2024 (4) TMI 99 - AAR - GST

Supply or not - future contracts - works contract services - pure services or not - supply related to the business of pumping stations and reservoirs to be undertaken by the applicant is covered under the notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, amended by Notification No. 2/2018 dated 25.01.2018 and further Notification No. 16/2021 dated 18.11.2021 or not - HELD THAT - The contract covers civil works wherein the supply of goods is also involved and thus such service falls under Works Contract service and hence it can't be a pure service. Further the applicant vide their letter dated 08.06.2022, addressed to the contractee M/s BWSSB clearly mentioned that the O M services consist of both supplies of labour / manpower and material and hence, the same shall be covered under works contract and cannot be considered in the nature of pure services . Thus, from the available information, the future contracts that the applicant intends to undertake are in the nature of works contract services for construction of pumping stations and reservoirs. The said services are not covered under any of the entries of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. It is concluded that the question posed by the applicant is related to supplies undertaken by them, to M/s BWSSB, Bengaluru, prior to the date of filing of the application for advance ruling and thus no ruling can be given on the question. Thus the instant application is not maintainable and liable for rejection under the provisions of the GST Act 2017. Further, as for the question on future supplies is concerned, based on the available information the supply is of works contract services and is not covered under any of the entry in the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended.

Summary

Issues Involved:
1. Admissibility of the application for advance ruling.
2. Applicability of Notification No. 12/2017-Central Tax (Rate) to the concluded supply.
3. Applicability of the same notification to future supplies.

Summary:

1. Admissibility of the Application:
The applicant sought an advance ruling on whether their concluded supply of Operation & Maintenance (O&M) services to BWSSB was covered under Notification No. 12/2017-Central Tax (Rate). The Authority for Advance Rulings (AAR), Karnataka, initially rejected the application, stating it was beyond their jurisdiction as it pertained to a completed supply. The High Court of Karnataka quashed this rejection, directing the AAR to reconsider the application with the opportunity for the applicant to present additional arguments.

2. Applicability of Notification No. 12/2017-Central Tax (Rate) to Concluded Supply:
The AAR examined the applicant's argument that the term "transaction" should be interpreted broadly. However, the AAR concluded that the term "advance ruling" as defined under Section 95(a) of the CGST Act 2017 pertains to supplies "being undertaken or proposed to be undertaken," not to concluded supplies. Therefore, the application concerning the concluded supply was deemed inadmissible and rejected under Section 98(2) of the CGST Act 2017.

3. Applicability of Notification No. 12/2017-Central Tax (Rate) to Future Supplies:
For future supplies, the applicant amended their application to seek a ruling on whether similar future contracts would be covered under the same notification. The AAR found that the nature of the future contracts, involving civil and electromechanical works for pumping stations and reservoirs, constituted works contract services and not pure services. Consequently, these services do not fall under any exemption entries of the Notification No. 12/2017-Central Tax (Rate), as amended.

Ruling:
a) The application for advance ruling on the concluded supply was rejected under Section 98(2) of the CGST Act 2017.
b) The works contract services for future construction of pumping stations and reservoirs are not covered under the exemption Notification No. 12/2017-Central Tax (Rate), as amended.