9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1039 - AAR - GSTLevy of GST - sub-let of Toll Collection work of certain road by NHAI - N/N. 12/2017-Central Tax(Rate) dated the 28th June, 2017 (Sr. No.23)(Heading No. 9967). Whether the same exemption will apply to services provided by the Applicant, i.e. Service by the way of access to a road or a bridge on payment of access to a road or a bridge on payment of toll charges on subcontract basis? Held that - Under the scheme of exemption under Goods & Services Tax Laws, some exemptions are based on activities, some exemptions are based on recipient of the service, some are based on provider of the service and some are based on a combination of the service (goods being supplied as well as the recipient / provider of service. In case where the exemption is based on the recipient of service, the exemption is at times not available to the sub-contractor since the principal contractor receiving supplies from the sub-contractor may not fulfil the qualification regarding recipient as per the exemption notification. In some cases, specific provision has been given in the Notifications itself to take into its fold, the supply by a sub-contractor. For example in Clause (ix) and (x) of Sl.No.3 in Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 makes provision for lower rate of GST for sub-contractor also - In case of providing access to a Road or Bridge on payment of Toll, the exemption is totally based on service of providing access to a road or a bridge on payment of toll charges. There is no restriction regarding the supplier or the recipient of the supply. In the instant case, therefore, even though the supply of the service to the user of the Toll Road is by the sub-contractor, GST is not payable on the amount of Toll Charges collected. In the transaction of collection of Toll Charges by the applicant as a sub-contractor, there are essentially two supplies being made; one to the user of the Toll Road, for which charges are paid by the user of the Road and the other by the applicant to Highway Infrastructure (P) Limited - the ruling has no bearing on the consideration received by the applicant from of Highway Infrastructure (P) Limited for the supplies made by the applicant to Highway Infrastructure (P) Limited. Ruling - The Toll Charges collected by the applicant are not Toll Charges per se in the hands of the applicant, but held in fiduciary capacity by the applicant, for onward remittance to Highway Infrastructure (P) Limited. The Ruling does not in any way relate to the Toll Charges retained by the sub-contractor, in terms of its agreement with Highway Infrastructure (P) Limited.
Issues Involved:
1. Taxability of services provided by the applicant as a sub-contractor for toll collection. 2. Applicability of GST exemption on toll charges collected by the sub-contractor. Detailed Analysis: 1. Taxability of Services Provided by the Applicant as a Sub-contractor for Toll Collection: The applicant, M/S Ankit Tandon Enterprises & Tollways Private Limited, is engaged in wholesale business, bonded warehouse, and leasing business. They intend to enter into a contract with an entity that has been allotted toll collection work by the NHAI. The applicant seeks to know if the GST exemption on toll charges applies to their services as a sub-contractor. The department's viewpoint is that while toll charges are exempt from GST, the consideration received by the sub-contractor from the contractor is taxable. The applicant argues that since the toll collection service is exempt under Notification No. 12/2017-Central Tax (Rate), their services should also be exempt. 2. Applicability of GST Exemption on Toll Charges Collected by the Sub-contractor: The National Highways Authority of India (NHAI) is empowered to collect toll charges and can outsource this activity to third parties. The contractor appointed by NHAI collects toll charges and remits a fixed amount to NHAI, retaining any excess as profit or bearing any deficit as loss. The applicant contends that their services are in the nature of toll collection, which is exempt from GST under Notification No. 12/2017. They argue that all parties involved (NHAI, the main contractor, and the sub-contractor) are engaged in toll collection services, which should be exempt from GST. 7. Discussions and Findings: The case involves two sets of services: a) Maintenance of roads as a sub-contractor. b) Granting access to roads or bridges for toll charges on behalf of Highway Infrastructure (P) Limited. The exemption for toll charges is based on the service of providing access to a road or bridge, with no restrictions on the supplier or recipient. Therefore, even if the service is provided by a sub-contractor, GST is not payable on the toll charges collected. However, there are two supplies in this transaction: 1. Service to the user of the toll road, exempt from GST. 2. Service by the applicant to Highway Infrastructure (P) Limited, which is taxable. 8. Ruling: The exemption under Sr. No. 23 of Notification No. 12/2017-Central Tax (Rate) applies to the toll charges collected by the sub-contractor. This exemption is based solely on the nature of the service, without regard to the supplier or recipient. The ruling specifies that the exemption applies to toll charges collected by the applicant but does not extend to the consideration received from Highway Infrastructure (P) Limited. The toll charges collected are held in a fiduciary capacity for remittance to Highway Infrastructure (P) Limited. This ruling is valid subject to the provisions under section 103(2) until declared void under Section 104(1) of the GST Act. Conclusion: The applicant's services of toll collection are exempt from GST under the specified notification. However, the consideration received from the main contractor for the services provided is taxable. The ruling clarifies the scope of the exemption and the taxability of the consideration received by the sub-contractor.
|
