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TMI Blog2019 (3) TMI 1953X X X X Extracts X X X X X X X X Extracts X X X X ..... e except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the UKGST Act. BRIEF FACTS OF THE CASE 1. In the instant case the Party vide their application under sub-section (1) of Section 97 of the CGST/SGST Act, 2017 sought an Advance Ruling on the following issues: (a) Whether the Notification No. 12/2017-Central 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. Following the personal hearing given to the applicant on 11.01.2019, the members of the Advance Ruling Authority for the state of Uttarakhand viz. Shri Vipin Chandra, and Shri Amit Gupta differed in their opinions and thus gave different rulings. (4) Shri Vipin Chandra, observed that:]- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entry of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 is exempt from GST notwithstanding the fact that GST rate has been prescribed for the same wider Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. In view of the above I observe that since the supply in question i.e 'construction of road' by sub-contractor is not exempted vide Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017, therefore the sub-contractors are liable to pay GST @ 12% CGST 6% + SGST 6%17 (B) Shri Amit Gupta, observed that: In the present case I find that Minis try of External Affairs (herein after referred to as MEA) has allotted the work i.e. 'construction of road' to the NHPC (applicant). The applicant sub-let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnmental 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 constitutional or statuary provision are shrouded in mystery, clouded with ambiguity and are unclear and unintelligible so that the dominant object of the legislature cannot be spelt out from the language, external and like parliamentary debates, the report of the select committees or its chairman, the statement made by the sponsor of the statute can be pressed into service so as to know the real purpose or intent of the legislature. In this context I find that the legal facts given under "Fiscal Interpretation of Statutes " has to be read in conjunction with the recommendation of 25th GST Council (supra) and I observe that where literal interpretation may not serve the purpose or may lead to absurdity, the "doctrine of purposive interpretation" can be adopted which is based on the understanding that the authority is supposed to attach that meaning to the provisions which serve the purpose behi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir 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 June, 2017 and 12/2017-Central Tax (Rate) dated 28th June, 2017 together in light of object behind the GST Council to pass the benefit of tax to the downstream of the chain, I observe that sub-contractors of supply in question are exempted from payment of GST in as much as the main contractor namely NHPC is exempted from GST in terms of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 (as amended from time to time) vide Advance Ruling bearing No10/2018-19 dated 22-10-2018. RULING:- In light of the aforementioned. facts, as both the members have divergent views, as discussed supra, a ruling has been made, whereby, in terms of Section 98 (5) of the Act ibid, a reference to the Appellate Authority for hearing and decision on said issue has been made. PERSONAL HEARING A personal hearing was held on 13.02.2019. Shri J.C. Pant, Sr. Manager (Law), appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks contract services to Central govt. State govt. Union territory, local authority or a govt. authority or a govt. entity, taxable @ 12% (CGST 6%+SGST 6%).Under GST, if any taxable supply of goods/services is exempted then certain conditions are specified in the notification. There is no specific entry in the notification no. 12/2019- CT (Rate) dated 28-06-2017 making sub contractor's supply of services to the main contractor as exempt. However, in the process, the sub contractors are to be taxed at the same rate as the main contractor not due to the reason of extrapolation. It is for the ease of calculation of ITC & tax liability, both the entities are made liable to be taxed at the same rate. The serial no. 9C of notification no. 12/2017 (amended vide notification no 32/2017), exempts the services by a govt. entity to another govt. entity. Neither this notification nor any other notification exempts the work contract services from govt. entity to private contractor or contractor to sub-contractor. The observation ni ade by the GST Council in reducing the tax liability of such contractor was made for the ease of calculations. This fortifies the fact that only the notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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