2020 (2) TMI 550 - AAR - GST

Classification of supply - composite supply of works contract or not - whether classified under Entry (vi) or Entry (iv) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification - rate of GST - Rate of GST with respect to services rendered by the sub-contractors. Whether the composite supply of works contract provided by the applicant to NHAI shall be classified under Entry (vi) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification liable to effective rate of GST @ 12% including CGST and UPGST? - Whether the composite supply of works contract provided by the applicant to NHAI shall also be classified under Entry (iv) to Serial No. 3 of the CGST Rate Notification read with the UPGST Rate Notification liable to effective rate of GST @ 12% including CGST and UPGST? - HELD THAT - The installation of ITS (Intelligent Transport System) is part and parcel of the construction of road transportation system for use by general public and the supply made by the applicant is more appropriately classified under Entry (iv) to Serial No. 3 of the CGST Rate Notification rather than Entry (vi) of the said Notification. Whether the rate of GST with respect to the services rendered by the sub-contractors to the main contractor i.e. the applicant would be applicable @ 12% in view of Entry (vi) and (iv) of the CGST Rate Notification read with the UPGST Rate Notification or @ 18%? - Section 95(a) of CGST Act, 2017 - HELD THAT - Any person/applicant can seek advance ruling in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by him. However, in the instant case the applicant wishes to know the GST rate for the sub-contractor providing input services to them, which is outside the purview of Advance Ruling - no ruling can be issued on this question.

Summary

Issues: Classification of works contract under GST Rate Notification, Applicability of GST rate for services by sub-contractor

Classification of Works Contract under GST Rate Notification:
The case involved an applicant, a joint venture, executing a contract with NHAI for the development of an expressway project. The applicant sought clarification on the classification of their composite supply of works contract under the CGST Rate Notification. The Authority analyzed the definitions of works contract and composite supply under the CGST Act, emphasizing the integration of goods and services in the project. The agreement entailed the supply, installation, and maintenance of an Intelligent Transport System (ITS) for the expressway. Referring to legal precedents and the nature of the project, the Authority concluded that the supply qualified as a works contract under the CGST Act. The ITS installation was deemed essential for public road transportation, leading to the classification under Entry (iv) of the CGST Rate Notification, attracting a 12% GST rate.

Applicability of GST Rate for Services by Sub-Contractor:
The applicant also inquired about the GST rate for services provided by a sub-contractor to the main contractor. The Authority highlighted the definition of advance ruling under the CGST Act, which pertains to matters related to the supply of goods or services undertaken by the applicant. However, the question regarding the GST rate for services by a sub-contractor was deemed beyond the scope of advance ruling. Therefore, the Authority declined to issue a ruling on this matter. The ruling provided clarity on the classification of the works contract under the GST Rate Notification, affirming the applicant's eligibility for a 12% GST rate under Entry (iv) for the project with NHAI.