TaxTMI 
TaxTMI 
2020 (3) TMI 190
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....loor, Le Royal Riteroof, Lloyds Road, Gopalapuram, Chennai-600086 (hereinafter called the Applicant or the Company) are registered under GST vide GSTIN 33AAACT40631ZT. The applicant undertakes contracts for construction of Head works, Sumps, Pump Rooms, laying, jointing of pipe line and commissioning and maintenance of entire work for water supply projects/ sewage projects. They have preferred an application seeking Advance Ruling on,- 1. Whether Notification No. 12/2017- CT(R) as amended by Notification No.02/2018- CT(R)dated 25.01.2018 S.No.3A is applicable to operation and maintenance part of Contract/s entered prior to implementation of GST? 2. Whether Notification No. 12/2017-CT/R as amended by Notification No. 02/2018-CT(R) dated 25.01.2018 S.No.3A is applicable to operation and maintenance part of contract/s entered post implementation of GST? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted the copy of Challan evidencing payment of application fees of Rs. 5,000/-each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they have been awarded contracts for w....
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....aintaining the water supply scheme in proper manner and attending to any defects arisen during the course. Therefore, the Labour portion is more than 75% of the total amount appropriated for maintenance. The applicant has also stated that in respect of the contract no.3 mentioned above, the Tender for the same was floated under Pre-GST Era and awarded under the GST Era and the same is under execution. In view of the above the applicant has sought Advance Ruling to clarify whether maintenance part of the contract would attract Tax @12% or shall be exempted vide the notification 12/2017-CT(rate) as amended by Notification No. 02/2018-CT(R) dated 25.01.2018. 3.1 The Authorized Representative of the Applicant was heard in the matter on 25.09.2018. They stated that they have contract of works which involves installation of water pipes and subsequent operation and maintenance. They stated that the value of goods supplied will be more than 25% of total value. They stated that they will submit agreements with BOQ, giving timelines, value of supply, dates of invoice, date of payment for each milestone. The applicant furnished Bid document-Agreement No. CE/TNJ/28/2013-14 dated 03.03.2014(....
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....rt), Viralimalai (Part) unions of Pudukkottai District and Vallam Town Panchayat of Thanjavur District including paid maintenance for one year." The applicant along with the application for advance ruling, has furnished the 'Forwarding slip to the Lump Sum Agreement', 'VIII. Special Conditions of Contract' and 'BOQ corresponding to 'Operation and Maintenance of the Scheme". From these documents, it is seen that the applicant has entered into an agreement for providing CWSS which comprises of construction (Section-I) and paid maintenance for a period of one year(Section-II). The maintenance undertaken is in continuation of construction. The total estimated amount of the works is given as Rs. 294.77 Crore and the charges for maintenance as per the BOQ is Rs. 7.89 Crores. The applicant has not furnished the details of RA bills/invoices/payment details to establish the timeline of execution of work. > Agreement No. CE/TNJ/28/2013-14 dt.03.03.2014 is for "Providing CWSS to 1003 Rural Habitations in Pattukottai, Madukkur, Peravurani and Sedhubavachathiram Unions, 150 Wayside Habitations in Thiruvaiyaru, Papanasam, Thanjavur, Orathanadu and Thirivonam Unions and Peravurini, Perum....
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....he agreement is a Lumpsum agreement for an estimated amount of Rs. 183.46 Crore and as per the 'General Abstract', the amount towards the 'Maintenance of the Scheme for one Year' is Rs. 0.70 Crores and the activity is yet to be billed. The ruling is sought on the following questions:- 1. Whether Notification No. 12/2017- CT(R) as amended by Notification No.02/2018- CT(R)dated 25.01.2018 S.No.3A is applicable to operation and maintenance part of Contract/s entered prior to implementation of GST? 2. Whether Notification No. 12/2017-CT/R as amended by Notification No. 02/2018-CT(R) dated 25.01.2018 S.No.3A is applicable to operation and maintenance part of contract/s entered post implementation of GST? 6.1 To answer the question raised, first, the type of supply and whether the supply is a taxable supply under GST is examined and then the applicability of the exemption entry is taken up for decision. Supply is defined under Section 7 of the CGST Act 2017 and the same is reproduced below for reference:- 7. (1) For the purposes of this Act, the expression "supply " includes,- (a) all forms of supply of goods or services or both such as sale, tra....
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....ply ................................................................... Explanation.- For the purposes of clauses (a) and (b),- (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; (ii) "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. In respect of Contract (1), the applicant has not furnished the RA bills/ Invoices/any documents to establish the Time of supply and therefore the applicability of GST on the 'Operation and Maintenance of the said contract' is not discussed. In respect of Contract (2) under consideration, it is seen that the RA bill-29 is raised on 28.03.2018 for the month of March 2018 and only from the said RA bill, the 'Operation and Maintenance' is billed. Therefore, in respect of Contract (2), the Time of Supply for the composite supply of 'Operation and Maintenance' under the said contract starts from March 2018 only as seen from the submissions before us. Hence on the entire activity of 'O....
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....ished by any Government, with ninety per cent or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution. This definition was later modified vide Notification No 32/2017- Central Tax (Rate) dt. 13.10.2017 "(ii) in paragraph 2, for clause (zf),the following shall be substituted, namely: - "(zf) "Governmental Authority" means an authority or a Board or any other body,- (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with 90 percent or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243 W of the Constitution or to a Panchayat under article 243 G of the Constitution." 7.2 From the above, it can be seen that for the applicability of the aforementioned entry, the following conditions needs to be fulfilled:- 1. Time of supply should be after 25.01.2018 (date of effect of the Notification) 2. The supply should be a composite supply of goods and services in which the value of goods do not constitute more than 25% of the tot....
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.... the RA bills raised for such supply do not constitute more than 25 percent of the value of such bills which are raised after 25.01.2018 and the break-up of the value of goods and other supplies are mentioned in such bills and all the other required conditions of the said entry stands fulfilled . 7.5 In respect of Contract (3)[CE/CBE/2017-18 dated 05.07.2017], the maintenance is to be undertaken after the execution of the project. In this contract also, the vivisection of the material and labour component is not furnished before this authority. Therefore, we hold that in respect of this contract, if the value of supply of goods involved in such supply as raised in each such bill does not constitute more than 25 percent of the value of such bill, then the exemption under SI.No. 3A of the Notification No. 12/2017-CT (Rate), inserted vide Notification No. 02/2018 -C.T.(Rate) dated 25.01.2018 is applicable to the Operation and Maintenance Part(Section-II) of the Contracts, in as much as all the other required conditions stands fulfilled. 8. In view of the foregoing, we rule as under: RULING 1. The exemption from CGST under Sl.No. 3A of the Notification No. 12/2017-CT (Rate)....