TaxTMI 
TaxTMI 
2023 (1) TMI 139
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....under The Companies Act, 2013 and is involved in construction of building and civil works (herein after called the Company). The company has a GST registration in the state of Chhattisgarh. 2.2 The company applied for a Tender for construction of CBD Railway Station in Sector 22, Naya Raipur, Chhattisgarh. The company was awarded the tender as per the prescribed rules by Nava Raipur Atal Nagar vikas Pradhikaran (hereinafter called NRANVP). 2.3 There is a tripartite agreement vide No 03/CBD-Rly-Stn/CE/SE-II/NRANVP/2022-23 dated 25 April 2022 between the Company as the contractor, NRANVP as the agency and employer being Nava Raipur Atal Nagar Smart City Corporation Limited (hereinafter called NRANSCCL) for the execution of the construction of the 'Railway Station. The railway station will be used for the connectivity of Naya Raipur with rest of India and will be called CBD Railway Station, as per the official website of Nava Raipur Atal Nagar. The copy of tripartite agreement was enclosed. 2.4 With reference to the tender document and drawings following civil construction, erection, commission and installation of original works are to be completed by the Company, which c....
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....arly falls under works contract as per above definition which is a contract for 'Construction of railway station, platform, buildings, parking etc' on the land allotted by NRANSCCL in Sector 22 Atal Nagar Nava Raipur. ii) Composite Supply: As per Sec. 2(30) of CGST Act of 2017, 'Composite Supply' is a kind of supply made by a taxable person to a recipient that includes two or more taxable supplies of goods or services or both, or their combination, that are naturally bundled and supplied in conjunction to each other in the ordinary course of business out of which one constitutes to be a Principal Supply. Thai, in their case, the supply is a composite that includes taxable services of construction service (labour) and taxable goods (construction material) for execution of the works. Both the taxable service and goods are naturally bundled and interrelated with each and hence falls under composite supply. The Company has to provide both labour service and material without which the construction will not be completed and the entire work is to be provided by the Company only. Hence the works contract service provided is a composite supply. iii) Original Work....
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....indicating the limits of the land appurtenant to a railway; (b) all lines of rails, sidings, or yards. or branches used for the purposes of, or in connection with, a railway; (c) all electric traction equipments, power supply and distribution installations used for the purposes of, or in connection with, a railway; (d) all rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospital, water works and water supply installations, staff dwellings and any other works constructed for the purpose of, or in connection with, railway; (e) all vehicles which are used on any road for the purposes of traffic of a railway and owned, hired or worked by a railway: and (f) all ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purposes of the traffic of 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, pork, or any oth....
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....fication 11/2017 dated 28 June 2017 (one of the questions for which applicant has applied for advance ruling). The Ld Authority in this case has emphasized on the meaning of 'Original Works' and held in the ruling that: "The new constructions involved in the contract are liable to tax at 12% (6% CGST and6% SGST) as per entry no.3(v) of Notification No. 11/2017 - Central Tax (Rate), dated 28-6-2017 as amended by Notification No. 20/2017 - Central Tax (Rate), dated 22-8-2017." 3.7 Thus it was applicant's opinion that in their case the works contract pertains to original works i.e., new construction of CBD Railway station platform, offices, buildings, foot over bridge, stay areas, parking, roads and all structures within the boundary very well falls under the GST rate of 12% under Sr no 3(v) of the Notification 11/2017 dated 28^th June 2017. 4. Personal Hearing: -Keeping with the established principles of natural justice, virtual hearing in the matter was extended to the applicant through virtual mode as requested by them, and accordingly, Smt. Anuja Shukla C.A & Shri Arif Memon, C.A. and authorized representative of the company appeared online for hearin....
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....r: - The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only - a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling: b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus, in view of the above section 103 of CGST Act, 2017, the ruling so sought by the Applicant would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above. 7. The applicant in support of their point of view furnished the copy of E-Tender Document for the construction of CBD Railway Station at Sector-22, Nava Raipur, Atal Nagar, Raipur, Chhattisgarh issued by Chief Executive officer, (NRANVP) under NIT No: 61/CBD-Rly-Stn/SE-11/CE/NRANVP/2021-22 dated 31.01.2022. They also furnished the copy of letter of acceptance cum work order dated 31.3.2022 issued by CEO, NRANVP, Raipur in this regard. The applicant has accepted above letter of acceptance cum work order amounting to Rs.51,91,14,365.01 (Fifty-One Crore Ninty One Lakhs Fourteen Thousand Three Hundred Sixty-Five and ....
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....(5) of the said Table:- TABLE Sl.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 1 Chapter 99 All Services 2 Section 5 Construction Services 3 Heading 9954 (Construction services) (i)............. (ia)............. (ib)............... ..................... ...... ............. (ii) [***] - - (iii) Composite supply of works contact as defined in clause (119) of Section 2 of the.......... (a)................ (b)................ (c)................. 6 [***] (iv) Composite supply of works contact........... (a)................ (b)................ (c)................. (d)................. (da)................. ................. 6 - (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) above supplied by way of construction, erection, commissioning, or installation of original works pertaining to, - (a) rai....
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....following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 11/2017-Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28th June, 2017, namely:- In the said notification, - (A) in the Table, - (I) against serial number 3, in column (3), - (a) items (iii), (iv), (v), (va), (vi) and (ix) and the corresponding entries relating thereto in columns (4) and (5) shall be omitted; (b) against items (vii) and (x), for the entry in column (4), the entry "6" shall be substituted; (c) in item (xii), for the brackets and figures "(iii), (iv), (v), (va), (vi), (vii), (viii), (ix)", the brackets and figures "(vii), (viii)," shall be substituted; 9.3 Thus from the above it gets abundantly clear that for the applicability of the reduced rate of CST as stipulated supra at 3(v)(a) supra (till 17.7.2022), all the conditions mentioned therein has to be necessarily fulfilled viz. (i) the service should be under the Heading 9954 (Construction Service) ....
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....vices of highways, streets, roads, railways and airfield runways, bridges and tunnels 14 995422 General construction services of harbours, waterways, dams, water mains and lines, irrigation and other waterworks Further, the 'Explanatory Notes to the Scheme of Classification of Service', indicates the scope and coverage of the Scheme of classification of service and is a guiding tool for classification of services, the Explanatory notes to SAC 995421 are as follows: EXPLANATORY NOTES TO SCHEME OF CLASSIFICATION OF SERVICES UNDER GST Preface The Scheme of Classification of Services adopted for the purposes of GST is a modified version of the United Nations Central Product Classification. 2. The Explanatory notes for the said Scheme of Classification of Services is based on the explanatory notes to the UNCPC, and as recommended by the committee constituted for the purpose, is annexed. 3. The explanatory notes indicate the scope and coverage of the heading, groups and service codes of the Scheme of Classification of Services. These may be used by the assessee and the tax administration as a guiding tool for clas....
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....aipur for construction of CBD Railway station at Nava Raipur. As SAC 9954 supra covers construction services we now proceed to analyse the compliance of other vital conditions much essential for being eligible to the reduced rate of tax claimed by the applicant, as stipulated under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. 9.6 Coming to the second criteria as to whether the instant supply is a "Composite supply", we would first like to get in to the definition of Composite supply which stands defined under Section 2 (30) of the CGST Act, 2017 as under: "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; illustration. - Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply; On perusal of the copy of letter of acceptance....
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....ods (whether as goods or in some other form) is involved in the execution of such contract." 'Thus, from the above it can be seen that the term works contract has been restricted to contract for building construction fabrication etc. of any immovable property only. Any such composite supply undertaken on goods say for example a .fabrication or paint job done in automotive body shop will not fall within the definition of term works contract per se under GST. Such contracts would continue to remain composite supplies, but will not be treated as a Works Contract for the purposes of GST. As per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the CGST Act, 2017 shall be treated as a supply of services. Thus, there exist a clear demarcation of a works contract as a supply of service under GST. Besides this, as per section 17 (5) (c) of the CGST Act, 2017, input tax credit shall not be available in respect of the works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Thus, ITC for works contra....
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....bling during the operations. • There is on intention of permanently attaching the said property to the ground. In the present case under consideration, the above referred "letter of acceptance cum work order" Chief Executive Officer, Nava Raipur Atal Nagar Vikas Pradhikaran and the tripartite agreement dated 25.4.2022 furnished by the applicant supra, only provides a peripheral aspect and indicates towards the outline description of the activity to be undertaken by the applicant, as "construction of CBD Railway station at Nava Raipur", which as per the applicant includes civil construction of railway platform, railway station officers, parking area, internal drop off lanes and roads, pavement, footpath, building within the boundary, foot over bridge, boundary. The other aspect as regards the property i.e., transfer of property in goods as required for categorizing the same under the definition of 'Works Contract' is a prerequisite and can in no way be ignored with. Under GST, only those defined works carried out on any immovable property is covered under 'Works Contract'. Thus, although the intended construction as above by its description as is fort....
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....enant to a railway; (b) all lines of rails, sidings, or yards, or branches used for the purposes of, or in connection with, a railway; (c) all electric traction equipments, power supply and distribution installations used for the purposes of, or in connection with, a railway; (d) all rolling stock, stations, offices, warehouses, wharves, workshops, manufactories, fixed plant and machinery, roads and streets, running rooms, rest houses, institutes, hospitals, water works and water supply installations, staff dwellings and any other works constructed for the purpose of, or in connection with, railway; (e) all vehicles which are used on any rood for the purposes of traffic of a railway and owned, hired or worked by a railway; and (f) all ferries, ships, boats and rafts which are used on any canal, river, lake or other navigable inland waters for the purposes of the traffic of 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 place solely for the purpose of rec....
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....thin the municipal area, line of communication wholly situated in one State and declared by the Parliament by law not to be Railway. The petitioner qualifies and is a Railway within the meaning of Section 2(31) of the 1989 Act. It is engaged in transportation of passengers on rails. It is a public carriage. This factual position is not challenged by the respondent. 10. In view of the reasoning given above, it has to be held that Section 184 of 1989 Act grants protection from levy of taxation by a local authority to "railway administration" be it a Government Railway or a Non Government Railway. The petitioner, therefore, will be entitled to protection under Section 184 of the Act to the extent it is "railway administration" as defined in Section 2 (32) read with Section 2 (25) of the 1989 Act." 9.9.2 The issues and circumstances involved in the case in hand of the applicant is quite distinguishable. Here in the impugned case the applicant has been awarded the work of construction of CBD Railway station, commercial complex, boundary etc. at Nava Raipur (C.G) by Nava Raipur Atal Nagar Vikas Pradhikaran [NRANVP]and not by any Railway. Besides this the work allotted and und....
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....adhikoran [NRANVP] on the basis of a "letter of acceptance cum work order" issued by the Chief Executive Officer, Nava Raipur Atal Nagar Vikas Pradhikaran and a tripartite agreement dated 25.4.2022 [between the applicant as the contractor, NRANVP as the agency and Nava Raipur Atal Nagar Smart City Corporation Limited (NRANSCCL) being the employer) for the execution of the said construction, can in no way be held as pertaining to railways or works constructed for the purpose of, or in connection with, railway. Thus, this authority in addition to the non-adherence of the other aspects/conditions for availing the benefit of Notification claimed by the applicant as discussed 'above by the applicant, comes to the conclusion that the said construction project being undertaken by the applicant cannot be termed as "pertaining to railways", much essential for entitlement of the reduced rate of tax as provided under s.no. 3 (v) (a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. 9.9.3 The applicant has cited reference to AAR rulings in support of their opinion. In this regard, it has been discussed in the preceding paras that the issues involved in the i....