2023 (1) TMI 77 - AAR - GST

Project Implementing Agency must issue tax invoices on full contract value despite claiming agent status for government

In Re: M/s. West Bengal Agro Industries Corporation Limited

In Re: M/s. West Bengal Agro Industries Corporation Limited - TMI Issues:1. Interpretation of provisions of Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017.2. Determination of tax liability for a Government Undertaking acting as a 'Project Implementing Agency' for various administrative departments.3. Clarification on the requirement to issue tax invoices to State Government Department/Directorate for works undertaken.Issue 1: Interpretation of GST ActsThe judgment clarifies that unless specified, provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and the West Bengal Goods and Services Tax Act, 2017 (WBGST Act) are considered the same. The term 'GST Act' encompasses both CGST Act and WBGST Act for the purpose of proceedings.Issue 2: Tax Liability for Government UndertakingThe applicant, a Government Undertaking under the Water Resources Investigation & Development Department, carries out commercial operations through three divisions. The Agri Engineering Division executes civil works as a 'Project Implementing Agency' for various government departments. The applicant sought an advance ruling on whether to issue tax invoices to State Government Departments for contract values determined by the departments.Issue 3: Requirement to Issue Tax InvoicesThe applicant explained the process of executing works as an 'executing agency' based on government notifications and procedures. The applicant argued that no additional GST liability accrues as they act as an agent for the government departments, and the contractors issue tax invoices for the work done. The Revenue did not provide a view on the matter.Observations & Findings:The Authority examined the applicant's role as a project implementing agency and noted that the applicant acts as an agent for government departments in executing works. The applicant enters into agreements with contractors and makes payments, making them the recipient of the supply. The Authority concluded that the applicant is required to issue tax invoices to State Government Departments for the contract value determined by the departments, considering the applicant as making supplies to the departments.Ruling:The Authority ruled that the applicant, while working as a 'Project Implementing Agency,' is obligated to issue tax invoices to State Government Departments/Directorates for the contract value determined by the departments. This decision clarifies the tax liability of a Government Undertaking acting as an executing agency for various administrative departments under the GST Acts.