9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 635 - AAR - GSTClassification of supply - composite supply or mixed supply - works contract or not - Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U - benefit of reduced rate of tax - Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - Applicability of N/N. 24/2017-IT(R) dated 21.09.2017 and 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. - HELD THAT - As per Section 2 (119) of the C.G.S.T. Act, 2017; works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract - From the terms and conditions of the M.O.U. dated 22.12.2016; it is evident that the activity undertaken by the applicant for the Construction and Commissioning of Jetty and the Development of Sites as per the M.O.U. squarely falls within the ambit of Works Contract as defined in Section 2 (119) of the CGST Act, 2017. As per Sl.No. 6 of Schedule II of the CGST Act, 2017; the composite supply of works contract as defined in clause (119) of Section 2 shall be treated as a supply of services. The activity undertaken by the applicant as per the M.O.U. is for the National Technical Research Organisation, a Technical Intelligence Agency of the Government of India. Since the services rendered by the applicant falls under the definition of Works Contract as per Section 2 (119) of the CGST Act, 2017 and the services being rendered to the Central Government for an original work meant predominantly for use other than for commerce, industry or any other business or profession the rate of GST applicable is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended. In view of the entry at Sl No. 3 (ix) of the Notification No. 08/2017 Integrated Tax (Rate) dated 28.06.2017 as amended the rate of GST applicable to the contractors / sub- contractors engaged by the applicant to execute the works as per the M.O.U. is also 12%. Liability and rate of GST applicable on the project management service charges, license fees for the building allotted to N.T.R.O. and the supply of electricity and water - HELD THAT - It is evident from the terms and conditions of the M.O.U. that the principal supply is the supply of works contract services for construction of Jetty and Development of Sites for N.T.R.O. and the project management service charges, license fees of building, the supply of electricity and water are components of the main supply which are ancillary to the main supply. Therefore, the rate of GST applicable for such supplies are also the same rate as applicable to the main supply as the activities cannot be segregated or vivisected from the main supply for a differential tax treatment. Thus, the activity undertaken by the applicant as per the M.O.U. dated 22.12.2016 entered with National Technical Research Organisation of the Government of India are covered under Works Contract as defined in Section 2 (119) of the CGST Act, 2017 - the rate of GST applicable on the services provided by the applicant as per the said M.O.U. is 12% as per Sl No. 3 (vi) (a) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - the rate of GST applicable on the services provided by the contractors / sub contractors to the applicant as envisaged in the said M.O.U. is 12% as per Sl No. 3 (ix) of the Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017 as amended - applicant is entitled for refund of the excess GST paid if any; subject to the provisions of Section 54 of the CGST Act, 2017 and the Rules made thereunder - supply of electricity and water are components of the main supply and are ancillary to the main supply and hence cannot be segregated or vivisected from the main supply and is liable to G.S.T. at the same rate as the main supply.
Issues Involved:
1. Nature of services rendered by CoPT under the M.O.U. 2. Eligibility for reduced rate of 12% GST for services provided by CoPT. 3. Eligibility for reduced rate of 12% GST for contractors engaged by CoPT. 4. Entitlement to claim refund of excess GST remitted. 5. Taxability of supply of goods such as electricity and water as composite supply of services. Detailed Analysis: 1. Nature of Services Rendered by CoPT: The applicant, Cochin Port Trust (CoPT), entered into an M.O.U. with the National Technical Research Organisation (N.T.R.O.) for the construction of a Jetty and development of sites on a "Deposit Work" basis. The activity involves design and execution of construction work on a turnkey basis, including various facilities and infrastructure development. As per Section 2 (119) of the CGST Act, 2017, a "works contract" involves building, construction, fabrication, etc., of any immovable property wherein transfer of property in goods is involved. The Authority concluded that the activities undertaken by CoPT fall within the ambit of "Works Contract" as defined in Section 2 (119) of the CGST Act, 2017. 2. Eligibility for Reduced Rate of 12% GST: The services rendered by CoPT to N.T.R.O. are for an original work meant predominantly for use other than commerce, industry, or any other business or profession. As per Sl No. 3 (vi) (a) of Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017, as amended, the applicable GST rate is 12%. Therefore, CoPT is eligible for the reduced rate of 12% GST for the services provided under the M.O.U. 3. Eligibility for Reduced Rate of 12% GST for Contractors: The contractors engaged by CoPT to execute the work as per the M.O.U. are also eligible for the reduced rate of 12% GST. This is in accordance with Sl No. 3 (ix) of Notification No. 08/2017 - Integrated Tax (Rate) dated 28.06.2017, as amended, which applies to sub-contractors providing services to the main contractor for works specified under item (vi). 4. Entitlement to Claim Refund of Excess GST Remitted: If CoPT is eligible for the reduced rate of 12% GST, they are entitled to claim a refund of the excess GST (6%) remitted from the date of applicability of the said Notification. This is subject to the provisions of Section 54 of the CGST Act, 2017, and the Rules made thereunder. 5. Taxability of Supply of Goods as Composite Supply of Services: The supply of electricity and water, although exempt from GST individually, are considered components of the main supply of works contract services. As per Section 2 (30) of the CGST Act, 2017, a "composite supply" consists of two or more taxable supplies naturally bundled and supplied in conjunction with each other, with one being the principal supply. The principal supply in this case is the works contract services, and the ancillary supplies (electricity and water) are taxed at the same rate as the main supply, which is 12%. Conclusion: 1. The services rendered by CoPT under the M.O.U. are classified as "Works Contract" as per Section 2 (119) of the CGST Act, 2017. 2. CoPT is eligible for a reduced GST rate of 12% for the services provided to N.T.R.O. 3. Contractors engaged by CoPT are also eligible for the reduced GST rate of 12%. 4. CoPT is entitled to claim a refund of excess GST remitted, subject to Section 54 of the CGST Act, 2017. 5. The supply of electricity and water, being ancillary to the main supply, is taxable at the same rate of 12% as the main supply.
|
