TaxTMI 
TaxTMI 
2020 (12) TMI 1305
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....for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. 3. Brief Facts of the case 3.1 The Applicant had received a sub contract from M/s Navavuga Engineering Company ltd holding GSTN 23AAAACN7396RIZP: By virtue of agreement dated 19.08. 2015, the Applicant is executing certain works contracts pertaining to Narmada Valley Project. The said works Is part of the work entrusted to M/s. Navayuga Engineering Company Ltd by the Narmada Valley Development Authority of M P Government for executing the work of dam in the State of MP. 3.2 On 01.07.2017 GST has been implemented in India replacing excise law, service tax/VAT. By virtue of the enactment the aforesaid contract between the applicant and M/s Navayuga stands governed by GST in the matter of Indirect Taxes, The Government of India has issued certain notifications under the CGST Act which have been co enacted MP for the State of MP. The relevant notifications are: Notification no 11/2017 (T) (R) as amended on 22.08.2017 which runs as under: (iii) Composite supply of works contract as defined 6 in clause (119) of section 2 of the....
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....erritory, 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. 3.5 As aforesaid the above entry lays down that the rate of tax applicable to a sub contractor shall be 12% if the sub contract work is in full or part a work that supplies to Government & attracts 12% tax in the hands of the principal contractor, The entry has been made effective from 25-01.2018. 3.6 On 20.03-4020, the Officers of DGGSTI visited the place of business of the applicant allegedly by exercising their powers under Section 67 of the Act. It may be noted that the officers have not found any discrepancy till date within the meaning of Section 67(1), Despite the same they have confiscated a pen drive containing commercial data u/s 67(2). The only point raised by the said officers till date, as evidenced by their letters dated 21.05-2020 & 08.06.2020 concerns the tax liability of a sub contractor in respect of works contracts that are li....
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....ct or retrospective effect. However it fully endorsed the view that there ought to be parity of tax between the contractor & sub contractor. 3.9 The issue as to whether the notification referred to above in Para no .5 is clarificatory & hence retroactive before 25-01-2018 has been addressed by quite a few Advance Ruling Authorities namely: (a) In Re: S P Slngla Construction Private Ltd {Punjab AAR dated 06-09-2019) (b) In Re: NHPC Ltd (Uttarakhand AAR dated 22-10-2018) (c) In Re: Mary Matha Construction Company (Kerala AAR dated 26-09-2018) (d). In Re: shree Construction (Maharashtra AAR dated 11-07-2018). In all the above Advance Rulings the Authorities have reiterated that the rate of tax for sub contractor shall be the same as that for the principal contractor right from the date of notification 11/2017 i.e, 22 -08- 2017. 4. QUESTION RAISED BEFORE THE AUTHORITY - "What is rate of tax applicable to a sub contractor, where, he executes works contract pertaining to dam, wherein the principal contractor is liable for tax @ 12%, for the period from 22.01-.2017 to 25-01.2018?" 5. DEPARTMENT VIEW POINT :- The Deputy Director, DGGST Intelligence Regional Unit, Indore vide l....
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.... let us first try & understand what is covered under Section 67 or what can be the subject matter of proceedings u/s 67. For quick reference Section 67 is reproduced which is as follows "Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that - (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made there under to evade tax under this Act;" The above provision can be dissected as being applicable only when there is suppression of supply or stock or when ITC in excess of the entitlement is claimed. The latter words in the provision i.e. contravention of any provisions of this Act or Rules, it is submitted, have to be interpreted in the context & restricted to the earlier instances specified i.e. in the event of suppression or excess claim of ITC. The said reasoning flows from the principle of ejusdem generis. The principle of ejusdem generis lays down the principle that, where specific words are follo....
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....tatute is to be construed as a whole & that no words in the statute are presumed to be superfluous" While laying down when the above rule is applicable the Court laid down in Amar Chandra vs Collector of Excise Tripura (AIR 1972 SC 1863) "The ejusdem generis rule strives to reconcile the incompatibility between specific and general words. This doctrine applies when (1) the statute contains an enumeration of specific words; (2) the subjects, of the enumeration constitute- a class or category; (3) that class or ,category is not exhausted by the enumeration; (4) the general term follows the enumeration and (5) there is no indication of a different legislative intent." In the present matter 1. Section 67 specifies the specific instances i.e. suppression of stock or supply or excess ITC. 2. The above specified instances are a class or category of evasion of tax 3. The category is not exhaustive i.e. tax can be evaded through other means other than above eg: misclassification of Tar entry to apply lower rare of tax. 4. The general term i.e. contravention of any provisions of Act or Rules follows the above specific instances quoted in Section 67. 5. There is ....
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....e liability of contractor shall be the same as that of the principal contractor & hence if the sub contractor proceeds on the said understanding, then it cannot be said that the lesser payment, if any, is an attempt to evade tax. Therefore even otherwise the question raised by the applicant, in the present proceedings, is not covered u/s 67 & hence, as a proposition of law, it may be stated that there is no proceedings regarding the question raised pending before any authority." 7. DISCUSSIONS AND FINDINGS - 7.1 We have carefully gone through the application, provisions and submission of the Applicant, we proceed to decide the case as under :- 7.2 The question raised by the Applicant is what is rate of tax applicable to a sub contractor, where, he executes works contract pertaining to dam, wherein the principal contractor is liable for tax @ 12%, for the period from 22-01-2017 to 25-01-2018? 7.3 As per the submission of the Applicant and the letter received from the Deputy Director, DGGST Intelligence, Regional Unit, Indore that the DGGST has initiated a proceeding on the issue of wrong availment of benefit of Notification wherein lower rate of GST 12% is prescribed for works c....