TaxTMI 
TaxTMI 
2022 (11) TMI 207
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....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 rendering various 'works contract' services related to modification/construction, renovation & maintenance of roads & highway projects and works connected with and incidental thereto. The applicant has been awarded a sub-contract from M/s KCC Buildcon Private Limited for shifting of electrical utilities for construction of 'Proposed 4-Laning of Barasat - Krishnagar Section of NH-34 Project on EPC mode. 1.3 Prior to the amendment made vide Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022, serial number 3(iv)(....
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....commercial terms and conditions prescribed in the RFP for undertaking the Project. 2.4 After evaluation of the bids received, the NHAI accepted the bid of the selected bidder and issued its Letter of Acceptance (hereinafter called the "LOA") to the selected bidder for construction of the above section of NH 34. 2.5 The applicant submits that in pursuance of the LOA issued by the NHAI to M/s KCC Buildcon Private Limited, having registered office at BU-5, SFS Flats, Outer Ring Road, Pitampura, Delhi -110034 (herein after referred to as, the contractor) for execution of the balance work for construction of 4-laning of Barasat-Krishnanagar section of NH-34 in the state of West Bengal, the contractor has issued 'Work order for sub-contracting of shifting of electrical utilities in respect of Proposed 4-laning of NH-34 Project' to the applicant. 2.6 The brief scope of work, arising out the aforesaid sub-contract from M/s KCC Buildcon Private Limited is as follows: (a) Shifting of Electrical Utility within the ROW or as directed by NHAI/KCC Buildcon Representative, as per approved estimates of NHAI in Barasat to Krishnagar Km. 48.533 to Km. 115.272 in the state of West Bengal. (b) ....
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....g power transmission lines are crossing the National Highways and for the purpose of widening of these roads to four lanes, these power lines are required to be shifted, to obtain safe clearances and safety purpose. d) The said work of utility shifting is being done by NHAI by appointing contractors, who in turn, may execute the work themselves or appoint sub-contractors. e) That in terms of Notification No. - 11/2017 - Central Tax (Rate) dated 28.06.2017, as amended from time to time (here-in-after referred to as the 'Rate Notification'), the supply of works contract services has been classified under Heading 9954 (Construction Services). That under the said rate notification, the rate of GST applicable in relation to construction services with respect to 'construction of roads' has been given in Heading 9954 - Entry No. 3(iv)(a) as 6%. Similar rates have been prescribed under West Bengal Goods and Services Tax Act, 2017 ("WBGST Act"). On a combined reading of notifications issued under CGST Act and WBGST Act, the effective rate of tax comes to 12% on construction of roads. f) The relevant text of the rate notification is reproduced as below: Sl.No. Chapter, Sectio....
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....the General Clauses Act 1897 states that - "immovable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth; j) That in the present case, the construction at the site of the highway project including utilities like cables and wires are fastened to the earth by using cement and concrete or by using nuts and bolts and if in case they are required to be shifted from one location to another then they are 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 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 structures will be dismantled and thereafter new structures shall be erected.....
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....ties will be a part of the four-lane highway and it is essential for the development of the highway as per the Agreement. o) That as per the facts of the current case, NHAI has executed an agreement with the Contractor for the development/expansion of part of NH-34 into a four-lane highway. The Applicant proposes to enter into a contract with the said Contractor for carrying out a specified part of this work. Thus, it can be said that the Applicant is a sub-contractor for NHAI, providing services of a works contract. However, it is to be noted that to be eligible under Entry 3(iv)(a) the nature of service recipient is irrelevant. It only has to be a works contract service in relation to construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a road. p) Intention of GST Council: That it is also the intent of the GST Council that in cases where the main contractor is falling within any entry, the same entry should also be made applicable on a sub-contractor providing those services. This intent has clearly been reflected in one of the recommendations that was made by the GST Council in their 25th Meeting he....
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....tractor providing services in Sr. (v) as provided in item (ix) and (x) which were incorporated into the Notification No. 11/2017-C.T. by the amending Notification No. 1/2018, dated 25-1-2018, we are of the opinion that there was no need to include such sub-contractors in the item (v) of the Notification as there was no confusion whether the sub-contractor will be eligible to such concessional rate of GST, since the activities described under item (v) of Sr. No. 3 of the notification are services specific. The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST. That is if the works contract services provided by the main contractor or sub-contractor are pertaining to the railways, the concessional rate of 12% GST is allowed to the person who carries out the such works contract pertaining to railways." s) That based on a reading of the above cited case laws and interpretation of the applicant, it is submitted that the current contract is one of construction of road and thus should be covered in Entry - 3(iv)(a) of Heading 9954 and the effective rate for the contract proposed to be undertaken by the Applican....
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....es) to an appropriate location or alignment and the cost of such shifting, as per estimates prepared by the entity owning the utility and approved by the Authority, shall be reimbursed by the Authority to the contractor. 4.4 The applicant has contended that in the current case, NHAI has executed an agreement with the Contractor for the development/expansion of part of NH-34 into a four-lane highway. The applicant proposes to enter into a contract with the said Contractor for carrying out a specified part of this work. Thus, it can be said that the applicant is a sub-contractor for NHAI, providing services of a works contract. We are unable to accept this proposition. Clause (93) of section 2 of the GST Act speaks that "recipient" of supply of goods or services or both, means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) ************ (c) ************* and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both su....