9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 165 - AAR - GSTDetermination of GST applicability - GST would be applicable only on supervision fee or on entire amount including material and labour - time and value of supply of goods or services or both - HELD THAT - The Applicant is Electricity Distribution Company. Being expert in the area, Electricity Lines are installed in their supervision where electricity lines needs to be installed, to supply the electricity at the designated location on the request of customers. Where installation of lines is arranged by MVVNL on behalf of the customer, the entire amount, including reimbursement amount is taken for the calculation of GST and the applicant has not disputed the same - Here, MVVNL is not a supplier of goods and services as per provisions of section 2 (105) of CGST Act, 2017 as the work is being undertaken by the customer itself. There is no relationship between the customer and MVVNL which can be categorized as that of supplier and recipient except for the services of the supervising the whole work. In this case the ownership of the property being dislocated / shifted is vested with MVVNL, the MVVNL receives money in the form of dislocation / shutting charges. The services supplied in such cases is related to an act of tolerance with respect to such immovable property and hence covered under agreeing the obligation to refrain from an act, or to tolerate an act or a situation , or to do an act and are classified under SAC 999794 - The work contract services in the present case is being supplied by an independent contractor and is covered under SAC 9954, it is distinct service which is being supplied by a registered person other than MVVNL. In the facts and circumstances, where the value of materials and cost of execution of work for installation of electric lines are borne by the recipient of service and the applicant charges supervision fees only, the value of materials and cost of installation shall not be included in the value of supply for determination of taxable value under GST and the applicant shall be liable to pay GST only on the supervision charges.
Issues Involved:
1. Determination of GST applicability on supervision fee versus entire amount including material and labour. Summary: Issue 1: Determination of GST Applicability on Supervision Fee versus Entire Amount Including Material and Labour The applicant, M/s Madhvanchal Vidyut Vitran Nigam Ltd. (MVVNL), sought an advance ruling on whether GST would be applicable only on the supervision fee or on the entire amount including material and labour in cases where customers arrange the material and hire contractors for installation, with MVVNL's role limited to supervision. Findings: 1. First Method: When MVVNL arranges the entire work with material and installation on behalf of the customer, GST is applicable on the entire amount, including reimbursement. This is not disputed by the applicant. 2. Second Method: When customers arrange the material and hire contractors, and MVVNL only supervises the work, GST applicability is questioned. 3. Applicant's Argument: MVVNL contends that GST should only be applicable on the supervision fee, citing: - Section 7(1) of the CGST Act, 2017, defining "supply." - Section 2(31) defining "consideration." - Section 15(1) stating the value of supply as the transaction value. - MVVNL is not a supplier of goods/services as per Section 2(105) since the work is undertaken by the customer. - No consideration under Section 2(31) as payments are made directly to vendors/contractors by the customer. - Work contract services are supplied by an independent contractor, not MVVNL. - MVVNL is not liable for unpaid services by third-party contractors. - The assets created (power lines) are immovable property and do not fall under the definition of "goods" in Section 2(52). 4. Precedents Cited: - Appellate Authority for Advance Ruling, Uttar Pradesh, in the case of M/s Purvanchal Vidyut Vitran Nigam Ltd., held that GST is applicable only on the supervision fee. - Similar ruling in the case of M/s National Highways Authority of India. Ruling: - Affirmative: GST is applicable only on the supervision fee charged by MVVNL. - Negative: GST is not applicable on the entire amount including material and labour. This ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
|
