TaxTMI 
TaxTMI 
2024 (7) TMI 980
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.... supra, there is a clear bifurcation in rates and activities and hence, can be termed as a divisible contract. 5. The applicant further contends that in terms of notification No. 66/2017-CT dated 15.11.2017, the Central Government has exempted payment of GST at the time of receipt of advances in case of goods, effective from 15.11.2017; that in their case, contract agreement Part-I pertains to supply of goods and contract agreement Part-II, pertains to supply of services; that they do separate billing for supply & erection; that it is a purely divisible contract; that no GST is payable on advance received against supply at the time of receipt of advance in terms of the notification, ibid; that they have received an interest bearing advance against supply by providing Bank Guarantee for 110% of advance received, which can be treated as corporate credit facility [loan] from the client. 6. The applicant has raised the below mentioned questions, seeking an advance ruling viz,- (i) Notification No. 66/2017 will applicable for turnkey contract? (ii) Is GST payable on advance received against supply portion in Turnkey contract.. ? (iii) Identification of r....
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....l Tax dated 15.11.2017 being relied upon by the applicant/contractor for exemption of payment of tax on advances received does not appear applicable in the present case. Discussion and findings 10. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 11. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made during, the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant's submission / interpretation of law in respect of question and the additional submission on which the advance ruling is sought. 12. Before adverting to the submissions made by the applicant, we would like to reproduce the relevant provisions and notification for ease of reference: • CGST Act, 2017 Section 2 (119) (119) "works contract" means a contract for building, construction, ....
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....ices in his books of account, in a case where the provisions of clause (a) or clause (b) do not: apply Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, he the date of issue of invoice relating to such excess amount. Explanation .-For the purposes of clauses (a) and (b)- (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or. as the case may be. the payment: (ii) "the date of receipt of payment" shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. • Notification No. 66/2017-CT dated 15.11.2017 GSR. (E):- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act) and in supercession of notification No. 40/2017-Central Tax. dated the 11th October, 2017, publ....
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.... Contract (Including GST) Rs. 18,53.54.364.00 (Eighteen crore fifty three lakh fifty four thousand three hundred sixty four only) Total Rs. 148,91,89,662.00 (One Hundred forty eight crore ninety one lakh eighty nine thousand six hundred sixty two only) 1. Scope of Work The Brief Scope of work is Supply, Installation, Testing and Commissioning of 11 KV medium Voltage Covered Conductor (MVCC) with Us Accessories in Morbi and Part of Kachchh Districts (Anjar Circle) in PGVCL under Revamped Reforms-Based and Results-Linked, Distribution Sector Scheme is to be executed on turnkey basis, the scope of which includes survey, network design supply manufacturer's quality assurance, testing (where specified/ required), transportation, storage, erection, including all civil structural works, site, testing, commissioning of all items & materials including ad associated activities though not exclusively specified herein and are required for the completion and satisfactory performance of the entire works as intended. The above said works are to be executed in the predefined phase manner work to achieve targets as per Action Plan of RDSS. • Contract Agre....
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....ation on the applicant. 18. Thus, it is clear that the first contract i.e. contract agreement part-I, relating to supply of plant, cannot be executed independent of the second contract i.e. contract agreement part-II, relating to supply of installation services. There cannot be supply of goods without a place of supply. As the goods to be supplied under the contract agreement part-1 involves movement and/or installation at the site, the place of supply shall be the location of the goods at the time when movement of the goods terminates for delivery to the recipient, or moved to the site for assembly or installation, in terms of section 10 (1) (a) & (d) of the IGST Act, 2017. Thus, contract agreement part-I is not a complete contract, unless tied up with contract agreement part-II. This is more so since any default or breach under the contract agreement part-II, shall automatically be deemed as a default or breach of contract agreement part-I [refer article 5 of the contracts]. 19. Black's Law Dictionary defines that "a severable contract, also termed as divisible contract, as a contract that includes two or more promises each of which can be enforced separately, so that f....
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.... [2014 (304) ELT 161 (SC)], wherein it was held as follows:- 38. Reference to the aforesaid authorities is for the purpose that post the constitutional amendment, the Court has been interpreting a contract of work, i.e., works contract in the constitutional backdrop. In certain cases, which involve transfer of property and also an element of service in the context of work rendered, it has been treated as works contract. 39. The essential characteristics have been elucidated by a three-Judge Bench in Larsen and Toubro (supra) thus: - "As the very title of Article 366 shows, it is the definition clause. It starts by saying that in the Constitution unless the context otherwise requires the expressions defined in that article shall have the meanings respectively assigned to them in the article. The definition of expression "tax on sale or purchase of the goods" is contained in clause (29-A). If the first part of clause (29-A) is read with sub-clause (b) along with latter part of this clause, it reads like this: "tax on the sale or purchase of the goods" includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in th....
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....of works contract. It has been further held that once the characteristics or elements of works contract are satisfied in a contract, then irrespective of additional obligations, such contract would be covered by the term "works contract" because nothing in Article 366(29-A)(b) limits the term "works contract" to contract for labour and service only. 42. At this juncture, it is condign to state that four concepts have clearly emerged. They are (i) the works contract is an indivisible contract but, by legal fiction, is divided into two parts, one for sale of goods, and the other for supply of labour and services; (ii) the concept of "dominant nature test" or, for that matter, the "degree of intention test" or "overwhelming component test" for treating a contract as a works contract is not applicable; (iii) the term "works contract" as used in Clause (29A) of Article 366 of the Constitution takes in its sweep all genre of works contract and is not to be narrowly construed to cover one species of contract to provide for labour and service alone; and (iv) once the characteristics of works contract are met with in a contract entered into between the parties, any additional oblig....
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....received. 25. In view of the foregoing, we hold that GST is payable on advance received by the applicant and the benefit of notification no. 66/2017-CT dated 15.1 1.2017 is not applicable in respect of the turnkey contract entered into by the applicant. RULING 26. In view of the foregoing, we pass the following ruling (i) As the turnkey contract entered into by the applicant has been held to be a works contract, Notification No. 66/2017-CT dated 15.1 1.2017 is not applicable in respect of the said turnkey contract. (ii) As the turnkey contract entered into by the applicant has been held to be a works contract, GST is payable on advance received against supply portion in respect of the Turnkey contract. (iii) As the turnkey contract entered into by the applicant has been held to be a works contract the said turnkey contract cannot be held to be a divisible contract. ============= Document 1 ONO MAZDA 0177 0104 CONTRACT AGREEMENT CONTRACT AGREEMENT PART I FOR SUPPLY OF PLANT BETWEEN Paschim Gujarat Vij Company Limited AND M/s. Vijai Electricals Ltd., THIS No. CONTRACT AGREEMENT PART PGVCL/PROJECT RDSS/INFRA/MVCC/P1/8....
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....act Price (Reference GCC Clause 11) for Contract Part I The Employer hereby agrees to pay to the Contractor the Contract Price for Contract Part I in consideration of the performance by the Contractor of its obligations hereunder. The Contract Price for Contract Part I shall be the aggregate of (Rs. 130,38,35,298.00 (with GST)) (In Words: One Hundred Thirty Crores Thirty Eighty Lakhs Thirty Five Thousand Two Hundred Ninety Eight Rupees Only), or such other sums as may be determined in accordance with the terms and conditions of the Contract. The break-up of the Contract Price for Contract Part I is as under: The detailed break-up of Contract Price for Contract Part I is given in the relevant Appendices hereto. Terms of Payment (Reference GCC Clause 12) The terms and procedures of payment according to which the Employer will reimburse the Contractor are given in Appendix 1 (Terms and Procedures of Payment) hereto. Sl. Description Total Price (Rs.) No. 1. TOTAL for Supply of Plant Contract Rs. (Excl. GST) 110,49,45,168.00 (One Hundred Ten Crores Forty Nine Total for Supply of Plant Contract (Incl. GST) Rs. Lak....
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.... B. NO. 0178 0104 CONTRACT AGREEMENT PART II FOR SUPPLY OF INSTALLATION SERVICES BETWEEN Paschim Gujarat Vij Company Limited AND M/s. Vijai Electricals Ltd.. THIS CONTRACT AGREEMENT PART II No. PGVCL/PROJECT/RDSS/INFRA /MVCC/P1/87/509 (also referred to as "Supply of Installation Services Contract/the Contract Part II") is made on the 1" day of April 2023. BETWEEN 1) Paschim Gujarat Vij Company Limited a company incorporated under the laws of Companies Act 1956/2013 (with amendment from time to time) and having its Registered and Corporate Office at, "Paschim Gujarat Vij Seva Sadan" Off, Nana Mava Road, Laxminagar, Rajkot - 360 004. (hereinafter called "the Employer" and also referred to as ("PGVCL") And (2) M/s. Vijai Electricals Limited a company incorporated under the laws of Companies Act 1956/2013 (with amendment from time to time) and having its Principal place of business at 6-3-648/1&2, Off. Raj Bhavan Road, Somajiguda, Hyderabad - 500 082 and Registered Office at 6-3-648/1&2, Off. Raj Bhavan Road, Somajiguda, Hyderabad - 500082 (hereinafter called "the Contractor" and also referred to as "(VEL") WHERE, the Employer, un....
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....ter of Intent/ Notification of Award No. PGVCL/PROJECT/RDSS/INFRA/MVCC/P1/87/509 has also been made on the 1 day of April 2023 between the Employer and the Contractor for the Supply of Plant (hereinafter referred to as the "Contract Part 1") for the supply of Plant on FOR (Site/Project Site) basis interalia including design, engineering, manufacture, testing, transportation, insurance etc. and other services, incidental thereto, required for the complete execution of the SUPPLY, INSTALLATION, TESTING AND COMMISSIONING OF 11 KV MEDIUM VOLTAGE COVERED CONDUCTOR (MVCC) WITH ITS ACCESSORIES IN MORBI AND PART OF KACHCHH DISTRICT (ANJAR CIRCLE) IN PGVCL UNDER REVAMPED REFORMS-BASED AND RESULTS LINKED, DISTRIBUTION SECTOR SCHEME (Package-1) and the scope of work is briefly described below: Site survey, planning, design, engineering, assembly manufacturing, testing, supply, loading. transportation, unloading, insurance, delivery at site, handling, storage, installation, testing. commissioning and documentation of all items/material required to complete the following works in Morbi and Part of Kachchh District (Anjar Circle) in PGVCL which inter-....