2019 (9) TMI 819 - AAR - GST

Contractor's Application for Advance Ruling Rejected Due to Lack of Eligibility

The application by M/s. Ajwani Infrastructure Pvt. Ltd. was rejected as not maintainable because the contract was awarded to the Joint Venture, and the ... Maintainability of Advance Ruling application - Classification of services - rate of tax - work of “Development of Infrastructure facility for Passenger Water Transport Terminal” - whether the activity fall under chapter heading 9954 (construction service) with serial no.3(iv)(a) or 3(vi)(a) of the Notification No. 11/2017-Central Tax (Rate)? HELD THAT:- It is the Joint Venture Company and not the applicant which has been awarded the contract and therefore supply of goods or services or both being undertaken or proposed to be undertaken will be by the Joint Venture Company, and not the applicant. Thus the person who can make such application is the Joint Venture Company since as per existing laws of the land, a Joint Venture Company, which is formed by 2 or more entities have a separate existence than that of the said entities. The CIDCO has awarded the construction contract of the project of “Development of Infrastructure facility for Passenger Water Transport Terminal at Nerul, Navi Mumbai to ‘Ajwani-Kargwal Joint Venture’, and not to the applicant. Thus the applicant is not a person competent to apply for ruling as provided under Section 95 of the GST Act. The Application in GST ARA form No. 01 of Ajwani Infrastructure Pvt. Ltd, vide reference ARA No. 138 dated 23.03.201 is a rejected as being not maintainable. Issues Involved:1. GST Rate on the work of 'Development of Infrastructure facility for Passenger Water Transport Terminal' at Nerul, Navi Mumbai awarded to M/s. Ajwani Karawal (JV).2. Classification of the activity under chapter heading 9954 (construction service) with serial no. 3(iv)(a) or 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate).Issue-wise Detailed Analysis:1. GST Rate on the Development of Infrastructure Facility for Passenger Water Transport Terminal:The applicant, M/s. Ajwani Infrastructure Pvt. Ltd., formed a Joint Venture with Kargwal Construction Pvt. Ltd. to undertake a project awarded by CIDCO of Maharashtra Limited. The project involves the development of an infrastructure facility for a passenger water transport terminal at Nerul, Navi Mumbai. The applicant contended that the facility is for public utility and does not involve commercial selling of property. The operation and maintenance of the facility will be handled by the Maharashtra Maritime Board (MMB), which is outside the scope of the contract agreement. The applicant argued that CIDCO is a non-commercial entity, and the original works constructed are meant predominantly for use other than commerce, industry, business, or profession, thus qualifying for a 12% GST rate as per Notification No. 24/2017-Central Tax (Rate) dated 21st September 2017, read with Notification No. 31/2017-Central Tax (Rate) dated 13th October 2017.2. Classification under Chapter Heading 9954:The applicant sought clarification on whether the activity falls under chapter heading 9954 (construction service) with serial no. 3(iv)(a) or 3(vi)(a) of Notification No. 11/2017-Central Tax (Rate). They argued that the development of the water transport terminal is a civil structure and an infrastructural project meant for public utility, thus falling under the definition of 'original works' as per the erstwhile Finance Act, 1994, and CPWD Manual, 2014. The applicant cited previous rulings, including the Maharashtra Authority of Advance Ruling in the case of Leena Power Tech Engineers Pvt. Ltd., to support their claim that CIDCO qualifies as a 'government entity' and the works contract should attract a 12% GST rate.Observations and Order:Upon reviewing the facts and submissions, the Authority for Advance Ruling noted that the contract was awarded to the Joint Venture, not the applicant alone. As per Section 95 of the CGST Act, only the entity undertaking the supply of goods or services can apply for an advance ruling. Since the Joint Venture, and not M/s. Ajwani Infrastructure Pvt. Ltd., was awarded the contract, the application was deemed not maintainable. The Authority concluded that the applicant is not competent to apply for a ruling under Section 95 of the GST Act.Conclusion:The application by M/s. Ajwani Infrastructure Pvt. Ltd. was rejected as being not maintainable because the contract was awarded to the Joint Venture, and the applicant alone does not satisfy the conditions to apply for an advance ruling as per Section 95 of the GST Act.