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2023 (11) TMI 592 - AAR - GSTScope of exemption from GST - Claim of exemption for services provided by sub-contractor to main contractor - The services provided by the Main Contractor claimed as exempted from GST - covered by Notification No. 12/2017-Central Tax (Rate), dated 28th November, 2017 as amended by Notification No 2/2018 - Central Tax (Rate) dated 25/01/2018 or not HELD THAT - Though the Notification 12/2017 as amended by Notification 2/2018-Central Tax (Rate), Dt. 25-01-2018 exempt works contract with value of supply of goods less than 25% when the said supply is made to the Central Government, State Government or Local Authority etc., it does not make any mention of the supplies made by the sub-contractor to the works contractor as was done in Notification 11/2017. As the exemption notification have to be strictly construed, the exemption extended to a works contractor is not applicable for his procurement of works contract - Therefore in sum and substance the exemption extended to a works contractor supplying the works contract services to Government or local bodies is not extendable to a taxable person who is supplying services to such works contractor in absence of any entry or notification under Sec11 (1) of the CGST Act.
Issues Involved:
1. Whether the supply of services by the applicant to the principal contractor is covered by Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 2/2018-Central Tax (Rate). 2. If covered by the aforementioned notification, what is the applicable rate of tax under the Goods and Services Tax Act, 2017 on such supplies. 3. If not covered by the notification, what is the applicable rate of tax on such supplies under the Goods and Services Tax Act, 2017. Summary: Issue 1: Coverage Under Notification No. 12/2017-Central Tax (Rate) The applicant, M/s. Immense Construction Company, sought an advance ruling to determine if their supply of services to M/s. THE INDIAN HUME COMPANY LTD. is covered under Notification No. 12/2017-Central Tax (Rate), as amended by Notification No. 2/2018-Central Tax (Rate). The applicant argued that their services are "Pure Services" provided ultimately to the State Government of Telangana, related to a function entrusted to a Municipality under Article 243W of the Constitution, and should thus be exempt under Entry No. 3 of the said notification. The Authority for Advance Ruling (AAR) observed that the exemption under Notification No. 12/2017, as amended, applies to works contracts where the value of goods is less than 25% and the supply is made directly to the Central Government, State Government, or Local Authority. However, the notification does not extend this exemption to sub-contractors supplying services to a main contractor. Issue 2: Applicable Rate of Tax if Covered by Notification As the AAR concluded that the supply of services by the applicant to the principal contractor is not covered by Notification No. 12/2017-Central Tax (Rate), the question of applicable tax rate under this notification does not arise. Issue 3: Applicable Rate of Tax if Not Covered by Notification Since the supply of services by the applicant is not covered by the aforementioned notification, the applicable rate of tax on such supplies under the Goods and Services Tax Act, 2017 is 9% CGST and 9% SGST. Final Ruling: 1. Whether the supply of Services by the Applicant to M/S. THE INDIAN HUME COMPANY LTD. is covered by Notification No. 12/2017-Central Tax (Rate), dated 28th November, 2017 as amended by Notification No 2/2018 - Central Tax (Rate) dated 25/01/2018: - Ruling: No 2. If the supplies as per Question (a) are covered by Notification No. 12/2017 Central Tax (Rate), dated 28th November, 2017 as amended by Notification No 2/2018 Central Tax (Rate) dated 25/01/2018, then what is the applicable rate of Tax under the Goods and Services Tax Act, 2017 on such Supplies: - Ruling: Not applicable 3. In case if the supplies as per Question (a) are not covered by the Notification supra then what is the applicable rate of tax on such supplies under the Goods and Services Tax Act, 2017: - Ruling: 9% CGST + 9% SGST
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