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TMI Blog2022 (4) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Tax Payer.? 2. What will be the GST Rate applicable to the tax payer as per attached work order? 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 FACTS: The submissions made by M/s. Shri Venkateshwara Infrastructure J V, the applicant are as under:- 2.1 The applicant is a Joint Venture partnership firm having its registered office at Padma Nagar, Barshi Road, Latur and has been allotted earthwork in embankment, cutting and bridge approaches etc. of Central Railway Department. It is composite Contract work which includes supply of material and service as per the Tender Value / Work Order, supply of goods which constitutes not more than 25% of the supply of material. 2.2 The Tender allotted for Rs. 24,22,47,153/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they cannot be separated. To undertake the impugned supply, natural bundle of supply of goods and/or services is inevitable. Thus, the works contract allotted to the applicant shall fall within the ambit of composite supply. 2.8.1 As per Notification No. 12/2017-CTR dt 28.06.2017 amended by Notification No. 2/2018-CTR dt 25.01.2018, GST rate applicable is Nil under Sr. No. 3A under HSN 9954 for "Composite supply of goods and services in which the value of supply of goods constitutes not more than 25% of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority." 2.8.2 In the instant case, it is seen from the Estimate Sheet enclosed with Tender Acceptance Letter that, cost of supply of services accounts for approximately 89% of total cost of the composite supply. Thus, supply of goods would constitute approximately 11% of the total value of the contract. 2.8.3 Since, the Contract/Transaction under consideration is Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017, services are provided to the Central Government and the cost of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under the definition of Earthwork. 2.12 Further, the total contract value is for Rs. 33,05,06,116, in which the works are itemized into Part A to F. Out of those, Part A, B, C and F exclusively deal with Earthwork items amounting to Rs. 29,41,40,231 which constitutes 89% of the total contract by value. Thus, the major part of the contract involves earth work i.e. more than 75% of the work involves earth work. 2.13 In view of the above, in the subject case, all the pre-requisites of entry Sr. No. 3(vii) of HSN 9954 are satisfied, and therefore, the said work order qualifies for the benefit of said entry and GST would be applicable at the rate of 5%. General Rules of Interpretation 2.14 As per the Explanatory Notes to the Scheme of Classification of Services, where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. 2.15 Entry Sr. No. 3A of HSN 9954, Notification No. 12/2017-CTR dt 28.06.2017 as amended, provides NIL GST rate, in general, for all composite supply of works contracts in which value of goods is not more than 25% of the total value of supply where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndled and supplied in conjunction with each other, hence, the said service seems to be falls under the category of Composite Supply as defined under Section 2(30) of CGST Act, 2017. 3.2 As per the calculation sheet submitted by the applicant, the total material cost of earth work including bridge work is Rs. 4,71,15,767/- which is 14% of total cost of the work order (Gross Revised CAV) i.e. Rs. 33,05,06,111/-. Accordingly, pure earth work cost is Rs. 28,33,90,344/-, which is 86% of the total cost of the work order dated 26.09.2017. 3.3 The CGST rate for the intra-State supply of services as per item No.(vii) against Serial No.3 (HSN 9954 Construction Services) of Table under Notification No.11/2017-CTR dt 28.06.2017 as amended vide Notfn. No. 31/2017-CTR dt 13.10.2017 for the Composite supply of works contract defined in clause (119) of section 2 of the CGST Act, 2017 involving predominantly earth work (that is, constituting more than 75 percent of the value of the works contract) provided to the Central Government, State Government, Union territory, local authority, a Governmental Authority or a Government Entity is 5% GST, subject to the conditions as specified in Col. (5) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2017 is for Rs. 24,22,47,153/-, which has been enhanced, vide Work Order dated 25.06.2019, to Rs. 33,05,06,116/- out of which Rs. 29,41,40,231/- is earth work cost and cost of bridge work which includes supply of goods is Rs. 3,63,65,880/-. Thus, according to applicant's initial submissions, the total percentage of the Earth work is 89% of the Work order amount and bridge work is 11% of the Total Work Order amount of Rs. 33,05,06,116/-. As per later submissions of the applicant, the cost of the earth work is Rs. 28,33,90,343/-(i.e., 86% of the work order) and cost of the bridge work is.4,71,15,767/-(i.e., 14% of the work order). 5.3 The applicant has produced statements showing itemized details of works/activities being carried out in the said contract. It is noticed that against the certain items, description is mentioned but, in the columns thereof the values are blank. However, the values shown against the remaining items are tallying with the submissions made by the applicant with respect to the total value of the contract. 5.4 The specific question raised by the applicant is, whether the impugned supply as per the subject Work Order received, is covered under Sr. No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore we have no hesitation in holding that the subject activity is a composite supply. Further, by way of fabrication, providing steel support, rock bolting, reinforcement, fixing of chain link, cement concreting, etc. there is a transfer of property like steel etc. Thus, we find that the impugned activity is a Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017. 5.7.3.1 The second condition mentioned in para 5.6 (b) is that the said Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017 should be involving predominantly earth work (that is, constituting more than 75 per cent of the value of the works contract). 5.7.3.2 The term "Earth Work "has not been defined under any GST provisions. The Webster Dictionary defines Earth Work as an embankment or construction made of earth specially one used as a field fortification. The Collins Dictionary defines Earth Work as "excavation of earth as in engineering construction; a fortification made of earth The Wikipedia defines Earth Work as "Earth work are engineering works through the processing of parts of earth surface involving quantities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the commencement of the Constitution, means the President. As per Article 53 of the Constitution, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers, subordinate to him in accordance with the Constitution. Further, in terms of Article 77 of the Constitution, all executive actions of the Government of India shall be expressed to be taken in the name of the President. 5.7.4.4 In view of the above, the Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. 5.7.4.5 We find that, in the subject case, in respect of the impugned tender 'for earthwork in embankment, cutting and bridge approaches and construction of minor bridges and RUBs in the section between Beed to Parli from Ch. 175000 to 185000 m for Ahmednagar-Beed Parli Vaijnath New Broad Gauge Line Project' the offer of the applicant has been accepted by the Central Railway Department vide Letter Of Acceptance dated 25/26th September, 2017, by Shri V.K. Agrawal, Chief Engineer (Construction) Central f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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