TaxTMI 
TaxTMI 
2025 (4) TMI 1003
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....for the said work? That the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 1. FACTS AND CONTENTIONS - AS PER THE APPLICANT 1.1. Central Railway introduced a scheme under which private players would reconstruct Goods sheds and maintain the same for 10 years. Private players would have to invest the entire capital cost for reconstruction. No upfront payment would be paid by Central Railway for such capital expenditure. The private player also has to maintain and upkeep the goods shed during the entire contract period. 1.2. Thereafter, Terminal charges are collected by Central Railway for inward and outward traffic of goods at the Goods shed in addition to freight charges (for transportation of the goods by rail) applicable to the goods. 1.3. Present rate of Terminal Charges is Rs. 20 per ton. The firm quoting ....
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....GST Act, 2017: ""composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration: Where goods are packed and transported with insurance. the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply:" • Principal Supply As per Section 2 (90) of the CGST Act, 2017: ""principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary" • Works Contract Clause (119) of section 2 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 prope....
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.... business; and they cannot be separated. To undertake the impugned supply, natural bundle of supply of goods and/or services is inevitable. Thus, the work allotted to the Applicant shall fall within the ambit of composite supply. • As per Notification No. 11/2017-Central (Rate) dated 28/06/2017 (as amended), GST Rate applicable is 12% under Sr No. 3(vii) under HSN 9954 for composite supply of works contract involving predominantly earth work that is, constituting more than 75% of the value of the works contract provided to Central/State Govt. • The expression "earthwork' has not been defined in the GST Act or GST Rules or any other notifications. Various dictionary meanings of the same areas under - Wikipedia - as per Civil engineering use Earthworks are engineering works created through the processing of parts of the earth's surface involving quantities of soil or unformed rock ... Typical earthworks include road construction, railway beds, causeways, dams, levees, canals, and berms. Other common earthworks are land grading to reconfigure the topography of a site, or to stabilize slopes Merriam Dictionary 1. an embankmen....
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....n No 1: Considering the entire contract the transaction appears to be composite supply wherein supply of goods as well as services both are involved. Accordingly, it may fall under Works Contract with heading 995414 attracting 18% GST as per Notification 11/2017 as amended. Question No 2: Whether Central Railway is entitled to claim ITC (input tax credit) for the GST payable on the payment made to the Applicant for the said work. Reply to Question No 2: The question relates to Central Railway and not to the applicant. The same does not fall within the purview of sub-section (2) of section 97 or sub-section (1) of section 100. 04. HEARING Preliminary e-hearing in the matter held on 14.11.2024. Mr. Prakash Mehta, C.A., appeared, and requested for admission of the application. Jurisdictional Officer Mr. Gokhru Pravin, Assistant Commissioner of CGST is available. The application was admitted and called for final e-hearing on 13.02.2025. Mr. Pranav Mehta, C.A. (Authorized Representative) appeared made oral and written submissions. Jurisdictional Officer Mr. Ashishkumar Pati, Assistant Commissioner of CGST appeared. We heard both the sides. 05. OBSERVATIONS AND FINDI....
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....by them, they receive compensation from the railways in the form of revenue sharing of 90% of the revenue generated from the said goods terminal by way of inward and outward traffic dealt at Kalamboli goods Shed for ten years. From the nature of the work described herein above, we find that the services provided by the applicant is in the nature of works contract. Section 2 (119) of the CGST Act, 2017, defines Works Contract as 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 the goods (whether as goods or in any other form) is involved in the execution of such contract. We find that in the instant case, the applicant is constructing, maintaining, modifying, renovating and repairing an immovable property for the Central Railway and the property so developed would be considered to be the property of the Central railway. Thus, it is observed that the said services provided by the applicant would qualify as a works contract as per the CGST Act, 2017. Further, we find that the applicant is pr....
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....this regard, we find that Section 2(74) of the CGST Act, defines Mixed Supply as two or more individual supplies of goods or services or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. In order to determine the proper classification and rate of tax in respect of the services provided by the applicant, it has to be determined whether the services provided by the applicant is a composite supply or a mixed supply. In order to constitute a composite supply, the services provided by the applicant should be naturally bundled in the ordinary course of business. 5.5. The concept of 'naturally bundled' supplies is not defined under CGST Act. For this, reliance can be placed on the flyer cum FAQ issued by CBIC to explain the concepts of 'composite supply' and 'mixed supply', which also makes reference to the Education Guide issued under service tax regime in determining whether a supply is a composite or a mixed supply under GST regime. The 'Education Guide' issued by the Central Board of Excise & Customs ('CBEC') in the year 2012 explains t....
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....of business. They cannot be treated as naturally bundled in the ordinary course of business. We also find that in the ordinary course of business, the construction is done by one entity and the maintenance is provided by some other entity or by the owner himself. It is not naturally expected in the line of business that the work of construction, maintenance, housekeeping and security is naturally supplied by one person in one package. Therefore, we hold that the services provided by the applicant of reconstruction, repairs and maintenance, housekeeping and security of the Kalamboli goods shed to the Central Railway would not qualify as a composite supply of service. It would rather be treated as a mixed supply of service involving supply of various services which can be individually classified as under :- S.No. Nature of Service Classification of service Classification heading under GST Rate of tax 1 Reconstruction Works contract Service 995414 12% 2 Repairs and Maintenance Works Contract Service 995419 18% 3 Housekeeping Services Cleaning Services 9985.39 18% 4 Security services Other security services nowhere el....
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.... find out the meaning of that word, as it is understood in common parlance'. In view of this first we are required to understand the general meaning of the word 'earthwork' in common parlance in the field of civil engineering/construction. 5.8. We find that Earthwork is the process of moving a portion of the earth's surface from one location to another. Earth movement also includes transforming the earth's material into a new desired shape and physical condition. It is commonly known as Earthwork excavation. Earthwork should not be confused with soil only; the engineering processes involving unformed rocks are also termed as earthwork. For the construction of foundations and trenches, earthwork is needed, which includes excavation and backfilling of soil to a required depth. To optimise the operation and avoid safety concerns, excavation and backfilling must be done correctly. While excavating, several soil strata may be encountered which require different types of operations. Because excavation costs make up a significant portion of the foundation, accurate measurement of excavation and backfilling is necessary. 5.9. From the details of the work submitted....
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....works contract, maintenance, housekeeping and security services to the Railway and by no stretch of imagination can it be held that the applicant is providing services of transportation of goods by rail. Therefore, the benefit of Sr.No.9(i) of Notification No. 11/2017 Central (Rate) dated 28.6.2017 would not be available to the applicant. 5.11 We find that the applicant is providing supply of services such as works contract service, repairs and maintenance, housekeeping services and security services to the Central Railway which can be considered as a supply of mixed service, with works contract (repairs and maintenance) having the highest rate of tax of 18%. (9% CGST + 9% SGST). In terms of Section 8 of the CGST Act, 2017, the said services are appropriately classifiable under Heading 995419 and chargeable to tax at the rate of 18% i.e. 9% CGST + 9% SGST. 5.12. The applicant has further raised the question whether the Central Railway would be entitled to avail input tax credit on the services provided by the applicant. In this regard, provisions of section 97 are produced below: Section 97 (1) An applicant desirous of obtaining an advance ruling under th....