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2023 (7) TMI 705
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.... charges and supervision charges / departmental charges are recovered from NHAI but the property remains under the ownership of PSTCL. Under which provision/section GST is to be charged on above work, at what rate and on which amount i.e; material, labour and supervision charges or only on supervision charges? ii) PSTCL construct and install sub-station / transmission lines on behalf of big industries/ other third parties for power supply (contribution works). In this case also total cost of work i.e; material cost, labour charges and supervision charges / departmental charges are recovered from NHAI but the property remains under the ownership of PSTCL Under which provision / section GST is to be charged on above work, at what rate and on which amount i.e; material, labour and supervision charges or only on supervision charges? iii) Whether the PSTCL can claim Input Tax Credit on material and services used in above works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL? At the outset, we would like to make it clear that the provisions of both the CGST Act and the PGST Act are the ....
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....power supply (Contribution work), at what rate and on which amount i.e. material, labour and supervision charges or only supervision charges? iii) Whether PSTCL can claim Input Tax Credit on material and services used in above works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL? M/s Punjab State Transmission Corporation Limited, GSTIN: 03AAFCP4714J1ZK is engaged in the business of Transmission of electricity which is exempt supply under GST Act. Apart from transmission of electricity, PSTCL executes deposit and contribution work on behalf of the third parties. i) Deposit Work: In case of deposit work, total cost of material, labour and supervision charges are to be paid by the third party to PSTCL and the property in goods (i.e; asset) will be transferred to the said party, which requested PSTCL to execute the work on behalf of them. ii) Contribution Work: In case of contribution work, total cost of material, labour and supervision charges are to paid by the third party to PSTCL. However, goods (i.e. asset) is not transferred to third party and asset shall remain the property of the P....
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....chargeable on use basis and the consideration paid for these services has no bearing with respect to the transmission of electricity. Therefore, the supplies although made to supplement the supply of electricity are neither naturally bundled nor provided in conjunction with each other. Hence it cannot be considered an exempted supply. These are taxable services falling under service accounting codes (SAC Codes) 995442 (Installation, assembly and erection services of other prefabricated structures and constructions) under Goods and Service Tax classification which are taxable at 18% of IGST Act (9% CGST and 9% PGST). With respect to third question regarding availability of TTC, as per sub-section (2) of section 17 of the PGST Act, 2017 read with rule 42 of the PGST Rules, 2017, ITC is available only to the extent of use in furtherance of taxable supplied. It implies that where the goods or services are used by the registered tax payer partly for utilisation in taxable supplies and partly for exempt supplies, then the ITC will be restricted to an amount which attributable for taxable supplies (including zero rated supplies). 4. PERSONAL HEARING: Personal hearing in the matte....
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....lso attached:- a) Copy of contract/agreement with the private firm for which project is executed as Annexure F. b) Copy of advance receipt voucher attached as Annexure G. c) Copies of invoice raised by the contractor is attached as Annexure H. d) Copy of tender document along with work cum allotment order attached as Annexure I,J,K,L& M. 5. DISCUSSIONS AND FINDINGS: We have carefully gone through to the facts of the case, submissions made by the applicant in his application for advance ruling as well as the submissions made by authorised representative at the time of personal hearing. We have also gone through the questions raised by the applicant on which advance ruling is sought, the applicant's interpretation of law and the detailed comments submitted by the Assistant Commissioner, State Tax, Patiala. We observe that the following issues merit careful consideration for arriving at the final decision: (i) Under which provision section GST is to be charged on shifting of Transmission Lines on request of NHAI (Contribution work) for widening of road, at what rate and on which amount i.e; material, labour and supervision charges....
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....ain and operate an efficient, co-ordinated and economical inter-State transmission system or intra-State transmission system, as the case may be;" Also as per Section 34 of Electricity Act 2003, the grid standards have been specified which are reproduced as under,- "Section 34. (Grid Standards): Every transmission licensee shall comply with such technical standards, of operation and maintenance of transmission lines, in accordance with the Grid Standards, as may be specified by the Authority." 5.5 Therefore, we find that as the applicant is a state transmission licensee under the Electricity Act 2003, and it owns the transmission system/infrastructure with exclusive right and responsibility of its transmission lines. Apart from the above activity, the applicant also executes deposit and contribution works as detailed below in relation to transmission on behalf of third parties. I). Deposit Work: In case of deposit work, total cost of material, labour and supervision charges are to be paid by the third party to applicant and the property in goods (i.e; asset) is transferred to the said party, which requested the applicant to execute the work on behalf of them....
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.... 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." 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 but there should be a transfer of property in goods involved in the execution of such contract. Since in the case of contributory work undertaken by the applicant the ownership of the transmission lines/ towers still lies with the applicant, the supply of goods and services cannot be said to be classified under "works contract". Therefore such supplies made shall be treated as a composite or a mixed supply as the case may but can not be treated as a "Works Contract" for the purpose of GST. 5.9 Further, Section 8 of the CGST Act makes provision for tax liability on composite and mixed supplies which is reproduced below:- "SECTION 8. Tax liability on composite and mixed supplies.-....
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....the supplies made are neither naturally bundled nor provided in conjunction with each other and hence shall be counted as a Mixed Supply. 5.12 Since the service made by the applicant is ancillary to the primary business of electricity transmission and distribution, therefore, for the proper classification of contribution work done by the applicant, the CODEWISE LIST OF SERVICES (service codes (Tariff) (SAC) & Scheme of classification of services) has been gone through and relevant service code is as under:- HSN Code HSN Code Description 998631 Support services to electricity transmission and distribution From the above, we observe that services provided by the applicant to the third parties as 'Contribution Work' falls under HSN/SAC 998631 which will attract GST @ 18% (CGST 9% + SGST 9%), as per Annexure to Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 (as amended). 5.13 We would also like to refer to Circular No. 34/8/2018-GST dated 01.03.2018, issued vide F. No. 354/17/2018, which has categorically clarified that the other services such as application fee for releasing connection of electricity, rental Charges against metering equi....
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.... supply. (2) The value of supply shall include- (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the. goods or services or both; (c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation.-For the purposes of this sub-section, ....
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....soil testing, geotechnical investigations, piling, casting of foundation for tower footings, installation of Tower Earthing, erection of towers, tack welding of bolts and nuts, painting, fixing of insulator strings, stringing of conductors and earth wires/OPGW along with necessary line accessories, stringing of power lines, supply and erection of span markers, testing and commissioning of the erected transmission lines and other activities as may be required for completion of the project. 5.17 We find that here also the total cost of material, labour and supervision charges are to be paid by the third party to PSTCL and the goods i.e. asset is not transferred to third party and remains the property of PSTCL. Therefore the taxability of the supply made in this case also shall be similar as discussed supra. 5.18 . With regard to the third query whether ITC is available to the applicant on the material and services used in above works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL. We find that the applicant is undertaking Contribution Work i.e. creating infrastructure for electricity transmission on the request of....