AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 139
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....n 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 can be summarised as below: * Railway Platform * R....
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.... 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 Works Original work is defined para 2(zs) of the Notification 12/2017 Central Tax (Rate) as below: (zs) "original works" means- all new constructions; (i) all types of additions and alterations to abandoned or damaged structures on l....
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....n 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 other place solely for the purpose of recreation; * From the above the relevant sub clause (d) of Sec 2(31) of The Railways Act, 1989 covers the all the points as per agreement included in construction of railway station. Hence construction of railways includes railway platform, station, offices, buildings, stay areas, parking, roads and all other su....
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....ral 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 28th 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 hearing on 10.08.2022 and reiterated their contention as furnished in the ARA-01. 5. The legal position, analysis and discussion: - At the very outset, we would like io make it clear that the provisions for implementing the CGST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as "the CGST Act and the CGGST Act"] are similar and thus, unless a mention is specifically made to such ....
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....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 One Paisa Only) with the specified time period of work being 15 months from 07.04.2022. The applicant has also furnished the copy of Tripartite contract agreement dated 25.4.2022 between NRANSCCL Nova Raipur Atal Nagar Smart City Corporation Limited of Chhattisgarh (the employer), NRANVP (the agency) and the applicant for construction of CBD Railway station at Nava Raipur, Atal Nagar, Raipur (CG). 8. Before getting in to the issues involved, we would first like to go through the rel....
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......... (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) railways, (including monorail and metro: (b) a single residential unit otherwise than as a port of a residential complex; ................. 6 - (va)............... (vi)............... (vii)............... (viii)............... (ix) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) above to the Central Government, State Government, Union territory or a l....
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....tem (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) (ii) the supply should be a 'Composite Supply' (iii) the work should be 'works contract' as, defined in Clause (119) of Section 2 of CGST Act and (iv) The work should be by way of construction, erection, commissioning, or installation of "original works" "pertaining to railways", including monorail and metro. 9.4 Coming to the first criterion above, the Scheme of Classification of Services as provided in the Annexure to Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 supra, the SAC relating to construction services reads as under: ANNEXURE SCHEME OF CLASSIFICATION OF SERVICES S.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 1 Chapter 99  ....
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....mmittee 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 classification of services. However, it may be noted that where a service is capable of differential treatment for any purpose based on its description, the most specific description shalt be preferred over a more general description. - EXPLANATORY NOTES FOR SUPPLY OF SERVICES UNDER GST [Chapter 99] 9954 Construction services : This heading includes : i. General construction services for all complete constructions. ii. Specialized construction services i.e., services related to parts of buildings or civil engineering works, rather than the complete construction object. ........ ............ ........... 995421 General construction services of highways, streets, roads, railways, airfield runways, bridges and tunnels This service code includes construction services i. for formations of highways, including elevated highways, roads, streets, other vehicular and pedestrian ways and open car p....
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....d supply of goods is a principal supply; On perusal of the copy of letter of acceptance supra, furnished by the applicant it is seen that the intended works to be undertaken by the applicant is construction of CBD Railway station. Now for the instant supply of Civil works to be undertaken by the applicant to be categorized as "composite supply" there needs to be supply of goods and services and the same should be a natural bundle of supply of both and supplied in conjunction with each other in the ordinary course of business. No such details of supply of goods for the intended civil works is forthcoming from the letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken, like materials/ goods to be supplied, related schedules, etc., it is practically impossible for this authority to conclude or for that matter hold that the works undertaken as is forthcoming form the "letter of acceptance cum work order' and the tripartite agreement dated 25.4.2022 furnished by the applicant is 'composite supply' perse. Accordingly, this authority on the basis of records furnished and available on record, is not in a position to co....
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....put service for further supply of works contract service. Thus, ITC for works contract also stands restricted and can be availed only by one who is in the same line of business and is using such services received for further supply of works contract service. For example, a building developer may engage services of a subcontractor for certain portion of the whole work. The subcontractor will charge GST in the tax invoice raised on the main contractor. The main contractor will be entitled to take ITC on the tax invoice raised by his sub-contractor as his output is works contract service. However, in case the main contractor provides works contract service (other than for plant and machinery) to a company say in the IT business, the ITC of GST paid on the invoice raised by the works contractor will not be available to the said IT Company. From the definition, a work shall be treated as Works Contract if that work is done for land or earth or for immovable property and there is transfer of property in goods involved in the execution of such contract, Immovable property by its very definition means that it cannot be moved and cannot be detached or dismantled from the land or earth and ....
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....ion as is forthcoming from the said two documents appears to be an immovable property, there must also be transfer of property in goods involved in the execution of such contract. Accordingly, this authority on the basis of records furnished and available on record, comes to considered conclusion that the benefit of reduced rate of GST claimed by the applicant as provided under Notification supra is applicable only when the said civil work intended to be undertaken by the applicant fulfils all the conditions stipulated therein for being treated as 'Works Contract' as defined under Section 2 (119) of CGST Act, 2017, as discussed herein above. 9.8 The other prerequisite to be satisfied in the instant case is that the supply should be by way of 'construction, erection, commissioning, or installation of original works pertaining to railways, including monorail and metro. Original work is defined in Para 2(zs) of the Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 is that : "original works" means- all new constructions: (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable; (ii) erection, commi....
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....ays Act, 1989 define Government Railway as well as non-Government Railway as, "(20) "Government railway" means a railway owned by the Central Government; ................. (25) "non-Government railway" means a railway other than a Government railway:" Thus, there can be two types of "railway", Government as well as non-Government. However, for both of them to qualify as ''railway" it should be used for the public carriage of passengers or goods. In case for the railways, the track in question is meant exclusively for the private use of the project owners for transport of goods upto/from their plant, the same cannot qualify as "railway" as it is not used for public carriage of passenger or goods. Hence, even though the said track may be constructed by using Rails as per the specifications of the Railway Act, 1989, the same cannot qualify as "fairway" and not eligible for exemption provided in the statute. It is actually a "private siding" as explained in Section 94 of the Railway Act, 1989, which deals with the liability of damage to in transit goods on the owner of the private siding upto the specified point of interchange of wagons between the siding and the railway....
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....ction of track work relating to any rail project or for that matter any private railway siding. Construction of complexes, railway station and commercial buildings on land belonging to NRANVP on purely commercial basis can in no way be treated as "pertaining to railways" or works constructed for the purpose of, or in connection with, railway. What NRANVP has awarded the applicant is the work of construction of commercial building / complexes/ station/ boundary etc. on the land owned by NRANVP which by no reasoning can be attributable as being "pertaining to railways", it not being related to Government railway or non-Government railway. Besides this, on perusal of the copy of drawings of the said project furnished by the applicant we find that at the site where the construction is being undertaken, the applicant appears to have been awarded the construction work of commercial buildings and other business complexes as well, which by no stretch of imagination can be treated as "pertaining to railways" or works constructed: for the purpose of, or in connection with, railway. Any construction project directly related to railways such as railway line / track, railway siding etc. where ....
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....T Act, 2017 stipulates about the ruling pronounced under the Act, as follows: - The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only- a. On the applicant who hod 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 given in the cited case would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above Accordingly on the basis of the above discussions, we come to the considered view that it would be appropriate to conclude that till 17.7.2022, the applicability of Sl.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended to the applicant, M/s Shreejikrupa Project Limited, H.No. 289, behind C.S.E.B Office, Sunder Nagar, Raipur-492001. Chhattisgarh GST1N-22AALCS6689K1ZNfor the said work, is subject to the fact that apart from the other stipulated conditions therein as discussed, the works undertaken by them satisfy the condition of ....