2023 (1) TMI 77 - AAR - GST

Requirement to issue tax invoice to State Government Department/ Directorate on the contract value as determined by the department where the applicant is working as a Project Implementing Agency - HELD THAT - In the instant case, the applicant enters into an agreement with the contractor and so is liable to pay the consideration to the contractor. Further, the applicant himself has admitted that as a project implementing agency engaged by the administrative department of Government of West Bengal, he merely acts as an agent of the said administrative department to execute the work. In this context, we find that an agent shall also be treated as recipient of supply of goods or services or both since the aforesaid definition has made it abundantly clear that any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied . Thus, the applicant undisputedly is the recipient of supply provided by the contractor meaning thereby the contractor doesn t make any supply to the department concerned. In the instant case, two separate supplies take place. The first one is made by the contractor to the applicant and thereafter another supply is made by the applicant to the department concerned in spite of the fact as stated by the applicant that there is no value addition in respect of the second supply - The applicant while working as a Project Implementing Agency is making supplies to State Government Department/ Directorate and therefore is required to issue tax invoice on the contract value as determined by the department.

Summary

Issues:
1. Interpretation of provisions of Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017.
2. Determination of tax liability for a Government Undertaking acting as a 'Project Implementing Agency' for various administrative departments.
3. Clarification on the requirement to issue tax invoices to State Government Department/Directorate for works undertaken.

Issue 1: Interpretation of GST Acts
The judgment clarifies that unless specified, provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) and the West Bengal Goods and Services Tax Act, 2017 (WBGST Act) are considered the same. The term 'GST Act' encompasses both CGST Act and WBGST Act for the purpose of proceedings.

Issue 2: Tax Liability for Government Undertaking
The applicant, a Government Undertaking under the Water Resources Investigation & Development Department, carries out commercial operations through three divisions. The Agri Engineering Division executes civil works as a 'Project Implementing Agency' for various government departments. The applicant sought an advance ruling on whether to issue tax invoices to State Government Departments for contract values determined by the departments.

Issue 3: Requirement to Issue Tax Invoices
The applicant explained the process of executing works as an 'executing agency' based on government notifications and procedures. The applicant argued that no additional GST liability accrues as they act as an agent for the government departments, and the contractors issue tax invoices for the work done. The Revenue did not provide a view on the matter.

Observations & Findings:
The Authority examined the applicant's role as a project implementing agency and noted that the applicant acts as an agent for government departments in executing works. The applicant enters into agreements with contractors and makes payments, making them the recipient of the supply. The Authority concluded that the applicant is required to issue tax invoices to State Government Departments for the contract value determined by the departments, considering the applicant as making supplies to the departments.

Ruling:
The Authority ruled that the applicant, while working as a 'Project Implementing Agency,' is obligated to issue tax invoices to State Government Departments/Directorates for the contract value determined by the departments. This decision clarifies the tax liability of a Government Undertaking acting as an executing agency for various administrative departments under the GST Acts.