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2020 (12) TMI 1303 - AAR - GSTClassification of supply - contracts towards construction, O M and other ancillary contracts which are in relation to work entrusted to MPPGCL by the State Government - composite supply as per Schedule II of CGST Act 2017 - rate of GST - Construction contracts awarded by MPPGCL (list enclosed) which are in relation to work entrusted to MPPGCL by the State Government as per Notification No. 11/2017 CT(R) as amended - O M and other ancillary contracts awarded by MPPGCL (list enclosed) which are in relation to work entrusted to MPPGCL by the State Government as per Notification No. 11/2017-CT(R) - HELD THAT - The definition states that the question should be in relation to supply and not about supply. There is nothing in the text of the section that states that the question can only be about supply. Once this assumed pre-condition is done away with it becomes clear how subject matter of the questions listed in Section 97(2) get covered under an Advance Ruling as per Section 95(a). The definition of Advance Ruling contains the term in, relation to , which enlarges the scope of a provision. The definition states that the question should be in relation to supply and not about supply. There is nothing in the text of the section that states that the question can only be about supply. Once this assumed pre-condition is done away with, it becomes clear how subject matter of the questions listed in Section 97(2) get covered under an Advance Ruling as per Section 95(a). The definition of Advance Ruling contains the term in relation to , which enlarges the scope of a provision - Rule of Harmonious Construction is used to avoid any inconsistency and repugnancy within a section or between a section and other parts of a statute. The rule follows a very simple premise that every statute has a purpose and intent as per law, and should be read as a whole. The interpretation which is consistent with all the provisions and makes the enactment consistent shall prevail. The doctrine follows a settled rule that an interpretation that results in injustice, hardship, inconvenience and anomaly should be avoided. MPPGCL has been established by M.P. Government with the objective of carrying out power generation in the state of Madhya Pradesh State Government of Madhya Pradesh holds 100% shares of MPPGCL. The State Government is also exercising full control over the activities of the said company. Therefore, M/s. MPPGCL qualifies to be called and termed as a 'Government Entity' for the purpose of GST law, as it fulfils the necessary and sufficient conditions laid down under notification supra in terms of Explanation to Notification No. 11/2017-C.T. (Rate). and also as per Notification No. 31/2017-C.T. (Rate), dated 13-10-2017 - Entry No. 3(vi) to the Notification No. 11/2017-C.T. (R) refers to different nature and type of Construction Services as composite supply. The provisions relating to Advance Ruling are to assist the applicants in making compliance under the Act and prevent litigation. This provision is not for the applicant to use as advisory service for GST matters. The applicant has furnished list of 68 contracts and sought the rate of GST applicable on those 68 contracts. From a perusal of the list it appears that the supplies under the contracts are not identical. Regarding classification of supply in Entry No. 6 of Schedule II to the GST Act we are unable to answer the question on account of insufficient information provided by the applicant. Further in respect of first question, regarding applicability of the Advance Ruling in the matter of Kalyan Toll Infrastructure Ltd - regarding the rate of GST on supplies made under different contracts.
Issues Involved:
1. Classification of contracts as composite supply or individual supply. 2. GST rate applicable on construction contracts awarded by MPPGCL. 3. GST rate applicable on O&M and ancillary contracts awarded by MPPGCL. Detailed Analysis: 1. Classification of Contracts: The applicant sought clarification on whether contracts for construction, O&M, and ancillary works related to the work entrusted to MPPGCL by the State Government should be taxed as composite supply or individual supply. The authority referred to the previous ruling in the case of M/s Kalyan Toll Infrastructure Ltd., which determined that such contracts should not be treated as composite supply but rather each supply should be treated separately for tax determination. However, the authority noted that an advance ruling is not binding beyond the specific case it addresses and does not serve as a binding precedent. Additionally, the authority emphasized that the question should be specific to a particular contract with clear facts for a proper ruling. 2. GST Rate on Construction Contracts: The applicant requested the GST rate applicable on construction contracts awarded by MPPGCL. The authority confirmed that MPPGCL qualifies as a "Government Entity" as per the GST law. According to Notification No. 11/2017-C.T. (Rate), the applicable GST rate for composite supply of works contract provided to a government entity is 12%, provided the services are procured in relation to a work entrusted to the entity by the government. The authority highlighted the need to establish whether each contract meets the conditions for being classified as a works contract and falls under the specified entries of the notification. 3. GST Rate on O&M and Ancillary Contracts: The applicant also sought the GST rate for O&M and ancillary contracts. Similar to the construction contracts, the authority indicated that the GST rate would depend on whether each contract qualifies as a works contract and meets the conditions specified in Notification No. 11/2017-C.T. (Rate). The authority noted the importance of providing copies of the contracts to ascertain their nature and applicability under the notification. Conclusion: 1. The authority could not provide a ruling on the classification of supply due to insufficient information and emphasized that the advance ruling in the case of Kalyan Toll Infrastructure Ltd. is not applicable to the applicant. 2. The authority could not determine the GST rate for construction contracts in the absence of specific contract details. 3. Similarly, the authority could not determine the GST rate for O&M and ancillary contracts without the relevant contract documents. The ruling is valid subject to the provisions under section 103 (2) until and unless declared void under Section 104 (1) of the GST Act.
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