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2023 (4) TMI 302 - AAAR - GSTClassification of services - rate of tax - services provided by appellant (sub-contractors) to the main contractor pertaining to the irrigation, construction and maintenance works to the irrigation department, State of Gujarat - taxable a tax rate of 12% GST or 18% GST? - time limit for filing appeal - HELD THAT - T here is a prohibition imposed by the main Contractor on the sub-contractor M/s Radhe Construction from further subcontracting the work allotted to them, without the consent of the main contractor. The appellant has also not produced any evidence to show that they were appointed by M/s Radhe Construction after obtaining the consent of the main contractor. On further verification of the EPC contract dated 08.03.2019 awarded by the Irrigation Department to the main contractor, it is seen that the main contractor has sub contracted only a part of the main contract to M/s Radhe Construction who in turn had engaged the appellant for further execution of the services as per the work order issued in the name of the appellant. Further, in the work order dated 05.09.2019 of M/s Radhe Construction, it is seen that at point No. 5. M/s Radhe Construction has mentioned that they would be paying applicable GST @18% in addition to the other prices mentioned in work Order. This would seem to suggest that the sub-contractor i.e M/s Radhe Construction was aware that further sub-contracting this work would be appropriately leviable to GST @18% and not eligible for the concessional rate of GST@12% - the contention of the appellant that they are covered under the provisions 3(iii) and 3(ix) of the amended Notification No. 11/2017-CT(Rate) is highly misplaced. The contention of the appellant need not be agreed that they are eligible for the concessional rate of GST @12% in terms of Notification No. 20/2017-CT(Rate) dated 22.08.2017 and Notification No. 1/2018-CT(R) dated 25.01.2018 as the activity undertaken by the appellant is not covered Sr. No. 3(iii) or under 3(ix) of the Notification No. 11/2017-CT(R) as amended and agree with the findings of the Gujarat Authority for Advance Ruling that the supply made by the appellant is not covered under entry No. 3(iii) or 3(ix) of Notification No. 11/2017-CT(R) dated 28.06.2017, as amended. The appellant is liable to discharge tax rate CGST @9% and GGST@9% under Entry No 3(ii) of Notification No. 11/2017-CT(R) dated 28.06.2017 further amended vide Entry No.3(xii) of Notification ibid as amended. Appeal rejected.
Issues Involved:
1. Time limit for filing appeal. 2. Applicability of GST rate on services provided by sub-contractors. 3. Classification of services under GST. 4. Eligibility for concessional GST rate of 12%. Summary: 1. Time Limit for Filing Appeal: The appeal was filed after the prescribed time limit of 30 days from the date of communication of the Advance Ruling. However, considering the Supreme Court's order extending the limitation period due to the COVID-19 pandemic, the appeal is deemed to be filed within the prescribed time limit under Section 100 of the CGST Act, 2017. 2. Applicability of GST Rate on Services Provided by Sub-Contractors: The appellant, M/s Shreeji Earth Movers, provided works contract services as a sub-contractor to M/s Radhe Construction, who was a sub-contractor to the main contractor, M/s JSIW Infrastructure Pvt. Ltd. The original contract was with the Irrigation Department of the State of Gujarat. The GAAR ruled that the GST rate on the appellant's services is 18%, classifying the services under Heading 9954, Entry No. 3(H) of Notification No. 11/2017-CT(R) dated 28.06.2017. 3. Classification of Services under GST: The appellant contended that their services should be classified under a concessional rate of 12% as per Notification No. 20/2017-CT(R) dated 22.08.2017. However, the appellate authority found that the appellant did not have a direct contract with any governmental authority and was not classified under the specified categories for the concessional rate. 4. Eligibility for Concessional GST Rate of 12%: The appellant argued that they should be eligible for the concessional rate of 12% GST as a sub-contractor. However, the appellate authority noted that the appellant is a second-level sub-contractor and does not have a direct relationship with the main contractor or the governmental authority. Therefore, the appellant does not fulfill the criteria for the concessional rate under Notification No. 11/2017-CT(R) as amended by Notification No. 1/2018-CT(R). Conclusion: The appellate authority upheld the decision of the GAAR, ruling that the appellant, M/s Shreeji Earth Movers, is liable to discharge tax at the rate of CGST @9% and GGST @9% under Entry No. 3(ii) of Notification No. 11/2017-CT(R) dated 28.06.2017, as amended. The appeal was rejected, and the Advance Ruling No. GUJ/GAAR/R/43/2021 dated 11.08.2021 was upheld.
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