AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 412
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....rises), A-3, Adarsh Nagar, Jaipur, Rajasthan 302004 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a) & (b) given as under: - (a) Classification of any goods or services or both; (b) Applicability of a notification issued under the provisions of this act; * Further, the applicant being a registered person (GSTIN is 08ARNPS7996R1Z3 as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: * The National Highway Authority of India ("NHAI') is an agency of the government which carries out the function of construction of roads and matters incidental thereto. The task of development of highways by the NHAI is a multi-faceted process which involves various phases that must be carried out. In such cases, organisations like the NHAI may get this work executed through contractors. * In the present case, the work to be undertaken is described below: "Four Laning of Dangiywa....
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....ax Act, 2017 ("RGST Act"). On a combined reading of notifications issued under CGST Act and RGST Act, the effective rate of tax comes to 12% on construction of roads. The Rate Notification also notifies the applicable rate of GST for various kinds of construction services. As per the said Rate Notification, the rate of tax for civil structures or any other original works has been specified at the rate of 6% under Heading 9954(vi), and the effective rate of tax comes to 12%. * That the Applicant has filed the present application in order to determine whether Entry (iv) of Heading 9954 of the Rate Notification would be applicable to them for the contract proposed to be undertaken. The relevant text of the notification is reproduced as below: Chapter, Section or Heading Description of Service Rate (per cent) Condition Heading 9954 (Construction services) (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above] supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance....
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....re first dismantled and then re-erected at another site. The scope of work of the Applicant also involves activities like drilling through the ground to lay down such new electrical lines. That within the scope of work, the Applicant will also have to erect "lattice towers", which are structures commonly used for transmission of power through electrical conductors on which conductors and electric wires can be affixed at a suitable height above the ground. Structurally these towers are required to be able to resist loads such as wind load, snow load and self-weight. In order to erect these structures, it is clear that the previously existing lattice towers will be dismantled and thereafter new towers shall be erected. In light of the above cited law and interpretation, it is submitted that the activity proposed to be undertaken by the Applicant will be in the nature of a 'works contract" in terms of Section 2(119) of the CGST Act since the supply involves transfer of goods along with construction services and such supply is resulting in the formation of immoveable property. * The scope of the Project (the "Scope of the Project") shall mean and include, during the Concession Period....
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....ent has to be carried out by the contractor in order for the Agreement to be fulfilled. Since the Agreement includes the obligations as given in Article XI of the Agreement as well, it is evident that carrying out the work as prescribed therein is a part of the process and a vital component of the work of construction of a four-lane highway to be carried out by the main Contractor in order to carry out the highway development project. Thus, it is submitted that the work proposed to be carried out by the Applicant in the present case is nothing more than the obligations of the main Contractor as specified in Article XI, which consists of construction as well as completion of a road. In the present case, the main contract awarded by NHAI to the Contractor itself includes in its scope of work the construction of project facilities as specified in Article XI. It can be said that these facilities will be a part of the four-lane highway and it is essential for the development of the highway as per the Agreement that all the project facilities and other structures as specified in the Agreement are constructed. * Applicability of Entry (iv) on sub-contractors That as per the facts of t....
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....ontract. * That this intent of the GST Council has also been recognised by the Maharashtra AAR in the case of Shree Constructions [2018 (17) G.S.T.L. 504 (A.A.R. - GST)] = 2018 (9) TMI 854 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA, which has been upheld by the Appellate Authority as well [2019 (23) G.S.T.L. 473 (App. A.A.R. - GST)] = 2019 (3) TMI 1567 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA. The relevant text of the Maharashtra AAAR is reproduced below for reference: It is very much clear that any supply of works contract pertaining to the railways including monorail and metro is subject to concessional rate of 12% GST. In the instant case, though the respondent i.e. M/ s. Shree Construction is providing works contract services to its main contractor who has entered into works contract agreement with railways, the composite supply of works contract being carried out by M/ s. Shree Construction is ultimately going to the use of railways without being subjected to any change or modification, thus the said works contracts, though undertaken by the subcontractor, is undoubtedly pertaining to the railways and no one else. Thus, the condition specified under item (v) of....
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....t) Condition Heading 9954 (Construction Services) (ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (Hi) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity 6 Provided that where the services are supplied to a Government Entity. They should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i). (ia), (ib), (ic), (id), (ie) and (if) above provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of- (a) a civil str....
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....the Rate Notification and the same reads as reproduced under: "Government Entity" means an authority or a board or any other body including a society, trust, corporation, (i) set up by an Act of Parliament or State Legislature; or (ii) established by any Government, with 90 per cent or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority." Reading the above with the definition of 'governmental authority', it is clear that NHAI will be a government entity since it is an agency of the Government of India itself, where the functions of the NHAI is to develop, maintain and manage the National Highways and other Highways vested in or entrusted to it by the Government of India. * The services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration has to be supplied for the civil structure or any other original works. For this it is important to understand the meaning of term 'civil structure' and 'original works'. The term 'civil structure' has not been defined in the CGST Act. Hence, as pe....
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....d, along with all the necessary structures to Support such cables. Thus, the main contract will clearly fall within the, definition of 'civil structure'. * That from the above discussion it is evident that the main contract in the present case will be for providing services of works contract by way of erection and installation, of a civil structure or the original works which is not meant for commerce, industry, or any other business or profession. Further, as discussed above, the main contract is for supply to NHAI, which is a 'governmental entity'. Hence, main contract shall fall under Entry (vi) of Heading 9954 of the Rate Notification" * Service provided to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity 35. That in the present case, the NHAI has entered into an Agreement with a Contractor for development of a four-lane highway. The Applicant is proposing to enter into a contract with the aforementioned Contractor, to carry out a part of this Agreement, and thus it is clear that the supply by way of the main contract is to a government entity, i.e., NHAI. * If services supplied to a Government Enti....
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....E RULING IS SOUGHT * Whether in the facts and circumstances of the case, does the activity carried out by the Applicant falls under Entry No. (iv)(a) of Notification No. 11/ 2017-CT(R)? * Alternatively, whether in the facts and circumstances of the case, does the activity carried out by the Applicant falls under Entry No. (ix) of Notification No. 11/ 2017- CT(R)? 3 PERSONAL HEARING In the matter personal hearing was granted to the applicant on 5.2.2020 for which the applicant requested for adjournment. Further personal hearing was granted on 19.02.2020 at Room no. 2.29 NCRB, Statue Circle, Jaipur. On behalf of the applicant Shri Rahul Lakhwani, C.A appeared for PH. During the PH, he reiterated the submissions already made in the application. Additional submissions viz. concession agreement between NHAI and M/s Sadbhav Jodhpur Ring Road Pvt. Ltd., Letter dated 5.12.2019 and Order No. AAR/GST/PB/010 dated 6.9.2019 = 2019 (10) TMI 315 - AUTHORITY FOR ADVANCE RULING - PUNJAB were also submitted. He also requested for early disposal of the application. 4 COMMENTS OF THE JURISDICTIONAL OFFICER The jurisdictional officer (Assistant Commissioner, State Tax, Circle-A, Jaipur, Z....
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....f activities to be undertaken has been stipulated as under-: "Electrical utility shifting / erection of 11 KV & LT lines (due to road widening) for completion of Jodhpur Ring Road under (Sub Division CSD-B-V, Division-CD-II Jodhpur from Km. 27+290 to 34+000)" * In view of the above description of the work it is clear that the applicant is proposing to submit a bid for shifting / erection of electrical lines only to M/s Sadbhav Jodhpur Ring Road Pvt. Ltd who is the main Contractor of NHAI. Thus the activity to be carried out by the applicant is restricted to shifting / erection of electrical lines only as discussed above. * Further, the details mentioned in the Article XI of the agreement as well 05.12.2019, as description of work mentioned in said letter dated specifically indicates the independent nature of work to be carried out by the applicant for which such cost will be borne by the authority or by the owning entity of the respective utility. * Thus, we observe that as per the details mentioned in the Article XI of the agreement and description of work mentioned in the letter dated 05.12.2019, the supply made by the applicant is regarding Electrical utility sh....
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..../2017-CT (Rate) dated 28.6.2017 does not arises. * Whether the activity carried out by the Applicant falls under Entry No. (ix) of Notification No. 11/2017- CT(R) dated 28.6.2017 or otherwise requires examination of the conditions mentioned in the said Notification. The relevant extract of Notification No. 11/2017- CT(R) dated 28.6.2017 is as under-: Notification No. 11/2017- CT(R) dated 28.6.2017 Chapter, Section or Heading Description of Service Rate (per cent) Condition Heading 9954 (Construction services) (ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity 6 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. * We observe that to qualify....