2022 (1) TMI 1110 - AAR - GST

Levy of GST - Tapping/ extraction of Lisa/Resin from reserved forest, van panchayat and civil forest by the selected bidder/contractor - Tapping/ extraction of Lisa/Resin from private (Naap) land on the basis of permit issued by the applicant - liability of GST on the department or the bidder? - applicable rate of GST - classification of HSN/SAC code for such activity - point/time of supply - amount on which GST to be paid - taxable amount will include all charges i.e. loading, unloading, tapping transportation charges or not - dedeuction of GST TDS by the department from the payment made to bidder - every contractor should be registered under GST working with the department for any types of activities or not - condition for deduction of GST TDS, if bidder has a contract less than 10 Lakh or unregistered person?. HELD THAT - Tapping/ extraction of Lisa/Resin and its transportation to Motor Road Depot (Godown) is a composite supply and, hence applicable GST for composite supply is payable by the contractor. Tax rate of the principle supply will apply on the entire supply, since extracted goods i.e. Lisa/Resin is the principal supply and the transportation' of the same to the Motor Head Depot is another supply and the transportation cannot be done separately, if there are no goods - since the consideration to be paid to the contractor is decided before the performance of said supply of services it is assumed that all the expenses incidental to said supply of composite supply is part of such consideration. Rate of tax - HELD THAT - Tax rate of the principle supply will apply on the entire supply, since extracted goods i.e. Lisa/ Resin is the principal supply and the transportation of the same to the Motor Head Depot is another supply and the transportation cannot be done separately, if there are no goods. We further find that once the Lisa/ Resin is deposited at the motor head depot (godown), total control and supervision is under the applicant i.e. the ownership of the goods is with the applicant, all the expenses incurred till such deposit, becomes part of taxable value of such composite supply - applicable GST is payable by the contractor / individual permit holder at the time of supply. For transportation of Lisa/Resin (which is under total control and supervision of the applicant) from Motor Head Depot (Godown) to Rail Head Depot (Kathgodam), a service provider is selected through a separate tender process. This is another service provided by the transporter to the applicant and applicable GST has to be paid by the service provider. Time of Supply - HELD THAT - Sections 12, 13 14 of the CGST Act, 2017, deals with the provisions related to time of supply and as per section 31 of the CGST Act, an invoice for supply of goods needs to be issued before or at the time of removal of goods for supply to the recipient, where the supply involves movement of goods. However, in other cases, an invoice needs to be issued before or at the time of delivery of goods or while making goods available to the recipient. Hence time of supply in case of goods, will be earliest of the following dates, Date of issue of invoice by the supplier, If the invoice is not issued, then the last date on which the supplier is legally bound to issue the invoice with respect to the supply Date on which the supplier receives the payment. Deduction of TDS GST - HELD THAT - As per section 51 of the CGST Act, 2017, a department or establishment of the Central Government or State Government, local authority, Governmental agencies and such persons or category of persons as may be notified by the Government on the recommendations of the Council, tax has to be deducted @ 2% of the payment made to the supplier of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees (excluding the amount of central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice), hence TDS as applicable under the provisions of law has to be deducted by the applicant being a Government body while making payments for the supply of goods as well as services. Liability to pay GST - HELD THAT - The liability to pay applicable GST at the time of final sale (after open auction) of Lisa/Resin lies with the applicant and all the expenses incurred from tapping/extraction to final sale including all incidental expenses namely loading unloading, transportation etc. form the part of taxable value.

Summary

Issues Involved:
1. Liability of the entire work under GST.
2. Liability for GST - department or bidder.
3. Applicable rate of GST for the activity.
4. Classification of HSN/SAC code for the activity.
5. Point/time of supply for GST payment.
6. Amount on which GST should be paid.
7. GST TDS deduction by the department from payment made to the bidder.
8. Requirement of GST registration for contractors.
9. Conditions for GST TDS deduction for contracts less than ?10 Lakh or unregistered persons.

Detailed Analysis:

1. Liability of the Entire Work under GST:
The ruling confirms that all activities related to the extraction, transportation, and sale of Lisa/Resin are liable under GST.

2. Liability for GST - Department or Bidder:
- Category-1: The contractor, who wins the bid and undertakes the extraction and transportation of Lisa/Resin, is liable for GST on the composite supply.
- Category-2: The individual permit holder, who extracts and transports Lisa/Resin from private land, is also liable for GST on the composite supply.

3. Applicable Rate of GST for the Activity:
The activity by both contractors and individual permit holders is considered a composite supply, with the principal supply being Oleo Resin (Lisa). The applicable GST rate for this composite supply is 5% (2.5% CGST + 2.5% SGST).

4. Classification of HSN/SAC Code for the Activity:
- Services: Goods transport service is classified under HSN code 9965.
- Sale: Oleo Resin (Lisa) is classified under HSN code 13019049.

5. Point/Time of Supply for GST Payment:
GST is payable by the applicant at the time of issuing the invoice, which occurs at the final sale through open auction. The time of supply is determined by the earliest of the following dates:
- Date of issue of invoice by the supplier.
- Last date on which the supplier is legally bound to issue the invoice.
- Date on which the supplier receives the payment.

6. Amount on Which GST Should Be Paid:
The taxable amount includes all charges such as loading, unloading, tapping, and transportation. The value at the time of final sale (after open auction) is considered for GST, and no deductions are allowed from this taxable value.

7. GST TDS Deduction by the Department:
As per section 51 of the CGST Act, the department must deduct TDS at 2% on payments made to suppliers of taxable goods or services where the contract value exceeds ?2.5 Lakhs.

8. Requirement of GST Registration for Contractors:
Every contractor/individual permit holder must get registered under GST if their aggregate turnover exceeds the threshold exemption limit as per section 22 of the CGST Act. However, those with an annual turnover within the threshold exemption limit are not required to register, as per Section 23 of the CGST Act.

9. Conditions for GST TDS Deduction for Contracts Less Than ?10 Lakh or Unregistered Persons:
TDS at 2% is required to be deducted on payments made to suppliers of taxable goods or services where the contract value exceeds ?2.5 Lakhs, regardless of whether the supplier is registered or unregistered.

Conclusion:
The judgment clarifies the applicability of GST on various activities related to the extraction, transportation, and sale of Lisa/Resin, specifying the liable parties, applicable rates, classification codes, and conditions for TDS deduction. The ruling ensures compliance with GST laws by both contractors and individual permit holders involved in these activities.