TaxTMI 
TaxTMI 
2022 (1) TMI 304
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....gulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be engaged in the business of design, construction and operation and maintenance of water distribution networks for municipal bodies across India. 1.3 The applicant entered into a performance based contract for water loss management with Kolkata Municipal Corporation (KMC, for short) which includes construction of water distribution networks and operation & maintenance in the Cossipore area in the city of Kolkata. The contract was awa....
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....Kolkata. A single tender was floated for Design & Construction of water networks ('DB') and Operation & Maintenance ('O&M') by KMC. As per the tender, the bidder was required to submit a single bid for the construction (DB) as well as O&M of water distribution networks (i.e. bidder did not have any option under tender terms to either bid for DB or O&M as it was a single scope contract i.e. construction and O&M of water distribution network). 2.2 The applicant furnishes a copy of "Invitation for Bids" dated 25.02.2016 and submits that the works and the principal quantities involved, but not limited to, are: SI.No Description of Items Unit Quantity(Approx.) 1 Establishment of District Meter Areas in ward no 1 to 6 LS 1 2 Providing D.I. K-9 grade pipes with internal cement mortar lining of assorted diameters between 100 mm dia to 700 mm dia KM 140 3 Providing and supplying Polyethelence Pipes of assorted diameters KM 13 4 Supply and Installation of various types of Valves of assorted diameters Nos 222 5 Supply and Installation of Domestic water and bulk meters of assorted diameters Nos 25000 6 Water loss ....
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....th the SIP and technical specifications; • Distribution System -Supply, Laying, Installation and Commissioning of distribution network with HDPE pipe for 13kms and DI pipe for 140kms. • Providing house service connections with specified (MDPE/GI) type of pipe on DI and HDPE pipe. • Providing and installing butterfly, sluice Valves, bulk flow meter, PRV valves; • Finding invisible leaks in pipeline network, carrying out repairs and allied works • SCADA system for distribution system management. B. During Operation and Maintenance Period from Initial Take over date [Clause 6.2.2 of the Bidding document] • Operation and maintenance of infrastructure within the DMA's established under this Project including major and minor repairs. • Operation & Maintenance of the distribution network for distributing water efficiently, equitably and minimizing water loss and maintaining infrastructure on DMA basis. • Providing continuous (24 x 7) pressurized water supply to the connected consumers and maintaining the infrastructure. • Collection of water and sending the same to Labor....
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....icant submits that Clause 18 of the payment terms referred to in the General Conditions stipulates that the payment of the retention money or bank guarantee for the works shall be refunded after the expiry of O&M phase for the water distribution network installed by the applicant and certificates to this effect are obtained from the competent authorities i.e. 50% of retention money shall be released after completion of O&M phase and 50% when all defects notified by engineer are corrected. 2.10 The applicant also submits that Article B of the agreement stipulates that, in consideration of the payment to be made by the customer (KMC) to the contractor, the contractor covenants with the employer to execute the work, to operate and maintain the work at its rated capacity, including maintaining the plant and equipment in good operating condition, normal wear and tear excepted, and remedying any defects therein in conformity in all respects with the provisions of the contract. A consolidated price is stipulated as the total contract price combining the contract prices of the inter related phases i.e. DB and O&M under single tender. 2.11 According to the applicant, following provisi....
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....act follows that: • Works contract in itself is a composite supply in which construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning etc. are involved along with transfer or property in goods. • In GST, as per definition of works contract service if construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning is for immovable property only, then it will classify as works contract. Hence it means that aforesaid activities if they are undertaken for a movable property then it will not be works contract service. • Notification No. 20/2017-Central Tax (Rate) dated 22nd August, 2017 provides that Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, pipeline, condu....
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....works and services for operation and maintenance of the said networks, they are, in fact, one single indivisible contract. The construction of water distribution networks supplied to the employer, under the supply contracts, is tailor made supply, and cannot be bought off the shelf. Such services cannot, ordinarily, be supplied to another except for in turn-key projects of a similar nature. The applicant has been entrusted with the work mainly for its expertise in erection and maintenance of networks in the execution of turn-key projects. As the applicant is entrusted with the work of operation and maintenance of the water distribution networks, the applicant -contractor has also been entrusted with the task of erection and installation of the networks. The functions relating to the rendering services of erection, installation and maintenance of the networks are integrally connected and are inter-dependent and therefore tender did not allow to bid separately for DB and O&M scope. 2.16 The Client being KMC is aware of such interdependence of the two contracts. Although awarded under the same LOA and two separate contract agreements signed for execution, clauses under both of them....
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....Contract for Water Loss Management in the Cossipore Service Zone, Ward Numbers 1 to 6". 4.3 The applicant has contended, as stated in Para 2.18, that though there are two separate agreements, the same are made against one indivisible contract for construction of water distribution networks and operation & maintenance owing to following factors: - • Single letter of acceptance is issued by client without any split of contract value in it; • Contract have 2 or more supplies of goods or services or both; • The supplies are naturally bundled; • The taxable supplies are supplied in conjunction with each other; 4.4 The applicant has further argued that since this supply is made to a Municipal Corporation viz. KMC, hence the rate of tax applicable on given service (as it is a works contract service) shall fall under Entry 3(iii) with HSN Code 99544 and would attract CGST and SGST @ 6% each. 4.5 In order to analyze the issue involved in the instant case, we find it relevant to reproduce following clauses from the "General Conditions of Contract" (GCC, for short): In clause 1.1 of GCC: • "Contract" is the Contract ....
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.... • 32.1 Certificate of Completion : At the end of the DMA Establishment Phase when the Design & Construction Works & water loss reduction phase have been substantially completed for respective DMAs or Sub DMAs in accordance with Section 6, Employer's Requirements, the Contractor shall request the Engineer to issue a Certificate of Sectional Completion for Design & Construction Works, and the Engineer within twenty one (21) days from receipt thereof, either issue to the Contractor a Certificate of Sectional Completion or give instructions in writing to the Contractor specifying all the conditions to be complied with and all the work which are required to be done by the Contractor before the issuance of such Certificate. Upon deciding that the work is complete, the Engineer shall thereafter issue a Certificate of Sectional Completion to the Contractor. • 32.2 Initial Take Over date: If Certificate of sectional completion is issued by Engineer to any construction works or part of it including DMA establishment works or Sub DMA establishment works as per clause 32.1 above, before the completion of Design & Construction Period as specified in PCC. Contractor s....
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....ervice Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 3 Heading 9954 (Construction services) (iii) Composite supply of works contract as defined in clause (119) of section 2 of the West Bengal Goods and Services Tax Act, 2017, supplied 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 historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. 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 a....