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2023 (12) TMI 1273 - AAR - GSTClassification of service - business of the civil constructions mainly with the Govt. Departments against the Contracts awarded by them - Whether the company will charge the GST @ 12% or @18% in the case of the contracts executed before the N/N. 03/2022-Central Tax (Rate) dated. 13.03.2022 w.e.f 18.07.2022? HELD THAT - The Applicant has been awarded the contract of Redevelopment of Carriageway, foothpath, vending zone covering ROW within ABD area of Aligarh Smart City(CW-23) on EPC mode (Pakage-1) at Aligarh by the Aligarh Smart City Limited (ASCL) vide contract agreement dated 23.12. 2021 - The Works contract services provided by the applicant was chargeable to GST @ 12% vide Notification 11/2017 - CT (Rate) as amended dated 28.06.2017. However subsequently vide Notification No 03/2022 dated 13.07.2022, the same was amended and enhanced to 18% w.e.f 18.07.2022. Consequent to the change in rate of tax during an ongoing continuous service, applicable rate of tax is to be decided in terms of provisions contained in Section 14 of the CGST Act, 2017. In cases where advance is received or invoices are raised before 18.07.2022, GST rate applicable is 12% - In cases where advance is received and invoices are raised after 18.07.2022. GST rate applicable is 18%.
Issues Involved:
1. Applicability of a notification issued under the provisions of the CGST Act. 2. Determination of the liability to pay tax on any goods or services or both. Summary: Issue 1: Applicability of Notification No. 03/2022-Central Tax (Rate) dated 13.07.2022 w.e.f. 18.07.2022 The applicant, M/s PPS Builders Private Limited, sought clarification on whether to charge GST at 12% or 18% for contracts executed before the notification No. 03/2022-Central Tax (Rate) dated 13.07.2022, which increased the GST rate from 12% to 18% effective from 18.07.2022. Issue 2: Determination of Liability to Pay TaxThe applicant is involved in civil construction work primarily with government departments. The contract in question was awarded by Aligarh Smart City Limited (ASCL) and executed on 27th December 2021. The applicant argued that the GST rate applicable at the time of bidding was 12%, and sought clarification on the applicable rate after the notification. Discussion and Findings:The Authority for Advance Ruling (AAR) examined the provisions under Section 14 of the CGST Act, 2017, which deals with changes in the rate of tax in respect of supply of goods or services. The AAR noted that the rate of GST on work contracts for roads, bridges, railways, metros, etc., was increased from 12% to 18% effective from 18.07.2022. Ruling:1) For contracts where advance payments were received or invoices were issued before 18.07.2022, the applicable GST rate is 12%. 2) For contracts where advance payments were received and invoices were issued after 18.07.2022, the applicable GST rate is 18%. The ruling is valid within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.
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