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TMI Blog2019 (3) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... her the Notification No. 12/2017-Centra1 Tax (Rate) dated 28.06.2017 (as amended from time to time) is applicable to the contractors/ sub- contractors involved in the construction of Indo-Nepal Border Road or otherwise. 2. Advance Ruling under GST means a decision provided by the authority or the appellate authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub section (1) of section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. 3. As per the said subsection (2) of Section 97 of the Act, advance ruling can be sought by an applicant in respect of : (a) Classification of any goods or services or both (b) Applicability of a notification issued under the provisions of this Act, (c) Determination of time and value of supply of goods or services or both, (d) Admissibility of input tax credit of tax paid or deemed to have been paid (e) Determination of the liability to pay tax on any goods or services or both (f) Whether the applicant is required to be registered (g) Whether any particular thing done by the applicant with respect to any goods or services or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Tanakpur Barrage to Brahmdev in District Champawat ii. Total cost of the project is Rs. 6.72 cr including GST & contingencies as indicated in the administrative and financial sanction issued as informed by General Manager, NHPC, Tanakpur Power Station vide letter dated 02.07.2018. iii. The construction agency shall commence & complete the work as per the schedule. In case the construction agency fails to complete the work within schedule, liquidated damages @ 0.035% per day of delay subject to the maximum of 10% of total cost of the project shall be deducted from the bill of the construction agency. iv. Security deposit/ Retention money shall be deducted by the construction agency from the interim bills of the contractor of the construction agency engaged for the execution of work @ 5% of the total value of each bill of the work done. The security deposit less any amount due shall, on demand, be released to the contractor by the construction agency after obtaining 'no defect certificate from the client/ department' after 30 days of expiry of defects liability period. v. At the time of making payment to construction agency by the client/department, GST as applicable s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt views and are discuss as under: (a) [Ruling per: Vipin Chandra, Member]- In the background of the issue in hand, the applicant has earlier sought the advance ruling on the applicability of GST on the activity being carried out by them and vide Advance Ruling No. 10/2018-19 dated 22-10-2018, it was held by the authority that their activity is exempted from GST in terms of Notification No. 12/2017-CT (Rate) dated 28.06.2017. Now the applicant has sought the advance ruling whether the same work allotted to sub-contractor is also exempted or otherwise. In this context, I find that there is no entry in the exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 which exempts the supply in question being carried out by the sub-contractors rather entry (iv) of serial no. 3 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribed GST rate @ 12% (CGST 6% + SGST 6%] for supply in question i.e. 'construction of road'. The relevant portion of Notification No. 11/2017-CT (Rate) dated 28.06.2017 is reproduced as under: Sl. No. Chapter, Section or Heading Description of Service Rate (Percent.) Condition 1 2 3 4 5 2 Section 5 Construction services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tri Awas Yojana; (e) a pollution control or effluent treatment plant, except located as a part of a factory; or (f) a structure meant for funeral, burial or cremation of deceased. 6 (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) railways, excluding monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the "Affordable Housing in Partnership" component of the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e) post- harvest storage infrastructure for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain contractor providing services specified in item (vii) above to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. 2.5 Provided that where the services supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be. Thus I observe that there is no conflict between the two entries made in the aforesaid notifications in as much as the activity of the applicant i.e 'construction of road' is exempted vide serial no. 9C of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 whereas the entry no. (iv) of serial no. 3 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 prescribed GST rate of 12% on the same work i.e 'construction of road'. I observe that the entries in Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 prescribing GST rates on service have to be read together with entries in exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. A supply which is specifically covered by any entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table. Initially, the GST rate on works contract service was notified at 18%. Subsequently, various notifications were issued notifying the various GST rates for different situations in which works contract service is being provided. To remove the ambiguity on the applicability of GST rate on the sub-contractors, the GST council in its 25th meeting held on 18 January 2018, made following recommendation in this regard: "to reduce GST rate from 18% to 12%) on works contract services (WCS) provided by sub-contractor to the main contractor providing Works Contract Services to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity from which attracts the GST rate of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also liable @ 5%" I find that in the case of S P Gupta Vs UOI [reported in AIR 1982 SC 149], the Hon'ble Apex Court held that words used in the constitutiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Siraj-ul-Haq Khan Vs Sunni Central Board of Waqf [reported in AIR 1959 SC 198], the Hon'ble Apex Court held that "an attempt must always be made to reconcile the relevant provisions so as to advance the remedy intended by statute. Where the liberal meaning of the words used in a statuary provision would manifestly defeat its object by making a part of it meaningless and ineffective, it is legitimate and even necessary to adopt the rule of liberal construction in such a way so as to give meaning to all parts of the Act and to make the whole of it effective and operative." I further observe that if the GST is made applicable to the sub-contractors in the instant case, the whole purpose of exemption extended to the applicant i.e NHPC vide Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 will be lost as NHPC & PWD do not do the work on their own and they get their work completed through the sub-contractors. In such circumstances and facts of the case in hand the objective and purpose of the GST Council to give benefit to the work being undertaken will be defeated. On harmonious reading of both notifications viz 11/2017 -Central Tax (Rate) dated 28th Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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