2021 (10) TMI 1119 - AAR - GST

Scope of Advance Ruling application - Classification of services - Works contract services - Krishna Bhima stabilization project - recipient of services - to be classified under sub-clause (vii) of serial no 3 of Heading 9954 (construction of service) substituted by way of Notification No 31/2017-Central tax (Rate) dated 13th Oct 2017 as amended to original notification 11/2017 - Central Tax (Rate)? - HELD THAT - This authority is governed by the provisions of Chapter XVII of CGST ACT and the relevant Sections are 95 to 98, 102, 103, 104 and 105. As per Section 95, the term 'advance ruling' means a decision provided by this authority to an applicant on matters or questions specified in sub-section 2 of Section 97, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Section 95 of the CGST Act, 2017 allows this authority to decide the matter in respect of supply of goods or services or both, undertaken or proposed to be undertaken by the applicant. The applicant has not undertaken the supply in the subject case. Rather, the applicant is a recipient of impugned services in the subject case. The impugned transactions are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the applicant and therefore, the subject application cannot be admitted as per the provisions of Section 95 of the GST Act. Hence without discussing the merits of the case, the subject application is rejected as not being maintainable.

Summary

Issues Involved:
1. Eligibility of the applicant to seek an advance ruling.
2. Classification of the works contract under the specified GST notification.
3. Determination of whether the contract involves predominantly earthwork.
4. Status of the applicant as a "Government Entity."

Issue-wise Detailed Analysis:

1. Eligibility of the applicant to seek an advance ruling:
The primary issue is whether the applicant, being a recipient of services, is eligible to seek an advance ruling under the GST Act. The relevant provisions are Sections 95 and 97 of the CGST Act, 2017. The authority concluded that the applicant does not qualify to seek an advance ruling as they are not the supplier of the services in question but rather the recipient. Section 95 defines 'advance ruling' as a decision provided to an applicant in relation to the supply of goods or services undertaken or proposed to be undertaken by the applicant. Since the applicant is a recipient and not the supplier, the application was deemed non-maintainable.

2. Classification of the works contract under the specified GST notification:
The applicant sought to classify the works contract under sub-clause (vii) of serial no 3 of Heading 9954 (construction of service) as per Notification No 31/2017-Central Tax (Rate) dated 13th Oct 2017. The contract involves the construction of a tunnel under the Krishna Bhima Stabilization project. The applicant argued that the contract should be classified under the specified notification, which involves predominantly earthwork provided to a Government Entity, attracting a lower GST rate of 2.5% SGST and 2.5% CGST.

3. Determination of whether the contract involves predominantly earthwork:
The applicant provided detailed submissions and documentation to establish that more than 75% of the contract value involves earthwork. The scope of work includes various excavation activities, which constitute 92.67% of the total contract value. The applicant argued that this satisfies the criteria for classification under the specified notification, which requires the works contract to involve predominantly earthwork.

4. Status of the applicant as a "Government Entity":
The applicant contended that they qualify as a "Government Entity" as per the explanatory notes to Notification No. 31/2017-Central Tax (Rate). The applicant is a body constituted under the Maharashtra Godawari Marathwada Irrigation Development Corporation Act, 1998, with the state government exercising control over its activities. The applicant argued that this status fulfills the criteria for classification under the specified notification.

Observations and Findings:
The authority observed that the applicant is a recipient of the supply and not the supplier. The provisions of Section 95 of the CGST Act, 2017, allow the authority to decide matters in respect of the supply of goods or services undertaken by the applicant. Since the applicant is not the supplier, the application cannot be admitted. The authority did not discuss the merits of the case and rejected the application as non-maintainable.

Order:
The authority rejected the application for advance ruling as non-maintainable under the provisions of the CGST Act, 2017, and the Maharashtra Goods and Services Tax Act, 2017.