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2023 (1) TMI 139 - AAR - GSTClassification of services - applicability of GST rate - Works Contract - composite supply - receipt of contract for new construction of CBD railway station, platform, parking, building and all other civil constructions within the boundary of the station - applicability of Entry No.3(v) of Notification No.11/2017- Central Tax (Rate) Dated 28 June 2017 - HELD THAT - In the instant case the eligibility or otherwise of reduced rate of GST under Notification no. 11/2017 Central Tax (Rate) as amended, provided under S.no. 3(v) ibid, is the subject matter of this proceeding. The aforesaid Notification stands amended vide Notification No. 03/2022-Central Tax (Rate)New Delhi, the 13thJuly, 2022, effective from 18.7.2022. In the instant case under consideration, the applicant has furnished the copy of letter of acceptance cum work order dated 31.3.2022 issued by CEO, NRANVP, Raipur for construction of CBD Railway station at Nava Raipur - As SAC 9954 covers construction services we now proceed to analyse the compliance of other vital conditions much essential for being eligible to the reduced rate of tax claimed by the applicant, as stipulated under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended. Whether the instant supply is a Composite supply? - HELD THAT - It is seen that the intended works to be undertaken by the applicant is construction of CBD Railway station. Now for the instant supply of Civil works to be undertaken by the applicant to be categorized as composite supply there needs to be supply of goods and services and the same should be a natural bundle of supply of both and supplied in conjunction with each other in the ordinary course of business. No such details of supply of goods for the intended civil works is forthcoming from the letter of acceptance furnished by the applicant. Thus without substantial evidence of the works contracted/undertaken, like materials/ goods to be supplied, related schedules, etc., it is practically impossible for this authority to conclude or for that matter hold that the works undertaken as is forthcoming form the letter of acceptance cum work order' and the tripartite agreement dated 25.4.2022 furnished by the applicant is composite supply' perse - this authority on the basis of records furnished and available on record, is not in a position to conclusively hold that the works mentioned in the letter of acceptance cum work order issued by Chief Executive Officer, Nava Raipur Atal Nagar Vikas Pradhikaran supra or tripartite agreement, intended to be undertaken by the applicant qualifies being treated as 'Composite supply' as per Section 2 (30) of CGST Act, 2017. The work undertaken by the applicant as is forthcoming from the same, it is seen that the work awarded to the applicant are Original work' as defined in the notification. Further, on a thorough look into the text of the claimed exemption as provided under S.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended, vide Notification 01/2018 Central Tax (Rate) dated 25.01.2018. we find that the entry at 3(v)(a) is specific to the composite supply of works contract pertaining to railways including monorail and metro. It would be appropriate to conclude that till 17.7.2022, the applicability of Sl.no. 3 (v)(a) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended to the applicant, M/s Shreejikrupa Project Limited, H.No. 289, behind C.S.E.B Office, Sunder Nagar, Raipur-492001. Chhattisgarh GST1N-22AALCS6689K1ZNfor the said work, is subject to the fact that apart from the other stipulated conditions therein as discussed, the works undertaken by them satisfy the condition of it being Composite supply as defined under Section 2 (30) of the CGST Act, 2017, the same are 'Works Contract' as per Section 2 (119) of the Act and that the same pertain to railways - As the applicant has been found wanting in compliance of the stipulations provided under Sr. no. 3(v) (a) of Notification no. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended including the condition that the work pertains to railway , the said construction works attract GST @ 18% under the residual entry at Sr. no. 3 (xii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended.
Issues Involved:
1. Applicability of GST Rate of 12% on the construction of CBD Railway Station as per Entry No. 3(v) of Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017. Detailed Analysis: Facts of the Case: M/s Shreejikrupa Project Limited, involved in building and civil works, sought an advance ruling regarding the applicability of a 12% GST rate on the construction of the CBD Railway Station in Naya Raipur, Chhattisgarh. The project includes constructing the railway station, platform, parking, buildings, and other civil works within the station's boundary. Contentions of the Applicant: The applicant argued that their services fall under Sr. No. 3(v) of Notification 11/2017-Central Tax (Rate), which specifies a 12% GST rate for "Composite supply of works contract" related to railways. They emphasized that the notification does not specify to whom the services should be provided, unlike other entries that charge 18%. Legal Position, Analysis, and Discussion: 1. Scope of Notification No. 11/2017-Central Tax (Rate): - The notification was amended several times, with the relevant entry being Sr. No. 3(v)(a), which includes the construction of railways. - For the reduced GST rate to apply, the service must be a "Composite Supply" and a "Works Contract" as defined under Section 2(30) and Section 2(119) of the CGST Act, respectively. 2. Composite Supply: - Defined as a supply consisting of two or more taxable supplies of goods or services that are naturally bundled and supplied together. - The applicant failed to provide substantial evidence that the supply included both goods and services, making it impossible to conclusively categorize the work as a "Composite Supply." 3. Works Contract: - Defined as a contract for building, construction, etc., of any immovable property involving the transfer of property in goods. - The applicant's contract involves constructing immovable property, but there was no clear evidence of the transfer of property in goods. 4. Original Works Pertaining to Railways: - The term "railways" is defined under Section 2(31) of the Railways Act, 1989, and includes all lands, lines of rails, stations, offices, etc., used for public carriage of passengers or goods. - The construction project awarded to the applicant by NRANVP is for commercial buildings and complexes, not directly related to railways or railway operations. 5. Judicial Precedents: - The applicant cited previous AAR rulings supporting their case, but the issues involved in those cases were distinguishable from the present case. Conclusion: The authority concluded that the construction project undertaken by the applicant does not qualify for the reduced GST rate of 12% under Sr. No. 3(v)(a) of Notification No. 11/2017-Central Tax (Rate) because: - The work does not meet the criteria of a "Composite Supply." - The project is not directly related to railways as defined under the Railways Act, 1989. Ruling: - For the work undertaken till 17.7.2022, the applicable GST rate is 18% under the residual entry at Sr. No. 3(xii) of Notification No. 11/2017-Central Tax (Rate). - From 18.7.2022, due to amendments in the notification, the construction services undertaken by the applicant will attract a GST rate of 18% under the residual entry at Sr. No. 3(xii).
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