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2019 (7) TMI 815 - AAR - GSTLevy of GST - Asset Transfer - work of shifting raising of transmission lines owned by RVPNL by NHAI in the course of widening, modification diversification of its highways after completion of this work - HELD THAT - The applicant is a Central Government entity whose primary work is building roads and bridges. Shifting, dismantling and raising of transmission lines is done by the applicant as and when required for safe electrical clearances during the widening of the National Highways, which is an ancillary to its main work. In the process of the activity, nowhere any assets are transferred to the applicant and therefore ownership lies with the RVPNL. It is merely an activity where just shifting of power transmission towers/ lines is done to widening of the National highways. Liability of GST - if there is an Asset transfer which is a Supply under GST, then who is liable to pay GST? - HELD THAT - The assets created by the applicant being an immovable property does not fall under the definition of goods as mentioned in the GST Act, 2017 - the element of consideration is not involved in the activity and therefore the said activity is not a supply under the Section 7 of GST Act, 2017. Levy of GST - exemption vide Entry 4 of Notification no. 12/2017- Central Tax (rate) dated 28.06.2017 - HELD THAT - While going through the above provision of Schedule II, it provides a transfer of business assets where goods form part of the assets. As the constructed power transmission lines are not goods as explained above, the said schedule is not applicable - in relation to definition of goods, supply and consideration under GST act, 2017 we find that assets constructed by the applicant do not fall under category of goods, thus no supply is involved. Therefore, the applicability of GST does not arise.
Issues Involved:
1. Whether there is any 'Asset Transfer' involved which is a supply leviable to GST in the work of shifting and raising of transmission lines owned by RVPNL by NHAI in the course of widening, modification, and diversification of its highways. 2. If there is an 'Asset transfer' which is a Supply under GST, then who is liable to pay GST? 3. If GST is to be paid by the Applicant, then whether the same will be exempt under Entry 4 of Notification no. 12/2017- Central Tax (rate) dated 28.06.2017. Detailed Analysis: Issue 1: Asset Transfer and GST Applicability - Applicant's Submission: - NHAI is engaged in the modification of highways, which necessitates the shifting or raising of RVPNL’s power transmission lines. The cost of this work is borne by NHAI, and RVPNL charges supervision and shutdown fees, including GST on these components. - RVPNL has demanded 18% GST on the total cost estimate, treating it as an "asset transfer." - NHAI contends that the modification work does not constitute an asset transfer since the transmission lines remain RVPNL’s property post-modification. - Jurisdictional Officer's Comments: - The view that no new asset is created and no asset transfer occurs seems appropriate, implying no GST applicability on asset transfer. - Authority's Findings: - The activity involves shifting, dismantling, and raising transmission lines, which are ancillary to NHAI’s primary work of road construction. - No new assets are transferred to NHAI; ownership remains with RVPNL. - According to Section 7 of the GST Act, 2017, a supply requires a sale/transfer of goods or services for consideration in the course of business. Here, the assets are immovable property and not considered "goods" under the GST Act. - Since there is no consideration involved, the activity does not qualify as a supply under GST. Issue 2: Liability to Pay GST on Asset Transfer - Applicant's Submission: - The only supply by RVPNL to NHAI is the supervision and shutdown service, for which NHAI is willing to pay GST. - GST on the total cost estimate, which is not a consideration for RVPNL, is contested by NHAI. - Authority's Findings: - The assets created by NHAI do not fall under the definition of "goods" as per the GST Act, 2017. - The activity does not involve a transfer of business assets as defined in Schedule II of the GST Act, 2017, since the constructed power transmission lines are not goods. Issue 3: Exemption under Notification 12/2017 - Applicant's Submission: - If the activity is considered a supply, it should be exempt under Entry 4 of Notification no. 12/2017- Central Tax (rate). - Authority's Findings: - Since the activity does not qualify as a supply, the question of exemption under Notification 12/2017 does not arise. Conclusion: - The asset constructed by the applicant does not fall under the category of "goods" as defined under the GST Act, 2017. Therefore, no supply is involved, and GST is not leviable. Ruling: - The asset constructed by the applicant does not fall under the category of "goods" (as defined under GST Act, 2017), therefore no supply is involved and accordingly GST is not leviable.
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