9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 705 - AAR - GSTLevy of GST - rate of GST - shifting of transmission lines on request of NHAI (Contribution work) for widening of road by NHAI - construction and installation sub-station / transmission lines on behalf of big industries/ other third parties for power supply (contribution works) - Input Tax Credit on material and services used in works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL. Shifting of Transmission Lines on request of NHAI for widening of road - HELD THAT - The work to be executed by the applicant includes construction of new towers, erection, sagging and dismantling of existing towers. Since these transmission lines are the property of PSTCL and require the modification on the need of NHAI, the overall cost of Highway diversification along with cost of shifting, dismantling and raising of transmission lines are borne by NHAI. We further observe that services like supervision are also charged by PSTCL for shifting/raising of power transmission lines. While going through the copy of contract/ agreement with NHAI, it is found that after finalization of route plan a detailed estimate for composite work (containing detail of material, labour cost and supervision charges) is prepared and the party is told to deposit the amount of estimate alongwith applicable GST @18%. The GST is deposited with the GST department after raising a tax invoice of advance. The material (i.e. conductor, tower material, cement, steel, nut bolts etc.) is used from the stores of PSTCL, already purchased by PSTCL in bulk through tendering process on which the applicable GST has already been paid. For labour part also a sub contract is done through tendering process. The term works contract has been restricted to contract for building construction, fabrication etc of any immovable property but there should be a transfer of property in goods involved in the execution of such contract. Since in the case of contributory work undertaken by the applicant the ownership of the transmission lines/ towers still lies with the applicant, the supply of goods and services cannot be said to be classified under works contract . Therefore such supplies made shall be treated as a composite or a mixed supply as the case may but can not be treated as a Works Contract for the purpose of GST - the services provided by the applicant to the third parties as 'Contribution Work' falls under HSN/SAC 998631 which will attract GST @ 18% (CGST 9% SGST 9%), as per Annexure to Notification No. 11/2017-Central Tax (Rate) dated 28th June, 2017 (as amended). In the present case, since the whole cost i.e. total cost of material, labour and supervision charges incurred by the applicant are recovered from the NHAI, the same shall be the transaction value. This is irrespective of the fact that being a transmission licensee, the ownership of the transmission system requiring modification/ augmentation/shifting/additions remains with the applicant even though the cost/charges are borne by NHAI. Thus according to Section 15(2)(b) of CGST Act, 2017, the cost of such asset/infrastructure incurred by the third party is to be included in the value of supply for the purpose of levy of GST. When the applicant incurred such cost, then GST would automatically be leviable on total transaction value without any recourse to Section 15(2)(b) of CGST Act, 2017. Therefore, value shall be the transaction value, i.e. the price actually paid or payable in terms of Section 15 of the CGST Act, 2017. GST to be charged on construction and installation of sub-station / transmission lines on behalf of big industries / other third parties for power supply - HELD THAT - The work includes fabrication and supply of all types of transmission line towers and accessories, supply of earth wire, hardware fittings and conductors, earth wire accessories and OPGW and associated fittings and accessories and Tower Earthing required for complete execution of the Package, transportation, insurance, detailed survey of route alignment, profiling, tower spotting, optimization of tower location, soil testing, geotechnical investigations, piling, casting of foundation for tower footings, installation of Tower Earthing, erection of towers, tack welding of bolts and nuts, painting, fixing of insulator strings, stringing of conductors and earth wires/OPGW along with necessary line accessories, stringing of power lines, supply and erection of span markers, testing and commissioning of the erected transmission lines and other activities as may be required for completion of the project - the total cost of material, labour and supervision charges are to be paid by the third party to PSTCL and the goods i.e. asset is not transferred to third party and remains the property of PSTCL. Therefore the taxability of the supply made in this case also shall be similar. Whether ITC is available to the applicant on the material and services used in above works (either the work done by PSTCL itself or on turnkey basis) as the property remains under the ownership of PSTCL? - HELD THAT - The applicant is undertaking Contribution Work i.e. creating infrastructure for electricity transmission on the request of NHAI/ Third party and recovering the same from the NHAI/ Third party. In terms of section 16(1) of the CGST Act, 2017 every registered person would be eligible to take the input tax credit on the receipt of goods or services which are intended to be used in the course or for the furtherance of business - in the present case, the transmission lines have been laid by which the electricity would be transferred. In terms of the aforesaid provision, the goods/services used in shifting, laying and setting up wires/towers for transmission of electricity for the furtherance of business and the input tax credit is admissible on the same in the purview of Section 16(1). Section 17 of the CGST Act 2017 which deals with Apportionment of credit and blocked credit. On bare reading of the said Section we find that none of the clauses is applicable to the instant case. Since GST is being charged on the shifting of transmission lines/ towers done on a specific request which has been discussed in detail in the preceding paras, Input tax credit would be available to the applicant on all the material and services used in above works (either the work done by PSTCL itself or on turnkey basis) even if the property remains under the ownership of PSTCL.
Issues Involved:
1. GST applicability on shifting of transmission lines on request of NHAI (Contribution work). 2. GST applicability on construction and installation of sub-station/transmission lines for big industries/third parties (Contribution work). 3. Eligibility of Input Tax Credit (ITC) for PSTCL on materials and services used in the above works. Summary: Issue 1: GST on Shifting of Transmission Lines for NHAI The services of shifting transmission lines on NHAI's request for road widening are classified under Service Head 998631 and attract GST at 18% (CGST 9% + SGST 9%). The value for GST purposes shall be the transaction value, which is the price actually paid or payable in terms of Section 15 of the CGST Act, 2017. The ruling clarifies that the entire cost, including material, labor, and supervision charges, is subject to GST. Issue 2: GST on Construction and Installation of Sub-station/Transmission Lines for Big Industries/Third Parties Similarly, the services of constructing and installing sub-stations/transmission lines for big industries or third parties are classified under Service Head 998631 and attract GST at 18% (CGST 9% + SGST 9%). The value for GST purposes shall again be the transaction value, i.e., the price actually paid or payable in terms of Section 15 of the CGST Act, 2017. The ruling confirms that the entire cost, including material, labor, and supervision charges, is subject to GST. Issue 3: Eligibility of Input Tax Credit (ITC) for PSTCL PSTCL is eligible to claim Input Tax Credit on materials and services used in the above works, whether done by PSTCL itself or on a turnkey basis, as the property remains under the ownership of PSTCL. The ruling references Section 16 and Section 17 of the CGST Act, 2017, which support the eligibility of ITC for goods and services used in the course or furtherance of business. Ruling: 1. Shifting of Transmission Lines for NHAI: Classified under Service Head 998631, attracting GST at 18%. The value for GST shall be the transaction value as per Section 15 of the CGST Act, 2017. 2. Construction and Installation of Sub-station/Transmission Lines for Big Industries/Third Parties: Classified under Service Head 998631, attracting GST at 18%. The value for GST shall be the transaction value as per Section 15 of the CGST Act, 2017. 3. Input Tax Credit (ITC) Eligibility: PSTCL is eligible to claim ITC on materials and services used in the above works.
|
