2022 (7) TMI 749 - AAR - GST

Classification of services - Composite supply of works contract - construction work of ISPAT POST- GRADUATE MEDICAL INSTITUTE AND SUPER SPECIALLY HOSPITAL, at Rourkela is a work entrusted by Central Government; to SAIL - Applicant being the Principal Contractor, whether the tax rate applicable to value of contract between the Applicant and M/s SAIL is also leviable at 12% - applicability of Entry no 3(vi) (a)or (b) of Notification No. 11/2017-Central Tax (Rate), dated 23-6-2017 - whether the rate of taxes so determined would be applicable to the entire value of the works contract covered by Memorandum of understanding dated 13.08.2018 - refund of excess tax paid - proper procedure under GST provisions for claiming the excess amount so paid. HELD THAT - In the instant case, it is observed that the MoU was entered into between the Applicant and M/s SAIL for construction of Ispat Post Graduate Medical Institute and Super Specialty Hospital at Rourkela Steel Plant. Subsequently, the said work was entrusted to M/s URC Construction (P) Ltd (the sub contractor of the Applicant) for execution. AAR. Odisha vide Order dated 09.03.2021 held that M/s SAIL, Rourkela qualifies to be called and termed as a Government Entity' and the works contract service which is being supplied by M/s URC Construction Private Limited would merit entitlement for concessional rate of GST @ 12% in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 (and as amended). It has been observed that all the pre-requisites as stipulated in para 6.4 are satisfied /fulfilled for the supply to qualify for the notified exemption. Accordingly. we hold that M/s SAIL. Rourkela qualifies to be called and termed as a Government Entity for the purpose of GST law. Therefore, the supply of works contract service which is being supplied to M/s SAIL. Rkl for construction of ISPAT Post Graduate Medical Institute and Super Specialty Hospital would merit entitlement for concessional rate of GST @ 12% in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 9and as amended).

Summary

Issues Involved:
1. Applicable rate of GST on the contract awarded by SAIL to the Applicant.
2. Applicability of the determined tax rate to the entire value of the works contract.
3. Eligibility for refund of excess tax paid.
4. Procedure for claiming the excess amount paid.

Issue-Wise Detailed Analysis:

1. Applicable Rate of GST on the Contract Awarded by SAIL:
The Applicant sought an advance ruling on the applicable rate of GST for the contract awarded by Steel Authority of India Ltd. (SAIL) for the construction of 'ISPAT Post-Graduate Medical Institute and Super Specialty Hospital' at Rourkela Steel Plant. The ruling confirmed that SAIL is a Government Entity and the construction work is entrusted by the Central Government to SAIL. Therefore, the tax rate applicable to the value of the contract between the Applicant and SAIL is leviable at 12% [CGST @ 6% + SGST @ 6%] as per Entry no 3(vi) (a) or (b) of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017.

2. Applicability of the Determined Tax Rate to the Entire Value of the Works Contract:
The ruling clarified that the determined tax rate of 12% is applicable to the entire value of the works contract covered by the Memorandum of Understanding dated 13.08.2018. The Applicant's supply is classified under serial no. 3(vi)(a) or (b) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, which covers services provided to a Government Entity by way of construction of a structure predominantly for use as a clinical establishment.

3. Eligibility for Refund of Excess Tax Paid:
The Applicant had paid 18% tax on its invoices raised to SAIL and sought clarification on whether the excess tax of 6% (18% paid - 12% applicable) is refundable. The ruling stated that the question does not fall under the provisions of Section 97(2) of the CGST Act, 2017 and thus does not merit discussion/consideration at the forum.

4. Procedure for Claiming the Excess Amount Paid:
Regarding the procedure for claiming the excess amount paid, the ruling referred to Section 54 of the CGST Act, 2017, which deals with the refund of taxes. The Applicant was advised to follow the procedure/provision of Section 54 for claiming a refund.

Conclusion:
The ruling confirmed that the applicable GST rate for the contract between the Applicant and SAIL is 12% [CGST @ 6% + SGST @ 6%]. The excess tax paid by the Applicant may be eligible for a refund under Section 54 of the CGST Act, 2017, and the Applicant should follow the prescribed procedure for claiming the refund. The ruling is valid subject to provisions under Section 103(2) and until declared void under Section 104(1) of the GST Act. Appeals can be made to the Odisha State Appellate Authority for Advance Ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.