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2021 (4) TMI 89 - AAAR - GSTClassification of supply - composite supply or not - Applicability of rate of taxes -r works relating to Planning, designing and supervision of construction of various building infrastructure development and interior work etc. - Authority for Advance Ruling have concluded that the works entrusted to the Applicant by IIT, Bhubaneswar under contract/agreement dt.02.05.2016 cannot be termed as composite supply - HELD THAT - On perusal of the copy of the agreement made between IIT, Bhubaneswar M/s. NBCC (India) Ltd. executed on dt.02.05.2016, we observed that IIT, Bhubaneswar entrusted the entire project works on turnkey basis to M/s. NBCC (India) Ltd. for works relating to Planning, designing and supervision of construction of various building infrastructure development and interior work etc. in IIT, Bhubaneswar campus and its extended campus. Under para 1 of the agreement, it is clearly mentioned that after completion of the project M/s. NBCC(India) Ltd. will hand over the building to IIT, Bhubaneswar in ready to use condition. Nowhere in the agreement the works order were offered to M/s. NBCC(India) Ltd. differently for different works and also there is no such conditions made in the agreement to make separate invoices for separate works. The agreement clearly speaks that the project was awarded on turnkey basis. The turnkey project works executed by M/s. NBCC (India) Ltd. is an works contract in terms of clause 119 of Section 2 of CGST/OGST Act, 2017 and ought to be treated as a composite supply as per clause 30 of the Section 2 of CGST/OGST Act. Composite supply works contract are treated as a supply of service under Schedule II para 6 of the CGST/OGST Act - the decision of the Authority for Advance Ruling that the works contract entrusted to Applicant M/s. NBCC (India) Ltd. cannot be termed as composite supply, cannot be accepted.
Issues:
1. Determination of nature of supply by NBCC to IIT, Bhubaneswar for tax rate applicability. 2. Classification of IIT, Bhubaneswar as a 'Government Entity' for tax purposes. 3. Applicability of tax rate for construction services provided by NBCC to IIT. 4. Consideration of construction services related to sewerage project under specific classification. 5. Determination of applicable clause and rate of GST if works contract service does not fall under specified classifications. Analysis: 1. The Applicant, NBCC (India) Ltd., sought an Advance Ruling on the tax rate applicability for supplies made to IIT, Bhubaneswar. The ruling addressed whether the nature of supply by NBCC to IIT qualifies as work contract services under the CGST Act, relying on specific clauses and notifications. The ruling clarified the applicable tax rate based on the specific classification codes. 2. The ruling also determined that IIT, Bhubaneswar is classified as a 'Government Entity' for tax purposes under the Central GST Act. This classification impacted the tax treatment of the works contract service provided by NBCC for the construction of IIT Bhubaneswar Campus. 3. The ruling analyzed various scenarios regarding the applicability of tax rates for the construction services provided by NBCC to IIT. It considered different clauses and classifications to determine the appropriate tax rate, including the possibility of concessional rates based on the nature of the services provided. 4. Additionally, the ruling addressed the classification of construction services related to a sewerage project under specific clauses of the tax notification. It provided a clear determination regarding the tax treatment for such services under the relevant classification code. 5. In case the works contract service did not fit within the specified classifications, the ruling discussed the alternative clauses and rates of GST that would be applicable. It considered the specific circumstances of the Applicant company to determine the most suitable tax treatment for the services provided. In conclusion, the Odisha Appellate Authority for Advance Ruling overturned the initial ruling and deemed the works entrusted to NBCC as a composite supply. This decision allowed for the concessional tax rate under specific notifications for the construction services provided to IIT, Bhubaneswar. The detailed analysis considered the contractual arrangements, nature of services, and relevant legal provisions to arrive at the final decision.
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