TaxTMI 
TaxTMI 
2021 (6) TMI 381
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....count of the Taxes being shared and borne by the Petitioner on post enactment Goods and Services Tax Act, 2017? ii. the Opp.Parties shall not be directed to restitute the benefit of GST to the Petitioner along with interest within a stipulated period in respect of work in which the estimated was prepared under VAT law. iii. the Office Memorandum dated 10.12.2018 issued by the Opp.Party No.4 under Annexure-3 shall not be declared illegal, arbitrary, unreasonable and same shall not be quashed. iv. further the process adopted by the Opp.Parties in preparation of revised SoR dated 15.09.2017 under Annexure-8 shall not be declared illegal, arbitrary and same shall not be quashed. v. why the notice issued by the Opp.Party No.9 under Annexure-9 shall not be declared illegal, arbitrary and same shall not be quashed? vi. why the Opp.Party shall not be directed to prepare a fresh schedule of rates considering rapidly change of rate and price and calculate the differential amount of GST on the contract in which estimate was prepared under VAT?' 2. The Petitioner is a registered work contractor and is stated to have executed many works contracts during the pre-GST period as we....
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....espect of works contract executed after 1st July, 2017, either partly or fully. 6. The Central Goods and Services Tax Act (CGST Act) and the OGST Act came into force with effect from 1st July, 2017. The CGST & the OGST inter alia subsume the Value Added Tax and Service Tax in vogue during the pre-GST period. Sec. 2 (119) of the CGST Act defines 'Works Contract' as follows: '(119)'works contract' means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alternation or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;' 7. Further, Clauses 5 and 6 of Schedule-II to the CGST Act define 'supply of services' as under: '5. Supply of services The following shall be treated as supply of services, namely: (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after i....
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....he inputs used for the purchase of materials or input services, like for e.g., architect charges for the execution of works. 11. The basic price of materials as per SoR-2014 was inclusive of VAT, entry tax and other tax components. Since 1st July 2017 GST is payable on the value of the contract, the value of tax components in the price of the materials in SoR-2014 was revised and reduced by excluding such tax components prevalent during pre-GST period. As such, the revised SoR-2014 was issued on 16th September, 2017. 12. The Petitioner complains that the procedure adopted in the preparation of the revised SoR-2014 dated 16th September, 2017(Annexure-8) is illegal, arbitrary and contrary to the provisions of Odisha Public Works Department Code (OPWD Code) and that the rates have not been determined on the basis of actual rates prevailing in different areas of the State. 13. The said submission of the Petitioner is not found acceptable because the rates of materials are to be maintained uniformly all over the State. Further, if there is any difference in the actual rate and scheduled rate in any particular area, the Petitioner could submit the same to the employer and this has not....
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....termine the amount payable to the works contractor; (i) Item-wise quantity of work done after 30.06.2017 (i.e. the Balance Work) and its work value as per the original agreement basing on the pre-revised SoR-2014 is to be ascertained first. (ii) The revised estimated work value for the Balance Work is to be determined as per the Revised SoR-2014, (In case of rates of any goods or service used in execution of the balance Work not covered in the Revised SoR- 2014, the tax-exclusive basic value of that goods or service shall be determined by removing the embedded tax incidences of VAT, Entry Tax, Excise Duty, Service Tax, etc. from the estimated Price/Quoted Price.) (iii) The revised estimated work value for the Balance Work shall then be enhanced or reduced in the same proportion as that of the tender premium/discount. (iv) Finally, the applicable GST rate (5%, 12%, or 18% as the case may be) is to be added on the revised estimated work value for the Balance Work to arrive at the GST-inclusive work value for the Balance Work. (v) A model formant for calculation of the GSTinclusive work value for the Balance Work is attached as Annexure. The competent authority responsi....
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....ontracts (i.e. The value of taxes subsumed under GST). The bench mark date for this purpose will be 01.07.2017, i.e. GST will be applicable on the portions of the contracts that are being paid from 01.07.2017. (Clause (iii) & (iv) of Para- 4(A)) Item-wise quantity of work done after 30.06.2017 (i.e. the Balance Work) and its work value as per the original agreement basing on the pre-revised SoR-2014 is to be ascertained first. (Para-3(i)) The value of the portion of the work not completed or not paid for as on 01.07.2017 shall be divided into two components. (a) Value of work including taxes and duties such as Custom Duty, taxes on petroleum products and other non-VAT taxes that have not been subsumed into GST should be worked out. (b) The balance will be the value of taxes subsumed into GST such as Central Excise Duty and VAT i.e. GST Component. (Para.4(A)(v)) The revised estimated work value for the Balance work is to be determined as per the Revised SoR-2014. ( In case of rates of any goods of service used in execution of the Balance work not covered in the Revised Sor-2014, the tax-exclusive basic value of that goods or services shall be determined by removing the embedded t....
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....nd notice issued to the Petitioner under Annexure-9 is a result of excess payment made thereof. Since the demand of recovery is pertaining to the excess payment received by the Petitioner, we do not see any flaw or illegality in the same as it is clear that the amount which is sought to be recovered from the Petitioner is the decreased value of contract and not the GST amount. The submission of the Petitioner to the contrary is misconceived. 21. It is made clear that the Petitioner has not challenged the tax liability on works contract nor any of the provisions of GST Act. Clause-30 of the General Conditions of Contract makes the contractor liable to bear all the taxes, cesses, tollage and charges etc. As discussed earlier, no major discrepancy is seen in the notification of NRIDA dated 6th June, 2018 and the corresponding OM dated 10th December, 2018 of the State Finance Department. 22. The Petitioner does not dispute the contention of Opposite Party No.7 ( the Executive Engineer, RWSS Division, Baripada) that, he has received the payments of final bill along with GST @ 12% extra for work No.18 (of the list mentioned in the writ petition) on 29th March, 2018 without any objectio....
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....sale of goods and the other for supply of labour and service and as a result of such contract which was single and indivisible has been brought on a par with a contract containing two separate agreements; 64.2. If the legal fiction introduced by Article 366 (29-A)(b) is carried to its logical end, it follows that even in a single and indivisible works contract there is a deemed sale of the goods which are involved in the execution of a works contract. Such a deemed sale has all the incidents of the sale of goods involved in the execution of a works contract where the contract is divisible into one for sale of goods and the other for supply of labour and services; 64.3. In view of sub-clause (b) of clause 29-A of Article 366, the State Legislatures are competent to impose tax on the transfer of property in goods involved in the execution of works contract. Under Article 286(3)(b), Parliament has been empowered to make a law specifying restrictions and conditions in regard to the system of levy, rates or incidents of such tax. This does not mean that the legislative power of the State cannot be exercised till the enactment of the law under Article 286(3)(b) by Parliament. It on....
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..... ........ XX 72. In our opinion, the term 'works contract' in Article 366(29-A)(b) is amply wide and cannot be confined to a particular understanding of the term or to a particular form. The term encompasses a wide range and many varieties of contract. The Parliament had such wide meaning of 'works contract' in its view at the time of Forty-sixth Amendment. The object of insertion of clause 29-A in Article 366 was to enlarge the scope of the expression 'tax of sale or purchase of goods' and overcome Gannon Dunkerley. Seen thus, even if in a contract, besides the obligations of supply of goods and materials and performance of labour and services, some additional obligations are imposed, such contract does not cease to be works contract. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract for works and satisfies the primary description of works contract. Once the characteristics or elements of works contract are satisfied in a contract then irrespective of additional obligations, such contract would be covered by the term 'works contract'. Nothing in Article 366(29-A)(b) limits the term 'works contra....
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....inished. 97.6. The dominant nature test has no application and the traditional decisions which have held that the substance of the contract must be seen have lost their significance where transactions are of the nature contemplated in Article 366(29-A). Even if the dominant intention of the contract is not to transfer the property in goods and rather it is rendering of service or the ultimate transaction is transfer of immovable property, then also it is open to the States to levy sales tax on the materials used in such contract if such contract otherwise has elements of works contract. The enforceability test is also not determinative. 97.7. A transfer of property in goods under clause 29- A(b) of Article 366 is deemed to be a sale of the goods involved in the execution of a works contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. 97.8. Even in a single and indivisible works contract, by virtue of the legal fiction introduced by Article 366(29-A)(b), there is a deemed sale of goods which are involved in the execution of the works contract. Such a deemed sale has all the incidents of the sale of goods inv....