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2020 (7) TMI 800 - AAR - GSTClassification of services - rate of tax to be levied by the sub-contractor to main contractor for original work contract pertaining to Government entity - applicability of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT - On perusal of the notification, it is found that the work contract services in respect of construction/ widening of road provided by the applicant to his main contractor is covered under entry at Serial No. 3(iv) of the said notification. It is also found that before amendment vide notification dated 25.01.2018, specific entry on rate of services provided by the sub-contractor to main contractor were introduced, the activity of the applicant was remain covered under the scope of Serial No. 3(iv) of the Notification No. 11/2017 (as amended), which provided the rate of GST @ 12% on the services supplied by way of construction of road. Thus, the services provided by the applicant as sub-contractor to principal contractors continues to be covered under the Serial No. 3(iv) of the Notification No. 11/2017-Central Tax (Rate) dated (as amended from time to time). Further Appellate Authority for Advance Ruling, Maharashtra in the case of IN RE M/S. SHREE CONSTRUCTION 2019 (3) TMI 1567 - APPELLATE AUTHORITY FOR ADVANCE RULING MAHARASHTRA and and Authority for Advance Rulings, Punjab in the case of IN RE S.P. SINGLA CONSTRUCTIONS PVT. LTD. 2019 (10) TMI 315 - AUTHORITY FOR ADVANCE RULING - PUNJAB on the same issue has passed the ruling that services provided by the sub-contractor to main contractor is covered tinder Serial No. 3(iv) of the Notification No. 11/2017 -Central Tax (Rate) dated 28.06.2017 (as amended from time to time) and attracts GST @ 12%.
Issues Involved:
1. Classification of the work contract service provided by the sub-contractor. 2. Determination of the applicable GST rate for the work contract service provided by the sub-contractor to the main contractor for government entity projects. Detailed Analysis: Issue 1: Classification of the Work Contract Service Provided by the Sub-Contractor The applicant, engaged in providing work contract services as a sub-contractor for the construction/widening of roads, sought an advance ruling on the classification of these services. According to Section 97(2) of the CGST/SGST Act, 2017, advance ruling can be sought on matters including the classification of goods or services. The relevant legal provisions include Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and its subsequent amendment via Notification No. 01/2018-Central Tax (Rate) dated 25.01.2018. Upon review, it was found that the services provided by the applicant fall under entry at Serial No. 3(iv) of Notification No. 11/2017, which pertains to the "composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a road, bridge, tunnel, or terminal for road transportation for use by the general public." Issue 2: Determination of the Applicable GST Rate The applicant also sought to determine the applicable GST rate for the services provided. The legal provisions under Notification No. 11/2017-Central Tax (Rate) and its amendment via Notification No. 01/2018-Central Tax (Rate) were examined. The notification specifies different GST rates for various types of construction services. For the services provided by the applicant, the applicable rate is determined by the nature of the work and the type of recipient (i.e., government entity). The ruling clarified that before the amendment, the applicant's services were covered under Serial No. 3(iv) of Notification No. 11/2017, which prescribed a GST rate of 12% (6% CGST + 6% SGST) for the construction of roads. This classification and rate were upheld even after the amendment, which introduced specific entries for services provided by sub-contractors to main contractors. The services provided by the applicant continue to fall under Serial No. 3(iv) of Notification No. 11/2017 (as amended), attracting a GST rate of 12%. The ruling also referenced similar cases, such as M/S Shree Construction and M/S S.P. Singla Constructions (P.) Ltd, where it was held that services provided by sub-contractors to main contractors fall under Serial No. 3(iv) of Notification No. 11/2017 and attract a GST rate of 12%. Conclusion: The Authority for Advance Rulings, Uttarakhand concluded that the services pertaining to the construction/widening of roads provided by the applicant as a sub-contractor fall under the scope of Serial No. 3(iv) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (as amended from time to time), and attract a GST rate of 12% (6% CGST + 6% SGST).
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