TaxTMI 
TaxTMI 
2021 (10) TMI 152
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....i; that in the 2014 budget, Railway Minister Shri D.V. Sadananda Gowda announced the first bullet train and 9 High-Speed Rail routes'; that in 2016, the Ministry of Railways fast tracked the project and set up a Special Purpose Vehicle(SPV), named the National High Speed Rail Corporation limited(hereinafter referred to as NHSRCL) to build and operate the corridor; that the company was registered in January, 2016 in the name of Indian Railways and was registered under the Companies Act, 2013 on February 12, 2016 ; that a copy of the Memorandum, Articles of Association and Certificate of Incorporation has been enclosed as Annexure-1(Colly.); that NHSRCL, which is a special purpose vehicle responsible only for the implementation of the Mumbai Ahmedabad high-speed rail project has divided the total construction work for the project into 27 packages for which it has to award contracts separately; that NHSCRL issued a 'Letter of Acceptance'(LOA) in favour of RITES limited, RITES Bhawan No.1, Sector-29, Gurgaon-122001(hereinafter referred to as 'main contractor' or 'RITES', as the case may be) for 'shifting of existing railway infrastructure and other utilities in connection with construc....
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....he course of personal hearing, it was desired by GAAR that any documentary evidence from the main contractor or any other Railways agency to the effect that the said work pertains to Railways may be produced for further consideration of the application and accordingly, the appellant had submitted relevant documents for the same vide letter dated 24.06.2020, a copy of which is attached as Annexure-5; that GAAR disposed off the application vide order No. GUJ/GAAR/R/ 36/2020 dated 03.07.2020(copy attached as Annexure-6) (hereinafter referred to as the 'impugned order') wherein it was ruled that the aforementioned contract work is not covered under clause 3(v)(a) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.20/2017-Central Tax(Rate) dated 22.08.2017; that while deciding the application, GAAR segregated the discussion in three parts as mentioned in column(2) of the table below and answered as mentioned in column(3) below: S.No. Issue Decision Para Number of impugned order (1) (2) (3) (4) 1. Whether the contract is a composite supply of Works Contract? Yes. 14.2 2. Whether the work is a construction, erection, commissio....
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....of contraction and the following has been laid down in paragraph 47 and 48:- "47.----------------We are of the opinion that the words 'pertaining to' and 'in relation to' have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word 'pertain' is synonymous with the word 'relate', see Corpus Juris Secundum, Volume 17, page 693. 48. The expression 'in relation to' (so also 'pertaining to') is a very broad expression which pre-supposes another subject matter. These are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Aziz (A.I.R.1933 All.649) and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated th....
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....orks contract pertaining to the railways including monorail and metro is subject to concessional rate of 12% GST. In the instant case, though the GAAR 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 the Sr.No.3 of the said notification is completely fulfilled and therefore the services provided by the subcontractor would attract concessional rate of 12% GST. (11) As regards the appellant's contention that there is no specific mention of subcontractor providing services in Sr.No.(v) as provided in item(ix) and (x) which were incorporated into the Notification 11/2017-C.T. by the amending notification 1/2018 dated 25.01.2018, we are of the opinion that there was no need to include such sub-contractors in the item(v) of the Notif....
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....istribution installations used for the purpose of, or in connection with, a railway. (d) All rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, road and streets, running rooms and rest houses, institute, hospitals, water works and water supply installations, staff dwellings and any other work constructed for the purpose of, or in connection with the railway; (e) All vehicles which are used on any road for the purpose of traffic of a railway and owned, hired or worked by railway; and (f) All ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purpose of the traffic or a railway and owned, hired or worked by a railway administration. but does not include (i) A tramway wholly within a municipal area; and (ii) Lines of rails built in any exhibition ground, fair, park, or any other places solely for the purpose of recreation.' (x) The definition given above is so extensive so as to cover all gamut of activities where the ownership pertains to the Railway and it necessarily obviate the requirement to have elaborative discussion of expression 'pertaining to'....
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....y the reasons of rationality and liable to be set aside. (i) GAAR has answered the question asked by the appellant in negative on the basis of the following reasoning: "14.3.3 The applicant has produced no evidence that the work was allotted to M/s.RITES ltd. was pertaining to Railways as defined at section 2(31) of the Railway Act, 1989. There is also no evidence on record whether the work has been awarded in respect of 'Government Railway' or 'Non-Government Railway'. Although the applicant has sought to infer that the said work was in respect of railways owned by Ministry of Railways, but he has not provided any supporting evidence in the form of agreement between M/s. RITES limited and Ministry of Railways to establish the same. Therefore, in the absence of any such conclusive proof that the work pertains to railways, we hold that the third condition is not satisfied.' (ii) In para 10 of the impugned order, GAAR has taken a note of submissions made on 24.06.2020(Ann-5). However, from the perusal of body of order, it appears that GAAR has not appreciated these submissions for perusing their evidentiary value. The relevant portion of the order reads as under: '10.We have ....
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.... shall be set aside and quashed being irrational because the evidentiary value of the submission dated 24.06.2020 has not been evaluated by the GAAR and no reasons in support of conclusion arrived in para 14.3.3 of the impugned order has been afforded. C.NHSRCL is incorporated with the sole objective of 'High Speed Rail Services' and is owned by the Ministry of Railways. Therefore, it is a 'Government Railway' and work allotted to the main contractor is pertaining to Railways, The 'Letter of Acceptance' issued by NHSRCL establishes that work is in respect of Railways. (i) As mentioned in facts of the case, in 2016, the Ministry of Railways fast tracked the project and set up a Special Purpose Vehicle (SPV), named the NHSRCL to build and operate the corridor. The company was registered in January, 2016 in the name of Indian Railways and was registered under the Companies Act, 2013 on February 12, 2016. Copy of the Memorandum and Articles of Association along with Certificate of Incorporation has been enclosed herewith as Annexure-I(Colly.). The object clause of NHSRCL reads as under: "1. To plan, design, develop, build, commission, maintain, operate and finance High Speed Rail....
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....y of which is attached as Annexure-4. (vi) In order to further substantiate the fact that present work pertains to railways, appellant wrote a letter to the main contractor asking for clarification in relation to work given to them and taxability of works by the main contractor. The main contractor has replied vide letter dated 23.06.2020 as under: a) NHSRCL have given the work to main contractor for the shifting of existing Railway Infrastructure and Other Utilities at Sabarmati, Ahmedabad and Vadodara in connection with construction of High Speed Rail Projects. b) Main contractor raises the invoice to NHSRCL at the rate of 12%. A copy of this letter was submitted before GAAR on 24.06.2020 and attached with this appeal paperbook as Annexure-5. (vii) For the purpose of taking license from the Licensing Officer to employ contract labour at the work site, authorization of the contractor is issued by the Principal Employer in Form III of Contract Labour(Regulation & Abolition) Central Rules, 1971 for submission to the Licensing Officer and on the basis of the same, the License in Form VI is issued by the Licensing Officer. In said License issued in Form VI, name of the works c....
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....thority for Advance Ruling, West Bengal in the case of M/s. RITES limited reported as 2018 (12) TMI 1226 as referred in Para A(xiii) of the application on Page no.16 of the paper book(attached as Annexure III). (iv) As mentioned in Para 'C' of Grounds of Appeal on Page No.17 of the paper book 'NHSRCL' is incorporated with the sole objective of 'High Speed Rail Services' and is owned by the Ministry of Railways. Therefore, it is a 'government Railway' and work allotted to the main contractor is pertaining to Railways. The 'Letter of Acceptance' issued by NHSRCL establishes that work is in respect of Railways.' 10. The appellant has further submitted that Section 2(20) and 2(25) of the Railways Act, 1989 defines 'Government railway' and 'Non Government Railway' as reproduced below: Section 2(20) 'Government railway' means a railway owned by the Central Government: Section 2(25) 'Non-Government railway' means a railway other than a Government railway. 11. The appellant has submitted that though as per their understanding (as already mentioned in C.(ii) and (iii) on page no.18 of the paper book), as NHSRCL is created for construction of Mumbai-Ahmedabad High Speed Rail Project ....
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....ed the aforementioned order of the Advance Ruling authority. The issue in the present appeal filed by the appellant is restricted to establishing whether the present 'Works Contract' pertains to Railways or otherwise for which a reference is required to be made to clause 3(v)(a) of the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017. 14. Entry No.3(v)(a) of the Notification No.11/2017-Central Tax(Rate) dated 28.06.2017 as amended by Notification No.20/2017-Central Tax(Rate) dated 22.08.2017and further amended vide Notification No.03/2019-Central Tax(Rate) dated 29.03.2019 reads as under: S.No. Chapter, Section or Heading Description of Service Rate (per cent) Condition (1) (2) (3) (4) (5) 2. Section 5 Construction services. 3. Heading 9954 (Construction services) ---------- ---------- (v) 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), supplied by way of construction, erection, commissioning, or installation of original works ....
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....he Tender and Contract document issued by M/s. RITES ltd. regarding Construction of Pavement, Track work, Warehouses, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat. (iv) Letter of acceptance No. RITES/RPO-ADI/NHSRCL/CONCOR/DCTKHD/2018 dated 13.06.2018 issued by M/s. RITES ltd. to M/s. J.K. Associates, M/s. Sanjeev Kumar Goyal Contractor & M/s. NMC Industries pvt.ltd. JV (the appellant) with regard to the work of Construction of Pavement, Track work, Warehouses, Admin Building, E&M works and other miscellaneous works at Khodiyar, Gandhinagar, Gujarat. (v) Letter dated 24.06.2020 addressed to the Registrar, GAAR, Ahmedabad vide which they have given additional submission to GAAR. (vi) Copy of letter dated 23.06.2020 issued by M/s. RITES ltd. to the appellant in response to their letter dated 16.06.2020. (vii) Copy of letter dated 16.06.2020 issued by the appellant to M/s. RITES ltd. 16. As per the submission of the appellant, the appellant was awarded the aforementioned 'Works Contract' from M/s. RITES ltd. The chain of events that resulted in the Works Contract' being awarded to the appellant is as under: (i) M/s. National High ....
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.... general power supply systems and public utility systems. ......................." 17.1 Thus, it is very much apparent from a plain reading of the above that the objective/work of NHSRCL is related to railways. Further, as per the details of M/s. RITES ltd online, we find that Rail India Technical and Economical Services limited (RITES ltd.)is a Public Sector Undertaking wherein ownership of the Government of India(72.02% in equity shares). As per Wikipedia, RITES Ltd, is an engineering consultancy company, specializing in the field of transport infrastructure. Established in 1974 by the Government of India, the company's initial charter was to provide consultancy services in rail transport management to operators in India and abroad. RITES has since diversified into planning and consulting services for other infrastructure, including airports, ports, highways and urban planning. 18. The appellant, vide their letter dated 16.06.2020 issued to M/s. RITES ltd. had asked them as to: (i) which Railway Agency/Corporation had awarded the Works Contract (in the instant case) to M/s. RITES ltd. which in turn was awarded to the appellant and (ii) What rate of GST was being charged....
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.... public carriage of passengers, or goods, and includes- (a) All lands within the fences or other boundary, marks indicating the limits of the land appurtenant to a railway; (b) All lines of rails, sidings or yards, or branches used for the purpose of, or in connection with a railway; (c) All electric traction equipments, power supply and distribution installations used for the purpose of, or in connection with, a railway. (d) All rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, road and streets, running rooms and rest houses, institute, hospitals, water works and water supply installations, staff dwellings and any other work constructed for the purpose of, or in connection with the railway; (e) All vehicles which are used on any road for the purpose of traffic of a railway and owned, hired or worked by railway; and (f) All ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purpose of the traffic or a railway and owned, hired or worked by a railway administration. but does not include (iii) A tramway wholly within a municipal area; and (iv) Line....
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....uch as an overhead electrical power line or an additional electrified rail.' Therefore, on going through the work mentioned at Sr.No.1,2 and 3 (of Phase-I works), it appears that the same pertains to construction of the railway track, pavements alongside it as well as and high mass lighting on the pavement along the track. Similarly, Sr.No.1 and 2 (of Phase-II works) appears to pertain to construction of warehouse as well as construction of Balance Pavement area like area around warehouse and connecting road between pavement near the track and pavement around warehouse. Further, 'EIMWB' mentioned at Sr.No.3 of Phase-II works above, stands for 'Electronic Inmotion weighment Bridge and pertains to Railways only. Similarly all the other works enlisted in para 18.1. above also appear to pertain to Railways only. On comparing the details of the scope of work provided in para 18.1 above to the definition of 'Railways' as mentioned in para-18 above, we find as under: (i) Work mentioned at Sr.No.1 and 2 (in Phase-I works above) appears to pertain to Section 2(31)(b) of the definition of 'Railways'. (ii) Work mentioned at Sr.No.3, 5 and 7 (in Phase-I works above) appears to pertain to ....