TaxTMI 
TaxTMI 
2023 (4) TMI 302
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....jkot-360311 against the Advance Ruling No. GUJ/GAAR/R/43/2021 dated 11.08.2021. Brief facts of the case; 3. M/s Shreeji Earth Movers (hereinafter referred to as 'the appellant') is a registered firm having GST No. 24BBTPS3402D1ZR with place of business at Kolithad. Taluka-Gondal, Dist. Rajkot (Gujarat). 3.1 The appellant is engaged in providing works contract service directly to subcontractors who execute the contract with the main contractor for original contract work with the irrigation department (State of Gujarat). M/s. JSIW Infrastructure Pvt. Ltd., received the original contract from the irrigation department (State of Gujarat) for the construction of pumping station and supplying and laying MS pipeline with all allied work etc. and maintenance of the commissioned project for 10 years. M/s. JSIW Infrastructure executed the same contract with M/s. Radhe Construction. Further, M/s. Radhe Construction executed the same contract with the appellant. 3.2 The appellant had filed application with the Authority for Advance Ruling, Gujarat seeking ruling on the following:- a) At what rate of tax the liability should be determined on services provided by app....
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.... main contractor, which may not be covered in the aforesaid entry, it is their belief that the rate applicable to them is 12% which is the rate applicable for composite supply of works contract as defined in clause (119) of Section 2 of CGST Act.2017 supplied by way of construction, erection, commissioning .or installation of original works pertaining to civil construction irrigation and construction work supply to the irrigation department of Gujarat. 4.7 As per Section 2(119) of the CGST Act. 2017, "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out. improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract"; as per Section 2(5) of CGST Act, 2017, "Agent" means a person including a factor, broker, commission agent, arhatia. del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; 4.8 Contractor an....
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.... 5 of classification of services even though not specified separately. Thus the rate applicable for civil works contract carried out for railways in para (v) of heading 9954 of Section 5 of classification of services should be applicable to sub-contractors also. 4.14 Vide letter dated 04.10.2021. copies of the following judgments were submitted:- A) S.P.Singla Construction Pvt Ltd.{(2019) 111 Taxmann.com 356 (AAR-PUNJAB)} B) M/s Shree Construction .{(2019) 103 faxmann.com 448 (AAAR-Mah)} C) NHPC Ltd .{(2019) 104 Taxmann.com 365 (AAR-Uttarakhand)} D) ST Engineering Electronics Ltd .{(2019) 109Taxmann.com 367 (AAR-Mah)} E) Yash Nirman Engineers & Contractors. {(2019) 109 Taxmann.com 367 (AAR-Mah)] F) State of Andhra Pradesh & Others V Larsen & Turbo Ltd & Other -Supreme Court of India -Civil appeal No. 5239 of 2008. 5. During the course of virtual personal hearing held on 06.01.2023, the authorized representative of the appellant. Shri. Ramesh Rakholiya, Advocate reiterated the grounds made in the written submissions. 5.1 In pursuance to transfer of Member (SGST), the appellant was informed regarding the same for fresh pe....
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....work order dated 15.09.2019 in the name of the appellant where the scope of work included 'Liasioning of Crop composition, Excavation of all strata including hard rock. Laying of water pipes including pipes, sand bedding, Lowering, Laying, jointing of pipes, RT of each joint, inner & outer joint coating, back filling, removal of surplus earth, restoration & NOC from farmer, testing etc'. Thus, the above facts make it clear that in the instant case, the original contract was awarded to the main contractor by the Irrigation Department of State of Gujarat and the appellant has been awarded the work order by a sub-contractor of the main contractor. 7.2 In the instant case the appellant has referred to Sr. No (iii) of Notification No.20/2017-CT (Rate) dated 22.08.2017 to submit that the rate applicable to them is 12%. We find that the entry No. 3(iii) of the subject Notification provides for rate of tax @12% if any taxable person is providing composite supply of works contract as defined in cause (119) of Section 2 of the CGST Act. 2017 to Central Government, State Government, Union Territory, a local authority or a Governmental Authority or a Government Entity by way of cons....
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....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. On a combined reading of the provisions made under serial No. 3(iii), Sr.No 3(ix) and Sr.No 3(x) of the amended Notification No. 11/2017-CT (R), which the appellant has referred to. it is seen that the rate of GST leviable is @ 12% or 5% (CGST and SGST taken together), as the case may be, when the specified services are provided to the Central Government. State Government, Union territory, a local authority, a Governmental Authority or a Government Entity, by the main contractor and sub-contractor to the main contractor. In the present case, we find that the appellant is neither the main contractor nor the sub-contractor. There is no agreement between the appellant and the main contractor to be treated as a sub-contractor. 7.4 From the submissions made by the appellant it is seen that the M/s JSIW Infrastructure was the main contractor who was awarded the works contract service pertaining to the Irrigation Department of the State of Gujarat. This main contractor then engaged a sub-contractor M/s Radhe Constru....
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....018. Thus, the appellant who actually is functioning as a sub-contractor of the sub-contractor of the main contractor, is not eligible for the concessional rate of tax @12%. 7.6 Further, on perusing the copy of the sub-contract Agreement between M/s JSIW Infrastructure Pvt Ltd, Ahmedabad (the main contractor) and M/s Radhe Construction, Rajkot (the sub-contractor) dated 2.9.2019. it is seen that the main contractor had appointed M/s Radhe Construction as a sub-contractor for execution of the work specified in the Agreement. Further, Point No. 9(v) of the Agreement under reference states that the M/s JSIW (the main contractor) shall have at his option and be at liberty to cancel the order wholly or a part of the order and proceed to carry out the work through some other agency at the risk and cost of the sub-contractor, if the sub-contractor sublets part or full work to other parties without the consent of the contractor. Thus, there is a prohibition imposed by the main Contractor on the sub-contractor M/s Radhe Construction from further subcontracting the work allotted to them, without the consent of the main contractor. The appellant has also not produced any evidence to show t....
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.... "(12) To reduce GST rate (from 18% to 12°/o) on Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a governmental authority or a Government Entity', which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @5%." The wordings in the aforesaid Press Release accord with the Notification and allows the benefit of the reduced rate of GST only to the sub-contractor of the main contractor only and not to the second level sub-contractor i.e. sub-contractor to sub-contractor. Therefore, reliance placed by the appellant on this press release is also completely unfounded. 9. The appellant has further contended that though they are sub-contractors providing civil construction services to the main contractor, which may not be covered in the Serial 3(ix), it is their belief that the rate of GST leviable in their case is 12% which is the rate applicable for composite supply of works contract as defined in clause (119) of Section 2 of CGST Act, 2017. It is observed that the said entry entails benefit of concessional r....