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TMI Blog2020 (6) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation of India ltd.(on behalf of Bharat Broadband network ltd.) which is a Government of India undertaking with 90 percent or more participation by way of equity or control. However, in order to fulfil the definition of being a Government Authority , the work carried out by the applicant for M/s. Railtel Corporation of India ltd. should be any function entrusted to a Municipality under Article 243 W of the Constitution or to a Panchayat under Article 243 G of the Constitution. Whether the civil structure that has arisen or come into existence as a result of the work executed/service provided by the applicant for M/s. Railtel Corporation of India ltd. i.e. optical fiber cables laid under the ground is meant predominantly for use other than for commerce, industry, or any other business or profession as envisaged in 3(vi)(a) of Notification No.24/2017-Central Tax(Rate) dated 21.09.2017? - HELD THAT:- The work done by the applicant for M/s. Railtel Corporation of India ltd. involves digging of trenches and laying of optical fiber cables for the purpose of supply of internet connection to the Gram Panchayat. However, it cannot be construed that the optical fiber cables laid und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industry or any other business or profession. They have also submitted that M/s. Railtel Corporation of India ltd. by whom they have been awarded the tender has 100% share holding by Union Government and is a Government of India Enterprise. 3. The applicant has also submitted photocopies of (i) Tripartite Memorandum of Understanding (MOU) between Department of Telecommunications of Government of India, Government of Gujarat and Broadband Network ltd. dated 12.04.2013. (ii) Letter of acceptance dated 26.10.2017 issued by M/s. Railtel Corporation of India ltd. to M/s. Shree Hari Engineers and Contractors, Bhuj-Kachchh containing the schedule of work to be carried out by the applicant alongwith the rates. (iii) Agreement/Contract between M/s. Railtel Corporation of India ltd.and M/s. Shree Hari Engineers and Contractors, Bhuj-Kachchh dated 09.02.2018 for ₹ 1,69,75,575/- (iv) GST Notification No:24/2017-CT dated 21.09.2017. (v) Few R.A. bills issued by the applicant to M/s. Railtel Corporation India ltd. 4. The applicant has put the following question for advance ruling in their application:- Whether the Contract with Railtel Corporation of India ltd. will fall under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Bharat Broadband Network ltd. have further entered into agreement with M/s. Railtel Corporation of India ltd. to further execute the work entrusted by Government of India for laying of Optical fiber cable, that floating tender for the work, that execution, supervision of the work etc. is done by M/s. Railtel Corporation of India ltd. on behalf of M/s. Bharat Broadband Network ltd., that they carry out the activity of excavation of trenches and laying of optical fiber cable and post execution of works contract, they bill to M/s. Bharat Broadband Network ltd. and submit the bills and other documents to M/s. Railtel Corporation of India ltd. for their review and processing on behalf of M/s. Bharat Broadband Network ltd., that M/s. Bharat Broadband Network ltd. is an entity incorporated under the sub-category of Union Government Company under Companies Act and have attached a copy of the said company s master data. The applicant has attached a copy of MGT-7( as available from the database of Ministry of Corporate Affairs) wherein as per para-VI(a)(Sr.No.2),the Central Government holds 100% shares in M/s. Bharat Broadband Network ltd. and has stated that the work executed and supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, which amends notification no. 11/2017-Central Tax (Rate) dated 28.06.2017,issued under the Central Goods and Services Tax Act, 2017 (herein after referred to as the CGST Act ), in the case of the applicant. As per the letter of acceptance/work order issued by M/s Railtel Corporation India ltd. No.Rail Tel/Tender/OT/WR/NOFN/2017-18/04/LOA dated 26.10.2017 as well as the agreement dated 09.02.2018 signed between the applicant and M/s. Railtel Corporation ltd., the applicant has been awarded a contract for excavation of trenches and laying of Optical Fibre Cables(OFC) through ducts, testing, commissioning of OFC and maintenance in the 01(one) Block(Nakhatrana) of Kachchh District of Gujarat State. The amount involved in the said contract is ₹ 1,69,75,575/-. The applicant has also submitted another letter of acceptance/work order No.Rail Tel/Tender/OT/WR/NOFN/2017-18/49/LOA dated 12.05.2018 issued by M/s Railtel Corporation India ltd. regarding a contract for excavation of trenches and laying of Optical Fibre Cables(OFC) through ducts, testing, commissioning of OFC and maintenance in the 02 Blocks of Abdasa and Nakhatarana of Kachchh District of Gujarat State valued at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider the question for advance ruling of the applicant to be as follows: Whether the Contract with Railtel Corporation of India ltd. will fall under the Notification 24/2017-Central Tax (Rate) Sr.No.3(vi)-Construction Service or Original Work to Government Authority, and the rate of tax applicable be 12%? 11. The issue for consideration is whether the two contracts in question are covered under entry No.3(vi)(a) of Notification No.24/2017-Central Tax(Rate) dated 21.9.2017 (which amends original Notification No.11/2017-Central Tax(Rate) dated 28.06.2017) as amended from time to time, liable to tax at 12% (CGST + SGST together) or not. 12. The entry no.3(vi) of the above notification reads as under: Sl.No. Heading Description of Services Rate Condition (1) (2) (3) (4) (5) 3. Heading 9954 (vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity. . 13. The term original work has not been defined under the said notification but has been defined in Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 which also can be used in the context of this notification as both deal with the taxation of services and reads as under: (zs) Original work means all new constructions: (i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable. (ii) Erection, commission or installation of plant, machinery or equipment or structures, whether fabricated or otherwise. 14. In view of the above, services provided by applicant would be liable to tax at the rate of 12% in terms of entry No.3(vi) of Notification No:11/2017-Central Tax (Rate), as amended from time to time, subject to the following conditions: (i) It must be a composite supply of works contract as defined in section 2(119) of the CGST Act, 2017. (ii) The contract should be by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of civil structure or any other original works. (iii) It must be pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pality and to a Panchayat under the Constitution of India are listed below: Functions entrusted to the Panchayats by Article 243G of the Constitution of India: 1. Agriculture, including agricultural extension. 2. Land improvement, implementation of land reforms, land consolidation and soil conservation. 3. Minor irrigation, water management and watershed development. 4. Animal husbandry, dairying and poultry. 5. Fisheries. 6. Social forestry and farm forestry. 7. Minor forest produce. 8. Small scale industries, including food processing industries. 9. Khadi, village and cottage industries. 10. Rural housing. 11. Drinking water. 12. Fuel and fodder. 13. Roads, culverts, bridges, ferries, waterways and other means of communication. 14. Rural electrification, including distribution of electricity. 15. Non-conventional energy sources. 16. Poverty alleviation programme. 17. Education, including primary and secondary schools. 18. Technical training and vocational education. 19. Adult and non-formal education. 20. Libraries. 21. Cultural activities. 22. Markets and fairs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with 90 percent or more participation by way of equity or control. However, in order to fulfil the definition of being a Government Entity ,the work carried out by the applicant for M/s. Railtel Corporation of India ltd. should be a function entrusted by the Central Government, State Government, Union Territory or a local authority. On going through the agreement dated 09.02.2018 signed between M/s. Railtel Corporation of India ltd.(on behalf of Bharat Broadband network ltd.) and the applicant M/s. Shree Hari Engineers and Contractors as well as the Letters of acceptance dated 26.10.2017 and 12.05.2018 issued by M/s. Railtel Corporation of India ltd. to the applicant, it is observed that it contains the following details: (i) type of work to be carried out by the applicant i.e. Excavation of Trenches and laying of OFC through ducts, testing, commissioning of OFC and maintenances etc. (ii) reference to tender issued by M/s. Railtel Corporation of India ltd. for the work to be done. (iii) value of the work. (iv) details of equipments and materials to be supplied by the applicant for the execution of the work (v) terms and conditions of the work etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession, vocation, adventure,wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) ---- (f)---- (g) ---- (h) ---- (i) ---- From the above definition of business, it is clear that any activity of trade, commerce, manufacture etc. or any other similar activity is included in the definition of business and it is immaterial whether it is done for a pecuniary benefit, and any activity done in connection with or incidental or ancillary to such activity is also included in the scope of business . 15. Thus, the applicant in the course of providing work contract service to M/s. Railtel Corporation of India ltd. (on behalf of M/s. Bharat Broadband Network ltd.) is involved in the laying of trenches and laying optical fiber cables (goods) th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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