TaxTMI 
TaxTMI 
2024 (10) TMI 878
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....itten statement in the form of attachment. The applicant in his application has sought advance ruling on following question- a. Whether undertaking of deposit works under both modes qualifies to be supply in terms of Section 7 of the CGST Act? b. If answer to the above question is yes, then what shall be the value of such supply under the First mode and under the Second mode? c. When deposit work is executed Second method, whether DISCOM is eligible to avail ITC of GST on Material, labour, installation and other overhead ? 3. The question is about applicable GST rate under the provisions of CGST Act and liability to pay GST, hence is admissible under Section 97 (2) (a) of the CGST Act 2017. Further, as per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.. 4. The applicant has submitted statement of relevant facts as under:- A. Paschimanchal Vidhyut Vitran Nigam Limited DISCOM ("Applicant") is the subsidiary company of Uttar Pradesh Power Corporation Ltd. is a state-owned Public Sector Undertaking situated in Meerut UP. The DIS....
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....consumers/ intending agencies and work is done in our supervision. We charge material cost and installation cost from the customers as reimbursement on cost to cost basis. For our supply of service we charge only supervision charges plus GST on Estimated cost i.e. the cost of Material and installation work plus supervision charge. 5. The applicant has submitted their interpretation of law as under- A. It may be noted that the actual execution of works under both modes is undertaken by Licensed Electrical Contractor (LEC), as are licensed by Directorate, Electrical Safety. Under the First method, it will be engaged by the consumer/ intending agencies and in Second method, LEC will be engaged by DISCOM and under the. The cost of deposit works is calculated by the DISCOMs as per the estimation methodology which includes cost (material and labour), overhead charges, other charges, etc. B. It is the understanding of the Applicant that irrespective of the mode of execution of deposit works, the ownership of the distribution system shall vest in the DISCOMs only, in capacity of being distribution licensee. On being specifically asked about the legal provision providing for vesting of....
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.... would be mentioned as being under the 'CGST Act'. 9. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issues on which advance ruling required- (1) determination of time and value of supply of goods or services or both. (2) admissibility of input tax credit tax paid or deemed to have been paid. At the outset, we find that the issue raised in the application is squarely covered under Section 97 (2) of the CGST Act 2017. We therefore, admit the application for consideration on merits. 10. Applicant (PVVNL) is the subsidiary company of Uttar Pradesh Power Corporation Ltd. is a state-owned Public Sector Undertaking situated in Meerut UP. 11. Applicant undertakes development of electricity infrastructure as requested by consumers / intending agencies ('consumer') for distribution of electricity, as 'deposit works'. Such deposit work is either in the form of making additions to the existing distribution system or augmenting / modifying / shifting the existing system to a new location. 12. The deposit works is carried out at the behest of the consumer via two modes: I. First method (Deposit work is undertaken b....
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....nor the consideration for same has been received by applicant. The contract for works contract services is executed between the concerned party and a third-party work contractor. Therefore, the applicant is a stranger to this contract. In a case where the third-party work contractor remains unpaid for the services supplied by him, he can sue only the concerned party not the applicant. There is no obligation to pay on the part of applicant. Hence, the case shall not be covered under section 15 (2) (b) of the CGST Act 2017. ii. Here, PVVNL is not a supplier of goods and services as per provisions of section 2 (105) of CGST Act, 2017 as the work is being undertaken by the customer itself. There is no relationship between the customer and PVVNL which can be categorized as that of supplier and recipient except for the services of the supervising the whole work. iii. It is also pertinent to note that in the present transaction there is no consideration which comes under the purview of section 2 (31) of CGST Act, 2017. All the payments are being made by the customer directly to the vendor and contractors and no payment is being made to PVVNL except supervision charge for the work. i....
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....taxable value under GST and the applicant shall be liable to pay GST only on the supervision charges. 15. Now we discuss the second method where Deposit work is undertaken by DISCOM: As all the work including cost of material and its supervision is being done by the applicant. The GST charged on the cost of material and supervision charge is tenable. In case materials have to be provided by the applicant including supervision charge the GST shall be charged under single invoice raised by the applicant. Further, the entire material and installation work is arranged by the applicant on behalf/ instance of consumers/ intending agencies and work is done in the supervision of the Applicant. The work done by applicant falls under "Works Contract" as per section 2 (119) of the CGST Act, 2017. The structure created in this process is used in the furtherance of business by the Applicant. In this regard, Section 17(5) (c) and (d) the CGST Act, 2017 is reiterated as under: (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- .................................