2023 (1) TMI 630 - AAR - GST

Benefit of concessional rate of GST - works contract service rendered in relation to laying of pipelines for water projects supplied to PHED Rajasthan - amendment carried out vide Notification 15/2021 dated on 18.11.2021 - HELD THAT - The applicant was awarded a work contract in relating to laying of pipelines for water projects. The contract price was inclusive of all taxes (service tax/VAT/CST etc). With the implementation of GST from 1st July 2017, the cost of all materials and service increased drastically due to applicability of GST on the works contract service in relation to water projects. The same projects were executing since introduction of GST i.e. w.e.f 01.7.2017 and paying GST/ submitting GST returns since 1.7.2017 on these supply. As per Section 95 of CGST Act, 2017; this authority shall decide on matters or on 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 and Authority means the Authority for Advance Ruling, constituted under Section 96. Thus Section 95 allows this authority only to decide on matters or on questions in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant i.e. in the subject case this application can be entertained only if the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - this authority is constituted to decide 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. It is very much clear that the scope of the ruling for Authority for Advance Ruling (AAR) is limited to the transactions being undertaken or proposed to be undertaken on the matters which are not sorted out. In the instant case, as already narrated, the application seeking advance ruling was filed on 11.03.2022 before the RAAR with respect to supplies already being undertaken, GST being paid and Monthly returns already being submitted.

Summary

Issues involved:
1. Applicability of concessional GST rate on works contract service for water projects supplied to a government entity.
2. Interpretation of GST notifications and circulars regarding GST rates on works contract services.
3. Scope of Advance Ruling Authority in deciding on matters already undertaken by the applicant.

Analysis:
1. The applicant, engaged in infrastructure projects, sought a ruling on the concessional GST rate for works contract service related to water projects supplied to a government entity, PHED Rajasthan. The applicant highlighted the impact of GST implementation on project costs and the subsequent rate changes through various notifications.
2. Both the applicant and the jurisdictional officer provided detailed interpretations of relevant GST laws, notifications, and circulars. The notifications clarified the GST rates applicable to works contract services provided to government authorities, specifying the change from 12% to 18% effective from January 2022.
3. The Advance Ruling Authority considered the purpose of advance rulings to provide certainty of tax liability in advance for future activities. The Authority emphasized that rulings are typically for proposed transactions, not for matters already undertaken. The applicant's submission was deemed to be seeking validation for past actions rather than guidance for future transactions.
4. The Authority concluded that the applicant's request, filed after the execution of the contract and after paying GST since July 2017, was outside the scope of advance ruling. The ruling was deemed not maintainable under the provisions of the GST Act, 2017, as it pertained to transactions already completed and tax liabilities already discharged.

This comprehensive analysis of the judgment addresses the issues raised by the applicant, the legal interpretations provided by both parties, and the ruling delivered by the Advance Ruling Authority.