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TMI Blog2018 (10) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... d by any authority. Based on the above observations. the application is 'admitted' to pronounce advance ruling. 1. SUBMISSION OF THE APPLICANT: (a) The Applicant also having Goods and Service Tax (GST) Registration Number 08AAFCN4743H1ZC has been engaged as a 'Concessionaire' wherein the Public Works Department (PWD), Government of Rajasthan has granted concession to construct, operate and maintain the project during the Construction Period which shall commence from the appointed date and will end on Commercial Operation Date (COD) and operate and maintain it for further period of 10 years from the COD. (b) The applicant is a company incorporated as a Special Purpose Vehicle (SPV) and registered under the provisions of Companies Act, 2013 for the purpose of undertaking two-lining/intermediate laning of the sections of State highway (hereinafter referred to as Project) on design, build, operate /maintain and transfer (hereinafter referred to as 'DBOT') basis under a contract (hereinafter referred to as 'Project') with Public Works Department (PWD). Government of Rajasthan (hereinafter referred to as 'Authority ). 2. Scope of the Contract: Under the Contract, the applicant has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods and Services Tax Act, 2017 read with Rule 42 of the Central Goods and Services Tax Rule, 2017 as Annuity Payment received during the said period is exempt whereas 0 & M payments received are subject to GST. 6. Comments of Jurisdictional Officer:- The Jurisdictional Deputy Commissioner of Works & Leasing Tax, Udaipur vide his letter 6.09.2018 submitted that the services provided by the applicant is classifiable under SAC 9954 i e. composite supply provided to Central Government or any other local body for construction of civil structure. The Services by way of access to a road or a bridge on payment of annuity (SAC 9967) has been exempted under Notification 12/2017-CT (rate) dated 28.06.2017 by inserting entry No 23A vide notification No. 32/2017-CT(Rate) dated 13.10.2017. The Jurisdiction Officer is of the view that: (i) The construction of Roads and Bridges classifiable under SAC 9954 are liable to tax hence they are eligible to avail input tax credit on all goods and services used in the said construction. (ii) The applicant's contention that they are is not liable to pay tax for payment of annuity to access a road or a bridge (SAC 9967) vide entry 23A of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as defined under clause 30 of section 2 of the CGST Act, 2017 which reads as under: "composite (30) supply' means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; 7.4 Further, these supplies are in relation to construction of immovable property like roads and bridges and it can be termed as 'Work Contract' in terms of Section 2(119) of CGST Act, 2017 which is as under: "(119) "works contract means a contract for building, construction, fabrication, completion„ erection, installation. fitting out, improvement, modification, repair, maintenance, renovation., alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract:" 7.5 The applicant has been awarded work contract vide agreement dated 3.3.2017 on Private Pubic Partnership (PPP) basis in which the applicant have to invest 60% of cost of the project. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also awarded the work of Operation & Maintenance of the said project for the period of 10 years, During this period, the applicant will also receive 50% of the project cost, as annuity, alongwith interest. The applicant contended that the said annuity is exempted under entry No. 23A of the Notification 12/2017-CT (rate) dated 28.06.2017. The contention of the applicant is not tenable as entry No 23A ibid pertains to SAC 9967 which is for support services of transport services whereas the services provided by the applicant is classifiable under SAC 9954 which is liable to tax at the applicable rate of GST. In the given circumstances the applicant has to pay GST on full value of cost of project during the period of construction. The annuity received by the applicant is already GST paid during the construction period for which they are also paid interest by the Government. 7.8 Now we come to the main question of the applicant as to whether they are entitled to claim Input Tax Credit in the above facts and circumstances. The eligibility & condition has been specified under form Section 16 to 21 in Chapter V of CGST Act, 2017. As per Section 16(1) of the CGST Act. 2017 "Every regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles and other conveyances except when they are used-- (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both:- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where -- (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovable property and goods and services received by them for construction of immovable property are not owned and capitalised by them, hence restriction contained under clause (c) & (d) ibid is not applicable for the applicant. 7.11 in the given facts and circumstances; we agree with the contention of the applicant for the first question that they are entitled to claim full ITC during the construction period. The applicant is paying applicable GST on full value of the project and they are not supplying any exempted goods and services during the construction period of 2 years, therefore they are entitled to claim full ITC paid on all eligible goods and services: 7.12 We do not agree with the contention of the applicant in respect of second question that they are entitled to claim ITC on procurement of goods and services after reversing the ITC under Section 17(2) of the CGST Act 2017 read with Rule 42 of the Central Goods and Services Tax Rule, 2017 as Annuity Payment received during the O & M period is exempted and payment received for O&M is subject to GST. As discussed herein above the annuity received by them for the construction of road and bridges is classifiable under SAC 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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