Gst on exempted service tax works contract

[Bijay Bharat]

Dear Sir/Madam,

Our company has went into a works contract agreement with state govt which mentions specifically that all taxes are included except service tax which will be reimbursed as per actual but now after GST coming into force when we had claimed the Cgst part as exemption or to be borne by client I.e state govt their is ambiguity and confusion kindly help out in this regard is their any law or way to claim the part to service tax which was rembursable .

Thank you

[Alkesh Jani]

Sir,

In this regards, my point of view is that, In terms of Section 2(84) of CGST Act, 2017, even Central Government or State Government is a “Person” and GST is to be borne by the receiver of goods or services, therefore, State Government being recipient of service is liable for GST. The exemption Notification No.12/2017-CT (Rate) dated 28.06.2017, as amended from time to time, nowhere states "service provided to Government.....". Hence, exemption is not available.

Moreover, central and state Government dept. are Tax deductor at source (TDS) under Section 51 of CGST Act,2017, however, in terms of Notification No. 33/2017-CT dated 15.09.2017, the said Section 51 came into force with effect from 18^th September-17.However, deduction of tax, shall be effected from date to be notified. This does not stipulates, from registration, But….

In view of above, it can be said that Government is liable to GST and should pay GST. Alternately, you can raise the Invoice including GST , supply to un-registered person and pay tax. Any other view is appreciated.

Thanks

[YAGAY andSUN]

In our view Government cannot deny to pay you the statutory dues/levies.

[ANITA BHADRA]

Sir

There are two important points in your query :-

Time of Supply and GST payable by State Government .

What is time of supply ?

GST will not applied, in case invoice raised or supply made ( whichever is earlier ) pre GST period . In that condition , service tax is reimbursable by State Government as per your work contract agreement .

In case supply made and invoice raised post GST , GST is payable by State Government at applicable rate .

[DR.MARIAPPAN GOVINDARAJAN]

State Government is to pay tax.

[Himansu Sekhar]

The ITC of the inputs, input services will be available to you. Government may think of reducing the Tax in that respect.

AI Summary

Government liability for GST: state is recipient and must bear GST post GST; pre GST supplies permit service tax reimbursement. State Government as recipient is liable for GST on works contract supplies; if supply or invoice predates GST, service tax reimbursement under the contract remains payable, but where supply and invoicing occur after GST commencement GST must be borne and reimbursed by the State. TDS under Section 51 may apply and input tax credit on inputs and input services is generally available to the supplier.