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of <h1>AAR rejects advance ruling application on GST computation for pre-GST lump sum work contracts as not maintainable</h1> <h3>In Re: M/s. Jaipur Metro Rail Corporation Limited</h3> The AAR Rajasthan rejected an advance ruling application concerning GST computation on a pre-GST lump sum contract. The applicant sought clarification on ... Scope of Advance Ruling application - Net impact of GST on the cost of a pre-GST lump sum contract - Computation of value of supply to levy GST of a lump sum work contract entered under pre-GST tax regime - HELD THAT:- The subject application for Advance Ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017. Issues Involved:1. How to assess the net impact of GST on the cost of a pre-GST lump sum contractRs.2. How to compute the value of supply to levy GST of a lump sum work contract entered under the pre-GST tax regimeRs.Summary:Issue 1: Assessing the Net Impact of GST on Pre-GST Lump Sum Contract1. Applicant's Submission: JMRC awarded a contract to CEC for metro construction. The contract price was lump sum, including all taxes except VAT. Clause 13.7 of the General Condition Clause (GCC) allowed for price adjustments due to changes in law, which includes the introduction of GST.2. Applicant's Interpretation: With the implementation of GST, the exemption for services related to metro construction was withdrawn, leading to an increased cost due to GST at 18%, later reduced to 12%. The applicant argued that the contract price should be adjusted to account for this increase.3. Jurisdictional Officer's Comments: For works contracts executed on or after 1st July 2017, SGST and CGST rates will be applicable. The value of the bill, inclusive of GST, should not exceed the pre-GST contract value inclusive of VAT and Service Tax.4. Authority's Findings: The authority noted the conflict between JMRC and CEC regarding GST liability computation and reimbursement. They emphasized that the dispute should be resolved per Clause 13.7 of the GCC, which is not covered under Section 97(2) of the CGST Act, 2017.Issue 2: Computing the Value of Supply for Levying GST on Pre-GST Lump Sum Work Contract1. Applicant's Submission: The applicant provided a detailed method for computing the additional GST liability, considering the pre-GST taxes and the new GST rates.2. Applicant's Interpretation: The computation method proposed by JMRC was not accepted by CEC, which argued that JMRC's assumptions lacked basis and did not consider the exemption of output service tax on metro projects.3. Jurisdictional Officer's Comments: The value of the bill under GST should be computed using a formula to ensure it does not exceed the pre-GST contract value inclusive of VAT and Service Tax.4. Authority's Findings: The authority reiterated that the dispute over GST liability and reimbursement should be resolved as per Clause 13.7 of the GCC and is not a matter for advance ruling under Section 97(2) of the CGST Act, 2017.Ruling:The application for Advance Ruling is not maintainable and is hereby rejected under the provisions of the GST Act, 2017. This ruling is valid subject to the provisions under Section 103 until declared void under Section 104(1) of the GST Act, 2017.
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