2022 (5) TMI 450 - AAAR - GST

AAAR dismisses GST exemption appeal for completed labour services under housing scheme citing timing requirements

In Re: M/s. Shri Vinayak Buildcon,

The AAAR dismissed an appeal regarding GST exemption for labour services under Chief Minister's Awas Yojana. The appellant sought advance ruling on ... Maintainability of application - Contract / Agreement in question is more than 2 years old - Exemption from GST - services of labour work of construction of residential houses under Chief Minister's Awas Yojana - covered under exemption entry at SI. No 10 of the Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017 - HELD THAT:- The definition of advance ruling, when seen in the context of the issue involved in the instant appeal, provides that questions seeking an advance ruling can relate to either supply of goods or supply of services or both by the applicant. In the instant case, the question concerns supply of services only by the applicant (appellant herein). However, as per the definition, the supply of goods or supply of services or both is qualified by two phrases viz. “being undertaken” or “proposed to be undertaken” by the applicant. The above phrases will be analysed a little later after examination of the factual position of the case based on the submissions of the appellant is completed. From perusal of the copies of certificates of extension of registration which have been attached to the appeal at pages 23 to 27, we observe that the same are a bunch' of three documents, one of them being a letter dated 29.09.2021 from the appellant addressed to the AAR with reference to the personal hearing held on 27.09.2021 submitting that the subject work under the said contract is still continuing and the period of completion of the said work stands extended upto 16.10.2022. It is further observed that the another document attached to the appeal is an undated letter of extension of contractor agreement signed by M/s Sanwaliya Buildcreation LLP which states that the duration of the contract with M/s Shri Vinayak Buildcon which was for a period of 24 months from 01.04.2019 to 31.03.2021 will now remain upto October 2022 as the builder has got extension from RERA upto 16th October 2022 - the other documents relevant to the instant document have to be seen in order to ascertain the date of coming into existence of the instant document. The supply of services by the appellant to the builder in the instant case commenced from 01.04.2019. The agreement dated 13.12.2019, duly notarised and signed by both the builder and the instant appellant being the supplier of service to the builder, specifically mentions that supply of services under the agreement by way of construction at the site started on 01.04.2019. The agreement further provides that the duration of the contract for completion of the said project by the second party i.e. the appellant herein, under the agreement shall be for a period of 24 months i.e. from 01.04.2019 to 31.03.2021 - the appellant did not file any application seeking advance ruling on the question of applicability of exemption in terms of Notification No. 12/2017-CT(R), dated 28.06.2017 to the services proposed to be provided by him to the builder, either before or at the time of commencement of the supply of service on 01.04,2019. Thereafter also no application seeking advance ruling was filed by them even on the date of signing the written agreement on 13.12.2019 or during the entire period of currency of the agreement which finally came to an end on 31.03.2021 while the appellant continued to provide services under the agreement. An application seeking advance ruling as defined under clause (a) of section 95 of the CGST Act, 2017 on any question as provided under sub-section (2) of section 97 of the CGST Act, 2017 could have been made in relation to the supply of services either proposed to be undertaken or being undertaken by the appellant but in any case the definition of advance ruling does not permit making of an application in relation to the supply of services already undertaken for a long period of two years in pursuance of an agreement which had expired long before the making of the application seeking advance ruling - the questions involving claim of extension of the two years contract agreement for supply of service for further period of one and a half years, creation of such an extension document at a stage far later than the date of filing application seeking advance ruling and non-existence of evidence showing submission of such an extension letter to the AAR lose their relevance and, therefore, the same need no further examination. Appeal dismissed. Issues Involved:1. Whether the services provided by the appellant fall under the exemption entry at SI. No 10 of Notification No. 12/2017-Central Tax (Rate), dated 28-06-2017, and are eligible for exemption from payment of GST.2. Whether the application for advance ruling was maintainable given the timing of the services provided.3. Interpretation of the term 'being undertaken' in the context of Section 95 of the CGST Act, 2017.Issue-wise Detailed Analysis:1. Exemption Eligibility under Notification No. 12/2017-Central Tax (Rate):The appellant, engaged in the supply of pure labor services for the construction of residential houses under the Affordable Housing Scheme, sought clarification on whether these services are exempt from GST under SI. No. 10 of Notification No. 12/2017-CT(R), dated 28-06-2017. The appellant argued that their services should be exempt as they fall within the scope of pure labor contracts for the construction of new residential houses under government schemes aimed at affordable housing.2. Maintainability of the Application for Advance Ruling:The Rajasthan Authority for Advance Ruling (AAR) rejected the application on the grounds that it pertained to services already undertaken prior to the filing date, thus falling outside the purview of advance ruling as defined under Section 95 of the CGST Act, 2017. The appellant contended that the services were ongoing and thus should be considered as 'being undertaken,' making the application maintainable. The AAR, however, held that since the services were provided between 01.04.2019 and 31.03.2021, the application filed on 06.07.2021 was not maintainable.3. Interpretation of 'Being Undertaken' in Section 95 of the CGST Act, 2017:The appellate authority examined the definition of 'advance ruling' under Section 95(a) of the CGST Act, 2017, which includes decisions on matters related to the supply of goods or services 'being undertaken' or 'proposed to be undertaken.' The authority concluded that 'being undertaken' refers to ongoing activities and does not cover services already completed. The authority noted that the appellant's contract, effective from 01.04.2019 to 31.03.2021, had expired before the application was filed. Despite the appellant's claim of an extension due to the pandemic, the authority found that the extension documents were not part of the original application and were not submitted until after the application date.Conclusion:The appellate authority upheld the AAR's decision, stating that the application for advance ruling was not maintainable as it related to services already completed before the filing date. The authority emphasized that the purpose of advance ruling is to provide clarity on tax liability for future or ongoing activities, not for activities already concluded. Consequently, the appeal was rejected, and no advance ruling was given on the merits of the exemption claim.