operations to recover costs and expenses
as provided in this Contract. The oil
exploration and production contractors
conduct all petroleum operations at their
sole risk, cost and expense. Hence, cost
 petroleum is not a consideration for service
to GOI and thus not taxable per se.
However, cost petroleum may be an
indication of the value of mining or
exploration services provided by operating
member to the joint venture, in a situation
where the operating member is found to be
supplying service to the oil exploration and
production joint venture.
2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Hindi version
would follow.