2021 (1) TMI 694 - AAR - GST

Ruling on Tax Rate for Composite Works Contract Invalid Due to Lack of Information

The Authority was unable to provide a ruling on the rate of tax for the composite supply of works contract due to insufficient information from the ... Rate of tax applicable to composite supply of works contract - nature of supply and recipient as determinative of rate - effective date of a notification - publication in the Official Gazette as commencement of notification - where notification itself specifies effective date, that date governsRate of tax applicable to composite supply of works contract - nature of supply and recipient as determinative of rate - Applicability of the GST rate (18% or 12%) on the applicant's composite works contract supply - HELD THAT: - The Authority held that the applicable rate depends on the specific nature of the supply and, in several entries of the amending notifications, also on the identity of the recipient. The amending notifications notified different rates for different types of works and for specified recipients; therefore satisfaction of the twin conditions-nature of the supply and identity of the recipient-is necessary to determine the rate. The applicant did not furnish particulars of the specific works undertaken, the recipient's particulars, or copies of work orders. In the absence of these relevant and necessary facts, the Authority could not determine which notification entry applied and therefore could not answer the question on the applicable rate. [Paras 7, 8]Unable to answer the query on the rate applicable to the applicant's composite works contract supply for want of necessary particulars regarding the nature of the work and the recipient.Effective date of a notification - publication in the Official Gazette as commencement of notification - where notification itself specifies effective date, that date governs - Effective date of Notifications No. 20/2017 and 24/2017 amending Notification No. 11/2017 - HELD THAT: - The Authority examined the statutory scheme and precedents. Section 9(1) empowers notification of rates on the recommendations of the Council and Section 2(80) defines 'notification' as publication in the Official Gazette. Reliance was placed on Supreme Court authority establishing that where a notification does not itself specify an effective date, it takes effect from the date of its publication in the Official Gazette. The Authority further observed that if an amending notification expressly states an effective date in its body, that date governs. Applying these principles, the amended rates in Notification Nos. 20/2017 and 24/2017 take effect from the dates on which those notifications were published in the Official Gazette. [Paras 7, 8]The amendments made by Notification Nos. 20/2017 and 24/2017 are effective from the respective dates of their publication in the Official Gazette (unless an amending notification itself specifies a different effective date).Final Conclusion: The Authority declined to determine the applicable GST rate on the applicant's works contract for want of particulars about the nature of supply and the recipient; it ruled that the effective date of the amendments embodied in Notification Nos. 20/2017 and 24/2017 is the date each notification was published in the Official Gazette, except where the notification itself specifies a different effective date. Issues involved:Rate of tax applicable to composite supply of works contract under GST Act and effective date of amendments to Notification No. 11/2017-Central Tax (Rate).Analysis:1. Rate of tax applicable to composite supply of works contract:The applicant sought clarification on whether to charge GST at 18% or 12% for works contract services. The Authority noted that the rate depends on the nature of the supply and recipient, as specified in Notification Nos 20/2017 and 24/2017. However, due to lack of specific details from the applicant regarding the nature of work and recipient, the Authority was unable to provide a conclusive answer.2. Effective date of amendments to Notification No. 11/2017:The Authority referred to Section 9(1) and 2(80) of the GST Act, stating that the effective date of a notification is the date of its publication in the Official Gazette. Citing the Supreme Court's decision in Union of India v. M/s Ganesh Das Bhojraj, it was reiterated that the notification takes effect upon publication in the official gazette. Therefore, the effective date for the amended rate of tax as per Notification Nos 20/2017 and 24/2017 would be the date of their publication in the Official Gazette.Ruling:1. The Authority was unable to provide a ruling on the rate of tax for the composite supply of works contract due to insufficient information from the applicant.2. The effective date of the amendments to Notification No. 11/2017 would be the date of publication of Notification Nos 20/2017 and 24/2017 in the Official Gazette.3. The ruling remains valid unless declared void under the relevant provisions of the GST Act.