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TMI Blog2022 (2) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... te of 12%? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions made by M/s Kapil Sons are as under:- 2.1 M/s. Kapil Sons, the applicant is registered under GST and engaged in drilling and blasting works at various sites using Industrial explosives and other materials. 2.2 Government of Maharashtra entrusted Maharashtra State Road Development Corporation Limited (MSRDC), a corporation fully owned by Government of Maharashtra, the development, operation and maintenance of Two Tunnel (Two Tubes of four lane each) for Missing Link under Capacity Augmentation of Mumbai Pune Expressway in Mumbai. 2.3 MSRDC resolved to construct the same, invited proposals for short listing of bidders for EPC and accepted the bid of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by MSRDC needs to be understood. Construction of tunnel involves a series of steps including planning for various factors including, route studies, Tunnel type studies, geotechnical investigation, operational and financial planning, risk management etc. 2.8 There are various methods of construction of tunnel also known as tunneling methods, as depicted in above chart and the main contractor has to undertake rock tunneling for the awarded work. The rock tunneling methods generally prevalent in use are: * Drill and Blast * Tunnel Boring Machines (TBM) * Road headers * Other Mechanized Excavation Method * Sequential Excavation Method (SEM)/New Austrian Tunneling Method (NATM) 2.9 The main contract has engaged applicant for the construction of tunnel by drill and blast technique of tunneling. The issue for consideration is with respect to classification of the said supply. The cycle of drilling and blasting activity to be undertaken by the applicant involves the following steps: * Drilling blast holes and loading them with explosives. * Detonating the blast, followed by ventilation to remove blast fumes. * Removal of the blasted rock (mucking). * Scaling crown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Article 366 of the Constitution of India has been considered in Larsen & Toubro Limited (supra) and it has been held that the expression "goods (whether as goods or in some other form)" appearing in sub-clause (b) of clause (29A) of Article 366 of the Constitution of India has the effect of enlarging the term "goods" by bringing within its fold goods in all different forms. Paragraph 56 of the opinion rendered in Larsen & Toubro Limited (supra) reads as under: "56. It is important to ascertain the meaning of sub- clause (b) of clause (29-A) of Article 366 of the Constitution. As the very title of Article 366 shows, it is the definition clause. It starts by saying that in the Constitution unless the context otherwise requires the expressions defined in that article shall have the meanings respectively assigned to them in the article. The definition of expression "tax an sale or purchase of the goods" is contained in clause (29-A). If the first part of clause (29-A) is read with sub-clause (b) along with latter part of this clause, it reads like this: "tax on the sale or purchaser of the goods" includes a tax on the transfer of property in goods (whether as goods or in some ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that transfer of property in such goods takes place when the goods are incorporated in the works and even though if they loose their identity as goods, this factor does not prevent them from being goods. Hence there is a transfer of property in goods, in some other form involved in the execution of construction project. 2.16 Further, in this regard, the judgment of Hon'ble Supreme Court in the case of State of Gujarat Vs. Bharat Pest Control (Civil Appeal No. 1335 of 2018] = 2018-170L-310-SC-VAT is relevant, wherein it has been held as follows :- "5. A Constitution Bench of this Court in Kane Elevator Indio Private Limited vs. State of Tamil Nadu, while considering the correctness of its earlier view with regard to dominant nature of the contract test, has apart from holding that the dominant nature test would no longer be determinative, considered paragraph 56 of the report in Larsen & Toubro Limited 2 (2014) 7 5CC 1 (supra) and has accepted the same to be the correct position in low. 6. In view of the above position of law enunciated in Larsen & Toubro Limited (supra) and Kone Elevator India Private Limited (supra) the view taken by the High Court that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process, it is clear that various goods including explosives, tools and other material have to be used during the process of blasting and hence there is an element of goods involved in the transaction. Further, undoubtedly there is a service element in carrying out the whole process starting from drilling till the by removing the rubble. Hence the activity involves both goods and services. It appears that the applicant is a sub-contractor and providing services to M/s Navayuga Engineering Company Ltd. (Main Contractor). M/s Navayuga Engineering Company Ltd. have signed an agreement with MSRDC a corporation which is fully owned by Govt. of Maharashtra. Further, as per work order, it appears that, activities carried out by the applicant may be classified as composite supply of works contract for construction of tunnel under Entry 3(iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 with taxable rate of GST 12%. However, the applicant has declared only goods having HSN 36020010 & 36030011 in their GST registration and they have never mentioned about any services in their GST registration at the time of execution of the works order i.e. Nov, 2018. 04. HEARING 4.1 Preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty involves both, the goods as well as the services. 5.6 Section 2(30) of the CGST Act, 2017, defines the term 'composite supply' as under:- (30) "composite 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. 5.7 The applicant has been issued a Work Order dated 28.11.2018 by M/s Navyauga Engineering Company Limited, the Main Contractor for "drilling and blasting including all tools, materials, explosive vans etc. complete for approach roads and Tunnel Works". The applicant has also submitted an Addendum to the aforementioned Work Order as per which: The said work entrusted to the applicant shall be in relation to the construction of Two Tunnels for missing link under Capacity Augmentation of Mumbai Pune Expressway in Mumbai and the impugned work awarded, shall include within its ambit various goods including explosives tools and other material to be used during the work. From the work diagram submitted by the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losive vans etc. complete for approach roads and Tunnel Works". Since, we have held that the impugned activity carried out by the applicant can be classified as composite supply of works contract for construction of tunnel we find that the said supply will be covered under Entry 3(iv) of Notification No. 11/2017-CT (Rate) dated 28.06.2017 which is reproduced as under:- Sr. No. Chapter, Section or Heading Description of services Rate % Condition 3 Heading 9954 Construction Services (iv) 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, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) a road, bridge, tunnel, or terminal for road transportation for use by general public; (b)......................... (c)......................... (d)......................... (e)......................... (f)......................... 6 5.10.3 It is further noticed that similar view has been taken by the Advance Ruling Authority of Gujarat in case of M/s KHEDUT HAT [2018-TIOL-173-AAR-GST] that blasting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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